Loveland Area Projects-Rate Order No. WAPA-146, 67191-67197 [E9-30147]
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Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
§ 825(b) (2000), and Part 45 of the
regulations of the Federal Energy
Regulatory Commission, 18 CFR Part 45
(2006).
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the Commission’s Rules of Practice and
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Comment Date: 5 p.m. Eastern Time
on December 31, 2009.
Kimberly D. Bose,
Secretary.
[FR Doc. E9–30067 Filed 12–17–09; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Western Area Power Administration
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Loveland Area Projects—Rate Order
No. WAPA–146
AGENCY: Western Area Power
Administration, DOE.
ACTION: Notice of order concerning firm
electric rates.
The Deputy Secretary of
Energy has confirmed and approved
Rate Order No. WAPA–146 and Rate
SUMMARY:
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Schedule L–F9, placing firm electric
service rates from the Loveland Area
Projects (LAP) 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
repay investments and irrigation aid
within the allowable periods.
DATES: Rate Schedule L–F9 will be
placed into effect on an interim basis on
the first day of the first full billing
period beginning on or after January 1,
2010, and will remain in effect until
FERC confirms, approves, and places
the rate schedule into effect on a final
basis ending December 31, 2014, or
until the rate schedule is superseded.
FOR FURTHER INFORMATION CONTACT: Mr.
Bradley S. Warren, Regional Manager,
Rocky Mountain Customer Service
Region, Western Area Power
Administration, 5555 East Crossroads
Boulevard, Loveland, CO 80538–8986,
telephone (970) 461–7201, or Mrs.
Sheila D. Cook, Rates Manager, Rocky
Mountain Customer Service Region,
Western Area Power Administration,
5555 East Crossroads Boulevard,
Loveland, CO 80538–8986, telephone
(970) 461–7211, e-mail
scook@wapa.gov.
SUPPLEMENTARY INFORMATION: The
Acting Deputy Secretary of Energy
approved existing Rate Schedule L–F8
for firm electric service on an interim
basis on January 8, 2009 (74 FR 3015,
January 16, 2009), for a 5-year period
beginning on February 1, 2009, and
ending December 31, 2013.1 Under Rate
Schedule L–F8, the composite rate is
37.24 mills per kilowatthour (mills/
kWh), the firm energy rate is 18.62
mills/kWh, and the firm capacity rate is
$4.88 per kilowattmonth (kWmonth).
This Rate Schedule is formula based,
providing for an increase in the Drought
Adder rate component of up to 2 mills/
kWh without a formal public process.
The current rate, including a 2 mills/
kWh increase provided for under the
Drought Adder rate component, is not
sufficient to meet the LAP revenue
requirement. As a result, the LAP firm
electric service rates must be increased
mostly due to the financial impacts of
the drought. The drought is causing a
decrease in hydro-power generation,
leading to an increase in purchase
power expenses and a decrease in
revenue from non-firm energy sales.
Additional increases are being driven by
slight increases in operation and
maintenance costs, as well as the
inclusion of additional transmission
costs associated with the wheeling of
Mt. Elbert generation in the FryingpanArkansas Power Repayment Study.
Rate Schedule L–F8 is being
superseded by Rate Schedule L–F9.
Under Rate Schedule L–F9, the
provisional rates for firm electric service
will result in a composite rate of 41.42
mills/kWh. The firm energy rate will be
20.71 mills/kWh (a Base component of
12.54 mills/kWh and a Drought Adder
component of 8.17 mills/kWh) and the
capacity rate will be $5.43/kWmonth (a
Base component of $3.29/kWmonth and
a Drought Adder component of $2.14/
kWmonth). This is an 11.2 percent
increase when compared to the LAP
firm electric rates under Rate Schedule
L–F8.
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–146, the proposed LAP firm
electric service rates, into effect on an
interim basis.
The new Rate Schedule L–F9 will be
promptly submitted to FERC for
confirmation and approval on a final
basis.
1 FERC confirmed and approved Rate Order
WAPA–142 on June 26, 2009, in Docket No. EF09–
5181. See United States Department of Energy,
Western Area Power Administration, Loveland Area
Projects, 127 FERC ¶ 62,245.
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Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
Dated: December 14, 2009.
Daniel B. Poneman,
Deputy Secretary.
Department of Energy Deputy Secretary
[Rate Order No. WAPA–146]
In the matter of: Western Area Power
Administration Rate Adjustment for the
Loveland Area Projects; Order
Confirming, Approving, and Placing the
Loveland Area Projects Firm Electric
Service Rates Into Effect on an Interim
Basis
These rates for the Loveland Area
Projects 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)), 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.
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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
firm electric service 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 Rate: The rate which sets forth the
charges for capacity. It is expressed in
dollars per kilowattmonth and applied to
each kilowatt of the Contract Rate of
Delivery (CROD).
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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.
Criteria: The Post-1989 General Power
Marketing and Allocation Criteria for the
sale of energy with capacity from the PickSloan Missouri Basin Program—Western
Division and the Fryingpan-Arkansas
Project.
Customer: An entity with a contract that is
receiving firm electric service from
Western’s Rocky Mountain Region.
Deficits: Deferred or unrecovered annual and/
or interest expenses.
DOE: The 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: Power produced or delivered over a
period of time. It is expressed in
kilowatthours.
Energy Rate: 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: The Federal Energy Regulatory
Commission.
Firm: A type of product and/or service
always available at the time requested by
a 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.
L–F8: Loveland Area Projects existing firm
electric service rate schedule (expires
December 31, 2013, or until superseded).
L–F9: Loveland Area Projects provisional
firm electric service rate schedule to be
effective January 1, 2010 (to expire
December 31, 2014, or when superseded).
M&I: Municipal and Industrial water
development.
mills/kWh: Mills per kilowatthour—the unit
of charge for energy (equal to one tenth of
a cent or one thousandth of a dollar).
MW: Megawatt—the electrical unit of
capacity that equals 1 million watts or
1,000 kilowatts.
Non-timing Power Purchases: Power
purchases that are not related to
operational constraints such as
management of endangered species,
species habitat, water quality, navigation,
and control area purposes.
