Final 2028 Parker-Davis Project Power Marketing Plan and Call for Resource Pool Applications, 88999-89011 [2024-26162]

Agencies

• DEPARTMENT OF ENERGY
• Western Area Power Administration

[Federal Register Volume 89, Number 218 (Tuesday, November 12, 2024)]
[Notices]
[Pages 88999-89011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26162]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Final 2028 Parker-Davis Project Power Marketing Plan and Call for 
Resource Pool Applications

AGENCY: Western Area Power Administration, Department of Energy (DOE).

ACTION: Notice of final plan and call for resource pool applications.

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SUMMARY: The Department of Energy (DOE), Western Area Power 
Administration (WAPA), Desert Southwest Region (DSW), announces its 
Final 2028 Parker-Davis Project (P-DP) Power Marketing Plan (Final 2028 
Plan) and issues a Call for Resource Pool Applications. This notice 
responds to comments received on the Proposed 2028 P-DP Power Marketing 
Plan (Proposed 2028 Plan). The Final 2028 Plan specifies the terms and 
conditions under which WAPA will market power from P-DP from October 1, 
2028, through September 30, 2048. WAPA will offer new contracts for the 
sale of power to existing contractors and create a resource pool for 
potential new applicants. Entities who wish to apply for a new 
allocation of power from WAPA, and who meet the criteria defined in the 
Final 2028 Plan, must submit a formal application using the Applicant 
Profile Data (APD) form and must meet the Eligibility Criteria and 
Allocation Criteria described herein. The General Criteria and Contract 
Principles set forth in the Final 2028 Plan will apply to new allottees 
and existing contractors. This Final 2028 Plan supersedes all previous 
marketing plans for P-DP.

DATES: The Final 2028 Plan will become effective December 12, 2024 to 
make power allocations and complete the other processes necessary to 
begin providing service on October 1, 2028. Resource pool applications 
must be received on or before 5:00 p.m., Mountain Standard Time (MST), 
on January 31, 2025. WAPA will accept applications using the APD form 
by email or by certified mail (or its equivalent). Applications sent by 
regular mail will be accepted if postmarked before January 31, 2025, 
and received no later than February 5, 2025. WAPA will not consider 
applications unless they are received by the prescribed dates.

ADDRESSES: Preference entities interested in applying for an allocation 
of WAPA power may complete the APD form available at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/ and mail the signed 
and dated APD form to Ms. Jennifer Henn, Power Marketing Advisor, 
Desert Southwest Region, Western Area Power Administration, P.O. Box 
6457, Phoenix, AZ 85005-6457. APD application forms with an electronic 
signature (e-signature) may be emailed to [email protected]. If 
an electronic signature is not available, the signed APD form may be 
scanned and emailed to the address above, faxed to (602) 605-4663, or 
mailed it to the address above. All APD forms must be received by WAPA 
within the time required in the DATES section, herein. WAPA will 
publish a notice of Proposed 2028 Allocations in the Federal Register 
after evaluating all applications.

FOR FURTHER INFORMATION CONTACT: Jennifer Henn, Power Marketing 
Advisor, Desert Southwest Region, Western Area Power Administration, 
(602) 605-2572 or email: [email protected]. Information on 
development of the Final 2028 Plan can be found at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.

SUPPLEMENTARY INFORMATION:

Development of the Final 2028 Plan

    P-DP power facilities include Davis Dam, with its current total 
operating capacity of 255,000 kilowatts (kW) for P-DP and expected 
increase of approximately 3,750 kW from the rewind of Unit 3, and 
Parker Dam, with 60,000 kW of operating capacity allotted to P-DP and 
60,000 kW allotted to Metropolitan Water District of Southern 
California. Both dams are owned and operated by the Bureau of 
Reclamation (Reclamation). WAPA owns and operates approximately 1,500 
miles of high voltage transmission lines and 45 substations throughout 
Arizona, California, and Nevada to facilitate delivery of P-DP power in 
those three states.
    On September 30, 2028, WAPA's existing long-term sales contracts 
for P-DP power will expire. WAPA began developing the Final 2028 Plan 
with a series of informal public information meetings for existing and 
new potential contractors. These meetings helped

[[Page 89000]]

WAPA identify pertinent issues to address in the Proposed 2028 Plan. 
WAPA subsequently published its Proposed 2028 Plan (1) to define the 
products and services WAPA will offer, and (2) to determine the 
criteria for marketing and allocating power from October 1, 2028, 
through September 30, 2048 (89 FR 43841). WAPA held a public 
information forum on June 20, 2024, to present the Proposed 2028 Plan 
and answer questions. On July 19, 2024, WAPA held a public comment 
forum to receive verbal comments. WAPA accepted written comments from 
the public through the end of the consultation and comment period on 
August 19, 2024. This notice sets forth WAPA's Final 2028 Plan and 
responds to comments received on the Proposed 2028 Plan.
    Based on comments received, WAPA will: (1) apply the Energy 
Planning and Management Program (EPAMP) Power Marketing Initiative 
(PMI) regulations, set forth at 10 CFR 905.30 through 10 CFR 905.37, to 
the P-DP remarketing effort; (2) extend 98 percent of marketable 
capacity to existing contractors for a term of 20 years; and (3) use 
the remaining two percent of marketable capacity for the creation of a 
resource pool. WAPA will make allocations from the resource pool to 
eligible preference contractors using the Eligibility Criteria and 
Allocation Criteria for Resource Pool Allocations described in this 
notice and under the Final 2028 Plan. The Final 2028 Plan also sets 
forth General Criteria and Contract Principles that will apply to new 
allottees and existing contractors. This Final 2028 Plan supersedes all 
previous marketing plans for this project.

Responses to Comments Received on the Notice of Proposed Plan

    During the public consultation and comment period, WAPA received 
nine letters commenting on the Proposed 2028 Plan. The letters are 
available on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/. Six contractors and interested stakeholder 
representatives commented during the July 19, 2024, public comment 
forum. Transcripts from the public meetings are also available on 
WAPA's website. In addition, multiple parties requested clarification 
on the Proposed 2028 Plan during the 90-day public consultation and 
comment period. WAPA provided clarifying responses to these questions 
during the consultation and comment period. These responses remain 
available on WAPA's website at the address above and are not included 
below.
    The following is a summary of the comments received during the 
consultation and comment period, and WAPA's responses to those 
comments. Comments are grouped by subject and paraphrased for brevity.

I. Marketing Plan Term

    Comment: Two commenters supported the 20-year contract term for the 
forthcoming marketing period. WAPA received no comments objecting to 
the 20-year term.
    Response: WAPA appreciates the support. The Final 2028 Plan 
provides for the marketing of P-DP power from October 1, 2028, through 
September 30, 2048.

