Pick-Sloan Missouri Basin Program-Eastern Division-Rate Order No. WAPA-140, 3022-3030 [E9-892]
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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
Base Capacity =
previous purchase power drought
deficits, and interest on the purchase
power drought deficits. For the period
beginning on or after the first day of the
Drought Adder Capacity =
Drought Adder Energy =
Process: Any proposed change to the
Base component will require a public
process. The Drought Adder may be
adjusted annually using the above
formula for any costs attributed to
drought of less than or equal to the
equivalent of 2 mills/kWh to the LAP
composite rate. Any planned
incremental adjustment to the Drought
Adder component greater than the
equivalent of 2 mills/kWh to the LAP
composite rate will require a public
process.
Adjustments:
For Drought Adder: Adjustments
pursuant to the Drought Adder
component will be documented in a
revision to this rate schedule.
For Transformer Losses: If delivery is
made at transmission voltage but
metered on the low-voltage side of the
substation, the meter readings will be
increased to compensate for transformer
losses as provided for in the contract.
For Power Factor: None. The customer
will be required to maintain a power
factor at all points of measurement
between 95-percent lagging and 95percent leading.
[FR Doc. E9–897 Filed 1–15–09; 8:45 am]
BILLING CODE 6450–01–P
DEPARTMENT OF ENERGY
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Western Area Power Administration
Pick-Sloan Missouri Basin Program—
Eastern Division-Rate Order No.
WAPA–140
AGENCY: Western Area Power
Administration, DOE.
ACTION: Notice of Order Concerning
Firm Power Rates.
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first full billing period beginning on or
after February 1, 2009, the Drought
Adder revenue requirement is $26
million.
50% × Drought Adder Revenue Requirement
= $1.67/kW month
Firm Billing Capacity
50% × Drought Adder Revenue Requirement
= $6.39 mills/kWh
Annual Energy
SUMMARY: The Acting Deputy Secretary
of Energy confirmed and approved Rate
Order No. WAPA–140 and Rate
Schedules P–SED–F10 and P–SED–
FP10, placing firm power and firm
peaking power rates from the Pick-Sloan
Missouri Basin Program—Eastern
Division (P–SMBP—ED) of the Western
Area Power Administration (Western)
into effect on an interim basis. The
provisional rates will be in effect until
the Federal Energy Regulatory
Commission (FERC) confirms, approves,
and places them into effect on a final
basis or until they are replaced by other
rates. The provisional rates will provide
sufficient revenue to pay all annual
costs, including interest expense, and
repayment of power investment and
irrigation aid within the allowable
periods.
DATES: Rate Schedules P–SED–F10 and
P–SED–FP10 will be placed into effect
on an interim basis on the first day of
the first full billing period beginning on
or after February 1, 2009, and will
remain in effect until FERC confirms,
approves, and places the rate schedules
in effect on a final basis ending
December 31, 2013, or until the rate
schedules are superseded.
FOR FURTHER INFORMATION CONTACT: Mr.
Robert J. Harris, Regional Manager,
Upper Great Plains Region, Western
Area Power Administration, 2900 4th
Avenue North, Billings, MT 59101–
1266, telephone (406) 247–7405, e-mail
rharris@wapa.gov, or Ms. Linda CadyHoffman, Rates Manager, Upper Great
Plains Region, Western Area Power
Administration, 2900 4th Avenue North,
Billings, MT 59101–1266, (406) 247–
7439, e-mail cady@wapa.gov.
SUPPLEMENTARY INFORMATION: The
Deputy Secretary of Energy approved
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existing Rate Schedules P–SED–F9 and
P–SED–FP9 for P–SMBP—ED firm and
firm peaking electric service,
respectively, on an interim basis on
November 1, 2007 (72 FR 68,64,067
November 14, 2007), for a 5-year period
beginning on January 1, 2008, and
ending December 31, 2012.1
Under Rate Schedule P–SED–F9, the
composite rate is 24.49 mills per
kilowatthour (mills/kWh), the firm
energy rate is 13.99 mills/kWh, and the
firm capacity rate is $5.65 per
kilowattmonth (kWmonth). Under Rate
Schedule P–SED–FP9, the firm peaking
capacity rate is $5.10/kWmonth. These
Rate Schedules are formula based with
Base and Drought Adder components
and provide for an up to 2 mills/kWh
increase in the Drought Adder rate
component.
The current rate adjustment reflects a
rate increase based on the P–SMBP
Final Fiscal Year 2007 Power
Repayment Study (PRS). The PRS sets
the total annual P–SMBP—ED revenue
requirement for 2009 for firm and firm
peaking electric service at $283.0
million, or a 19.9 percent increase. The
current rates, including the 2 mills/kWh
increase provided for under the Drought
Adder formula rate component, are not
sufficient to meet the P–SMBP—ED
revenue requirements.
The P–SMBP—ED revenue
requirement increase is mainly
attributed to the economic impacts of
the drought. A decrease in hydro-power
generation has caused purchase power
expense to increase and revenue from
1 FERC confirmed and approved Rate Order No.
WAPA–135 on April 14, 2008, in Docket No. EF08–
5031–000. See United States Department of Energy,
Western Area Power Administration, Pick-Sloan
Missouri Basin Program, 123 FERC ¶ 62048 (April
14, 2008).
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Drought Adder: A formula-based
revenue requirement that includes
future purchase power expense
excluding timing power purchases,
50% × Base Revenue Requirement
= 12.23 mills/kWh
Annual Energy
EN16JA09.016
Base Energy =
50% × Base Revenue Requirement
= $3.21/kW month
Firm Billing Capacity
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non-firm energy sales to decrease. There
has been an increase in both the price
and volume of purchase power needed
to meet contractual commitments to
Western’s customers. The purchase
price of power is set by supply and
demand on the open market.
The existing firm electric service Rate
Schedules P–SED–F9 and P–SED–FP9
are being superseded by Rate Schedules
P–SED–F10 and P–SED–FP10,
respectively. Under Rate Schedule P–
SED–F10, the provisional rates for firm
electric services will result in a
combined composite rate of 29.34 mills/
kWh. The energy rate will be 16.71
mills/kWh (a Base component of 9.27
mills/kWh and a Drought Adder
component of 7.44 mills/kWh), and the
capacity rate will be $6.80/kWmonth (a
Base component of $3.80/kWmonth and
a Drought Adder component of $3.00/
kWmonth). Under Rate Schedule P–
SED–FP10, the provisional rates for firm
peaking electric services consist of a
capacity charge of $6.20/kWmonth (a
Base component of $3.40/kWmonth and
a Drought Adder component of $2.80/
kWmonth) and an energy charge of
16.71 mills/kWh.
By Delegation Order No. 00–037.00,
effective December 6, 2001, the
Secretary of Energy delegated: (1) The
authority to develop power and
transmission rates to the Administrator
of Western; (2) the authority to confirm,
approve, and place such rates into effect
on an interim basis to the Deputy
Secretary of Energy; and (3) the
authority to confirm, approve, and place
into effect on a final basis; to remand;
or to disapprove such rates to FERC.
Existing Department of Energy
procedures for public participation in
power rate adjustments (10 CFR part
903) were published on September 18,
1985.
Under Delegation Order Nos. 00–
037.00 and 00–001.00C, 10 CFR part
903, and 18 CFR part 300, I hereby
confirm, approve, and place Rate Order
No. WAPA–140, the proposed P–
SMBP—ED firm power, and firm
peaking power rates into effect on an
interim basis.
The new Rate Schedules P–SED–F10
and P–SED–FP10 will be promptly
submitted to FERC for confirmation and
approval on a final basis.
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Dated: January 8, 2009.
Jeffrey F. Kupfer,
Acting Deputy Secretary.
Department of Energy
Deputy Secretary
In the matter of:
Western Area Power Administration Rate
Adjustment for the Pick-Sloan Missouri
Basin Program—Eastern Division; Rate Order
No. WAPA–140;
Order Confirming, Approving, and Placing
the Pick-Sloan Missouri Basin Program—
Eastern Division Firm Power and Firm
Peaking Power Service Rates Into Effect on an
Interim Basis
The firm and firm peaking electric
service rates for the Pick-Sloan Missouri
Basin Program—Eastern Division were
established in accordance with section
302 of the Department of Energy (DOE)
Organization Act (42 U.S.C. 7152). This
Act transferred to and vested in the
Secretary of Energy the power marketing
functions of the Secretary of the
Department of the Interior and the
Bureau of Reclamation under the
Reclamation Act of 1902 (ch. 1093, 32
Stat. 388), as amended and
supplemented by subsequent laws,
particularly section 9(c) of the
Reclamation Project Act of 1939 (43
U.S.C. 485h(c)) and section 5 of the
Flood Control Act of 1944 (16 U.S.C.
825s) and other Acts that specifically
apply to the project involved.
By Delegation Order No. 00–037.00,
effective December 6, 2001, the
Secretary of Energy delegated: (1) The
authority to develop power and
transmission rates to the Administrator
of Western; (2) the authority to confirm,
approve, and place such rates into effect
on an interim basis to the Deputy
Secretary of Energy; and (3) the
authority to confirm, approve and place
into effect on a final basis; to remand;
or to disapprove such rates to the
Federal Energy Regulatory Commission.
Existing DOE procedures for public
participation in power rate adjustments
(10 CFR part 903) were published on
September 18, 1985.
Acronyms and Definitions
As used in this Rate Order, the
following acronyms and definitions
apply:
Administrator: The Administrator of
the Western Area Power
Administration.
Base: Revenue requirement
component of the power rate including
annual operation and maintenance
expenses, investment repayment and
associated interest, normal timing
power purchases, and transmission
costs.
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Capacity: The electric capability of a
generator, transformer, transmission
circuit, or other equipment. It is
expressed in kilowatts.
Capacity Charge: The rate which sets
forth the charges for capacity. It is
expressed in dollars per kilowattmonth.
Composite Rate: The rate for
commercial firm power which is the
total annual revenue requirement for
capacity and energy divided by the total
annual energy sales. It is expressed in
mills per kilowatthour and used for
comparison purposes.
Corps: The United States Army Corps
of Engineers.
CROD: Contract Rate of Delivery. The
maximum amount of capacity and
energy allocated to a preference
customer for a period specified under a
contract.
Customer: An entity with a contract
that is receiving service from Western’s
Upper Great Plains Region.
Deficits: Deferred or unrecovered
annual and/or interest expenses.
DOE: United States Department of
Energy.
DOE Order RA 6120.2: An order
outlining power marketing
administration financial reporting and
rate-making procedures.
Drought Adder: Formula-based
revenue requirement component
including costs associated with the
drought.
Energy: Measured in terms of the
work it is capable of doing over a period
of time. It is expressed in kilowatthours.
Energy Charge: The rate which sets
forth the charges for energy. It is
expressed in mills per kilowatthour and
applied to each kilowatthour delivered
to each customer.
FERC: Federal Energy Regulatory
Commission.
Firm: A type of product and/or service
available at the time requested by the
customer.
FRN: Federal Register notice.
Fry-Ark: Fryingpan-Arkansas Project.
FY: Fiscal Year; October 1 to
September 30.
kW: Kilowatt—the electrical unit of
capacity that equals 1,000 watts.
kWh: Kilowatthour—the electrical
unit of energy that equals 1,000 watts in
1 hour.
kWmonth: Kilowattmonth—the
electrical unit of the monthly amount of
capacity.
LAP: Loveland Area Projects.
Load Factor: The ratio of average load
in kW supplied during a designated
period to the peak or maximum load in
kW occurring in that period.
mills/kWh: Mills per kilowatthour—
the unit of charge for energy (equal to
one tenth of a cent or one thousandth
of a dollar).