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.
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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 of Energy.
PRS: Power Repayment Study.
Rate Brochure: An August 2009 document
explaining the rationale and background
for the rate proposal contained in this Rate
Order.
Ratesetting PRS: The PRS used for the rate
adjustment period.
Reclamation: The United States Department
of the Interior, Bureau of Reclamation.
Reclamation Law: A series of Federal laws
that contain the framework under which
Western markets power.
Regions: Western’s Rocky Mountain Region
and Upper Great Plains Region.
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.
Rocky Mountain Region: The Rocky
Mountain Customer Service Region of the
Western Area Power Administration.
Upper Great Plains Region: 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 provisional rates will take effect
on the first day of the first full billing
period beginning on or after January 1,
2010, and will remain in effect until
December 31, 2014, 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 as
follows:
1. The proposed rate adjustment
process began March 17, 2009, when
Western’s Rocky Mountain Region
mailed a notice announcing informal
meetings to all LAP preference
Customers and interested parties.
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2. The informal meetings were held
on April 15, 2009, in Sioux Falls, South
Dakota, and on April 16, 2009, in
Northglenn, Colorado. At these informal
meetings, Western explained the
rationale for the rate adjustment,
presented rate designs and
methodologies, and answered questions.
3. A Federal Register notice,
published on July 14, 2009 (74 FR
34009), announced the proposed rates
for LAP, began the public consultation
and comment period, and announced
the public information and public
comment forums.
4. On July 14, 2009, Western mailed
letters to all LAP preference Customers
and interested parties transmitting the
FRN published on July 14, 2009.
5. On August 18, 2009, 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
electric service rates for LAP and P–
SMBP—ED. Western also answered
questions and gave notice that more
information was available in the Rate
Brochure.
6. On August 18, 2009, at 11 a.m.
(MDT), following the public information
forum, 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. Western provided a Website with
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. The
Web site is located at https://
www.wapa.gov/rm/ratesRM/2010/
default.htm.
8. Western received one comment
letter and no oral comments during the
consultation and comment period,
which ended October 13, 2009. All
formally submitted comments have been
considered in preparing this Rate Order.
Comments
Written comments were received from
the following organization:
Mid-West Electric Consumers
Association
Project Descriptions
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Loveland Area Projects
The Post-1989 General Power
Marketing and Allocation Criteria,
published in the Federal Register on
January 31, 1986 (51 FR 4012),
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integrated the resources of the P–
SMBP—WD and Fry-Ark. This
operational and contractual integration,
known as LAP, allowed an increase in
marketable resource, simplified contract
administration, and established a
blended rate for LAP power sales. The
Rocky Mountain Region markets 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—WD and Fry-Ark retain
separate financial status. For this
reason, separate PRSs are prepared
annually for each project. These PRSs
are used to determine the sufficiency of
the firm electric service rate to generate
adequate revenue to repay project
investment and costs during each
project’s prescribed repayment period.
The revenue requirement of the Fry-Ark
PRS is combined with the P–SMBP—
WD revenue requirement, derived from
the P–SMBP PRS, to develop one rate
for LAP firm electric sales.
Pick-Sloan Missouri Basin Program—
Western Division
The P–SMBP was authorized by
Congress in Section 9 of the Flood
Control Act of December 22, 1944,
commonly referred to as the Flood
Control Act of 1944. 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 Rocky Mountain Region,
with a regional office in Loveland,
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Colorado, markets the Western Division
power of P–SMBP through LAP. The
Upper Great Plains Region, with a
regional office in Billings, Montana,
markets power from the Eastern
Division of P–SMBP. Eastern Division
power is marketed in western Iowa,
western Minnesota, Montana, east of the
Continental Divide, North Dakota, South
Dakota, and the eastern two-thirds of
Nebraska. P–SMBP power is marketed
to approximately 54 firm power
Customers by the Rocky Mountain
Region and approximately 300 firm
power Customers by the Upper Great
Plains Region.
Fryingpan-Arkansas Project
Fry-Ark is a trans-mountain diversion
development in southeastern Colorado
authorized by the Act of Congress on
August 16, 1962 (Pub. L. 87–590, 76
Stat. 389, as amended by Title XI of the
Act of Congress on October 27, 1974
(Pub. L. 93–493, 88 Stat. 1486, 1497)).
The Fry-Ark diverts water from the
Fryingpan River and other tributaries of
the Roaring Fork River in the Colorado
River Basin on the West Slope of the
Rocky Mountains to the Arkansas River
on the East Slope. The water diverted
from the West Slope, together with
regulated Arkansas River water,
provides supplemental irrigation and
M&I water supplies, and produces
hydroelectric power. Flood control, fish
and wildlife enhancement, and
recreation are other important purposes
of Fry-Ark. The only generating facility
in Fry-Ark is the Mt. Elbert PumpedStorage powerplant on the East Slope.
Power Repayment Studies—Firm
Electric Service Rate
Western prepares PRSs each FY to
determine if revenues will be sufficient
to repay, within the required time, all
costs assigned to the LAP. Repayment
criteria are based on Western’s
applicable laws and legislation, as well
as policies including DOE Order RA
6120.2. To meet Cost Recovery Criteria
outlined in DOE Order RA 6120.2,
revised studies and rate adjustments
have been developed to demonstrate
that sufficient revenues will be collected
under the proposed rates to meet future
obligations.
Existing and Provisional Rates
A comparison of the existing and
provisional rates for LAP firm electric
service follows:
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Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
TABLE 1—COMPARISON OF EXISTING AND PROVISIONAL RATES LAP FIRM ELECTRIC SERVICE
Existing rate
(February 1, 2009)
L–F8
Firm electric service
LAP Revenue Requirement (million) ...........................................................................
LAP Composite Rate (mills/kWh) ................................................................................
Firm Energy Rate (mills/kWh) .....................................................................................
Firm Capacity Rate ($/kWmonth) ................................................................................
Certification of Rates
Western’s Administrator certified that
the provisional rates for LAP firm
electric service under Rate Schedule
L–F9 are the lowest possible rates
consistent with sound business
principles. The provisional rates were
developed following administrative
policies and applicable laws.
