Boulder Canyon Project-Rate Order No. WAPA-171, 44098-44100 [2015-18237]

Agencies

• DEPARTMENT OF ENERGY
• Western Area Power Administration

[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44098-44100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18237]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project-Rate Order No. WAPA-171

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Extension of Existing Rate-setting Formula and 
Approval of Fiscal Year (FY) 2016 Base Charge and Rates.

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SUMMARY: This action extends the existing Boulder Canyon Project (BCP) 
rate-setting formula through September 30, 2020, and approves the base 
charge and rates for FY 2016. The existing Electric Service Rate 
Schedule, BCP-F8, is set to expire on September 30, 2015. The Electric 
Service Rate Schedule contains a rate-setting formula that is 
recalculated annually based on updated financial and sales data.

DATES: The first day of the first full billing period beginning on or 
after October 1, 2015, and extending through September 30, 2020, or 
until superseded by another rate schedule, whichever occurs earlier.

FOR FURTHER INFORMATION CONTACT: Mr. Ronald E. Moulton, Regional 
Manager, Desert Southwest Customer Service Region, Western Area Power 
Administration, P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 605-2453, 
email moulton@wapa.gov, or Mr. Jack Murray, Rates Manager, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 605-2442, email 
jmurray@wapa.gov.

SUPPLEMENTARY INFORMATION: The existing Rate Schedule BCP-F8 under Rate 
Order No. WAPA-150\1\ was approved for a five-year period beginning on 
October 1, 2010, and ending September 30, 2015.
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    \1\ FERC confirmed and approved Rate Order No. WAPA-150 on 
December 9, 2010, in Docket No. EF10-7-000, See United States 
Department of Energy, Western Area Power Administration, Boulder 
Canyon Project, 133 FERC ] 62,229 (December 9, 2010).
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    Western proposed extending the existing rate-setting formula 
pursuant to 10 CFR part 903.23(a), Formula Rate Schedule BCP-F9 under 
Rate Order No. WAPA-171. The notice of proposed extension was published 
in the Federal Register on February 9, 2015 (80 FR 6955). As allowed by 
10 CFR part 903.23(a), Western held a public information forum and 
public comment forum. The consultation and comment period ended May 11, 
2015. All comments received during the comment period were considered 
in the development of the final rates.
    By Delegation Order No. 00-037.00A, effective October 25, 2013, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to the Administrator of Western Area Power 
Administration (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 (FERC).
    Following review of Western's proposal within the Department of 
Energy, I hereby approve Rate Order No. WAPA-171, which extends the 
existing rate-setting formula through September 30, 2020, and approves 
the proposed BCP electric service base charge and rates for FY 2016. 
Rate Order No. WAPA-171 will be submitted to FERC for confirmation and 
approval on a final basis.

    Dated: July 17, 2015.
Elizabeth Sherwood-Randall,
Deputy Secretary.GPO Follow Lit

DEPARTMENT OF ENERGY

DEPUTY SECRETARY

    In the matter of:
Western Area Power Administration, Rate Extension for the Boulder 
Canyon Project, Electric Service Formula Rate Schedule

Rate Order No. WAPA-171

ORDER CONFIRMING AND APPROVING AN EXTENSION OF THE BOULDER CANYON 
PROJECT ELECTRIC SERVICE RATE-SETTING FORMULA AND FY 2016 BASE CHARGE 
AND RATES FORMULA RATE SCHEDULE

    These rates 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 (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 other acts that specifically apply 
to the project involved.
    By Delegation Order No. 00-037.00A, effective October 25, 2013, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to the Administrator of Western Area Power 
Administration (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 (FERC). This 
extension is issued pursuant to the Delegation Order and DOE rate 
extension procedures at 10 CFR part 903.23(a).

BACKGROUND

    On December 9, 2010, in Docket No. EF10-7-000 at 133 FERC ] 62,229, 
FERC issued an order confirming, approving and placing into effect on a 
final basis Electric Service Rate Schedule BCP-F8 for the Boulder 
Canyon Project (BCP). Electric Service Rate Schedule BCP-F8, Rate Order 
No. WAPA-150, was approved for five years beginning October 1, 2010 
through September 30, 2015.
    Western followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions set forth in 10 CFR 
part 903.23(a) in extending the BCP rate-setting formula through 
September 30, 2020, and setting the new base charge and rates for 
Fiscal Year (FY) 2016. The steps Western took to involve interested 
parties in the rate process were:
    1. On February 9, 2015, Western published a notice in the Federal 
Register (80 FR 6955) announcing the extension of the rate-setting 
formula and the proposed base charge and rates for BCP. Publication of 
this notice initiated the public consultation and comment period, and 
announced the public information and public comment forums. Western 
also announced the public forum dates and posted the BCP rate 
adjustment at https://www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.
    2. On March 11, 2015, Western hosted an informal customer meeting 
in Phoenix, Arizona. At this informal