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MISO: Midwest Independent
Transmission System Operator.
MW: Megawatt—the electrical unit of
capacity that equals 1 million watts or
1,000 kilowatts.
NEPA: National Environmental Policy
Act of 1969 (42 U.S.C. 4321, et seq.).
Non-timing Power Purchases: Power
purchases that are not related to
operational constraints such as
management of endangered species,
species habitat, water quality,
navigation, control area purposes, etc.
O&M: Operation and Maintenance.
P–SMBP: The Pick-Sloan Missouri
Basin Program.
P–SMBP—ED: Pick-Sloan Missouri
Basin Program—Eastern Division.
P–SMBP—WD: Pick-Sloan Missouri
Basin Program—Western Division.
Power: Capacity and energy.
Power Factor: The ratio of real to
apparent power at any given point and
time in an electrical circuit. Generally,
it is expressed as a percentage.
Preference: The provisions of
Reclamation Law which require
Western to first make Federal power
available to certain entities. For
example, section 9(c) of the Reclamation
Project Act of 1939 (43 U.S.C. 485h(c))
states that preference in the sale of
Federal power shall be given to
municipalities and other public
corporations or agencies and also to
cooperatives and other nonprofit
organizations financed in whole or in
part by loans made under the Rural
Electrification Act of 1936.
Provisional Rate: A rate which has
been confirmed, approved, and placed
into effect on an interim basis by the
Deputy Secretary.
PRS: Power Repayment Study.
Rate Brochure: An August 2008
document explaining the rationale and
background for the rate proposal
contained in this Rate Order.
Reclamation: The United States
Department of the Interior, Bureau of
Reclamation.
Reclamation Law: A series of Federal
laws. Viewed as a whole, these laws
create the originating framework under
which Western markets power.
Revenue Requirement: The revenue
required to recover annual expenses
(such as O&M, purchase power,
transmission service expenses, interest,
and deferred expenses) and repay
Federal investments and other assigned
costs.
RMR: The Rocky Mountain Customer
Service Region of the Western Area
Power Administration.
SPP: Southwest Power Pool.
Timing Power Purchases: Power
purchases that are due to operational
constraints (e.g. management of
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endangered species, species habitat,
water quality, navigation, control area
purposes, etc.) and not associated with
the drought.
UGPR: The Upper Great Plains
Customer Service Region of the Western
Area Power Administration.
Western: The United States
Department of Energy, Western Area
Power Administration.
Effective Date
The new provisional rates will take
effect on the first day of the first full
billing period beginning on or after
February 1, 2009, and will remain in
effect until December 31, 2013, pending
approval by FERC on a final basis.
Public Notice and Comment
Western followed the Procedures for
Public Participation in Power and
Transmission Rate Adjustments and
Extensions, 10 CFR part 903, in
developing these rates. The steps
Western took to involve interested
parties in the rate process were:
1. The proposed rate adjustment
process began April 9, 2008, when
Western’s UGPR mailed a notice
announcing informal customer meetings
to all P–SMBP—ED preference
customers and interested parties. The
informal meetings were held on April
29, 2008, in Denver, Colorado, and on
April 30, 2008, in Sioux Falls, South
Dakota. At these informal meetings,
Western explained the rationale for the
rate adjustment, presented rate designs
and methodologies, and answered
questions.
2. A Federal Register notice,
published on August 15, 2008 (73 FR
47945) announced the proposed rates
for P–SMBP—ED, began a public
consultation and comment period and
announced the public information and
public comment forums.
3. On August 18, 2008, Western
mailed letters to all P–SMBP—ED
preference customers and interested
parties transmitting the FRN published
on August 15, 2008.
4. On August 29, 2008, a letter was
mailed to preference customers and
interested parties informing them of a
$400,000 misstatement in the FRN
published revenue requirement.
5. On September 9, 2008, at 9 a.m.
(MDT), Western held a public
information forum at the Ramada Plaza
Hotel in Northglenn, Colorado. Western
provided updates to the proposed firm
power rates for the P–SMBP, which
encompasses the P–SMBP—ED and LAP
rates. Western also answered questions
and gave notice that more information
was available in the rate brochure.
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6. On September 9, 2008, at 11:30 a.m.
(MDT), following the public information
forum, and at the same location, a
public comment forum was held. The
comment forum gave the public an
opportunity to comment for the record.
No oral or written comments were
received at this forum.
7. On September 10, 2008, at 8 a.m.
(CDT), Western held a public
information forum at the Holiday Inn in
Sioux Falls, South Dakota. Western
provided updates to the proposed firm
power rates for the P–SMBP, which
encompasses the P–SMBP—ED and LAP
rates. Western also answered questions
and gave notice that more information
was available in the rate brochure.
8. On September 10, 2008, at 10:30
a.m. (CDT), following the public
information forum, and at the same
location, a public comment forum was
held. The comment forum gave the
public an opportunity to comment for
the record. One oral comment was
received at this forum.
9. Western provided a Web site which
contains all of the letters, time frames,
dates, and locations of forums,
documents discussed at the information
meetings, FRNs, rate brochure, and all
other information about this rate process
for easy customer access. The Web site
is located at https://www.wapa.gov/ugp/
rates/2009FirmRateAdjust.
10. During the consultation and
comment period, which ended
November 13, 2008, Western received
17 comment letters. One comment letter
was rescinded. Western also received an
oral comment. All formally submitted
comments have been considered in
preparing this Rate Order.
Comments
Written comments were received from
the following organizations:
City of Blue Hill, Nebraska.
City of Burwell, Nebraska (2).
City of Fort Morgan, Colorado.
City of Sargent, Nebraska.
City of Wall Lake, Iowa.
City of West Point, Nebraska.
City of Wisner, Nebraska.
City of Wood River, Nebraska.
Corn Belt Power Cooperative, Iowa.
Mid-West Electric Consumers
Association, Colorado.
North Iowa Municipal Electric
Cooperative Association, Iowa.
Spencer Municipal Utilities, Iowa.
Village of Oxford, Nebraska.
Village of Shickley, Nebraska.
Village of Spencer, Nebraska.
Village of Stuart, Nebraska.
A representative of the following
organization made an oral comment:
Minnesota Municipal Utilities,
Minnesota.
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Project Description
The P–SMBP was authorized by
Congress in section 9 of the Flood
Control Act of December 22, 1944,
commonly referred to as the 1944 Flood
Control Act. This multipurpose program
provides flood control, irrigation,
navigation, recreation, preservation and
enhancement of fish and wildlife, and
power generation. Multipurpose
projects have been developed on the
Missouri River and its tributaries in
Colorado, Montana, Nebraska, North
Dakota, South Dakota, and Wyoming.
In addition to the multipurpose water
projects authorized by Section 9 of the
Flood Control Act of 1944, certain other
existing projects have been integrated
with the P–SMBP for power marketing,
operation, and repayment purposes. The
Colorado-Big Thompson, Kendrick, and
Shoshone Projects were combined with
the P–SMBP in 1954, followed by the
North Platte Project in 1959. These
projects are referred to as the
‘‘Integrated Projects’’ of the P–SMBP.
The Flood Control Act of 1944 also
authorized the inclusion of the Fort
Peck Project with the P–SMBP for
operation and repayment purposes. The
Riverton Project was integrated with the
P–SMBP in 1954 and in 1970 was
reauthorized as a unit of P–SMBP.
The P–SMBP is administered by two
regions. The UGPR, with a regional
office in Billings, Montana, markets
power from the Eastern Division of P–
SMBP, and the RMR, with a regional
office in Loveland, Colorado, markets
the Western Division power of P–SMBP.
The UGPR markets power in western
Iowa, western Minnesota, Montana east
of the Continental Divide, North Dakota,
South Dakota, and the eastern twothirds of Nebraska. The RMR markets P–
SMBP—WD power, which in
combination with Fry-Ark power is
known as LAP power, in northeastern
Colorado, east of the Continental Divide
in Wyoming, west of the 101st meridian
in Nebraska, and most of Kansas. The P–
SMBP power is marketed to
approximately 300 firm power
customers by the UGPR and
approximately 60 firm power customers
by the RMR.
Power Repayment Study—Firm Power
Rate
Western prepares a PRS each FY to
determine if revenues will be sufficient
to repay, within the required time, all
costs assigned to the P–SMBP.
Repayment criteria are based on law,
policies including DOE Order RA
6120.2, and authorizing legislation. To
meet Cost Recovery Criteria outlined in
DOE Order RA 6120.2, a revised study
and rate adjustment has been developed
to demonstrate that sufficient revenues
will be collected under proposed rates
to meet future obligations.
Existing and Provisional Rates
Eastern Division
Under Rate Schedule P–SED–F9, the
composite rate is 24.49 mills/kWh, the
firm energy rate is 13.99 mills/kWh, and
the firm capacity rate is $5.65/
kWmonth. For Rate Schedule P–SED–
FP9 the firm peaking capacity rate is
$5.10/kWmonth. These Rate Schedules
are formula based with Base and
Drought Adder components and provide
for an up to a 2 mills/kWh increase in
the Drought Adder rate component.
The current rate adjustment reflects a
rate increase based on the P–SMBP
Fiscal Year 2007 PRS. The PRS sets the
total annual P–SMBP—ED revenue
requirement for 2009 for firm and firm
peaking electric service at $283.0
million, or a 19.9 percent increase.
A comparison of the existing and
provisional firm power and firm
peaking power rates follow:
TABLE 1—COMPARISON OF EXISTING AND PROVISIONAL RATES PICK-SLOAN MISSOURI BASIN PROGRAM—EASTERN
DIVISION
Firm electric service
Current rates
Provisional rates
Rate Schedules
P–SED–F9/P–SED–
FP9
P–SED–F10/P–SED–
FP10
Firm and Firm Peaking Revenue Requirement (million) .....................
Composite Rate (mills/kWh) ................................................................
Firm Capacity Rate (/kWmonth) ..........................................................
Firm Energy Rate (mills/kWh) .............................................................
Firm Peaking Capacity Rate (/kWmonth) ............................................
Firm Peaking Energy Rate (mills/kWh)1 ..............................................
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1 Firm
$235.9
24.49
$5.65
13.99
$5.10
13.99
$283.0
29.34
$6.80
16.71
$6.20
16.71
Percent change
19.9
19.8
20.4
19.4
21.6
19.4
Peaking Energy is normally returned. This rate will be assessed in the event Firm Peaking Energy is not returned.
Western Division
The LAP rate is designed to recover
the P–SMBP—WD revenue requirement
for the P–SMBP and the revenue
requirement for Fry-Ark. The
adjustment to the LAP rate is a separate
formal rate process which is
documented in Rate Order No. WAPA–
142. Rate Order No. WAPA–142 is
scheduled to go into effect on the first
day of the first full billing period after
the Acting Deputy Secretary of Energy
approves the rate.
Certification of Rates
Western’s Administrator certified that
the Provisional Rates for P–SMBP—ED
firm power and firm peaking power
rates are the lowest possible rates
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consistent with sound business
principles. The Provisional Rates were
developed following administrative
policies and applicable laws.
P–SMBP—ED Firm Power Rate
Discussion
According to Reclamation Law,
Western must establish power rates
sufficient to recover operation,
maintenance, purchased power and
interest expenses, and repay power
investment and irrigation aid.
The P–SMBP—ED firm power and
firm peaking power rates must be
increased due to the economic impact of
the drought, increased annual expenses,
increased investments, and increased
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interest expense associated with
deficits.