LAP Firm Electric Service Rate
Discussion
According to Reclamation Law,
Western must establish power rates
Provisional rate
L–F9
$75.9
37.24
18.62
$4.88
sufficient to recover O&M, purchased
power and interest expenses, and repay
power investment and irrigation aid.
The Criteria, published in the Federal
Register on January 31, 1986 (51 FR
4012), operationally and contractually
integrated the resources of the
P–SMBP—WD and Fry-Ark (thereafter
referred to as LAP). A blended rate was
established for the sale of LAP firm
electric service. The P–SMBP—WD
portion of the revenue requirement for
LAP firm electric service rates was
developed from the revenue
Percent change
$84.5
41.42
20.71
$5.43
11.2
11.2
11.2
11.2
requirement calculated in the P–SMBP
Ratesetting PRS. The P–SMBP—WD
revenue requirement increased
approximately 13 percent from the
previous revenue requirement due to
the financial impact of the drought,
increased annual expenses, increased
investments, and increased interest
expenses associated with deficits. The
revenue requirements for P–SMBP—WD
are as follows:
TABLE 2—SUMMARY OF P–SMBP—WD REVENUE REQUIREMENTS ($000)
Current Revenue Requirement (Feb 09):
(30.89 mills/kWh × 1,988,000,000 kWh) ..................................................................................................................................
Provisional Increase:
Base: 0.25 mills/kWh × 1,988,000,000 kWh ............................................................................................................................
Drought Adder: 3.66 mills/kWh × 1,988,000,000 kWh .............................................................................................................
$61,409
497
7,276
7,773
Provisional Revenue Requirement:
(30.89 + 3.91 = 34.80 mills/kWh × 1,988,000,000 kWh) .........................................................................................................
The adjustment to the P–SMBP—ED
revenue requirement is a separate
formal rate process which is
documented in Rate Order No. WAPA–
147. Rate Order No. WAPA–147 is also
scheduled to go into effect on the first
day of the first full billing period on or
after January 1, 2010.
Fry-Ark
The Fry-Ark portion of the revenue
requirement for LAP firm electric
service rates was developed from the
revenue requirement calculated in the
69,182
Fry-Ark Ratesetting PRS. The Fry-Ark
revenue requirement increased
approximately 5 percent due to
increased transmission expenses and
the financial impact of the drought. The
revenue requirements for Fry-Ark are as
follows:
TABLE 3—SUMMARY OF FRY-ARK REVENUE REQUIREMENTS ($000)
Current Revenue Requirement (Feb 09): ........................................................................................................................................
Provisional Increase:
Base ..........................................................................................................................................................................................
Drought Adder ..........................................................................................................................................................................
$14,545
773
10
783
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Provisional Revenue Requirement ..................................................................................................................................................
The following table compares LAP
existing revenue requirements to the
proposed revenue requirements:
TABLE 4—SUMMARY OF LAP REVENUE TABLE 4—SUMMARY OF LAP REVENUE
REQUIREMENTS ($000)
REQUIREMENTS ($000)—Continued
Existing
(February
2009)
P–SMBP—WD ..
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15,328
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$61,409
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Existing
(February
2009)
Provisional
$69,182
Fry–Ark .............
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14,545
Provisional
15,328
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Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
TABLE 4—SUMMARY OF LAP REVENUE habitat, water quality, navigation,
control area purposes, etc.) and are not
REQUIREMENTS ($000)—Continued
associated with drought conditions in
the Regions. The Base component
Provisional cannot be adjusted by Western without
a public process.
The Drought Adder component for
Total LAP ...
75,954
84,510
each project is a formula-based revenue
requirement that includes costs
Under Rate Schedule L–F9, Western
attributable to the drought conditions in
will continue to identify its firm electric the Regions. The Drought Adder
service revenue requirement using Base component includes costs associated
and Drought Adder components. The
with future non-timing power purchases
Base component is a fixed revenue
to meet firm electric service contractual
requirement for each project that
obligations not covered with available
includes annual O&M expenses,
system generation due to the drought,
investment repayment and associated
previously incurred deficits due to
interest, normal timing power
purchased power debt that resulted
purchases, and transmission costs.
from non-timing power purchases made
Normal timing power purchases are
during the drought, and the interest
purchases due to operational constraints associated with the previously incurred
(e.g., management of endangered species and future drought debt. The Drought
Existing
(February
2009)
Adder component is designed to repay
the drought debt within 10 years from
the time the debt was incurred using
balloon-payment methodology. For
example, the drought debt incurred by
Western in FY 2008 will be repaid by
FY 2018.
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, the LAP annual
revenue requirement is $84.5 million
and is comprised of a Base revenue
requirement of $51.2 million plus a
Drought Adder revenue requirement of
$33.3 million.
A comparison of the current and
proposed rate components are listed in
the following table:
TABLE 5—SUMMARY OF LAP COMPONENTS
Existing rates
L–F8
Drought
adder
Base
Firm Capacity ($/kW–month) ...................................................................
Firm Energy (mills/kWh) ..........................................................................
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Continuing to identify the firm
electric service revenue requirement
using Base and Drought Adder
components will assist Western in
presenting the effects of the drought
within the Regions, demonstrating
repayment of the drought related costs,
and allow 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 components.
Western reviews its firm electric
service rates annually. Western will
review the Base rate component after
the annual PRSs are complete, 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
component, Western will review the
$3.21
12.23
$1.67
6.39
Drought Adder component each
September to determine if drought costs
differ from those projected in the PRSs.
If drought costs differ, Western will
determine whether an adjustment to the
Drought Adder component is necessary.
Western will notify Customers by letter
each October of the planned
incremental or decremental adjustment
and implement the adjustment in the
following January billing cycle.