II. Products and Services--Quarterly Energy

    Background: WAPA proposed to offer energy amounts for three-month 
periods (``Quarterly Energy'') based on Reclamation's 24-month 
generation projection studies (``24-Month Study''), which are released 
every month.
    Comment: Three commenters generally supported WAPA's proposed 
operational changes in response to challenging hydrology and WAPA's 
efforts to reduce purchase power activities, as such activities had led 
to accumulated deficits.
    Response: WAPA appreciates the support to change the energy 
delivery methodology. The Final 2028 Plan will align energy deliveries 
with actual hydropower generation, thereby decreasing the amount of 
energy WAPA will have to purchase, reducing financial burdens on 
contractors, and promoting rate stability.
    Comment: Two commenters recommended WAPA consider leaving the 
majority of the details concerning the implementation of the new 
operational strategy, such as the final process and operational changes 
related to estimating, committing, and scheduling the hydropower 
resource, in the contract and Metering and Scheduling Instructions 
(MSI), rather than including these details in the Final 2028 Plan to 
allow the most flexibility to amend agreements as conditions change.
    Response: WAPA agrees more detailed terms and conditions regarding 
Quarterly Energy, Optional Energy, Excess Energy, changes to generation 
forecasts, minimum scheduling requirements, and other products or 
services will be addressed, as appropriate, in electric service 
contracts or MSI, which will be incorporated into such contracts as an 
attachment. WAPA has added additional language to the Final 2028 Plan 
to align with this recommendation.
    Comment: One commenter expressed concern that WAPA is adopting a 
Quarterly Energy methodology while simultaneously creating a new 
resource pool. The commenter further stated that creating a Quarterly 
Energy methodology admits that the P-DP resource cannot sustain the 
energy deliveries associated with the allocated capacity.
    Response: P-DP's fixed contractual obligation methodology for 
energy delivery imposed financial burdens on contractors in the 
existing marketing period. As a result, existing contractors have 
experienced increased P-DP power rates and incurred deficits for 
purchase power and wheeling (PPW) expenses. WAPA developed the Final 
2028 Plan to provide energy deliveries based on actual generation and 
to reduce such deficits. WAPA believes the Final 2028 Plan constitutes 
a balanced approach between maximizing the ongoing value of the P-DP 
resource to existing contractors and encouraging widespread use with a 
two-percent resource pool.
    Comment: One commenter noted that aligning P-DP energy deliveries 
with the July 2024, 24-Month Study would have resulted in a 17 percent 
megawatt hour (MWh) average potential reduction over a 12-month period, 
with the largest reductions occurring during the highest demand and 
highest price summer peaking months. This commenter requested that WAPA 
develop a policy to support full availability of P-DP generation 
capacity during summer from 3-10 p.m. MST when demand is at its highest 
and solar resources are waning. The commenter also requested 
operational measures to make generation available during system 
emergencies or forecasted peak days so that WAPA may have substantial 
operational flexibility to support regional reliability.
    Response: Thank you for this recommendation. WAPA and Reclamation 
already collaborate to optimize P-DP generation. WAPA will continue 
those efforts and will approach Reclamation about options to further 
optimize the resource.
    Additionally, the Final 2028 Plan provides for Optional Energy in 
which a contractor may elect for WAPA to purchase energy on behalf of 
the contractor to supplement available P-DP energy, up to the 
contractor's Contract Rate of Delivery (CROD). This product may help 
contractors meet their energy requirements during high demand hours.

[[Page 89001]]

    Comment: One commenter expressed concern that Quarterly Energy will 
affect existing metering and scheduling instructions with its 
scheduling agent. This entity requested WAPA coordinate with its 
scheduling agent to ensure any energy delivery changes meet with the 
agent's approval.
    Response: A contractor's entitlement to Quarterly Energy will not 
be contingent upon approval of a scheduling agent. WAPA is willing to 
work with the scheduling agent for this contractor, and other 
contractors as requested, to coordinate Quarterly Energy deliveries.
    Comment: Comments expressed support for structuring the P-DP 
contract more like WAPA's Colorado River Storage Project (CRSP) 
contracts, with a small replacement power budget to help control future 
rates. The commenters strongly supported these changes, as they will 
help mitigate the rate impacts contractors are seeing with the 
reduction of generation at the dams.
    Response: WAPA appreciates the support. Aligning energy deliveries 
with forecasted generation will mitigate rate impacts and significantly 
reduce the P-DP purchase power costs.

III. Products and Services--Optional Energy

    Comment: One commenter supported the concept of Optional Energy and 
requested that WAPA develop a plan to meet the commenter's requirements 
using Optional Energy while minimizing energy purchase costs.
    Response: WAPA appreciates the support. WAPA will work with the 
contractor to provide assistance as requested.

IV. Products and Services--Contractor Use of Transmission

    Background: WAPA will allow contractors to use transmission 
capacity, reserved for delivery of their P-DP firm electric service 
(FES) allocation, for contractor-owned or contractor-purchased 
resources. Transmission capacity used for such energy must not exceed a 
contractor's CROD. As clarified during the public information forum, 
usage of transmission capacity will be comparable to service under 
WAPA's Open Access Transmission Tariff (OATT).
    Comment: Three commenters supported WAPA's transmission proposal, 
with one commenter stating that the use of transmission up to CROD is 
consistent with the use of transmission facilities in other marketing 
areas.
    Response: WAPA appreciates the support.
    Comment: One commenter noted that reference to WAPA's OATT suggests 
divergency from WAPA's traditional practice of pairing an allocation of 
power with firm transmission rights over WAPA transmission facilities 
for the delivery of power. WAPA was asked to clarify that such 
transmission rights remain tied to the allocation and are not 
severable. Furthermore, the commenter stated the allusion to WAPA's 
OATT should be clarified to state that firm power customers are not 
required to separately reserve transmission pursuant to WAPA's OATT. 
The commenter stated that while WAPA may market transmission capacity 
excess for the mission of delivering preference power pursuant to the 
terms and conditions set forth in its safe harbor OATT, the use of 
transmission capacity associated with the P-DP allocation should remain 
within WAPA's organic authorities and outside the purview of the 
Federal Energy Regulatory Commission.
    Response: WAPA will continue to utilize existing transmission 
capacity to deliver energy associated with a contractor's P-DP 
allocation. Under the Final 2028 Plan, transmission capacity not used 
by WAPA to deliver a contractor's P-DP allocation will be made 
available for contractors to deliver contractor-owned or contractor-
purchased resources. Contractors will not be required to separately 
reserve transmission to deliver P-DP energy. When a contractor requests 
transmission service for contractor-owned or contractor-purchased 
resources on a transmission path other than that reserved for delivery 
of P-DP energy, WAPA will study the transmission system to determine 
availability, comparable to the OATT process for redirecting point-to-
point transmission rights.
    Comment: A commenter stated that WAPA's decision to create a new 
resource pool should be delayed until contractors fully understand the 
impact of how the transmission rights up to CROD are delineated and 
understood by the contractors.
    Response: Transmission capacity used for delivery of contractor-
owned or contractor-purchased resources must not exceed a contractor's 
CROD, regardless of the creation of a resource pool.