[[Page 44099]]

meeting, Western explained the rationale for the adjustment in the 
proposed base charge and rates, and answered questions. Contractors 
were notified of the informal meeting at the BCP Engineering and 
Operating Committee meetings in October 2014 and January 2015.
    3. On April 1, 2015, Western held a public information forum at the 
Desert Southwest Regional Office in Phoenix, Arizona. Western provided 
detailed explanations of the proposed base charge and rates for BCP, 
and answered questions. Western provided a copy of the rate 
presentation, supporting documentation, and informational handouts.
    4. On April 29, 2015, Western held a comment forum to give the 
public an opportunity to comment for the record. Individuals 
representing multiple entities commented at this forum.
    5. Western received two comment letters during the consultation and 
comment period, which ended May 11, 2015. All comments have been 
considered in preparing this Rate Order.
    Comments:
    Written comments were received from the following organizations: 
Metropolitan Water District of Southern California, California 
Irrigation & Electrical Districts Association of Arizona, Arizona
    The comments and responses regarding the electric service base 
charge and rates, paraphrased for brevity when not affecting the 
meaning of the statement(s), are discussed below. Direct quotes from 
comment letters are used for clarification, where necessary.
    Comment: Commenters expressed concern that many BCP Contractors, 
who will be new as of October 1, 2017, are not familiar with Western's 
existing rate-setting formula methodology. Western should consider 
reaching out to these new Contractors prior to October 1, 2017, and 
educate them on the methodology or, alternatively, alter the length of 
this proposed extension period so a new rate period will begin with the 
FY 2018 rate and base charge adjustment process.
    Response: Western has been providing outreach and education 
opportunities to the new BCP Contractors through the Post-2017 
remarketing and new electric service contracts negotiation processes. 
In addition, under the BCP Implementation Agreement, Western submits 
BCP rates to the Deputy Secretary of Energy for approval each year and 
with the proposed extension, the new Contractors will have an 
opportunity to participate and be educated in the annual rate process 
through informal customer meetings, as well as formal public 
information and comment forums.
    Comment: The BCP Contractors have proposed a joint audit paid for 
by the contractors with funds from prior year carryover. This joint 
audit would be completed prior to the termination of the Hoover 
Electric Service Contracts.
    Response: Western and Reclamation support the proposal of a joint 
audit prior to the termination of the existing Hoover Electric Service 
Contracts. Western and Reclamation also support the Contractors' 
proposal to fund the audit costs by reducing prior year carryover which 
effectively increases the FY 2016 base charge.
    Comment: Contractors expressed their support for extending the 
existing rate-setting formula methodology and approval of the base 
charge and rates for FY 2016.
    Response: Western appreciates the contractors expressing its 
support with the extension of the existing rate-setting formula 
methodology and calculation of the base charge and rates for FY 2016.

DISCUSSION

    On September 30, 2015, the BCP Electric Service Rate Schedule BCP-
F8 will expire. This makes it necessary to extend the existing rate-
setting formula and approve the FY 2016 Base Charge and Rates. With 
this approval, the existing rate-setting formula under Rate Schedule 
BCP-F9 will be extended under Rate Order No. WAPA-171.
    The existing electric service rate-setting formula provides 
adequate revenue to pay all annual costs, including interest expense, 
and to repay investment within the cost recovery criteria as set forth 
in DOE Order RA 6120.2. Rate Order No. WAPA-171 extends the existing 
rate-setting formula through September 30, 2020, thereby continuing to 
ensure project repayment within the cost recovery criteria.
    The existing base charge for FY 2015 is $61,008,518, the composite 
rate is 16.28 mills/kWh, the energy rate is 8.14 mills/kwh, and 
capacity rate is $1.61/kW/month.
    The BCP increase in the electric service base charge and rates for 
FY 2016 is driven by three factors: 1) an increase of approximately $2 
million in annual expenses, primarily estimated replacements and 
visitor center costs, and principal payments for uprating program and 
capitalized investments from FY 2015 to FY 2016; 2) a $1.5 million 
reduction in projected carryover between FY 2015 and FY 2016; and 3) a 
projected increase of $750K in other revenues, which acts as an offset 
to total expenses. The proposed base charge for FY 2016 is $63,735,856, 
composite rate is 18.33 mills/kWh, energy rate is 9.17 mills/kWh, and 
capacity rate is $1.72/kW/month. While there is an increase between FY 
2015 and FY 2016, Western notes the base charge and rates for FY 2015 
were artificially reduced due to actions taken by Contractors in FY 
2014 and issues faced by Reclamation. During FY 2014, the BCP 
Contractors refinanced the highest interest rate debt on the visitor 
facilities and air slots investments, effectively eliminating them as a 
cost in the power repayment study. This transaction had the effect of 
increasing carryover by approximately $5 million at the end of FY 2014, 
and decreasing the base charge for FY 2015. At the same time, due to 
budget sequestration issues at the end of FY 2013, expenses at the end 
of FY 2013 were much lower than expected. The final results, received 
in mid-FY 2014, also served to increase the amount of carryover 
available to apply against the base charge and rates for FY 2015.