Although decremental adjustments to
the Drought Adder 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 in early summer and notify
Customers by letter of any estimated
change to the Drought Adder for the
following January. Western will verify
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
Provisional rates
L–F9
Total
Base
$4.88
18.62
Drought
adder
$3.29
12.54
Total
$2.14
8.17
$5.43
20.71
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 provides a
summary of projected revenue and
expense data for the Fry-Ark firm
electric service revenue requirement
through the 5-year provisional rate
approval period:
TABLE 6—FRY–ARK COMPARISON OF 5-YEAR RATE APPROVAL PERIOD (FY 2010–2014) TOTAL REVENUE AND EXPENSE
($000)
Existing rate
Total Revenues ................................................................................................................
Revenue Distribution:
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$78,983
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$84,897
18DEN1
Difference
$5,914
67196
Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
TABLE 6—FRY–ARK COMPARISON OF 5-YEAR RATE APPROVAL PERIOD (FY 2010–2014) TOTAL REVENUE AND EXPENSE
($000)—Continued
Existing rate
Provisional rate
Difference
Expenses:
O&M 1 .......................................................................................................................
Purchase Power .......................................................................................................
Transmission ............................................................................................................
Interest 2 ....................................................................................................................
$28,868
1,398
20,027
21,383
$25,307
1,077
20,671
20,243
$¥3,561
¥321
644
¥1,140
Total Expenses ..................................................................................................
71,676
67,298
¥4,378
Principal Payments:
Capitalized Expenses (deficits) ................................................................................
Original Project and Additions 3 ................................................................................
Replacements 3 .........................................................................................................
0
1,762
5,545
0
14,214
3,385
0
12,452
¥2,160
Total Principal Payments ..................................................................................
Total Revenue Distribution ................................................................................
7,307
78,983
17,599
84,897
10,292
5,914
1 The
2 The
3 The
decrease in O&M expense is due to changes reflected in Reclamation’s FY 2010 work plan.
decrease in interest expense is primarily due to a increased repayment over the 5-year period.
difference in principal payments is due to increased revenue being available for repayment during the 5-year period.
Ratemaking Procedure Requirements
The existing rates for LAP firm
electric service in Rate Schedule L–F8,
which expire December 31, 2013, no
longer provide sufficient revenues to
pay all annual costs, including interest
expense, and repay investments and
irrigation aid within the allowable
period. The adjusted rates reflect
increases due to the financial 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 expenses, and repay
investments and irrigation aid within
the allowable periods. The provisional
rates will take effect on the first day of
the first full billing period beginning on
or after January 1, 2010, 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, 2014.
power rates is taken very seriously by
the Customers. This Customer
representative also stated that, while
recent forecasts of Pick-Sloan generation
suggest improved revenues over those
projected when Western began this
public process, the customer
representative does not think it would
be appropriate for Western to attempt to
adjust its proposed rate in the middle of
this public process. The customer
representative noted that, should
generation and revenues witness a
dramatic improvement, Western has the
capability to adjust the Drought Adder
up to 2 mills without going through a
full public process.
Response: Western acknowledges the
financial impact of the extended
drought and the need for a firm power
rate increase, as well. Western
recognizes the Firm Power Customers’
serious commitment to power
repayment. Western agrees that it would
not be appropriate to adjust the
proposed rate in the middle of this
public process, but recognizes that it has
the ability to make subsequent changes
to the rate through the Drought Adder
in the event of changes in forecast
generation and revenues.
Comments
Availability of Information
The comment and response below
regarding the firm electric service rates
is paraphrased for brevity when not
affecting the meaning of the
statement(s).
Comment: One Customer
representative recognized the impacts
that the extended drought has had on
the current financial status of the P–
SMBP and stated that the repayment of
Federal investment through Federal
Information about this rate
adjustment, including the PRSs,
comments, letters, memorandums and
other supporting materials, that was
used to develop the provisional rates is
available for public review in the Rocky
Mountain Regional Office, Western Area
Power Administration, 5555 E.
Crossroads Boulevard, Loveland,
Colorado.
In view of the foregoing and under the
authority delegated to me, I confirm and
approve on an interim basis, effective on
the first full billing period on or after
January 1, 2010, Rate Schedule L–F9 for
the Loveland Area Projects of the
Western Area Power Administration.
The rate schedule 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, 2014.
The summary of P–SMBP—WD
revenues and expenses for the 5-year
provisional rate approval period is
included in the P–SMBP Statement of
Revenue and Related Expenses that is
part of Rate Order No. WAPA–147.
sroberts on DSKD5P82C1PROD with NOTICES
Basis for Rate Development
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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
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
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Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / Notices
Dated: December 14, 2009.
The first day of the first full billing
period beginning on or after January 1,
2010, through December 31, 2014.
Available:
Within the marketing area served by
the Loveland Area Projects.
Applicable:
To the wholesale power Customers for
firm electric service supplied through
one meter at one point of delivery, or as
otherwise established by contract.
Character:
Alternating current, 60 hertz, three
phase, delivered and metered at the
voltages and points established by
contract.
Monthly Rates:
Capacity Charge: $5.43 per kilowatt of
billing capacity.
Daniel B. Poneman
Deputy Secretary
Rate Schedule L–F9
(Supersedes Rate Schedule L–F8)
Effective January 1, 2010
United States Department of Energy
Western Area Power Administration
Loveland Area Projects Colorado,
Kansas, Nebraska, Wyoming
Schedule of Rates For Firm Electric
Service
(Approved Under Rate Order No.
WAPA–146)
Effective:
67197
Energy Charge: 20.71 mills per
kilowatthour (kWh) of monthly
entitlement.
Billing Capacity: Unless otherwise
specified by contract, the billing
capacity will be the seasonal contract
rate of delivery.
Charge Components:
Base: A fixed revenue requirement
that includes operation and
maintenance expense, investment
repayment and associated interest,
normal timing power purchases
(purchases due to operational
constraints, not associated with
drought), and transmission costs. The
Base revenue requirement is $51.2
million.
50% × Base Revenue Requirement
= $3.29 / kWmonth
Firm Billing Capacity
50% × Base Revenue Requirement
= 12.54 mills / kWmonth
Base Energy =
Annual Energy
Base Capacity =
Drought Adder: A formula-based
revenue requirement that includes
future purchase power expense in
excess of timing purchases, 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 first full billing
period beginning on or after January 1,
2010, the Drought Adder revenue
requirement is $33.3 million.