Under Rate Schedule P–SED–F10,
Western will continue identifying its
firm electric service revenue
requirement using Base and Drought
Adder rate components. The Base rate
component is a revenue requirement
that includes annual operation and
maintenance expenses, investment
repayment and associated interest,
normal timing power purchases, and
transmission costs. Western’s normal
timing power purchases are purchases
due to operational constraints (e.g.,
management of endangered species
habitat, water quality, navigation, etc.)
and are not associated with the current
drought. The Base component cannot be
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adjusted by Western without a public
process.
The Drought Adder rate component is
a formula-based revenue requirement
that includes costs attributable to the
past and present drought conditions
within the Pick-Sloan Program. The
Drought Adder rate component includes
costs associated with future non-timing
power purchases to meet firm power
contractual obligations not covered with
available system generation due to the
drought, previously incurred deficits
due to purchased power debt that
resulted from non-timing power
purchases made during this drought,
and the interest associated with the
previously incurred and future drought
deficit. The Drought Adder rate
component is designed to repay
Western’s drought deficit within 10
years from the time the debt was
incurred, using balloon-payment
methodology. For example, the drought
deficit incurred by Western in 2007 will
be repaid by 2017.
The annual revenue requirement
calculation will continue to be
summarized by the following formula:
Annual Revenue Requirement = Base
Revenue Requirement + Drought Adder
Revenue Requirement. Under this
Provisional Rate, effective February 1,
2009, the P–SMBP—ED annual revenue
requirement equals $294.1 million and
is comprised of a Base revenue
requirement of $163.5 million plus a
Drought Adder revenue requirement of
$130.6 million. Both the Base and
Drought Adder rate components recover
portions of the firm power revenue
requirement, firm peaking power, and
associated 5 percent discount revenue
necessary to equal the P–SMBP—ED
revenue requirement. A comparison of
the current and proposed rate
components are listed in Table 2.
TABLE 2—SUMMARY OF P–SMBP—ED RATE COMPONENTS
Existing rates P–SED–F9/P–SED–FP9
Base
component
Firm
Firm
Firm
Firm
$3.65
8.93
$3.25
8.93
$2.00
5.06
$1.85
5.06
Capacity Rate (/kWmonth) ......................................
Energy Rate (mills/kWh) ..........................................
Peaking Capacity Rate (/kWmonth) ........................
Peaking Energy Rate (mills/kWh)1 ..........................
1 Firm
mstockstill on PROD1PC66 with NOTICES
Drought
adder
component
Provisional rates P–SED–F10/
P–SED–FP10
Base
component
Total
$5.65
13.99
$5.10
13.99
Drought
adder
component
$3.80
9.27
$3.40
9.27
$3.00
7.44
$2.80
7.44
Total
$6.80
16.71
$6.20
16.71
peaking energy is normally returned. This will be assessed in the event firm peaking energy is not returned.
As set forth in Table 2 above,
provisional Rate Schedule P–SED–F10
has a firm capacity rate of $6.80/
kWmonth and a firm energy rate of
16.71 mills/kWh. Under proposed Rate
Schedule P–SED–FP10, the firm peaking
capacity rate will increase to $6.20/
kWmonth, or a 21.6 percent increase.
Peaking energy is either returned to
Western or paid for in accordance with
the terms of the contract between
Western and the peaking power
customer.
Continuing to identify the firm
electric service revenue requirement
using Base and Drought Adder rate
components will assist Western in
presenting the effects of the drought
within the P–SMBP, demonstrating
repayment of the drought related costs,
and allowing Western to be more
responsive to changes in drought related
expenses. Western will continue to
charge and bill customers firm electric
service rates for energy and capacity,
which are the sum of the Base and
Drought Adder rate components.
Western reviews its firm electric
service rates annually. Western will
review the Base rate component after
the annual PRS is completed, generally
in the first quarter of the calendar year.
If an adjustment to the Base rate
component is necessary, Western will
VerDate Nov<24>2008
19:02 Jan 15, 2009
Jkt 217001
initiate a public process pursuant to 10
CFR part 903 prior to making an
adjustment.
In accordance with the original
implementation of the Drought Adder
rate component, Western will continue
to review the Drought Adder rate
component each September to
determine if drought costs differ from
those projected in the PRS. If drought
costs differ, Western will determine if
an adjustment to the Drought Adder rate
component is necessary. Western will
notify customers by letter each October
of the planned incremental or
decremental adjustment and implement
the adjustment in the January billing
cycle. Although decremental
adjustments to the Drought Adder rate
component will occur as drought costs
are repaid, the adjustments cannot
result in a negative Drought Adder rate
component. To give customers advance
notice, Western will conduct a
preliminary review of the Drought
Adder rate component in early summer
and notify customers by letter of the
estimated change to the Drought Adder
rate component for the following
January. Western will verify the final
Drought Adder rate component
adjustment by notification in the
October letter to the customers.
Implementing the Drought Adder rate
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component adjustment on January 1 of
each year will help keep the drought
deficits from escalating as quickly, will
lower the interest expense due to
drought deficits, will demonstrate
responsible deficit management, and
will provide prompt drought deficit
repayments.
Western’s current and Provisional
Rate schedules provide for a formulabased adjustment of the Drought Adder
rate component of up to 2 mills/kWh.
The 2 mills/kWh cap is intended to
place a limit on the amount the Drought
Adder formula can be adjusted relative
to associated drought costs without
initiating a public process to recover
costs attributable to the Drought Adder
formula rate for any one-year cycle.
Statement of Revenue and Related
Expenses
The following Table 3 provides a
summary of projected revenue and
expense data for the total P–SMBP,
including both the Eastern and Western
Divisions, firm electric service revenue
requirement through the 5-year rate
approval period.
The firm power rates for both
divisions have been developed with the
following revenues and expenses for the
P–SMBP:
E:\FR\FM\16JAN1.SGM
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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
TABLE 3—TOTAL P–SMBP FIRM POWER COMPARISON OF 5-YEAR RATE PERIOD (FY 2009–2013) TOTAL REVENUES AND
EXPENSES
Current rate
($000)
Provisional
rate
($000)
Difference
($000)
Total Revenues ............................................................................................................................
Revenue Distribution
Expenses:
O&M ......................................................................................................................................
Purchased Power .................................................................................................................
Interest ..................................................................................................................................
Transmission ........................................................................................................................
2,124,002
2,417,497
293,495
904,589
155,654
528,272
55,596
859,559
431,180
639,356
65,963
(45,030)
275,526
111,084
10,367
Total Expenses ..............................................................................................................
1,644,111
1,996,058
351,947
Principal Payments:
Capitalized Expenses (Deficits)1 ..........................................................................................
Original Project and Additions1 ............................................................................................
Replacements1 .....................................................................................................................
Irrigation Aid .........................................................................................................................
150,549
263,052
3,314
62,976
351,517
1,546
2,704
65,672
200,968
(261,506)
(610)
2,696
Total Principal Payments ..............................................................................................
479,891
421,439
(58,452)
Total Revenue Distribution .....................................................................................
2,124,002
2,417,497
293,495
1 Due
to the deficit or near deficit conditions between 1999 and 2008, revenues generated in the cost evaluation period are applied toward repayment of deficits rather than repayment of project additions and replacements. All deficits are projected to be repaid by 2017.
Basis for Rate Development
The existing rates for P–SMBP—ED
firm power in Rate Schedule P–SED–F9,
which expire December 31, 2012, no
longer provide sufficient revenues to
pay all annual costs, including interest
expense, and repay investment and
irrigation aid within the allowable
period. The adjusted rates reflect
increases due to the economic impact of
the drought, increased annual expenses,
increased investments, and increased
interest expense associated with
investments and drought deficits. The
Provisional Rates will provide sufficient
revenue to pay all annual costs,
including interest expense, and repay
power investment and irrigation aid
within the allowable periods. The
Provisional Rates will take effect on
February 1, 2009, and will remain in
effect on an interim basis, pending
FERC’s confirmation and approval of
them or substitute rates on a final basis,
through December 31, 2013.
mstockstill on PROD1PC66 with NOTICES
Emergency Fund Discussion
Due to continuing below-normal
hydropower generation, Western may
need to use the Continuing Fund
(Emergency Fund) to pay for
unanticipated purchase power and
wheeling expenses necessary to meet its
contractual obligations for the sale and
delivery of power to its customers.
Should Western use this funding
mechanism, Western will replenish the
Continuing Fund (Emergency Fund) in
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19:02 Jan 15, 2009
Jkt 217001
accordance with law and Western’s
current repayment policy.2
Comments
The comments and responses below
regarding the firm and firm peaking
electric service rates are paraphrased for
brevity when not affecting the meaning
of the statement(s). Direct quotes from
comment letters are used for
clarification when necessary.
The issues discussed are (1) Firm
Power Rate and (2) MISO Markets.
1. Firm Power Rate
Comment: Western received
numerous comments from customers
stating that they understand the need for
the rate increases and support the
concept of the Drought Adder, which
provides a set window during which
drought-related expenses are repaid.
Response: Western appreciates the
customer support received for the rate
adjustment proposal. Western continues
separation of the annual revenue
requirement into Base and Drought
Adder components.
Comment: Many comments were
received from customers that showed
appreciation for Western’s commitment
to keep power customers informed and
involved throughout this rate process.
Customers were grateful for past costcutting measures and encouraged
Western’s continued vigilance in
keeping controllable costs as low as
possible.
2 Western’s Continuing Fund (Emergency Fund)
Policy can be found at https://www.wapa.gov/
powerm/pdf/repaypolicy.pdf.
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Response: Western is pleased with the
level of customer interest and
participation in the public meetings.
Under the Flood Control Act of 1944,
power is to be sold at the lowest
possible rates consistent with sound
business principles. Western is
committed to keeping controllable costs
as low as possible while continuing to
deliver reliable cost-based hydroelectric
power and related services.
Comment: Customers state that they
are looking forward to working with
Western’s staff on the projected Base
rate adjustments as they pertain to
Western’s draft Strategic Plan and
Western’s potential involvement in
changes associated with MISO and SPP.
Response: Western’s goal is to work
closely with our customers throughout
this rate, as well as any future rate
adjustments. Changes to the Base Rate
are made through a public process and
allow for input.
Comment: Two customers were
opposed to the firm peaking rate and
questioned whether it reflects the costs
associated with the drought and
delivery of peaking power. It was noted
that the firm peaking rate is being
increased at approximately the same
percentage rate as the firm power rate,
which the commenting customers felt
may not be fair and equitable. These
customers wanted additional
information regarding the firm peaking
contracts so the impact on the rates can
be better understood and evaluated. It
was understood that Western allows
peaking energy to be returned. They
questioned under what terms and
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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
conditions peaking customers are
allowed to return energy and whether
peaking energy is allowed to be returned
off-peak. Customers asked if Western
makes market purchases to fulfill
Western’s peaking contracts. The
customers asked for assurance from
Western that the firm peaking rate is
fairly priced based on the nature of the
product and its historical and future
contributions to the bottom line.
Response: Western separated the firm
and firm peaking rates and developed
rate designs for both firm power and
firm peaking power in the FRN
published November 14, 2007 (72 FR
¶ 64067). In development of this firm
peaking rate design, Western analyzed
historical peaking data and concluded
that this rate reflects the firm peaking
customer’s historical usage and their
impact on the drought costs. During the
current rate adjustment process,
Western concluded that there has not
been substantial change to the firm
peaking usage or power markets since
the introduction of the new firm
peaking rate design that would support
revisiting the rate design at this time.
Western believes that both the firm and
firm peaking customers are being treated
equitably with the current rate designs.