V. Application of PMI and Creation of Resource Pool

    Background: WAPA proposed to apply the principles of the PMI (10 
CFR 905.30-905.37) to P-DP for the forthcoming marketing period. This 
included a proposal to extend 98 percent of P-DP marketable capacity to 
existing contractors' CROD and creation of a single, one-time, two-
percent resource pool of marketable capacity for new allottees.
    Comment: Eight entities provided comments on this proposal. One 
entity supported the proposal to encourage widespread use. One entity 
requested a larger resource pool. Two entities opposed creating a 
resource pool at this time. Four entities preferred no resource pool 
but supported the small two-percent resource pool to accommodate 
widespread use. Two of these entities specifically supported WAPA's 
application of the PMI principles to ensure current contractors 
continue to receive a substantial amount of their resource. One entity 
noted its preference that WAPA not create a resource pool, but stated 
WAPA's proposal of a small, one-time, resource pool appears to be a 
reasonable compromise to ensure that existing contractors continue to 
receive most of their existing resources.
    Response: WAPA appreciates the feedback.
    Comment: One entity opposed using PMI principles because of the 
significant reduction WAPA is proposing for energy deliveries, along 
with the impact the capacity reduction may have on this entity's 
current crediting arrangement.
    Response: Application of PMI provides WAPA with a framework for 
extending a significant portion of existing marketable capacity to 
existing contractors while also encouraging widespread use. Entities 
without a Federal hydropower allocation may exist within the P-DP 
marketing area, and WAPA intends to provide those entities with an 
opportunity to apply.
    The two-percent resource pool will be largely offset by the 
anticipated addition of capacity from the Davis Dam Unit 3 rewind. 
Creating a resource pool during drought conditions further reduces 
energy deliveries to existing contractors. For that reason, WAPA 
determined to establish a modest resource pool.
    WAPA has decided to apply the PMI formula to extend existing 
contractors' allocation for the Final 2028 Plan consistent with the 
Proposed 2028 Plan. WAPA recognizes the impact of reducing allocations 
for existing Tribal contractors with benefit crediting arrangements and 
is willing to coordinate with scheduling agents, as requested by 
contractors.
    Comment: One commenter opposed reducing existing allocations and 
recommended creating the resource pool from the additional capacity 
expected from the rewind of Davis Dam Unit 3 to preserve existing 
allocations.

[[Page 89002]]

The commenter further stated that WAPA markets power consistent with 
sound business principles and therefore must weigh the benefit of 
creating small allocations (one kW) versus the cost that may be 
incurred if existing crediting arrangements are impacted by the 
withdrawal.
    Response: WAPA appreciates the alternative idea. However, WAPA 
believes that the PMI formula, established through an extensive public 
process and commonly applied by WAPA in marketing plans across its 
territory, remains an effective methodology in the context of P-DP. 
WAPA recognizes the impact of reducing allocations for existing 
contractors with benefit crediting arrangements and is willing to 
coordinate with scheduling agents, as requested by contractors.
    WAPA recognizes that small allocations may not be cost effective 
for every potential new contractor because associated energy is 
currently less than optimal. Each potential contractor will need to 
evaluate the cost effectiveness of the resource before entering into a 
contract with WAPA.
    WAPA believes its decision to apply PMI and the other components of 
its Final 2028 Plan are in accordance with its statutory obligation to 
offer the lowest possible rates consistent with sound business 
principles.
    Comment: A commenter that is not an existing P-DP contractor, but 
is located in the P-DP marketing area, requested that the resource pool 
be formed from a larger percentage of current allocations because if 
numerous or large preference entities apply, it would create an 
inequity between earlier applying parties who would keep 98 percent of 
their allocations, and later applying preference entities who would 
have to share two percent of the project's surplus power.
    Response: WAPA interprets this commenter's reference to ``surplus 
power'' to mean marketable resource from the resource pool. WAPA is 
sensitive to the current hydrological conditions that exist in the 
Colorado River Basin. Under the existing P-DP marketing plan, energy 
allocations are a fixed seasonal amount for the length of contracts, 
regardless of hydroelectric generation (49 FR 50582, 50587; 68 FR 
23709). Due to challenging hydrological conditions in the Colorado 
River Basin, this methodology imposed financial burdens on existing 
contractors during the current marketing period, as WAPA has been 
required to purchase significant amounts of power to meet contractors' 
firm energy requirements. For the Final 2028 Plan, WAPA will eliminate 
this methodology and instead offer energy amounts based on 
hydroelectric generation forecasts. A WAPA analysis using Reclamation's 
July 2024, 24-Month Study showed an approximate 17 percent reduction to 
energy deliveries to existing contractors over a 12-month period, with 
an even greater impact in the summer months when energy in the 
Southwest is needed most. This analysis was included in WAPA's 
responses to clarifying questions and can be found on WAPA's website at 
https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.
    WAPA had to find a balance between encouraging widespread use and 
providing valuable energy deliveries. The two-percent resource pool 
would be largely offset by an anticipated increase in capacity 
resulting from the rewind of Davis Dam Unit 3. However, that additional 
capacity will not increase energy deliveries during current 
hydrological conditions. Because WAPA is sensitive to concerns over 
challenging hydrological conditions and reduced energy deliveries, it 
is extending 98 percent of marketable capacity to existing contractors 
in the Final 2028 Plan. WAPA believes a modest, two-percent resource 
pool is still a reasonable means of encouraging widespread use.
    Comment: One commenter opposed the creation of a resource pool 
stating that with the loss of roughly 25 percent of energy deliveries 
since the execution of the last contracts, there is little additional 
energy for a new resource pool. The commenter stated the impacts to the 
creation of a new resource pool need to be assessed, and further stated 
that WAPA is asking existing contractors to make additional sacrifices 
at a point in time in which DSW has been unable to meet the CROD. The 
commenter stated that although WAPA indicates that capacity allocations 
for new contractors will be made from new capacity associated with a 
turbine rewind, there is an absence of associated energy for a new 
allocation.
    Response: WAPA concurs that challenging hydrological conditions 
have reduced the energy output of P-DP generators since 2008. To 
clarify the comment, during the current marketing period, as P-DP 
energy production decreased, WAPA maintained CROD and associated energy 
through market purchases. As a result, existing contractors experienced 
rate increases, but no decrease in energy deliveries. As part of the 
Final 2028 Plan, contractors will be entitled to energy deliveries 
based on their pro rata share of projected hydrogeneration. WAPA 
recognizes the two-percent resource pool impacts existing contractors' 
CROD and resulting energy delivery. WAPA balanced the marketing of a 
limited and valuable resource with its obligation to encourage 
widespread use of the Federal resource. Given recent hydrology, and 
knowing that potential new contractors may exist, WAPA has decided to 
create a modest, two-percent resource pool, which some commenters have 
indicated is small. Marketable capacity is expected to increase with 
the addition of approximately 3,750 kW from the Davis Dam Unit 3 
rewind, which will largely offset the capacity set aside for the 
resource pool. Energy deliveries are directly attributable to water 
releases and are constrained by the current hydrological conditions. 
WAPA assessed the impacts of creating a resource pool, along with 
changes using the Quarterly Energy methodology. The results are posted 
on WAPA's website as part of its responses to clarifying questions and 
show potential P-DP Quarterly Energy projections by contractor, 
including with the two-percent resource pool, using July 2024, 24-Month 
Study data.
    Comment: A commenter opposed creation of the resource pool at this 
time because it argued that adopting the Quarterly Energy methodology 
while simultaneously proposing a new resource pool presents a conflict. 
According to the commenter, the creation of a Quarterly Energy 
methodology admits that the P-DP resource cannot sustain the energy 
deliveries associated with the allocated capacity.
    Response: Given challenging hydrology, WAPA designed the Quarterly 
Energy product to achieve alignment with actual generation and to 
address the significant costs of purchase power. WAPA chose a modest 
resource pool size to reflect the reduction in hydrogeneration while 
encouraging widespread use.
    Comment: A commenter explained it opposes creation of a resource 
pool based on WAPA eliminating the current off peak requirements and 
instead requiring minimum schedule requirements to coincide with water 
deliveries. The commenter stated this could lead to purchases at times 
when the resource is out of the market and at a point in time when it 
would not be as economic to the contractors to receive the power. With 
potential loss of value against the decision to create a new resource 
pool, this commenter suggested that WAPA refrain from creating the new 
resource pool until the actual impacts associated with the new 
scheduling regime have been disclosed and discussed with the 
contractors.