50% × Drought Adder Revenue Requirement
= $2.14 / kWmonth
Firm Billing Capacity
50% × Drought Adder Revenue Requirement
= 8.17 mills/kWh
Drought Adder Energy =
Annual Energy
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power factor at all points of
measurement between 95-percent
lagging and 95-percent leading.
[FR Doc. E9–30147 Filed 12–17–09; 8:45 am]
BILLING CODE 6450–01–P
DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program—
Eastern Division—Rate Order No.
WAPA–147
AGENCY: Western Area Power
Administration, DOE.
ACTION: Notice of Order Concerning
Firm Power Rates.
SUMMARY: The Deputy Secretary of
Energy confirmed and approved Rate
Order No. WAPA–147 and Rate
Schedules P–SED–F11 and P–SED–
FP11, placing firm power and firm
peaking power rates from the Pick-Sloan
Missouri Basin Program—Eastern
Division (P–SMBP—ED) of the Western
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Sfmt 4703
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
repay power investments and irrigation
aid within the allowable periods.
DATES: Rate Schedules P–SED–F11 and
P–SED–FP11 will be placed into effect
on an interim basis on the first day of
the first full billing period beginning on
or after January 1, 2010, and will remain
in effect until FERC confirms, approves,
and places the rate schedules in effect
on a final basis ending December 31,
2014, 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
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18DEN1
EN18DE09.424</MATH>
Process:
Any proposed change to the Base
component will require a public
process. The Drought Adder component
may be adjusted annually using the
above formulas 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
EN18DE09.423</MATH>
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Drought Adder Capacity =
]]>Agencies
[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Notices]
[Pages 67191-67197]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30147]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Western Area Power Administration
Loveland Area Projects--Rate Order No. WAPA-146
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of order concerning firm electric rates.
-----------------------------------------------------------------------
SUMMARY: The Deputy Secretary of Energy has confirmed and approved Rate
Order No. WAPA-146 and Rate Schedule L-F9, placing firm electric
service rates from the Loveland Area Projects (LAP) 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 repay investments and irrigation aid
within the allowable periods.
DATES: Rate Schedule L-F9 will be placed into effect on an interim
basis on the first day of the first full billing period beginning on or
after January 1, 2010, and will remain in effect until FERC confirms,
approves, and places the rate schedule into effect on a final basis
ending December 31, 2014, or until the rate schedule is superseded.
FOR FURTHER INFORMATION CONTACT: Mr. Bradley S. Warren, Regional
Manager, Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7201, or Mrs. Sheila D. Cook, Rates Manager,
Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7211, e-mail scook@wapa.gov.
SUPPLEMENTARY INFORMATION: The Acting Deputy Secretary of Energy
approved existing Rate Schedule L-F8 for firm electric service on an
interim basis on January 8, 2009 (74 FR 3015, January 16, 2009), for a
5-year period beginning on February 1, 2009, and ending December 31,
2013.\1\ Under Rate Schedule L-F8, the composite rate is 37.24 mills
per kilowatthour (mills/kWh), the firm energy rate is 18.62 mills/kWh,
and the firm capacity rate is $4.88 per kilowattmonth (kWmonth). This
Rate Schedule is formula based, providing for an increase in the
Drought Adder rate component of up to 2 mills/kWh without a formal
public process.
---------------------------------------------------------------------------
\1\ FERC confirmed and approved Rate Order WAPA-142 on June 26,
2009, in Docket No. EF09-5181. See United States Department of
Energy, Western Area Power Administration, Loveland Area Projects,
127 FERC ] 62,245.
---------------------------------------------------------------------------
The current rate, including a 2 mills/kWh increase provided for
under the Drought Adder rate component, is not sufficient to meet the
LAP revenue requirement. As a result, the LAP firm electric service
rates must be increased mostly due to the financial impacts of the
drought. The drought is causing a decrease in hydro-power generation,
leading to an increase in purchase power expenses and a decrease in
revenue from non-firm energy sales. Additional increases are being
driven by slight increases in operation and maintenance costs, as well
as the inclusion of additional transmission costs associated with the
wheeling of Mt. Elbert generation in the Fryingpan-Arkansas Power
Repayment Study.
Rate Schedule L-F8 is being superseded by Rate Schedule L-F9. Under
Rate Schedule L-F9, the provisional rates for firm electric service
will result in a composite rate of 41.42 mills/kWh. The firm energy
rate will be 20.71 mills/kWh (a Base component of 12.54 mills/kWh and a
Drought Adder component of 8.17 mills/kWh) and the capacity rate will
be $5.43/kWmonth (a Base component of $3.29/kWmonth and a Drought Adder
component of $2.14/kWmonth). This is an 11.2 percent increase when
compared to the LAP firm electric rates under Rate Schedule L-F8.
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-146, the proposed LAP firm electric service rates, into
effect on an interim basis.
The new Rate Schedule L-F9 will be promptly submitted to FERC for
confirmation and approval on a final basis.
[[Page 67192]]
Dated: December 14, 2009.
Daniel B. Poneman,
Deputy Secretary.
Department of Energy Deputy Secretary
[Rate Order No. WAPA-146]
In the matter of: Western Area Power Administration Rate Adjustment for
the Loveland Area Projects; Order Confirming, Approving, and Placing
the Loveland Area Projects Firm Electric Service Rates Into Effect on
an Interim Basis
These rates for the Loveland Area Projects 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)),
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 firm electric service
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 Rate: The rate which sets forth the charges for capacity.
It is expressed in dollars per kilowattmonth and applied to each
kilowatt of the Contract Rate of Delivery (CROD).
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.
Criteria: The Post-1989 General Power Marketing and Allocation
Criteria for the sale of energy with capacity from the Pick-Sloan
Missouri Basin Program--Western Division and the Fryingpan-Arkansas
Project.
Customer: An entity with a contract that is receiving firm electric
service from Western's Rocky Mountain Region.
Deficits: Deferred or unrecovered annual and/or interest expenses.
DOE: The 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: Power produced or delivered over a period of time. It is
expressed in kilowatthours.
Energy Rate: 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: The Federal Energy Regulatory Commission.