The firm peaking rate design accurately
reflects the value and restrictions of the
peaking product.
Comment: One customer would like
to evaluate the voltage discount and was
concerned that it may be too high in
light of the recent drought-related
increases. The concern was that billing
amounts have grown since the voltage
discount was put into place and now
the discount may be too much in
comparison to the actual cost.
Response: Historically, Western has
provided a 5-percent voltage discount as
a provision to the firm power rate
schedule. The purpose of the discount
is to provide the discount on firm power
sales to customers who receive
deliveries at higher transmission voltage
and relieve Western of substation
delivery costs. Reclamation began, and
Western continues, the 5-percent
voltage discount to customers meeting
the criteria. Up to this time, Western has
not been formally asked to change the
discount percentage and has not
evaluated the impacts of such a change
on the firm power customers. Western is
open to discussion among our
customers and exploring options
regarding the 5-percent voltage
discount; but until additional customers
request a review or modification of this
provision, Western will continue
applying the discount.
Comment: One customer recognized
the impacts that the extended drought
VerDate Nov<24>2008
19:02 Jan 15, 2009
Jkt 217001
has had on the current financial status
of the P–SMBP and expressed support
for the proposed firm power rate
increases. The customer also stated that
the repayment of Federal investment
through Federal power rates is taken
very seriously. In the future, the
Drought Adder will help to avoid a
repetition of the financial impacts that
are seen today.
Response: Western acknowledges the
extended drought, its financial impacts,
and the need for a firm power rate
increase as well. The Drought Adder
will allow Western to be more
responsive to the changing hydrological
conditions.
Comment: A customer representative
acknowledged the financial challenges
of this drought and made note of the
difficulties Federal power customers are
confronted with in fulfilling their
financial responsibilities to the Federal
government. They noted the good water
years in the 1990s generated significant
revenue surplus to P–SMBP financial
requirements. Also noted was Western’s
administration of repayment according
to repayment policies and the
repayment of a significant amount of
capital investment ahead of schedule.
This early repayment benefitted both P–
SMBP customers and the Federal
government but left no financial
resources to deal with drought. Thus,
the current repayment practices and
policies exacerbate the impacts of the
natural swings in hydrology. When the
drought deficit is repaid, there will still
be a substantial amount of paid-ahead
investments for the P–SMBP. The
customer would like to work with
Western to address this issue.
Response: Western acknowledges the
financial impacts of the current drought
and believes the ratemaking policy of
identifying the Base and Drought Adder
components will make the rates more
responsive to hydrological changes
caused by both drought and flush water
years. The Drought Adder component
may be adjusted annually up to 2 mills/
kWh without a public process to quickly
address drought impacts, and the Base
Rate component can only be adjusted
through a public process. This practice
will lower interest expense due to
drought deficits and demonstrate
responsible deficit management.
Western acknowledges the customer
group statements regarding Western’s
adherence to repayment policies and the
associated repayment of a significant
amount of capital investment ahead of
schedule in the 1990s. Prepayment is an
integral part of the long-term plan for P–
SMBP and has provided rate stability for
consumers while meeting Federal
repayment obligations. The ability to
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Fmt 4703
Sfmt 4703
reduce the Drought Adder rate
component when normal hydrological
conditions return to P–SMBP will allow
appropriate recognition of repayment
obligations. Western appreciates the
customers’ support and willingness to
work with Western and will continue to
discuss issues, impacts, and possible
solutions with the customers.
2. MISO Markets
Comment: Western has received
numerous comments concerning the
issue of whether to join MISO and its
Day Two Markets. The comments
support a thorough review of costs and
benefits to all of Western’s customers
before a change is made. Comments
suggest that administrative costs
associated with the Day Two Markets
may impose a significant burden,
especially on smaller customers. There
were concerns that if Western joins
MISO and other area transmission
owners that serve the customers join
SPP there could be significant cost
issues associated with the delivery of
Western’s allocation to Preference
customer loads. Comments stated that if
there are benefits to participating in the
Day Two Market those benefits should
flow to all of Western’s customers, not
just those that participate in joint
dispatching arrangements inside the
Integrated System. Concerns are that
costs associated to deliver Western’s
allocations to the edge of the system
should be recovered as part of the total
system transmission rate recovery, as it
has been done in the past.
Response: This comment is not
directly related to the proposed rate
action. However, Western is actively
addressing these issues as well as other
options and evaluating them based on
costs and benefits to Western’s
customers.
Comment: A commenter noted that
MISO intends to start an ancillary
service market; and when that occurs,
Western has preference power
customers that are served in the MISO
footprint. The question was asked does
Western have avoided costs due to the
MISO market providing those ancillary
services; specifically, are there avoided
costs in Schedule 3, Regulation and
Frequency Response; Schedule 5,
Operating Reserves Spinning; and
Schedule 6, Operating Reserves
Supplemental.
Response: This comment is not
directly related to the proposed rate
action. Western is actively evaluating its
obligations to customers in the MISO
Ancillary Services Market footprint. As
Western moves forward in evaluating
the impacts on market participation and
changes for customers, Western will
E:\FR\FM\16JAN1.SGM
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seek input from customers and will
continue to keep customers informed of
decisions regarding these matters.
effect, together with supporting
documents, will be submitted to FERC
for confirmation and final approval.
Availability of Information
Information about this rate
adjustment, including the PRS,
comments, letters, memorandums, and
other supporting materials that was
used to develop the Provisional Rates is
available for public review in the Upper
Great Plains Regional Office, Western
Area Power Administration, 2900 4th
Avenue North, Billings, Montana.
Order
Determination Under Executive Order
12866
Western has an exemption from
centralized regulatory review under
Executive Order 12866; accordingly, no
clearance of this notice by the Office of
Management and Budget is required.
Dated: January 8, 2009.
Jeffrey F. Kupfer,
Acting Deputy Secretary.
Rate Schedule P–SED–F10
(Supersedes Schedule P–SED–F9)
Effective February 1, 2009
Charge Components
Pick-Sloan Missouri Basin Program—
Eastern Division Montana, North
Dakota, South Dakota, Minnesota,
Iowa, Nebraska
Base: A fixed revenue requirement
that includes operation and
maintenance expense, investments and
replacements, interest on investments
and replacements, normal timing
purchase power costs (purchases due to
operational constraints, not associated
with drought), and transmission costs.
The Base revenue requirement is $163.5
million.
Schedule of Rates for Firm Power
Service
Effective: The first day of the first full
billing period beginning on or after
Base Demand =
Base Energy =
Drought Adder: A formula-based
revenue requirement that includes
future purchase power expense
50% × Base Revenue Requirement
= $9.27 mills/kWh
Annual Energy
Drought Adder Demand =
mstockstill on PROD1PC66 with NOTICES
Drought Adder Energy =
VerDate Nov<24>2008
19:02 Jan 15, 2009
Jkt 217001
50% × Base Revenue Requirement
= $3.80/kW month
Firm Metered Billing Units
excluding timing purchases, previous
purchase power drought deficits, and
interest on the purchase power drought
Process: Any proposed change to the
Base component will require a public
process. The Drought Adder component
may be adjusted annually using the
above formula for any costs attributed to
drought of less than or equal to the
Demand Charge: $6.80 for each
kilowatt per month (kWmonth) of
billing demand.
Energy Charge: 16.71 mills per
kilowatthour (kWh) for all energy
delivered as firm power service.
Billing Demand: The billing demand
will be as defined by the power sales
contract.
United States Department of Energy,
Western Area Power Administration
(Approved Under Rate Order No.
WAPA–140)
Submission to the Federal Energy
Regulatory Commission
The Provisional Rates herein
confirmed, approved, and placed into
Monthly Rates
deficits. For the period beginning
February 1, 2009, the Drought Adder
revenue requirement is $130.6 million.
50% × Drought Adder Revenue Requirement
= $3.00/kW month
Firm Metered Billing Units
50% × Drought Adder Revenue Requirement
= $7.44 mills/kWh
Annual Energy
equivalent of 2 mills/kWh to the Power
Repayment Study (PRS) composite rate.
Any planned incremental adjustment to
the Drought Adder component greater
than the equivalent of 2 mills/kWh to
PO 00000
Frm 00039
Fmt 4703
Sfmt 4703
the PRS composite rate will require a
public process.
Adjustments
For Drought Adder: Adjustments
pursuant to the Drought Adder
E:\FR\FM\16JAN1.SGM
16JAN1
EN16JA09.009
Environmental Compliance
In compliance with the National
Environmental Policy Act (NEPA) of
1969, 42 U.S.C. 4321–4347; Council on
Environmental Quality Regulations (40
CFR parts 1500–1508); and DOE NEPA
Regulations (10 CFR part 1021), Western
has determined that this action is
categorically excluded from preparing of
an environmental assessment or an
environmental impact statement.
February 1, 2009, through December 31,
2013.
Available: Within the marketing area
served by the Eastern Division of the
Pick-Sloan Missouri Basin Program.
Applicable: To the power and energy
delivered to customers as firm power
service.
Character: Alternating current, 60
hertz, three phase, delivered and
metered at the voltages and points
established by contract.
EN16JA09.008
Ratemaking Procedure Requirements
In view of the foregoing and under the
authority delegated to me, I confirm and
approve on an interim basis, effective
February 1, 2009, Rate Schedules P–
SED–F10 and P–SED–FP10 for the PickSloan Missouri Basin Program—Eastern
Division Project of the Western Area
Power Administration. These rate
schedules shall remain in effect on an
interim basis, pending FERC’s
confirmation and approval of them or
substitute rates on a final basis through
December 31, 2013.
3029
Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
component will be documented in a
revision to this rate schedule.
For Character and Conditions of
Service: Customers who receive
deliveries at transmission voltage may
in some instances be eligible to receive
a 5-percent discount on demand and
energy charges when facilities are
provided by the customer that results in
a sufficient savings to Western to justify
the discount. The determination of
eligibility for receipt of the voltage
discount shall be exclusively vested in
Western.
For Billing of Unauthorized Overruns:
For each billing period in which there
is a contract violation involving an
unauthorized overrun of the contractual
firm power and/or energy obligations,
such overrun shall be billed at 10 times
the above rate.
For Power Factor: None. The customer
will be required to maintain a power
factor at the point of delivery between
95 percent lagging and 95 percent
leading.
Rate Schedule P–SED–FP10
Pick-Sloan Missouri Basin Program—
Eastern Division Montana, North
Dakota, South Dakota, Minnesota,
Iowa, Nebraska;
Schedule of Rates for Firm Peaking
Power Service
(Approved Under Rate Order No.
WAPA–140)
Effective: The first day of the first full
billing period beginning on or after
February 1, 2009, through December 31,
2013.
Available: Within the marketing area
served by the Eastern Division of the
Pick-Sloan Missouri Basin Program, to
customers with generating resources
enabling them to use firm peaking
power service.
Applicable: To the power sold to
customers as firm peaking power
service.
purchases, previous purchase power
drought deficits, and interest on the
purchase power drought deficits. For
Drought Adder Demand =
Jkt 217001
Charge Components
Base: A fixed revenue requirement
that includes operation and
maintenance expense, investment and
replacements, normal timing purchase
power costs (purchases due to
operational constraints, not associated
with drought), and transmission costs.
The Base peaking revenue requirement
is $14.5 million.
the period beginning February 1, 2009,
the Drought Adder peaking revenue
requirement is $12.0 million.
the power sales contract, or (2) the
contract rate of delivery.
ENVIRONMENTAL PROTECTION
AGENCY
Adjustments
[AMS–FRL–8762–9]
For Drought Adder: Adjustments
pursuant to the Drought Adder
component will be documented in a
revision to this rate schedule.