[[Page 89003]]

    Response: WAPA does not believe there is a direct correlation 
between the decision to establish a resource pool and minimum 
scheduling requirements. Furthermore, it is not feasible to delay the 
resource pool determination.
    WAPA is developing a tool to optimize scheduling requirements to 
reduce WAPA's purchase power requirements and minimize energy sales in 
low load hours. The tool will create minimum requirements that are 
based on actual limitations around the resource. The process to develop 
the tool will take time, but WAPA believes having a collaborative 
approach and providing contractors the opportunity to help shape the 
results will provide the best possible outcome. Prior to the execution 
of contracts for the 2028-2048 marketing period, WAPA will provide 
examples of methods being considered, seek feedback from existing 
contractors and potential new allottees, and select which option 
provides the greatest flexibility and achieves the goals identified in 
the Final 2028 Plan. Minimum scheduling requirements will be included 
in the MSI.
    Comment: A commenter opposed creation of a resource pool because if 
WAPA is eliminating the scheduling flexibility and requiring 
contractors to purchase power at times when it is not economic, WAPA is 
not following its principle to set rates at the lowest possible rate 
consistent with sound business principles. The commenter states WAPA is 
allocating capacity, resources, and energy to new contractors at a time 
when WAPA does not have the full resources to meet contract rates of 
delivery, thus creating a situation in which existing allottees are 
being deprived of the value of the resource. To the extent that WAPA 
reduces energy allocations, the commenter stated contractors with 
longstanding allocations are forced to seek higher-cost replacement 
energy, and the record to date does not explain how promoting 
widespread use ensures that the power is sold at the lowest possible 
cost. The commenter also stated that the Federal Register notice fails 
to reconcile this proposed departure from the longstanding policy of 
keeping rates as low as possible, consistent with sound business 
principles, with an increased dilution of the resource under the guise 
of promoting widespread use of the power.
    Response: WAPA believes that by changing the minimum scheduling 
requirements and developing the Quarterly Energy product, WAPA will be 
marketing power in alignment with its obligation to provide the lowest 
possible rates consistent with sound business principles, especially 
given the challenging hydrological conditions in the Colorado River 
Basin and the agency's obligation to encourage widespread use. 
Extending the benefit of Federal hydropower to new potential 
contractors who do not have an existing Federal hydropower allocation 
encourages widespread use with minimal impact to WAPA's rates.
    Comment: A commenter provided further reasoning for opposing the 
resource pool at this time because there needs to be an understanding 
in terms of the flexibility of the transmission rights up to CROD, and 
decisions on creating a new resource pool should also be held until the 
customers fully understand the impact of how the transmission rights up 
to CROD are delineated and understood by the customers.
    Response: WAPA has defined the transmission use it intends to 
provide to contractors. WAPA discerns no reason to delay its 
determination to create a resource pool.
    Comment: A commenter noted that the impact from the creation of the 
resource pool is isolated to those contractors who are not Priority Use 
Power (PUP) contractors, and the new resource pool would not reduce 
capacity or energy deliveries to contractors who receive PUP. The 
commenter did not oppose any change to allocations for PUP or any 
change in those operations for PUP contractors.
    Response: A portion of P-DP capacity and energy is first reserved 
for PUP requirements and remaining marketable capacity is marketed by 
WAPA as FES. Therefore, PUP capacity and energy allocations will not be 
reduced with the creation of the resource pool as part of the Final 
2028 Plan.

VI. Eligibility Criteria for Resource Pool Allocations

    Background: Qualified applicants must not have an existing 
allocation of Federal power or be a member of a parent entity that has 
an allocation of Federal power.
    Comment: WAPA received comments in support of limiting resource 
pool eligibility to those who do not have other Federal hydropower 
allocations.
    Response: WAPA appreciates the support.
    Comment: WAPA received comments from three entities requesting that 
the eligibility criteria be changed to allow those with existing 
Boulder Canyon Project (BCP) and/or CRSP Federal hydropower allocations 
to be eligible for a P-DP allocation from the 2028 resource pool.
    Response: WAPA chose to create a two-percent resource pool at a 
time when drought is already reducing P-DP energy production. Existing 
contractors have experienced rate increases and PPW deficits because P-
DP generation could not meet contractual requirements. WAPA determined 
that limiting eligibility for resource pool allocations to those 
entities that do not already have a Federal power allocation is an 
appropriate means of encouraging widespread use, while the modest size 
of the resource pool also recognizes the strains on the P-DP resource 
and existing contractors.
    Comment: One commenter requested WAPA consider adjusting the 
proposed eligibility criteria language to ``Qualified applicants must 
not have a significant allocation of Federal power . . .'' to not 
disqualify small electric utilities that currently receive a small BCP 
Federal power allocation from being considered as a 2028 P-DP qualified 
applicant.
    Response: Given that Federal hydropower is a finite resource in the 
Southwest, WAPA considers all allocations to be beneficial and 
significant. In WAPA's view, determining a threshold at which an 
allocation is ``significant'' is not possible, and could not be 
accomplished in an equitable manner. WAPA's policy is to encourage 
widespread use of P-DP power at the lowest rates possible consistent 
with sound business principles. Adhering to the proposal to limit the 
resource pool eligibility to those entities without an existing Federal 
power allocation accomplishes both goals.
    Comment: A commenter noted that WAPA is proposing that its resource 
pool allocations be returned to existing contractors if enough new 
preference customers are not found. The commenter requested that WAPA 
should reconsider this option and allow for additional qualified 
applicants that may have a small share of existing Federal power 
resources to be considered in lieu of returning the unused allocation 
pool back to the existing P-DP contractors.
    Response: As discussed previously, WAPA considers all allocations 
to be beneficial and significant. WAPA created the two-percent resource 
pool to encourage widespread use at a time when it is experiencing 
challenging hydrological conditions. Granting resource pool allocations 
to entities that already have a Federal power allocation does not 
encourage widespread use to the same extent as making allocations to 
entities without an existing allocation. Returning the resource pool 
power to existing P-DP contractors if new