Firm: A type of product and/or service always available at the time
requested by a 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.
L-F8: Loveland Area Projects existing firm electric service rate
schedule (expires December 31, 2013, or until superseded).
L-F9: Loveland Area Projects provisional firm electric service rate
schedule to be effective January 1, 2010 (to expire December 31,
2014, or when superseded).
M&I: Municipal and Industrial water development.
mills/kWh: Mills per kilowatthour--the unit of charge for energy
(equal to one tenth of a cent or one thousandth of a dollar).
MW: Megawatt--the electrical unit of capacity that equals 1 million
watts or 1,000 kilowatts.
Non-timing Power Purchases: Power purchases that are not related to
operational constraints such as management of endangered species,
species habitat, water quality, navigation, and control area
purposes.
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 of
Energy.
PRS: Power Repayment Study.
Rate Brochure: An August 2009 document explaining the rationale and
background for the rate proposal contained in this Rate Order.
Ratesetting PRS: The PRS used for the rate adjustment period.
Reclamation: The United States Department of the Interior, Bureau of
Reclamation.
Reclamation Law: A series of Federal laws that contain the framework
under which Western markets power.
Regions: Western's Rocky Mountain Region and Upper Great Plains
Region.
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.
Rocky Mountain Region: The Rocky Mountain Customer Service Region of
the Western Area Power Administration.
Upper Great Plains Region: 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 provisional rates will take effect on the first day of the
first full billing period beginning on or after January 1, 2010, and
will remain in effect until December 31, 2014, 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 as follows:
1. The proposed rate adjustment process began March 17, 2009, when
Western's Rocky Mountain Region mailed a notice announcing informal
meetings to all LAP preference Customers and interested parties.
[[Page 67193]]
2. The informal meetings were held on April 15, 2009, in Sioux
Falls, South Dakota, and on April 16, 2009, in Northglenn, Colorado. At
these informal meetings, Western explained the rationale for the rate
adjustment, presented rate designs and methodologies, and answered
questions.
3. A Federal Register notice, published on July 14, 2009 (74 FR
34009), announced the proposed rates for LAP, began the public
consultation and comment period, and announced the public information
and public comment forums.
4. On July 14, 2009, Western mailed letters to all LAP preference
Customers and interested parties transmitting the FRN published on July
14, 2009.
5. On August 18, 2009, 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 electric service rates
for LAP and P-SMBP--ED. Western also answered questions and gave notice
that more information was available in the Rate Brochure.
6. On August 18, 2009, at 11 a.m. (MDT), following the public
information forum, 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. Western provided a Website with 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. The Web site is located at https://www.wapa.gov/rm/ratesRM/2010/default.htm.
8. Western received one comment letter and no oral comments during
the consultation and comment period, which ended October 13, 2009. All
formally submitted comments have been considered in preparing this Rate
Order.
Comments
Written comments were received from the following organization:
Mid-West Electric Consumers Association
Project Descriptions
Loveland Area Projects
The Post-1989 General Power Marketing and Allocation Criteria,
published in the Federal Register on January 31, 1986 (51 FR 4012),
integrated the resources of the P-SMBP--WD and Fry-Ark. This
operational and contractual integration, known as LAP, allowed an
increase in marketable resource, simplified contract administration,
and established a blended rate for LAP power sales. The Rocky Mountain
Region markets 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--WD and Fry-Ark retain separate financial status. For
this reason, separate PRSs are prepared annually for each project.
These PRSs are used to determine the sufficiency of the firm electric
service rate to generate adequate revenue to repay project investment
and costs during each project's prescribed repayment period. The
revenue requirement of the Fry-Ark PRS is combined with the P-SMBP--WD
revenue requirement, derived from the P-SMBP PRS, to develop one rate
for LAP firm electric sales.
Pick-Sloan Missouri Basin Program--Western Division
The P-SMBP was authorized by Congress in Section 9 of the Flood
Control Act of December 22, 1944, commonly referred to as the Flood
Control Act of 1944. 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 Rocky Mountain
Region, with a regional office in Loveland, Colorado, markets the
Western Division power of P-SMBP through LAP. The Upper Great Plains
Region, with a regional office in Billings, Montana, markets power from
the Eastern Division of P-SMBP. Eastern Division power is marketed in
western Iowa, western Minnesota, Montana, east of the Continental
Divide, North Dakota, South Dakota, and the eastern two-thirds of
Nebraska. P-SMBP power is marketed to approximately 54 firm power
Customers by the Rocky Mountain Region and approximately 300 firm power
Customers by the Upper Great Plains Region.
Fryingpan-Arkansas Project
Fry-Ark is a trans-mountain diversion development in southeastern
Colorado authorized by the Act of Congress on August 16, 1962 (Pub. L.
87-590, 76 Stat. 389, as amended by Title XI of the Act of Congress on
October 27, 1974 (Pub. L. 93-493, 88 Stat. 1486, 1497)). The Fry-Ark
diverts water from the Fryingpan River and other tributaries of the
Roaring Fork River in the Colorado River Basin on the West Slope of the
Rocky Mountains to the Arkansas River on the East Slope. The water
diverted from the West Slope, together with regulated Arkansas River
water, provides supplemental irrigation and M&I water supplies, and
produces hydroelectric power. Flood control, fish and wildlife
enhancement, and recreation are other important purposes of Fry-Ark.
The only generating facility in Fry-Ark is the Mt. Elbert Pumped-
Storage powerplant on the East Slope.
Power Repayment Studies--Firm Electric Service Rate
Western prepares PRSs each FY to determine if revenues will be
sufficient to repay, within the required time, all costs assigned to
the LAP. Repayment criteria are based on Western's applicable laws and
legislation, as well as policies including DOE Order RA 6120.2. To meet
Cost Recovery Criteria outlined in DOE Order RA 6120.2, revised studies
and rate adjustments have been developed to demonstrate that sufficient
revenues will be collected under the proposed rates to meet future
obligations.