Billing for Unauthorized Overruns:
For each billing period in which there
is a contract violation involving an
unauthorized overrun of the contractual
obligation for peaking demand and/or
energy, such overrun shall be billed at
10 times the above rate.
[FR Doc. E9–892 Filed 1–15–09; 8:45 am]
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California State Nonroad Engine and
Vehicle Pollution Control Standards;
Authorization of Transport
Refrigeration Unit Engine Standards,
Notice of Decision
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Notice of Decision for
Authorization of California Transport
Refrigeration Unit In-use Engine
Emission Standards.
SUMMARY: EPA today, pursuant to
section 209(e) of the Clean Air Act (Act),
42 U.S.C. 7543(e), is granting California
its request for authorization to enforce
its Airborne Toxic Control measure
(ATCM) establishing in-use emission
performance standards for engines in
BILLING CODE 6450–01–P
1 Firm peaking energy is normally returned. This
rate will be assessed in the event firm peaking
energy is not returned.
21:14 Jan 15, 2009
Demand Charge: $6.20 for each
kilowatt per month (kWmonth) of the
effective contract rate of delivery for
peaking power or the maximum amount
scheduled, whichever is greater.
Energy Charge: 16.71 mills for each
kilowatthour (kWh) for all energy
scheduled for delivery without return.
Drought Adder Peaking Demand Revenue Requirement
= $2.80/kW month
Peaking CROD Billing Units
Energy 1 = 7.44 mills/kWh
Process:
Any proposed change to the Base
component will require a public
process. The Drought Adder component
may be adjusted annually using the
above formula for any costs attributed to
drought of less than or equal to the
equivalent of 2 mills/kWh to the Power
Repayment Study (PRS) composite rate.
Any planned incremental adjustment to
the Drought Adder component greater
than the equivalent of 2 mills/kWh to
the PRS composite rate will require a
public process.
Billing Demand: The billing demand
will be the greater of: (1) The highest 30minute integrated demand measured
during the month up to, but not in
excess of, the delivery obligation under
VerDate Nov<24>2008
Monthly Rates
Base Peaking Demand Revenue Requirement
= $3.40/kW month
Peaking CROD Billing Units
Energy 1 = 9.27 mills/kWh
Drought Adder: A formula-based
revenue requirement that includes
future purchase power above timing
mstockstill on PROD1PC66 with NOTICES
United States Department of Energy,
Western Area Power Administration
Character: Alternating current, 60
hertz, three phase, delivered and
metered at the voltages and points
established by contract.
Sfmt 4703
E:\FR\FM\16JAN1.SGM
16JAN1
EN16JA09.011
Base Demand =
(Supersedes Schedule P–SED–FP9)
Effective February 1, 2009
EN16JA09.010
3030
Agencies
[Federal Register Volume 74, Number 11 (Friday, January 16, 2009)]
[Notices]
[Pages 3022-3030]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-892]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division-Rate Order
No. WAPA-140
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of Order Concerning Firm Power Rates.
-----------------------------------------------------------------------
SUMMARY: The Acting Deputy Secretary of Energy confirmed and approved
Rate Order No. WAPA-140 and Rate Schedules P-SED-F10 and P-SED-FP10,
placing firm power and firm peaking power rates from the Pick-Sloan
Missouri Basin Program--Eastern Division (P-SMBP--ED) of the Western
Area Power Administration (Western) into effect on an interim basis.
The provisional rates will be in effect until the Federal Energy
Regulatory Commission (FERC) confirms, approves, and places them into
effect on a final basis or until they are replaced by other rates. The
provisional rates will provide sufficient revenue to pay all annual
costs, including interest expense, and repayment of power investment
and irrigation aid within the allowable periods.
DATES: Rate Schedules P-SED-F10 and P-SED-FP10 will be placed into
effect on an interim basis on the first day of the first full billing
period beginning on or after February 1, 2009, and will remain in
effect until FERC confirms, approves, and places the rate schedules in
effect on a final basis ending December 31, 2013, or until the rate
schedules are superseded.
FOR FURTHER INFORMATION CONTACT: Mr. Robert J. Harris, Regional
Manager, Upper Great Plains Region, Western Area Power Administration,
2900 4th Avenue North, Billings, MT 59101-1266, telephone (406) 247-
7405, e-mail rharris@wapa.gov, or Ms. Linda Cady-Hoffman, Rates
Manager, Upper Great Plains Region, Western Area Power Administration,
2900 4th Avenue North, Billings, MT 59101-1266, (406) 247-7439, e-mail
cady@wapa.gov.
SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved
existing Rate Schedules P-SED-F9 and P-SED-FP9 for P-SMBP--ED firm and
firm peaking electric service, respectively, on an interim basis on
November 1, 2007 (72 FR 68,64,067 November 14, 2007), for a 5-year
period beginning on January 1, 2008, and ending December 31, 2012.\1\
---------------------------------------------------------------------------
\1\ FERC confirmed and approved Rate Order No. WAPA-135 on April
14, 2008, in Docket No. EF08-5031-000. See United States Department
of Energy, Western Area Power Administration, Pick-Sloan Missouri
Basin Program, 123 FERC ] 62048 (April 14, 2008).
---------------------------------------------------------------------------
Under Rate Schedule P-SED-F9, the composite rate is 24.49 mills per
kilowatthour (mills/kWh), the firm energy rate is 13.99 mills/kWh, and
the firm capacity rate is $5.65 per kilowattmonth (kWmonth). Under Rate
Schedule P-SED-FP9, the firm peaking capacity rate is $5.10/kWmonth.
These Rate Schedules are formula based with Base and Drought Adder
components and provide for an up to 2 mills/kWh increase in the Drought
Adder rate component.
The current rate adjustment reflects a rate increase based on the
P-SMBP Final Fiscal Year 2007 Power Repayment Study (PRS). The PRS sets
the total annual P-SMBP--ED revenue requirement for 2009 for firm and
firm peaking electric service at $283.0 million, or a 19.9 percent
increase. The current rates, including the 2 mills/kWh increase
provided for under the Drought Adder formula rate component, are not
sufficient to meet the P-SMBP--ED revenue requirements.
The P-SMBP--ED revenue requirement increase is mainly attributed to
the economic impacts of the drought. A decrease in hydro-power
generation has caused purchase power expense to increase and revenue
from
[[Page 3023]]
non-firm energy sales to decrease. There has been an increase in both
the price and volume of purchase power needed to meet contractual
commitments to Western's customers. The purchase price of power is set
by supply and demand on the open market.
The existing firm electric service Rate Schedules P-SED-F9 and P-
SED-FP9 are being superseded by Rate Schedules P-SED-F10 and P-SED-
FP10, respectively. Under Rate Schedule P-SED-F10, the provisional
rates for firm electric services will result in a combined composite
rate of 29.34 mills/kWh. The energy rate will be 16.71 mills/kWh (a
Base component of 9.27 mills/kWh and a Drought Adder component of 7.44
mills/kWh), and the capacity rate will be $6.80/kWmonth (a Base
component of $3.80/kWmonth and a Drought Adder component of $3.00/
kWmonth). Under Rate Schedule P-SED-FP10, the provisional rates for
firm peaking electric services consist of a capacity charge of $6.20/
kWmonth (a Base component of $3.40/kWmonth and a Drought Adder
component of $2.80/kWmonth) and an energy charge of 16.71 mills/kWh.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to the Administrator of Western; (2) the authority
to confirm, approve, and place such rates into effect on an interim
basis to the Deputy Secretary of Energy; and (3) the authority to
confirm, approve, and place into effect on a final basis; to remand; or
to disapprove such rates to FERC. Existing Department of Energy
procedures for public participation in power rate adjustments (10 CFR
part 903) were published on September 18, 1985.
Under Delegation Order Nos. 00-037.00 and 00-001.00C, 10 CFR part
903, and 18 CFR part 300, I hereby confirm, approve, and place Rate
Order No. WAPA-140, the proposed P-SMBP--ED firm power, and firm
peaking power rates into effect on an interim basis.
The new Rate Schedules P-SED-F10 and P-SED-FP10 will be promptly
submitted to FERC for confirmation and approval on a final basis.
Dated: January 8, 2009.
Jeffrey F. Kupfer,
Acting Deputy Secretary.
Department of Energy
Deputy Secretary
In the matter of:
Western Area Power Administration Rate Adjustment for the Pick-Sloan
Missouri Basin Program--Eastern Division; Rate Order No. WAPA-140;
Order Confirming, Approving, and Placing the Pick-Sloan Missouri Basin
Program--Eastern Division Firm Power and Firm Peaking Power Service
Rates Into Effect on an Interim Basis
The firm and firm peaking electric service rates for the Pick-Sloan
Missouri Basin Program--Eastern Division were established in accordance
with section 302 of the Department of Energy (DOE) Organization Act (42
U.S.C. 7152). This Act transferred to and vested in the Secretary of
Energy the power marketing functions of the Secretary of the Department
of the Interior and the Bureau of Reclamation under the Reclamation Act
of 1902 (ch. 1093, 32 Stat. 388), as amended and supplemented by
subsequent laws, particularly section 9(c) of the Reclamation Project
Act of 1939 (43 U.S.C. 485h(c)) and section 5 of the Flood Control Act
of 1944 (16 U.S.C. 825s) and other Acts that specifically apply to the
project involved.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to the Administrator of Western; (2) the authority
to confirm, approve, and place such rates into effect on an interim
basis to the Deputy Secretary of Energy; and (3) the authority to
confirm, approve and place into effect on a final basis; to remand; or
to disapprove such rates to the Federal Energy Regulatory Commission.
Existing DOE procedures for public participation in power rate
adjustments (10 CFR part 903) were published on September 18, 1985.
Acronyms and Definitions
As used in this Rate Order, the following acronyms and definitions
apply:
Administrator: The Administrator of the Western Area Power
Administration.
Base: Revenue requirement component of the power rate including
annual operation and maintenance expenses, investment repayment and
associated interest, normal timing power purchases, and transmission
costs.
Capacity: The electric capability of a generator, transformer,
transmission circuit, or other equipment. It is expressed in kilowatts.
Capacity Charge: The rate which sets forth the charges for
capacity. It is expressed in dollars per kilowattmonth.
Composite Rate: The rate for commercial firm power which is the
total annual revenue requirement for capacity and energy divided by the
total annual energy sales. It is expressed in mills per kilowatthour
and used for comparison purposes.
Corps: The United States Army Corps of Engineers.
CROD: Contract Rate of Delivery. The maximum amount of capacity and
energy allocated to a preference customer for a period specified under
a contract.
Customer: An entity with a contract that is receiving service from
Western's Upper Great Plains Region.
Deficits: Deferred or unrecovered annual and/or interest expenses.
DOE: United States Department of Energy.
DOE Order RA 6120.2: An order outlining power marketing
administration financial reporting and rate-making procedures.
Drought Adder: Formula-based revenue requirement component
including costs associated with the drought.
Energy: Measured in terms of the work it is capable of doing over a
period of time. It is expressed in kilowatthours.
Energy Charge: The rate which sets forth the charges for energy. It
is expressed in mills per kilowatthour and applied to each kilowatthour
delivered to each customer.
FERC: Federal Energy Regulatory Commission.
Firm: A type of product and/or service available at the time
requested by the customer.
FRN: Federal Register notice.
Fry-Ark: Fryingpan-Arkansas Project.
FY: Fiscal Year; October 1 to September 30.
kW: Kilowatt--the electrical unit of capacity that equals 1,000
watts.
kWh: Kilowatthour--the electrical unit of energy that equals 1,000
watts in 1 hour.
kWmonth: Kilowattmonth--the electrical unit of the monthly amount
of capacity.