[[Page 89004]]

preference contractors are not found recognizes the resource strains on 
existing contractors. WAPA's decision is also consistent with the 
framework set forth in the PMI, which provides, ``[i]f power is 
reserved for new customers but not allocated, or resources are offered 
but not placed under contract, this power will be offered on a pro rata 
basis to customers that contributed to the resource pool through 
application of the extension formula in [10 CFR] 905.33.'' 10 CFR 
905.32(e)(1).
    Comment: One commenter asked if it is a new requirement that 
qualified applicants must not have an existing allocation of Federal 
power or be a member of a parent entity that has an allocation of 
Federal power. Two commenters noted that at least one of WAPA's current 
FES allocation contractors obtained Federal power from more than one 
Federal source. A commenter located in the P-DP marketing area with a 
CRSP allocation stated that this eligibility requirement seems to be an 
inequity and a bias against later applying preference customers, as 
well as a violation of the widespread use mandate.
    Response: WAPA's eligibility criterion is not new. The EPAMP Final 
Rule, published October 20, 1995, provided a framework for the 
marketing of power while also allowing for project-specific approaches 
to be used during future proceeding and marketing plan development. The 
Final Rule noted, ``[i]n the past, [WAPA] has allowed preference 
entities to receive power from more than one project when marketing 
areas overlap. Given the significant new customer load that exists in 
portions of [WAPA]'s service territory, [WAPA] is not willing to 
continue this policy on a [WAPA]-wide basis. On this issue, [WAPA] will 
retain the flexibility set forth in the proposed Program. An existing 
customer will not be eligible to receive power from a resource pool 
unless [WAPA] provides otherwise on a project-specific basis. Comments 
on the eligibility of existing customers to receive resource pool power 
will be accepted as part of the project-specific public process'' (60 
FR 54151, 54163).
    Given the hydrological conditions impacting P-DP generation, it is 
prudent for WAPA to maintain that existing Federal power contractors 
will not be eligible to receive P-DP power from the resource pool.
    Comment: One commenter requested that if there are fewer applicants 
than can equitably use the resource pool, then the unallocated power be 
shared among all customers.
    Response: WAPA interprets this comment to mean that unallocated 
power be shared among all resource pool applicants and existing 
contractors. WAPA has wide discretion to balance relative amounts of 
load being served by Federal hydropower as part of establishing the 
resource pool. WAPA's goal is to find applicants that meet the 
eligibility criteria up to the two percent.
    Comment: A Tribe with an existing CRSP Federal hydropower 
allocation commented that it considers its ability to receive 
allocations and Federal hydropower resources (generation and 
transmission systems) to be trust resource under the DOE definitions 
and related to the construction of Coolidge Dam. Although the Tribe has 
a CRSP allocation, it requested the ability to apply for an allocation 
of P-DP power as well.
    Response: WAPA's power marketing authority is defined by 
Reclamation law, which grants the agency-wide discretion as to who and 
under what terms it will contract for the sale of Federal power. While 
WAPA will create a modest resource pool to encourage widespread use, it 
also chose to limit applicant eligibility for the resource pool because 
P-DP energy has been limited in recent years due to drought conditions. 
WAPA believes expanding resource pool eligibility to entities already 
holding a Federal power allocation would not encourage widespread use 
given current conditions.
    Although there is no federal legislation requiring WAPA to expand 
its eligibility criteria to make the Tribe eligible for a P-DP resource 
pool allocation, WAPA notes the San Carlos Irrigation Project, owned 
and operated by the Department of Interior, Bureau of Indian Affairs, 
is an existing P-DP contractor and is required by Federal law to 
provide power to the Tribe.\1\ WAPA values its relationships with 
tribal preference customers and understands the challenges the Tribe 
faces in obtaining affordable electric service. WAPA is willing to 
further collaborate with the Tribe and the Bureau of Indian Affairs in 
addressing these challenges.
---------------------------------------------------------------------------

    \1\ See Act of March 7, 1928, 45 Stat. 200, 210-212.
---------------------------------------------------------------------------

VII. General Criteria and Contract Principles--Minimum Scheduling 
Requirements

    Background: P-DP contractors will have a new minimum scheduling 
requirement that aligns with Reclamation's generation schedule and how 
energy is scheduled within the Western Interconnection. Please also see 
comments and responses under V. Application of PMI and Creation of 
Resource Pool regarding implementing minimum scheduling requirements at 
the same time as creating a resource pool.
    Comment: One commenter noted that the details regarding minimum 
scheduling requirements are unclear and requested WAPA ensure that 
changes are coordinated with its scheduling agent and are acceptable to 
all parties.
    Response: WAPA will collaboratively develop the minimum scheduling 
requirements tool with contractors and is willing to coordinate changes 
with scheduling agents, as requested by contractors.
    Comment: A commenter supported changing minimum scheduling 
requirements to provide scheduling flexibility, reduce purchase power 
costs, and minimize sales in low load hours. The commenter questioned 
how changing minimum scheduling requirements to meet water requirements 
will affect schedules and noted that it appears that this impact has 
not been fully examined by DSW personnel. The commenter stated that 
removing the 25 percent off peak minimum could improve resource 
availability but remains uncertain as to how that change will benefit 
contractors. The commenter asks WAPA to improve transparency regarding 
scheduling requirements and operational needs.
    Response: WAPA is developing a tool to identify contractor minimum 
schedules needed to meet Reclamation water release requirements. When 
P-DP contractors schedule less energy than Reclamation generates, WAPA 
may need to sell P-DP energy to balance hourly loads and resources. 
WAPA intends to produce an hourly minimum schedule each month for each 
contractor. The change will benefit P-DP contractors by reducing sales 
of short-term surplus energy when such energy could have been delivered 
to P-DP contractors and will decrease potential WAPA purchases in more 
expensive hours to replace generation that was sold. Selling generation 
and replacing it with purchases in more expensive hours increases the 
purchase power requirement for the project. Consequently, there is a 
direct relationship between potential scheduling flexibility and the 
need for purchase power. WAPA intends to collaborate with contractors 
when identifying levels of purchase power to align with contractors' 
preference for scheduling flexibility.
    Comment: A commenter stated that the proposal does not indicate any