Existing and Provisional Rates
A comparison of the existing and provisional rates for LAP firm
electric service follows:
[[Page 67194]]
Table 1--Comparison of Existing and Provisional Rates LAP Firm Electric Service
----------------------------------------------------------------------------------------------------------------
Existing rate
Firm electric service (February 1, Provisional rate Percent change
2009) L-F8 L-F9
----------------------------------------------------------------------------------------------------------------
LAP Revenue Requirement (million)....................... $75.9 $84.5 11.2
LAP Composite Rate (mills/kWh).......................... 37.24 41.42 11.2
Firm Energy Rate (mills/kWh)............................ 18.62 20.71 11.2
Firm Capacity Rate ($/kWmonth).......................... $4.88 $5.43 11.2
----------------------------------------------------------------------------------------------------------------
Certification of Rates
Western's Administrator certified that the provisional rates for
LAP firm electric service under Rate Schedule L-F9 are the lowest
possible rates consistent with sound business principles. The
provisional rates were developed following administrative policies and
applicable laws.
LAP Firm Electric Service Rate Discussion
According to Reclamation Law, Western must establish power rates
sufficient to recover O&M, purchased power and interest expenses, and
repay power investment and irrigation aid.
The Criteria, published in the Federal Register on January 31, 1986
(51 FR 4012), operationally and contractually integrated the resources
of the P-SMBP--WD and Fry-Ark (thereafter referred to as LAP). A
blended rate was established for the sale of LAP firm electric service.
The P-SMBP--WD portion of the revenue requirement for LAP firm electric
service rates was developed from the revenue requirement calculated in
the P-SMBP Ratesetting PRS. The P-SMBP--WD revenue requirement
increased approximately 13 percent from the previous revenue
requirement due to the financial impact of the drought, increased
annual expenses, increased investments, and increased interest expenses
associated with deficits. The revenue requirements for P-SMBP--WD are
as follows:
Table 2--Summary of P-SMBP--WD Revenue Requirements ($000)
------------------------------------------------------------------------
------------------------------------------------------------------------
Current Revenue Requirement (Feb 09):
(30.89 mills/kWh x 1,988,000,000 kWh)............. $61,409
Provisional Increase:
Base: 0.25 mills/kWh x 1,988,000,000 kWh.......... 497
Drought Adder: 3.66 mills/kWh x 1,988,000,000 kWh. 7,276
-----------------
7,773
=================
Provisional Revenue Requirement:
(30.89 + 3.91 = 34.80 mills/kWh x 1,988,000,000 69,182
kWh).............................................
------------------------------------------------------------------------
The adjustment to the P-SMBP--ED revenue requirement is a separate
formal rate process which is documented in Rate Order No. WAPA-147.
Rate Order No. WAPA-147 is also scheduled to go into effect on the
first day of the first full billing period on or after January 1, 2010.
Fry-Ark
The Fry-Ark portion of the revenue requirement for LAP firm
electric service rates was developed from the revenue requirement
calculated in the Fry-Ark Ratesetting PRS. The Fry-Ark revenue
requirement increased approximately 5 percent due to increased
transmission expenses and the financial impact of the drought. The
revenue requirements for Fry-Ark are as follows:
Table 3--Summary of Fry-Ark Revenue Requirements ($000)
------------------------------------------------------------------------
------------------------------------------------------------------------
Current Revenue Requirement (Feb 09):................. $14,545
Provisional Increase:
Base.............................................. 773
Drought Adder..................................... 10
-----------------
783
=================
Provisional Revenue Requirement....................... 15,328
------------------------------------------------------------------------
The following table compares LAP existing revenue requirements to
the proposed revenue requirements:
Table 4--Summary of LAP Revenue Requirements ($000)
------------------------------------------------------------------------
Existing
(February Provisional
2009)
------------------------------------------------------------------------
P-SMBP--WD.................................... $61,409 $69,182
Fry-Ark....................................... 14,545 15,328
-------------------------
[[Page 67195]]
Total LAP................................. 75,954 84,510
------------------------------------------------------------------------
Under Rate Schedule L-F9, Western will continue to identify its
firm electric service revenue requirement using Base and Drought Adder
components. The Base component is a fixed revenue requirement for each
project that includes annual O&M expenses, investment repayment and
associated interest, normal timing power purchases, and transmission
costs. Normal timing power purchases are purchases due to operational
constraints (e.g., management of endangered species habitat, water
quality, navigation, control area purposes, etc.) and are not
associated with drought conditions in the Regions. The Base component
cannot be adjusted by Western without a public process.
The Drought Adder component for each project is a formula-based
revenue requirement that includes costs attributable to the drought
conditions in the Regions. The Drought Adder component includes costs
associated with future non-timing power purchases to meet firm electric
service 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 the drought, and the interest associated with the previously
incurred and future drought debt. The Drought Adder component is
designed to repay the drought debt within 10 years from the time the
debt was incurred using balloon-payment methodology. For example, the
drought debt incurred by Western in FY 2008 will be repaid by FY 2018.
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, the LAP annual revenue requirement is $84.5 million
and is comprised of a Base revenue requirement of $51.2 million plus a
Drought Adder revenue requirement of $33.3 million.
A comparison of the current and proposed rate components are listed
in the following table:
Table 5--Summary of LAP Components
----------------------------------------------------------------------------------------------------------------
Existing rates L-F8 Provisional rates L-F9
-----------------------------------------------------------------
Drought Drought
Base adder Total Base adder Total
----------------------------------------------------------------------------------------------------------------
Firm Capacity ($/kW-month).................... $3.21 $1.67 $4.88 $3.29 $2.14 $5.43
Firm Energy (mills/kWh)....................... 12.23 6.39 18.62 12.54 8.17 20.71
----------------------------------------------------------------------------------------------------------------
Continuing to identify the firm electric service revenue
requirement using Base and Drought Adder components will assist Western
in presenting the effects of the drought within the Regions,
demonstrating repayment of the drought related costs, and allow 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 components.
Western reviews its firm electric service rates annually. Western
will review the Base rate component after the annual PRSs are complete,
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
component, Western will review the Drought Adder component each
September to determine if drought costs differ from those projected in
the PRSs. If drought costs differ, Western will determine whether an
adjustment to the Drought Adder component is necessary. Western will
notify Customers by letter each October of the planned incremental or
decremental adjustment and implement the adjustment in the following
January billing cycle. Although decremental adjustments to the Drought
Adder 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 in early summer and notify Customers by letter of any
estimated change to the Drought Adder for the following January.