AVAILABILITY OF INFORMATION

    Information about this extension and adjustment of electric service 
base charge and rates, including power repayment studies, comments, 
letters, memoranda, and other supporting material made or kept by 
Western to develop the provisional base charge and rates, is available 
for public review in the Desert Southwest Customer Service Regional 
Office, Western Area Power Administration, 615 South 43 Avenue, 
Phoenix, Arizona.
    Dated: July 17, 2015
    Elizabeth Sherwood-Randall
    Deputy Secretary
    Formula Rate Schedule BCP-F9
    (Supersedes Schedule BCP-F8)

UNITED STATES DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION

Boulder Canyon Project Desert Southwest Customer Service Region

SCHEDULE OF RATES FOR ELECTRIC SERVICE

Effective:

    The first day of the first full billing period beginning on or 
after October 1, 2015, and extending through September 30, 2020, or 
until superseded by another rate schedule, whichever occurs earlier.

Available:

    In the marketing area serviced by the Boulder Canyon Project (BCP).

Applicable:

    To power Contractors served by the BCP supplied through one meter, 
at one

[[Page 44100]]

point of delivery, unless otherwise provided by contract.

Character and Conditions of Service:

    Alternating current at 60 hertz, three-phase, delivered and metered 
at the voltages and points established by contract.

Base Charge:

    The total charge paid by a Contractor for annual capacity and 
energy based on the annual revenue requirement. The base charge shall 
be composed of an energy component and a capacity component:
    ENERGY CHARGE: Each Contractor shall be billed monthly an energy 
charge equal to the rate year energy dollar multiplied by the 
Contractor's firm energy percentage multiplied by the Contractor's 
monthly energy ratio as provided by contract.
    CAPACITY CHARGE: Each Contractor shall be billed monthly a capacity 
charge equal to the rate year capacity dollar divided by 12 multiplied 
by the Contractor's contingent capacity percentage as provided by 
contract.

Forecast Rates:

    ENERGY: Shall be equal to the rate year energy dollar divided by 
the lesser of the total master schedule energy or 4,501.001 million 
kWhs. This rate is to be applied for use of excess energy, unauthorized 
overruns, and water pump energy.
    CAPACITY: Shall be equal to the rate year capacity dollar divided 
by 1,951,000 kWs, to be applied for use of unauthorized overruns.

Calculated Energy Rate:

    Within 90 days after the end of each rate year, a calculated energy 
rate shall be calculated. If the energy deemed delivered is greater 
than 4,501.001 million kWhs, then the calculated energy rate shall be 
applied to each Contractor's energy deemed delivered. A credit or debit 
shall be established based on the difference between the Contractor's 
energy dollar and the Contractor's actual energy charge, to be applied 
the following month or as soon as possible thereafter.

Lower Basin Development Fund Contribution Charge:

    The contribution charge is 4.5 mills/kWh for each kWh measured or 
scheduled to an Arizona purchaser and 2.5 mills/kWh for each kWh 
measured or scheduled to a California or Nevada purchaser, except for 
purchased power.

Billing for Unauthorized Overruns:

    For each billing period in which there is a contract violation 
involving an unauthorized overrun of the contractual power obligations, 
such overrun shall be billed at 10 times the forecast energy rate and 
forecast capacity rate. The contribution charge shall also be applied 
to each kWh of overrun.

Adjustments:

    None.

ORDER

    In view of the foregoing and under the authority delegated to me, I 
hereby extend from October 1, 2015, through September 30, 2020, the 
existing BCP rate-setting formula and approve the base charge and rates 
for FY 2016, on an interim basis for the BCP. Formula Rate Schedule 
BCP-F9 shall remain in effect on an interim basis, pending FERC 
confirmation and approval of this extension or substitute rates on a 
final basis through September 30, 2020.

    Dated: July 17, 2015
Elizabeth Sherwood-Randall,
Deputy Secretary.
[FR Doc. 2015-18237 Filed 7-23-15; 8:45 am]
 BILLING CODE 6450-01-P