[[Page 89005]]

limits to the amount of off peak power that would have to be required 
and could lead to a further diminishment of the value of the P-DP 
resource by eliminating scheduling flexibility and requiring 
contractors to purchase power at times when it is non-economic.
    Response: P-DP generation is based on Reclamation water release 
requirements. WAPA will continue to coordinate with Reclamation to 
optimize generation timing and intends to work out a collaborative 
solution with contractors during negotiations of electric service 
contracts and the MSI. WAPA received requests specifically asking WAPA 
to reserve the details of operational changes to the MSI and contracts.
    Comment: A commenter requested WAPA confirm that, although the 
scheduling may evolve to a more dynamic model, WAPA will provide 
suitable advance notice for contractors to schedule the resource for 
maximum benefit.
    Response: WAPA agrees that it is beneficial for all parties to 
receive suitable advance notice for scheduling parameters. Minimum 
scheduling requirements will be included in the MSI.
    Comment: One commenter stated that as WAPA reserves the right to 
enter exchange transmission service and other related agreements, such 
reservation of authorities should also include WAPA's discretion to 
manage its interconnection queue to meet these objectives.
    Response: Thank you for this recommendation.
    Comment: One commenter acknowledged that P-DP generation is based 
on Reclamation water orders and asked, to the extent possible, for 
increased flexibility to provide peak shaving in the summer and to 
avoid competing with solar resources.
    Response: WAPA appreciates the recommendation. WAPA acknowledges 
that the energy market has changed with the increase in solar resources 
and there are times when P-DP energy is more valuable to contractors. 
WAPA will continue to stay engaged in the energy market and will 
collaborate with Reclamation to optimize generation dispatch within 
water release requirements.

VIII. General Criteria and Contract Principles--Renewable Energy 
Certificates

    Background: Renewable energy certificates (RECs) associated with P-
DP power will be made available to contractors and may be sold or 
transferred to third parties, provided such sale or transfer is 
consistent with WAPA policy and documented in electric service 
contracts. As stated in the responses to clarifying questions posted on 
WAPA's website, it is WAPA's intention that P-DP RECs will be made 
available to contractors with similar flexibility offered to BCP 
contractors; however, the end result for P-DP will need to be 
consistent with WAPA policy.
    Comment: Two commenters supported WAPA's RECs proposal and 
requested WAPA to make its RECs policy available as soon as practicable 
and before P-DP contract negotiations.
    Response: WAPA is currently working on changing its RECs policy and 
is attempting to achieve resolution as soon as possible.
    Comment: One commenter strongly supported WAPA's RECs proposal to 
help mitigate rate impacts from generation reductions. WAPA was asked 
to consider using similar language as that used in the BCP contracts 
when drafting P-DP RECs language to ensure contractors receive the 
``environmental benefits'' of hydropower.
    Response: WAPA appreciates this recommendation and agrees that 
language from the BCP electric service contracts may be appropriate for 
use in the P-DP contracts, consistent with WAPA policy and project-
specific legal authorities.

IX. General Criteria and Contract Principles--Undepreciated Replacement 
Advances

    Background: Consistent with the current P-DP Advancement of Funds 
contract, new allottees would be required to reimburse existing 
contractors for undepreciated replacement advances, to the extent 
existing contractors' allocations are reduced as a result of creating 
the resource pool.
    Comment: WAPA received comments from three entities supporting the 
requirement for new allottees to reimburse existing contractors for 
undepreciated replacement advances. Additionally, commenters stated it 
is imperative that potential new allottees understand that a P-DP 
allocation includes responsibility for their portion of the 
undepreciated replacement advances and understanding how the deferred 
purchase power repayments could impact their future rates. The 
commenters noted these issues could severely change a potential new 
contractor's decision to sign the contract, especially benefit 
crediting contractors.
    Response: WAPA appreciates the supportive comments. It is accurate 
that new potential allottees need to consider all costs associated with 
a P-DP allocation, including their share of undepreciated replacement 
advances. WAPA agrees that it is prudent for new allottees to evaluate 
the costs and value associated with a P-DP allocation, especially if a 
bill crediting or benefit crediting partnership will be required. WAPA 
would like to clarify that, as stated in its proposal and in the Final 
2028 Plan, deficits incurred during the current marketing period will 
not be passed through to new allottees in the forthcoming marketing 
period. Such deficits include purchase power deficits.

X. General Criteria and Contract Principles--Deficit Repayment

    Background: Deficits for costs incurred during a previous marketing 
period will not be passed through to new allottees.
    Comment: One commenter stated that a portion of the current period 
deficit should be repaid by future potential allottees under the new 
resource pool since purchase power expenses were accumulated in 
connection with the rewind at Davis Dam and purchase power costs 
related to that outage should not be solely borne by the existing 
allottees.
    Response: PPW deficits were incurred from fiscal years 2018-2023 
when challenging hydrological conditions were experienced at the same 
time as numerous variables affecting the energy market, resulting in 
higher than anticipated P-DP purchase power costs. New potential 
contractors will have a different energy product than existing 
contractors, and WAPA's ability to level PPW costs in rates does not 
mean that future contractors should pay for annual expenses from the 
prior marketing period.
    It is accurate that the Davis Dam Unit 3 rewind requires a unit 
outage and results in reduced capacity during the current marketing 
period. However, there is not a reduction to energy resulting from the 
outage because Reclamation dispatches the same amount of generation to 
maintain water releases. The impact to existing contractors is not an 
overall reduction in energy, but is from the timing of purchases, to 
the extent WAPA needs to buy power due to capacity shortages in higher 
priced hours. Existing contractors will experience the benefit of WAPA 
retaining the additional capacity for the remainder of the current 
marketing period and that additional capacity could help defer power 
purchases in high demand hours. To quantify the estimated PPW costs 
associated with this Davis Dam Unit 3

[[Page 89006]]

outage, WAPA would need to conduct a post-hoc analysis to determine 
when WAPA may or may not have purchased or sold power in various hours. 
Such analysis would be speculative and hypothetical. Therefore, WAPA 
believes that a balanced approach is to not pass such outage-related 
PPW expenses onto potential new contractors, but rather WAPA may use 
the unallocated, additional capacity from the rewind for the remainder 
of the current marketing period to help offset PPW expenses incurred 
during maintenance on the unit, thereby benefitting existing 
contractors.

XI. Changes in the Electric Utility Industry

    Comment: Two commenters noted expansion of markets in the West and 
requested WAPA to include contract language to protect the value of P-
DP to enable WAPA's contractors to use the resource in current and 
future energy markets. Some of the examples provided in which WAPA has 
worked with contractors included use of RECs, dynamic signals, and 
pseudo-ties. The commenters requested language to allow technical 
solutions for changing market dynamics in the future.
    Response: WAPA appreciates this comment. WAPA will work with 
contractors to include language in contracts to protect the value of 
contractors' Federal hydropower resources in the event WAPA joins a 
market.
    Comment: A Tribe requested government-to-government consultation if 
WAPA continues forward with participation in SPP.
    Response: WAPA interprets this comment's reference to SPP as the 
Southwest Power Pool (SPP). WAPA appreciates this request and comment. 
Currently, DSW does not intend to participate in the SPP regional 
transmission organization or expand current market participation with 
SPP. DSW will engage in government-to-government consultation in the 
event changes to current market participation are contemplated.