LAP: Loveland Area Projects.
Load Factor: The ratio of average load in kW supplied during a
designated period to the peak or maximum load in kW occurring in that
period.
mills/kWh: Mills per kilowatthour--the unit of charge for energy
(equal to one tenth of a cent or one thousandth of a dollar).
[[Page 3024]]
MISO: Midwest Independent Transmission System Operator.
MW: Megawatt--the electrical unit of capacity that equals 1 million
watts or 1,000 kilowatts.
NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, et
seq.).
Non-timing Power Purchases: Power purchases that are not related to
operational constraints such as management of endangered species,
species habitat, water quality, navigation, control area purposes, etc.
O&M: Operation and Maintenance.
P-SMBP: The Pick-Sloan Missouri Basin Program.
P-SMBP--ED: Pick-Sloan Missouri Basin Program--Eastern Division.
P-SMBP--WD: Pick-Sloan Missouri Basin Program--Western Division.
Power: Capacity and energy.
Power Factor: The ratio of real to apparent power at any given
point and time in an electrical circuit. Generally, it is expressed as
a percentage.
Preference: The provisions of Reclamation Law which require Western
to first make Federal power available to certain entities. For example,
section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c))
states that preference in the sale of Federal power shall be given to
municipalities and other public corporations or agencies and also to
cooperatives and other nonprofit organizations financed in whole or in
part by loans made under the Rural Electrification Act of 1936.
Provisional Rate: A rate which has been confirmed, approved, and
placed into effect on an interim basis by the Deputy Secretary.
PRS: Power Repayment Study.
Rate Brochure: An August 2008 document explaining the rationale and
background for the rate proposal contained in this Rate Order.
Reclamation: The United States Department of the Interior, Bureau
of Reclamation.
Reclamation Law: A series of Federal laws. Viewed as a whole, these
laws create the originating framework under which Western markets
power.
Revenue Requirement: The revenue required to recover annual
expenses (such as O&M, purchase power, transmission service expenses,
interest, and deferred expenses) and repay Federal investments and
other assigned costs.
RMR: The Rocky Mountain Customer Service Region of the Western Area
Power Administration.
SPP: Southwest Power Pool.
Timing Power Purchases: Power purchases that are due to operational
constraints (e.g. management of endangered species, species habitat,
water quality, navigation, control area purposes, etc.) and not
associated with the drought.
UGPR: The Upper Great Plains Customer Service Region of the Western
Area Power Administration.
Western: The United States Department of Energy, Western Area Power
Administration.
Effective Date
The new provisional rates will take effect on the first day of the
first full billing period beginning on or after February 1, 2009, and
will remain in effect until December 31, 2013, pending approval by FERC
on a final basis.
Public Notice and Comment
Western followed the Procedures for Public Participation in Power
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in
developing these rates. The steps Western took to involve interested
parties in the rate process were:
1. The proposed rate adjustment process began April 9, 2008, when
Western's UGPR mailed a notice announcing informal customer meetings to
all P-SMBP--ED preference customers and interested parties. The
informal meetings were held on April 29, 2008, in Denver, Colorado, and
on April 30, 2008, in Sioux Falls, South Dakota. At these informal
meetings, Western explained the rationale for the rate adjustment,
presented rate designs and methodologies, and answered questions.
2. A Federal Register notice, published on August 15, 2008 (73 FR
47945) announced the proposed rates for P-SMBP--ED, began a public
consultation and comment period and announced the public information
and public comment forums.
3. On August 18, 2008, Western mailed letters to all P-SMBP--ED
preference customers and interested parties transmitting the FRN
published on August 15, 2008.
4. On August 29, 2008, a letter was mailed to preference customers
and interested parties informing them of a $400,000 misstatement in the
FRN published revenue requirement.
5. On September 9, 2008, at 9 a.m. (MDT), Western held a public
information forum at the Ramada Plaza Hotel in Northglenn, Colorado.
Western provided updates to the proposed firm power rates for the P-
SMBP, which encompasses the P-SMBP--ED and LAP rates. Western also
answered questions and gave notice that more information was available
in the rate brochure.
6. On September 9, 2008, at 11:30 a.m. (MDT), following the public
information forum, and at the same location, a public comment forum was
held. The comment forum gave the public an opportunity to comment for
the record. No oral or written comments were received at this forum.
7. On September 10, 2008, at 8 a.m. (CDT), Western held a public
information forum at the Holiday Inn in Sioux Falls, South Dakota.
Western provided updates to the proposed firm power rates for the P-
SMBP, which encompasses the P-SMBP--ED and LAP rates. Western also
answered questions and gave notice that more information was available
in the rate brochure.
8. On September 10, 2008, at 10:30 a.m. (CDT), following the public
information forum, and at the same location, a public comment forum was
held. The comment forum gave the public an opportunity to comment for
the record. One oral comment was received at this forum.
9. Western provided a Web site which contains all of the letters,
time frames, dates, and locations of forums, documents discussed at the
information meetings, FRNs, rate brochure, and all other information
about this rate process for easy customer access. The Web site is
located at https://www.wapa.gov/ugp/rates/2009FirmRateAdjust.
10. During the consultation and comment period, which ended
November 13, 2008, Western received 17 comment letters. One comment
letter was rescinded. Western also received an oral comment. All
formally submitted comments have been considered in preparing this Rate
Order.
Comments
Written comments were received from the following organizations:
City of Blue Hill, Nebraska.
City of Burwell, Nebraska (2).
City of Fort Morgan, Colorado.
City of Sargent, Nebraska.
City of Wall Lake, Iowa.
City of West Point, Nebraska.
City of Wisner, Nebraska.
City of Wood River, Nebraska.
Corn Belt Power Cooperative, Iowa.
Mid-West Electric Consumers Association, Colorado.
North Iowa Municipal Electric Cooperative Association, Iowa.
Spencer Municipal Utilities, Iowa.
Village of Oxford, Nebraska.
Village of Shickley, Nebraska.
Village of Spencer, Nebraska.
Village of Stuart, Nebraska.
A representative of the following organization made an oral
comment:
Minnesota Municipal Utilities, Minnesota.
[[Page 3025]]
Project Description
The P-SMBP was authorized by Congress in section 9 of the Flood
Control Act of December 22, 1944, commonly referred to as the 1944
Flood Control Act. This multipurpose program provides flood control,
irrigation, navigation, recreation, preservation and enhancement of
fish and wildlife, and power generation. Multipurpose projects have
been developed on the Missouri River and its tributaries in Colorado,
Montana, Nebraska, North Dakota, South Dakota, and Wyoming.
In addition to the multipurpose water projects authorized by
Section 9 of the Flood Control Act of 1944, certain other existing
projects have been integrated with the P-SMBP for power marketing,
operation, and repayment purposes. The Colorado-Big Thompson, Kendrick,
and Shoshone Projects were combined with the P-SMBP in 1954, followed
by the North Platte Project in 1959. These projects are referred to as
the ``Integrated Projects'' of the P-SMBP.
The Flood Control Act of 1944 also authorized the inclusion of the
Fort Peck Project with the P-SMBP for operation and repayment purposes.
The Riverton Project was integrated with the P-SMBP in 1954 and in 1970
was reauthorized as a unit of P-SMBP.
The P-SMBP is administered by two regions. The UGPR, with a
regional office in Billings, Montana, markets power from the Eastern
Division of P-SMBP, and the RMR, with a regional office in Loveland,
Colorado, markets the Western Division power of P-SMBP. The UGPR
markets power in western Iowa, western Minnesota, Montana east of the
Continental Divide, North Dakota, South Dakota, and the eastern two-
thirds of Nebraska. The RMR markets P-SMBP--WD power, which in
combination with Fry-Ark power is known as LAP power, in northeastern
Colorado, east of the Continental Divide in Wyoming, west of the 101st
meridian in Nebraska, and most of Kansas. The P-SMBP power is marketed
to approximately 300 firm power customers by the UGPR and approximately
60 firm power customers by the RMR.
Power Repayment Study--Firm Power Rate
Western prepares a PRS each FY to determine if revenues will be
sufficient to repay, within the required time, all costs assigned to
the P-SMBP. Repayment criteria are based on law, policies including DOE
Order RA 6120.2, and authorizing legislation. To meet Cost Recovery
Criteria outlined in DOE Order RA 6120.2, a revised study and rate
adjustment has been developed to demonstrate that sufficient revenues
will be collected under proposed rates to meet future obligations.
Existing and Provisional Rates
Eastern Division
Under Rate Schedule P-SED-F9, the composite rate is 24.49 mills/
kWh, the firm energy rate is 13.99 mills/kWh, and the firm capacity
rate is $5.65/kWmonth. For Rate Schedule P-SED-FP9 the firm peaking
capacity rate is $5.10/kWmonth. These Rate Schedules are formula based
with Base and Drought Adder components and provide for an up to a 2
mills/kWh increase in the Drought Adder rate component.
The current rate adjustment reflects a rate increase based on the
P-SMBP Fiscal Year 2007 PRS. The PRS sets the total annual P-SMBP--ED
revenue requirement for 2009 for firm and firm peaking electric service
at $283.0 million, or a 19.9 percent increase.
A comparison of the existing and provisional firm power and firm
peaking power rates follow:
Table 1--Comparison of Existing and Provisional Rates Pick-Sloan Missouri Basin Program--Eastern Division
----------------------------------------------------------------------------------------------------------------
Firm electric service Current rates Provisional rates Percent change
----------------------------------------------------------------------------------------------------------------
Rate Schedules P-SED-F9/P-SED-FP9 P-SED-F10/P-SED-FP10
----------------------------------------------------------------------------------------------------------------
Firm and Firm Peaking Revenue Requirement $235.9 $283.0 19.9
(million)..................................
Composite Rate (mills/kWh).................. 24.49 29.34 19.8
Firm Capacity Rate (/kWmonth)............... $5.65 $6.80 20.4
Firm Energy Rate (mills/kWh)................ 13.99 16.71 19.4
Firm Peaking Capacity Rate (/kWmonth)....... $5.10 $6.20 21.6
Firm Peaking Energy Rate (mills/kWh)\1\..... 13.99 16.71 19.4
----------------------------------------------------------------------------------------------------------------
\1\ Firm Peaking Energy is normally returned. This rate will be assessed in the event Firm Peaking Energy is not
returned.
Western Division
The LAP rate is designed to recover the P-SMBP--WD revenue
requirement for the P-SMBP and the revenue requirement for Fry-Ark. The
adjustment to the LAP rate is a separate formal rate process which is
documented in Rate Order No. WAPA-142. Rate Order No. WAPA-142 is
scheduled to go into effect on the first day of the first full billing
period after the Acting Deputy Secretary of Energy approves the rate.
Certification of Rates
Western's Administrator certified that the Provisional Rates for P-
SMBP--ED firm power and firm peaking power rates are the lowest
possible rates consistent with sound business principles. The
Provisional Rates were developed following administrative policies and
applicable laws.
P-SMBP--ED Firm Power Rate Discussion
According to Reclamation Law, Western must establish power rates
sufficient to recover operation, maintenance, purchased power and
interest expenses, and repay power investment and irrigation aid.
The P-SMBP--ED firm power and firm peaking power rates must be
increased due to the economic impact of the drought, increased annual
expenses, increased investments, and increased interest expense
associated with deficits.