Western will verify 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 provides a summary of projected revenue and
expense data for the Fry-Ark firm electric service revenue requirement
through the 5-year provisional rate approval period:
Table 6--Fry-Ark Comparison of 5-Year Rate Approval Period (FY 2010-2014) Total Revenue and Expense ($000)
----------------------------------------------------------------------------------------------------------------
Existing rate Provisional rate Difference
----------------------------------------------------------------------------------------------------------------
Total Revenues............................................ $78,983 $84,897 $5,914
Revenue Distribution:
[[Page 67196]]
Expenses:
O&M \1\............................................... $28,868 $25,307 $-3,561
Purchase Power........................................ 1,398 1,077 -321
Transmission.......................................... 20,027 20,671 644
Interest \2\.......................................... 21,383 20,243 -1,140
-----------------------------------------------------
Total Expenses.................................... 71,676 67,298 -4,378
----------------------------------------------------------------------------------------------------------------
Principal Payments:
Capitalized Expenses (deficits)....................... 0 0 0
Original Project and Additions \3\.................... 1,762 14,214 12,452
Replacements \3\...................................... 5,545 3,385 -2,160
-----------------------------------------------------
Total Principal Payments.......................... 7,307 17,599 10,292
Total Revenue Distribution........................ 78,983 84,897 5,914
----------------------------------------------------------------------------------------------------------------
\1\ The decrease in O&M expense is due to changes reflected in Reclamation's FY 2010 work plan.
\2\ The decrease in interest expense is primarily due to a increased repayment over the 5-year period.
\3\ The difference in principal payments is due to increased revenue being available for repayment during the 5-
year period.
The summary of P-SMBP--WD revenues and expenses for the 5-year
provisional rate approval period is included in the P-SMBP Statement of
Revenue and Related Expenses that is part of Rate Order No. WAPA-147.
Basis for Rate Development
The existing rates for LAP firm electric service in Rate Schedule
L-F8, which expire December 31, 2013, no longer provide sufficient
revenues to pay all annual costs, including interest expense, and repay
investments and irrigation aid within the allowable period. The
adjusted rates reflect increases due to the financial 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 expenses, and repay investments
and irrigation aid within the allowable periods. The provisional rates
will take effect on the first day of the first full billing period
beginning on or after January 1, 2010, 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, 2014.
Comments
The comment and response below regarding the firm electric service
rates is paraphrased for brevity when not affecting the meaning of the
statement(s).
Comment: One Customer representative recognized the impacts that
the extended drought has had on the current financial status of the P-
SMBP and stated that the repayment of Federal investment through
Federal power rates is taken very seriously by the Customers. This
Customer representative also stated that, while recent forecasts of
Pick-Sloan generation suggest improved revenues over those projected
when Western began this public process, the customer representative
does not think it would be appropriate for Western to attempt to adjust
its proposed rate in the middle of this public process. The customer
representative noted that, should generation and revenues witness a
dramatic improvement, Western has the capability to adjust the Drought
Adder up to 2 mills without going through a full public process.
Response: Western acknowledges the financial impact of the extended
drought and the need for a firm power rate increase, as well. Western
recognizes the Firm Power Customers' serious commitment to power
repayment. Western agrees that it would not be appropriate to adjust
the proposed rate in the middle of this public process, but recognizes
that it has the ability to make subsequent changes to the rate through
the Drought Adder in the event of changes in forecast generation and
revenues.
Availability of Information
Information about this rate adjustment, including the PRSs,
comments, letters, memorandums and other supporting materials, that was
used to develop the provisional rates is available for public review in
the Rocky Mountain Regional Office, Western Area Power Administration,
5555 E. Crossroads Boulevard, Loveland, Colorado.
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 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 on the first full
billing period on or after January 1, 2010, Rate Schedule L-F9 for the
Loveland Area Projects of the Western Area Power Administration. The
rate schedule 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, 2014.
[[Page 67197]]
Dated: December 14, 2009.
Daniel B. Poneman
Deputy Secretary
Rate Schedule L-F9
(Supersedes Rate Schedule L-F8)
Effective January 1, 2010
United States Department of Energy Western Area Power Administration
Loveland Area Projects Colorado, Kansas, Nebraska, Wyoming
Schedule of Rates For Firm Electric Service
(Approved Under Rate Order No. WAPA-146)
Effective:
The first day of the first full billing period beginning on or
after January 1, 2010, through December 31, 2014.
Available:
Within the marketing area served by the Loveland Area Projects.
Applicable:
To the wholesale power Customers for firm electric service supplied
through one meter at one point of delivery, or as otherwise established
by contract.
Character:
Alternating current, 60 hertz, three phase, delivered and metered
at the voltages and points established by contract.
Monthly Rates:
Capacity Charge: $5.43 per kilowatt of billing capacity.
Energy Charge: 20.71 mills per kilowatthour (kWh) of monthly
entitlement.
Billing Capacity: Unless otherwise specified by contract, the
billing capacity will be the seasonal contract rate of delivery.
Charge Components:
Base: A fixed revenue requirement that includes operation and
maintenance expense, investment repayment and associated interest,
normal timing power purchases (purchases due to operational
constraints, not associated with drought), and transmission costs. The
Base revenue requirement is $51.2 million.
[GRAPHIC] [TIFF OMITTED] TN18DE09.423
Drought Adder: A formula-based revenue requirement that includes
future purchase power expense in excess of timing purchases, 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 first full billing period beginning on or after January 1, 2010,
the Drought Adder revenue requirement is $33.3 million.
[GRAPHIC] [TIFF OMITTED] TN18DE09.424
Process:
Any proposed change to the Base component will require a public
process. The Drought Adder component may be adjusted annually using the
above formulas 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 95-percent leading.
[FR Doc. E9-30147 Filed 12-17-09; 8:45 am]
BILLING CODE 6450-01-P