XII. Additional Comments

    Comment: Commenters expressed appreciation for the effort and 
careful thought that WAPA put into this process; WAPA's effort to 
preserve the existing contractors' allocations and provide a more 
workable construct for future rates; WAPA's deliberate approach to the 
2028 marketing plan; and WAPA recognizing the impact of drought on 
hydropower generation.
    Response: WAPA appreciates the support and engagement throughout 
this process.

Summary of Revisions to the Proposed Plan

    WAPA revised the Proposed 2028 Plan as a result of the comments 
received during the consultation and comment period and public forums. 
Revisions have been made to define the intent of the marketing plan 
more clearly; the revisions do not alter the substance of the original 
proposal. The revisions are summarized as follows:
    WAPA was asked to clarify the meaning of ``prescheduling'' 
regarding prescheduling timetables for Quarterly Energy, Optional 
Energy, and generation forecast changes to Quarterly Energy. WAPA 
provided a response to this clarifying question on its website during 
the consultation and comment period. WAPA modified references to 
``prescheduling'' in the Proposed 2028 Plan to ``day-ahead 
prescheduling'' in the Final 2028 Plan for enhanced clarity.
    In response to recommendations that WAPA leave the majority of 
details concerning the implementation of the new operational strategy, 
such as the final process and operational changes related to 
estimating, committing, and scheduling the hydropower resource, in the 
contract and MSI, WAPA has added language in the Final 2028 Plan to 
indicate that additional details will be addressed, as appropriate, in 
FES contracts or MSI, which will be incorporated into such contracts as 
an attachment.
    The Proposed 2028 Plan stated that WAPA expected the addition of 
3,750 kW of capacity resulting from the rewind of Davis Dam Unit 5. The 
unit number was incorrect; the rewind will occur at Davis Dam Unit 3. 
WAPA has made this correction in the Final 2028 Plan.
    The Final 2028 Plan clarifies that ``approximately'' 3,750 kW of 
additional marketable capacity is expected to be available as a result 
of the rewind of Davis Dam Unit 3. The modification was necessary 
because the rewind is not yet complete, and the actual capacity gains 
from the rewind cannot be determined until the project is complete.
    The Final 2028 Plan clarifies that WAPA will allow contractors to 
use transmission capacity, reserved for delivery of their P-DP FES 
allocation, for ``contractor-owned or contractor-purchased resources.'' 
The Proposed 2028 Plan used the term, ``contractor-owned or -purchased 
resources.''
    The Final 2028 Plan also clarifies that transmission used for 
contractor-owned or contractor-purchased resources will only be 
available to contractors after minimum scheduling requirements for P-DP 
generation have been met.
    Finally, the Final 2028 Plan fixes an error in the statutory 
citation for Section 9(c) of the Reclamation Project Act. The correct 
citation is 43 U.S.C. 485h(c).

Final 2028 Plan

    The Final 2028 Plan provides new power marketing criteria for 
Parker-Davis Project (P-DP). The Final 2028 Plan addresses: (1) the 
power to be marketed after September 30, 2028, which is the termination 
date for all existing P-DP firm electric service (FES) contracts; (2) 
the general terms and conditions under which the power will be marketed 
starting on October 1, 2028, and going through September 30, 2048; and 
(3) the criteria to determine eligibility for allocations from the 
resource pool.
    Within broad statutory guidelines and operational constraints of P-
DP, WAPA has wide discretion as to whom and under what terms it will 
contract for the sale of Federal power, if preference is accorded to 
statutorily defined entities. WAPA markets power in a manner that will 
encourage the most widespread use at the lowest possible rates 
consistent with sound business principles. All products and services 
provided under this Final 2028 Plan will be subject to the operational 
requirements and constraints of the P-DP, transmission availability, 
purchase power limitations, and Federal authorities. WAPA will continue 
a collaborative process in implementing the terms set forth in this 
Final 2028 Plan.

I. Marketable Power Resource

    The primary purpose of P-DP is water control and delivery. The 
water control system consists of storage reservoirs that provide daily, 
seasonal, and annual flow regulation. Power generated from these 
resources depends on hydrology and water operation requirements.
    Some of the power generated by P-DP is reserved for priority use by 
the United States (herein referred to as ``Priority Use Power'' or 
``PUP''). PUP is capacity and energy required for the development and 
operation of Reclamation projects as required by legislation 
(Reclamation project use power), and irrigation pumping on certain 
Indian lands. Reclamation project use power is defined to mean that 
capacity and energy for Reclamation projects in the Lower Colorado 
River Basin. The following is a list of facilities and projects for 
which Reclamation project use power is reserved: relift and drainage 
pumps;

[[Page 89007]]

construction campsites; the Yuma-Mesa Irrigation and Drainage District; 
Gila Project drainage pumps; Wellton-Mohawk Irrigation and Drainage 
District Plant Nos. 1, 2, and 3; and the Colorado River Front Work and 
Levee System. Power for irrigation pumping on certain Indian lands is 
defined to mean capacity and energy for use in irrigation pumping on 
Indian irrigation projects which are adjacent to the Lower Colorado 
River south of Davis Dam and north of the border between the United 
States and Mexico.
    P-DP power in surplus to that reserved for PUP shall be reserved 
for allocation to existing contractors and a resource pool shall be 
offered to potential new contractors, consistent with applicable law 
and the terms and conditions provided herein. Power that is reserved as 
PUP, but not presently needed, also may be marketed to contractors as 
withdrawable power. Withdrawable power is power that can be withdrawn 
for Reclamation project use power and power for irrigation pumping on 
Indian lands, which shall have equal priority. When PUP is requested, 
WAPA will confirm that the power to be withdrawn will be used for the 
above specified purposes, and then will withdraw the necessary amount 
of PUP upon a two-year advance notice. Withdrawals of power will be 
made as requested and confirmed until the total amount of power 
reserved for priority use purposes is in use.