Under Rate Schedule P-SED-F10, Western will continue identifying
its firm electric service revenue requirement using Base and Drought
Adder rate components. The Base rate component is a revenue requirement
that includes annual operation and maintenance expenses, investment
repayment and associated interest, normal timing power purchases, and
transmission costs. Western's normal timing power purchases are
purchases due to operational constraints (e.g., management of
endangered species habitat, water quality, navigation, etc.) and are
not associated with the current drought. The Base component cannot be
[[Page 3026]]
adjusted by Western without a public process.
The Drought Adder rate component is a formula-based revenue
requirement that includes costs attributable to the past and present
drought conditions within the Pick-Sloan Program. The Drought Adder
rate component includes costs associated with future non-timing power
purchases to meet firm power contractual obligations not covered with
available system generation due to the drought, previously incurred
deficits due to purchased power debt that resulted from non-timing
power purchases made during this drought, and the interest associated
with the previously incurred and future drought deficit. The Drought
Adder rate component is designed to repay Western's drought deficit
within 10 years from the time the debt was incurred, using balloon-
payment methodology. For example, the drought deficit incurred by
Western in 2007 will be repaid by 2017.
The annual revenue requirement calculation will continue to be
summarized by the following formula: Annual Revenue Requirement = Base
Revenue Requirement + Drought Adder Revenue Requirement. Under this
Provisional Rate, effective February 1, 2009, the P-SMBP--ED annual
revenue requirement equals $294.1 million and is comprised of a Base
revenue requirement of $163.5 million plus a Drought Adder revenue
requirement of $130.6 million. Both the Base and Drought Adder rate
components recover portions of the firm power revenue requirement, firm
peaking power, and associated 5 percent discount revenue necessary to
equal the P-SMBP--ED revenue requirement. A comparison of the current
and proposed rate components are listed in Table 2.
Table 2--Summary of P-SMBP--ED Rate Components
----------------------------------------------------------------------------------------------------------------
Existing rates P-SED-F9/P-SED-FP9 Provisional rates P-SED-F10/ P-SED-
---------------------------------------------------------FP10----------------
Drought Drought
Base adder Total Base adder Total
component component component component
----------------------------------------------------------------------------------------------------------------
Firm Capacity Rate (/kWmonth)..... $3.65 $2.00 $5.65 $3.80 $3.00 $6.80
Firm Energy Rate (mills/kWh)...... 8.93 5.06 13.99 9.27 7.44 16.71
Firm Peaking Capacity Rate (/ $3.25 $1.85 $5.10 $3.40 $2.80 $6.20
kWmonth).........................
Firm Peaking Energy Rate (mills/ 8.93 5.06 13.99 9.27 7.44 16.71
kWh)\1\..........................
----------------------------------------------------------------------------------------------------------------
\1\ Firm peaking energy is normally returned. This will be assessed in the event firm peaking energy is not
returned.
As set forth in Table 2 above, provisional Rate Schedule P-SED-F10
has a firm capacity rate of $6.80/kWmonth and a firm energy rate of
16.71 mills/kWh. Under proposed Rate Schedule P-SED-FP10, the firm
peaking capacity rate will increase to $6.20/kWmonth, or a 21.6 percent
increase. Peaking energy is either returned to Western or paid for in
accordance with the terms of the contract between Western and the
peaking power customer.
Continuing to identify the firm electric service revenue
requirement using Base and Drought Adder rate components will assist
Western in presenting the effects of the drought within the P-SMBP,
demonstrating repayment of the drought related costs, and allowing
Western to be more responsive to changes in drought related expenses.
Western will continue to charge and bill customers firm electric
service rates for energy and capacity, which are the sum of the Base
and Drought Adder rate components.
Western reviews its firm electric service rates annually. Western
will review the Base rate component after the annual PRS is completed,
generally in the first quarter of the calendar year. If an adjustment
to the Base rate component is necessary, Western will initiate a public
process pursuant to 10 CFR part 903 prior to making an adjustment.
In accordance with the original implementation of the Drought Adder
rate component, Western will continue to review the Drought Adder rate
component each September to determine if drought costs differ from
those projected in the PRS. If drought costs differ, Western will
determine if an adjustment to the Drought Adder rate component is
necessary. Western will notify customers by letter each October of the
planned incremental or decremental adjustment and implement the
adjustment in the January billing cycle. Although decremental
adjustments to the Drought Adder rate component will occur as drought
costs are repaid, the adjustments cannot result in a negative Drought
Adder rate component. To give customers advance notice, Western will
conduct a preliminary review of the Drought Adder rate component in
early summer and notify customers by letter of the estimated change to
the Drought Adder rate component for the following January. Western
will verify the final Drought Adder rate component adjustment by
notification in the October letter to the customers. Implementing the
Drought Adder rate component adjustment on January 1 of each year will
help keep the drought deficits from escalating as quickly, will lower
the interest expense due to drought deficits, will demonstrate
responsible deficit management, and will provide prompt drought deficit
repayments.
Western's current and Provisional Rate schedules provide for a
formula-based adjustment of the Drought Adder rate component of up to 2
mills/kWh. The 2 mills/kWh cap is intended to place a limit on the
amount the Drought Adder formula can be adjusted relative to associated
drought costs without initiating a public process to recover costs
attributable to the Drought Adder formula rate for any one-year cycle.
Statement of Revenue and Related Expenses
The following Table 3 provides a summary of projected revenue and
expense data for the total P-SMBP, including both the Eastern and
Western Divisions, firm electric service revenue requirement through
the 5-year rate approval period.
The firm power rates for both divisions have been developed with
the following revenues and expenses for the P-SMBP:
[[Page 3027]]
Table 3--Total P-SMBP Firm Power Comparison of 5-Year Rate Period (FY 2009-2013) Total Revenues and Expenses
----------------------------------------------------------------------------------------------------------------
Current rate Provisional Difference
($000) rate ($000) ($000)
----------------------------------------------------------------------------------------------------------------
Total Revenues.................................................. 2,124,002 2,417,497 293,495
Revenue Distribution
Expenses:
O&M......................................................... 904,589 859,559 (45,030)
Purchased Power............................................. 155,654 431,180 275,526
Interest.................................................... 528,272 639,356 111,084
Transmission................................................ 55,596 65,963 10,367
-----------------------------------------------
Total Expenses.......................................... 1,644,111 1,996,058 351,947
-----------------------------------------------
Principal Payments:
Capitalized Expenses (Deficits)\1\.......................... 150,549 351,517 200,968
Original Project and Additions\1\........................... 263,052 1,546 (261,506)
Replacements\1\............................................. 3,314 2,704 (610)
Irrigation Aid.............................................. 62,976 65,672 2,696
-----------------------------------------------
Total Principal Payments................................ 479,891 421,439 (58,452)
-----------------------------------------------
Total Revenue Distribution.......................... 2,124,002 2,417,497 293,495
----------------------------------------------------------------------------------------------------------------
\1\ Due to the deficit or near deficit conditions between 1999 and 2008, revenues generated in the cost
evaluation period are applied toward repayment of deficits rather than repayment of project additions and
replacements. All deficits are projected to be repaid by 2017.
Basis for Rate Development
The existing rates for P-SMBP--ED firm power in Rate Schedule P-
SED-F9, which expire December 31, 2012, no longer provide sufficient
revenues to pay all annual costs, including interest expense, and repay
investment and irrigation aid within the allowable period. The adjusted
rates reflect increases due to the economic impact of the drought,
increased annual expenses, increased investments, and increased
interest expense associated with investments and drought deficits. The
Provisional Rates will provide sufficient revenue to pay all annual
costs, including interest expense, and repay power investment and
irrigation aid within the allowable periods. The Provisional Rates will
take effect on February 1, 2009, and will remain in effect on an
interim basis, pending FERC's confirmation and approval of them or
substitute rates on a final basis, through December 31, 2013.
Emergency Fund Discussion
Due to continuing below-normal hydropower generation, Western may
need to use the Continuing Fund (Emergency Fund) to pay for
unanticipated purchase power and wheeling expenses necessary to meet
its contractual obligations for the sale and delivery of power to its
customers. Should Western use this funding mechanism, Western will
replenish the Continuing Fund (Emergency Fund) in accordance with law
and Western's current repayment policy.\2\
---------------------------------------------------------------------------
\2\ Western's Continuing Fund (Emergency Fund) Policy can be
found at https://www.wapa.gov/powerm/pdf/repaypolicy.pdf.
---------------------------------------------------------------------------
Comments
The comments and responses below regarding the firm and firm
peaking electric service rates are paraphrased for brevity when not
affecting the meaning of the statement(s). Direct quotes from comment
letters are used for clarification when necessary.
The issues discussed are (1) Firm Power Rate and (2) MISO Markets.
1. Firm Power Rate
Comment: Western received numerous comments from customers stating
that they understand the need for the rate increases and support the
concept of the Drought Adder, which provides a set window during which
drought-related expenses are repaid.
Response: Western appreciates the customer support received for the
rate adjustment proposal. Western continues separation of the annual
revenue requirement into Base and Drought Adder components.
Comment: Many comments were received from customers that showed
appreciation for Western's commitment to keep power customers informed
and involved throughout this rate process. Customers were grateful for
past cost-cutting measures and encouraged Western's continued vigilance
in keeping controllable costs as low as possible.
Response: Western is pleased with the level of customer interest
and participation in the public meetings. Under the Flood Control Act
of 1944, power is to be sold at the lowest possible rates consistent
with sound business principles. Western is committed to keeping
controllable costs as low as possible while continuing to deliver
reliable cost-based hydroelectric power and related services.
Comment: Customers state that they are looking forward to working
with Western's staff on the projected Base rate adjustments as they
pertain to Western's draft Strategic Plan and Western's potential
involvement in changes associated with MISO and SPP.
Response: Western's goal is to work closely with our customers
throughout this rate, as well as any future rate adjustments. Changes
to the Base Rate are made through a public process and allow for input.
Comment: Two customers were opposed to the firm peaking rate and
questioned whether it reflects the costs associated with the drought
and delivery of peaking power. It was noted that the firm peaking rate
is being increased at approximately the same percentage rate as the
firm power rate, which the commenting customers felt may not be fair
and equitable. These customers wanted additional information regarding
the firm peaking contracts so the impact on the rates can be better
understood and evaluated. It was understood that Western allows peaking
energy to be returned. They questioned under what terms and
[[Page 3028]]
conditions peaking customers are allowed to return energy and whether
peaking energy is allowed to be returned off-peak. Customers asked if
Western makes market purchases to fulfill Western's peaking contracts.
The customers asked for assurance from Western that the firm peaking
rate is fairly priced based on the nature of the product and its
historical and future contributions to the bottom line.
Response: Western separated the firm and firm peaking rates and
developed rate designs for both firm power and firm peaking power in
the FRN published November 14, 2007 (72 FR ] 64067). In development of
this firm peaking rate design, Western analyzed historical peaking data
and concluded that this rate reflects the firm peaking customer's
historical usage and their impact on the drought costs. During the
current rate adjustment process, Western concluded that there has not
been substantial change to the firm peaking usage or power markets
since the introduction of the new firm peaking rate design that would
support revisiting the rate design at this time. Western believes that
both the firm and firm peaking customers are being treated equitably
with the current rate designs. The firm peaking rate design accurately
reflects the value and restrictions of the peaking product.
Comment: One customer would like to evaluate the voltage discount
and was concerned that it may be too high in light of the recent
drought-related increases. The concern was that billing amounts have
grown since the voltage discount was put into place and now the
discount may be too much in comparison to the actual cost.
Response: Historically, Western has provided a 5-percent voltage
discount as a provision to the firm power rate schedule. The purpose of
the discount is to provide the discount on firm power sales to
customers who receive deliveries at higher transmission voltage and
relieve Western of substation delivery costs. Reclamation began, and
Western continues, the 5-percent voltage discount to customers meeting
the criteria. Up to this time, Western has not been formally asked to
change the discount percentage and has not evaluated the impacts of
such a change on the firm power customers. Western is open to
discussion among our customers and exploring options regarding the 5-
percent voltage discount; but until additional customers request a
review or modification of this provision, Western will continue
applying the discount.
Comment: One customer recognized the impacts that the extended
drought has had on the current financial status of the P-SMBP and
expressed support for the proposed firm power rate increases. The
customer also stated that the repayment of Federal investment through
Federal power rates is taken very seriously. In the future, the Drought
Adder will help to avoid a repetition of the financial impacts that are
seen today.
Response: Western acknowledges the extended drought, its financial
impacts, and the need for a firm power rate increase as well. The
Drought Adder will allow Western to be more responsive to the changing
hydrological conditions.
Comment: A customer representative acknowledged the financial
challenges of this drought and made note of the difficulties Federal
power customers are confronted with in fulfilling their financial
responsibilities to the Federal government. They noted the good water
years in the 1990s generated significant revenue surplus to P-SMBP
financial requirements. Also noted was Western's administration of
repayment according to repayment policies and the repayment of a
significant amount of capital investment ahead of schedule. This early
repayment benefitted both P-SMBP customers and the Federal government
but left no financial resources to deal with drought. Thus, the current
repayment practices and policies exacerbate the impacts of the natural
swings in hydrology. When the drought deficit is repaid, there will
still be a substantial amount of paid-ahead investments for the P-SMBP.
The customer would like to work with Western to address this issue.
Response: Western acknowledges the financial impacts of the current
drought and believes the ratemaking policy of identifying the Base and
Drought Adder components will make the rates more responsive to
hydrological changes caused by both drought and flush water years. The
Drought Adder component may be adjusted annually up to 2 mills/kWh
without a public process to quickly address drought impacts, and the
Base Rate component can only be adjusted through a public process. This
practice will lower interest expense due to drought deficits and
demonstrate responsible deficit management. Western acknowledges the
customer group statements regarding Western's adherence to repayment
policies and the associated repayment of a significant amount of
capital investment ahead of schedule in the 1990s. Prepayment is an
integral part of the long-term plan for P-SMBP and has provided rate
stability for consumers while meeting Federal repayment obligations.
The ability to reduce the Drought Adder rate component when normal
hydrological conditions return to P-SMBP will allow appropriate
recognition of repayment obligations. Western appreciates the
customers' support and willingness to work with Western and will
continue to discuss issues, impacts, and possible solutions with the
customers.
2. MISO Markets
Comment: Western has received numerous comments concerning the
issue of whether to join MISO and its Day Two Markets. The comments
support a thorough review of costs and benefits to all of Western's
customers before a change is made. Comments suggest that administrative
costs associated with the Day Two Markets may impose a significant
burden, especially on smaller customers. There were concerns that if
Western joins MISO and other area transmission owners that serve the
customers join SPP there could be significant cost issues associated
with the delivery of Western's allocation to Preference customer loads.
Comments stated that if there are benefits to participating in the Day
Two Market those benefits should flow to all of Western's customers,
not just those that participate in joint dispatching arrangements
inside the Integrated System. Concerns are that costs associated to
deliver Western's allocations to the edge of the system should be
recovered as part of the total system transmission rate recovery, as it
has been done in the past.
Response: This comment is not directly related to the proposed rate
action. However, Western is actively addressing these issues as well as
other options and evaluating them based on costs and benefits to
Western's customers.
Comment: A commenter noted that MISO intends to start an ancillary
service market; and when that occurs, Western has preference power
customers that are served in the MISO footprint. The question was asked
does Western have avoided costs due to the MISO market providing those
ancillary services; specifically, are there avoided costs in Schedule
3, Regulation and Frequency Response; Schedule 5, Operating Reserves
Spinning; and Schedule 6, Operating Reserves Supplemental.
Response: This comment is not directly related to the proposed rate
action. Western is actively evaluating its obligations to customers in
the MISO Ancillary Services Market footprint. As Western moves forward
in evaluating the impacts on market participation and changes for
customers, Western will
[[Page 3029]]
seek input from customers and will continue to keep customers informed
of decisions regarding these matters.
Availability of Information
Information about this rate adjustment, including the PRS,
comments, letters, memorandums, and other supporting materials that was
used to develop the Provisional Rates is available for public review in
the Upper Great Plains Regional Office, Western Area Power
Administration, 2900 4th Avenue North, Billings, Montana.
Ratemaking Procedure Requirements
Environmental Compliance
In compliance with the National Environmental Policy Act (NEPA) of
1969, 42 U.S.C. 4321-4347; Council on Environmental Quality Regulations
(40 CFR parts 1500-1508); and DOE NEPA Regulations (10 CFR part 1021),
Western has determined that this action is categorically excluded from
preparing of an environmental assessment or an environmental impact
statement.
Determination Under Executive Order 12866
Western has an exemption from centralized regulatory review under
Executive Order 12866; accordingly, no clearance of this notice by the
Office of Management and Budget is required.
Submission to the Federal Energy Regulatory Commission
The Provisional Rates herein confirmed, approved, and placed into
effect, together with supporting documents, will be submitted to FERC
for confirmation and final approval.
Order
In view of the foregoing and under the authority delegated to me, I
confirm and approve on an interim basis, effective February 1, 2009,
Rate Schedules P-SED-F10 and P-SED-FP10 for the Pick-Sloan Missouri
Basin Program--Eastern Division Project of the Western Area Power
Administration. These rate schedules shall remain in effect on an
interim basis, pending FERC's confirmation and approval of them or
substitute rates on a final basis through December 31, 2013.
Dated: January 8, 2009.
Jeffrey F. Kupfer,
Acting Deputy Secretary.
Rate Schedule P-SED-F10
(Supersedes Schedule P-SED-F9)
Effective February 1, 2009
United States Department of Energy, Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division Montana, North
Dakota, South Dakota, Minnesota, Iowa, Nebraska
Schedule of Rates for Firm Power Service
(Approved Under Rate Order No. WAPA-140)
Effective: The first day of the first full billing period beginning
on or after February 1, 2009, through December 31, 2013.
Available: Within the marketing area served by the Eastern Division
of the Pick-Sloan Missouri Basin Program.
Applicable: To the power and energy delivered to customers as firm
power service.
Character: Alternating current, 60 hertz, three phase, delivered
and metered at the voltages and points established by contract.
Monthly Rates
Demand Charge: $6.80 for each kilowatt per month (kWmonth) of
billing demand.
Energy Charge: 16.71 mills per kilowatthour (kWh) for all energy
delivered as firm power service.
Billing Demand: The billing demand will be as defined by the power
sales contract.
Charge Components
Base: A fixed revenue requirement that includes operation and
maintenance expense, investments and replacements, interest on
investments and replacements, normal timing purchase power costs
(purchases due to operational constraints, not associated with
drought), and transmission costs. The Base revenue requirement is
$163.5 million.
[GRAPHIC] [TIFF OMITTED] TN16JA09.008
Drought Adder: A formula-based revenue requirement that includes
future purchase power expense excluding timing purchases, previous
purchase power drought deficits, and interest on the purchase power
drought deficits. For the period beginning February 1, 2009, the
Drought Adder revenue requirement is $130.6 million.
[GRAPHIC] [TIFF OMITTED] TN16JA09.009
Process: Any proposed change to the Base component will require a
public process. The Drought Adder component may be adjusted annually
using the above formula for any costs attributed to drought of less
than or equal to the equivalent of 2 mills/kWh to the Power Repayment
Study (PRS) composite rate. Any planned incremental adjustment to the
Drought Adder component greater than the equivalent of 2 mills/kWh to
the PRS composite rate will require a public process.
Adjustments
For Drought Adder: Adjustments pursuant to the Drought Adder
[[Page 3030]]
component will be documented in a revision to this rate schedule.
For Character and Conditions of Service: Customers who receive
deliveries at transmission voltage may in some instances be eligible to
receive a 5-percent discount on demand and energy charges when
facilities are provided by the customer that results in a sufficient
savings to Western to justify the discount. The determination of
eligibility for receipt of the voltage discount shall be exclusively
vested in Western.
For Billing of Unauthorized Overruns: For each billing period in
which there is a contract violation involving an unauthorized overrun
of the contractual firm power and/or energy obligations, such overrun
shall be billed at 10 times the above rate.
For Power Factor: None. The customer will be required to maintain a
power factor at the point of delivery between 95 percent lagging and 95
percent leading.
Rate Schedule P-SED-FP10
(Supersedes Schedule P-SED-FP9)
Effective February 1, 2009
United States Department of Energy, Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division Montana, North
Dakota, South Dakota, Minnesota, Iowa, Nebraska;
Schedule of Rates for Firm Peaking Power Service
(Approved Under Rate Order No. WAPA-140)
Effective: The first day of the first full billing period beginning
on or after February 1, 2009, through December 31, 2013.
Available: Within the marketing area served by the Eastern Division
of the Pick-Sloan Missouri Basin Program, to customers with generating
resources enabling them to use firm peaking power service.
Applicable: To the power sold to customers as firm peaking power
service.
Character: Alternating current, 60 hertz, three phase, delivered
and metered at the voltages and points established by contract.
Monthly Rates
Demand Charge: $6.20 for each kilowatt per month (kWmonth) of the
effective contract rate of delivery for peaking power or the maximum
amount scheduled, whichever is greater.
Energy Charge: 16.71 mills for each kilowatthour (kWh) for all
energy scheduled for delivery without return.
Charge Components
Base: A fixed revenue requirement that includes operation and
maintenance expense, investment and replacements, normal timing
purchase power costs (purchases due to operational constraints, not
associated with drought), and transmission costs. The Base peaking
revenue requirement is $14.5 million.
[GRAPHIC] [TIFF OMITTED] TN16JA09.010
Energy \1\ = 9.27 mills/kWh
Drought Adder: A formula-based revenue requirement that includes
future purchase power above timing purchases, previous purchase power
drought deficits, and interest on the purchase power drought deficits.
For the period beginning February 1, 2009, the Drought Adder peaking
revenue requirement is $12.0 million.
[GRAPHIC] [TIFF OMITTED] TN16JA09.011
Energy \1\ = 7.44 mills/kWh
---------------------------------------------------------------------------
\1\ Firm peaking energy is normally returned. This rate will be
assessed in the event firm peaking energy is not returned.
---------------------------------------------------------------------------
Process:
Any proposed change to the Base component will require a public
process. The Drought Adder component may be adjusted annually using the
above formula for any costs attributed to drought of less than or equal
to the equivalent of 2 mills/kWh to the Power Repayment Study (PRS)
composite rate. Any planned incremental adjustment to the Drought Adder
component greater than the equivalent of 2 mills/kWh to the PRS
composite rate will require a public process.
Billing Demand: The billing demand will be the greater of: (1) The
highest 30-minute integrated demand measured during the month up to,
but not in excess of, the delivery obligation under the power sales
contract, or (2) the contract rate of delivery.
Adjustments
For Drought Adder: Adjustments pursuant to the Drought Adder
component will be documented in a revision to this rate schedule.
Billing for Unauthorized Overruns: For each billing period in which
there is a contract violation involving an unauthorized overrun of the
contractual obligation for peaking demand and/or energy, such overrun
shall be billed at 10 times the above rate.
[FR Doc. E9-892 Filed 1-15-09; 8:45 am]
BILLING CODE 6450-01-P