II. Products and Services

    WAPA will market a fixed amount of capacity, referred to as 
Contract Rate of Delivery (CROD), for summer and winter seasons. WAPA 
will have at least 259,206 kW of marketable capacity in the summer and 
at least 198,337 kW of marketable capacity in the winter, beginning 
October 1, 2028, with an expected capacity increase of approximately 
3,750 kW resulting from a rewind of Davis Dam Unit 3. The summer season 
for any calendar year is the seven-month period beginning the first day 
of P-DP's March billing period and continuing through the last day of 
its September billing period. The winter season is the five-month 
period beginning the first day of P-DP's October billing period and 
continuing through the last day of its February billing period in the 
next succeeding calendar year.
    Under the existing P-DP marketing plan, energy allocations are a 
fixed seasonal amount for the length of customers' contracts and are 
equal to 3,441 kWh/kW, a 67 percent capacity factor, in the summer 
season, and 1,703 kWh/kW, a 47 percent capacity factor, in the winter 
season (49 FR 50582, 50587; 68 FR 23709). Due to challenging 
hydrological conditions in the Colorado River Basin, this methodology 
has imposed increasing financial burdens on contractors during the 
current marketing period, as WAPA has been required to purchase 
significant amounts of power to meet contractors' firm energy 
requirements. Accordingly, WAPA will eliminate this methodology and 
instead offer energy amounts for three-month periods (``Quarterly 
Energy'') based on Reclamation's 24-month generation projection studies 
(``24-Month Study''), which are released every month. The Quarterly 
Energy will be published for contractors by no later than the last day 
of August for October through December, the last day of November for 
January through March, the last day of February for April through June, 
and the last day of May for July through September, of each year during 
the marketing period. This will allow for energy deliveries to be 
aligned with actual generation. Under the Final 2028 Plan, available 
generation, less PUP (which will be fixed on the same terms as under 
the existing marketing plan), will be published for contractors in the 
form of Quarterly Energy based on a pro rata share of their seasonal 
CROD. Details for Quarterly Energy will be further outlined, as 
appropriate, in FES contracts or Metering and Scheduling Instructions 
(MSI), which will be incorporated into such contracts as an attachment.
    WAPA will purchase energy on behalf of contractors to supplement 
projected hydropower generation (``Optional Energy''), if requested. 
Contractors must elect to purchase Optional Energy from WAPA no later 
than the day before day-ahead prescheduling takes place. The amount of 
Optional Energy requested, combined with the contractor's monthly 
energy entitlement pursuant to its Quarterly Energy, must not exceed 
the contractor's CROD scheduled at a hundred percent capacity factor 
(contractor's CROD multiplied by twenty-four hours multiplied by the 
number of days in the month). An estimated monthly price for Optional 
Energy will be published by WAPA at least quarterly but may be revised 
and re-published as conditions dictate. The actual costs associated 
with Optional Energy purchased by WAPA will be passed through to the 
contractor who elects to receive it. Details for Optional Energy will 
be further outlined, as appropriate, in FES contracts or MSI, which 
will be incorporated into such contracts as an attachment.
    There may be instances, after Quarterly Energy has been published, 
that Reclamation makes significant reductions to generation 
projections. For example, sustained periods of precipitation and/or run 
off from water sources other than the Colorado River can result in 
water being stored in Lake Mead for later use, thereby reducing P-DP 
generation. To minimize power purchases resulting from these 
situations, WAPA will revise contractors' monthly energy entitlements 
when significant generation reductions occur after Quarterly Energy has 
been published. A significant reduction in generation will occur when 
dollars associated with projected purchase power requirements needed to 
maintain the Quarterly Energy for a particular month exceed dollars 
associated with that month's portion of WAPA's Annual Purchase Power 
Projection. The Annual Purchase Power Projection is an annual estimate 
of what power WAPA will purchase in the upcoming fiscal year, from 
October 1 through September 30. Currently, WAPA's Annual Purchase Power 
Projection is used as a component of the P-DP firm electric service 
(FES) rate. When such significant reductions occur, WAPA will publish 
contractors' revised energy for the month using the reduced generation 
projections. Revised energy will continue to be based on a pro rata 
share of contractors' CROD and will be effective no later than one day 
prior to day-ahead prescheduling. Contractors may request that WAPA 
purchase Optional Energy on their behalf per the terms described above 
to obtain energy following a revision.
    WAPA will designate the portion of projected annual generation 
exceeding a kWh calculation of all projected marketable capacity 
(including PUP) multiplied by a 67 percent capacity factor in the 
summer season and 47 percent capacity factor in the winter season as 
``Excess Energy.'' If the current 24-Month Study generation projection 
for a year exceeds the result of the capacity factor calculation 
described above, energy exceeding that calculation (Excess Energy) will 
be distributed to all contractors and PUP recipients based on a pro 
rata share of their seasonal CROD. Excess Energy will be distributed to 
contractors monthly and included as an addition to each contractor's 
Quarterly Energy. Excess Energy will be subject to the same rate and 
payment requirements as other available P-DP hydropower. The 24-Month 
Study yearly projections could show Excess Energy at the beginning of a 
year, but such Excess Energy may not remain at originally projected 
levels for the full year. Excess Energy distributed

[[Page 89008]]

in part of a year may be subject to adjustment in subsequent months if 
the 24-Month Study yearly generation projection drops below the Excess 
Energy threshold later that year. WAPA will establish procedures for 
designating and adjusting Excess Energy in MSI, which will be 
incorporated into the electric service contracts, to minimize 
subsequent energy adjustments as much as possible. Additional details 
for Excess Energy will be outlined, as appropriate, in FES contracts or 
MSI.
    WAPA also will allow contractors to use transmission capacity, 
reserved for delivery of their P-DP FES allocation, for contractor-
owned or contractor-purchased resources, after hourly minimum 
scheduling requirements have been met. Transmission capacity used for 
such energy must not exceed a contractor's CROD.

III. Resource Extensions and Resource Pool Allocations

    WAPA will apply the principles of the Power Marketing Initiative 
(PMI) (10 CFR 905.30 through 10 CFR 905.37) to P-DP for the forthcoming 
marketing period. WAPA will extend 98 percent of P-DP marketable 
resource as of September 30, 2028, to existing contractors' CROD, for 
an additional 20 years, from October 1, 2028, through September 30, 
2048. The existing CROD for PUP contractors will remain unchanged. WAPA 
will establish a single, one-time resource pool of two percent of P-DP 
marketable capacity for new allottees. Energy associated with the new 
resource pool will be based on a pro rata share of the allottee's 
seasonal CROD and published in the form of Quarterly Energy. Specific 
terms and conditions governing the extensions and resource pool are 
described below.
A. Extension for Existing Contractors
    WAPA will have at least 259,206 kW of marketable capacity in the 
summer and at least 198,337 kW of marketable capacity in the winter, 
beginning October 1, 2028. WAPA expects an addition of approximately 
3,750 kW of capacity resulting from the rewind of Davis Dam Unit 3, 
anticipated to be available in July 2025 or earlier. The actual 
marketable capacity for the forthcoming marketing period will be 
adjusted to include the final Davis Dam Unit 3 capacity increase.
    WAPA will extend existing contractors' allocations using the 
formula contained in the PMI: ``Customer Contract Rate of Delivery 
(CROD) today/total project CROD under contract today x project-specific 
percentage x marketable resource determined to be available at the time 
future resource extensions begin = CROD extended'' (10 CFR 905.33(a)). 
The creation of a resource pool will not affect PUP customers' CROD.
    In the event any existing contractors forfeit or express an 
intention not to extend some or all of their allocations prior to 
October 1, 2028, such resources will be returned to the other existing 
contractors on a pro rata basis.
B. Resource Pool Allocations
    WAPA will establish a resource pool by reserving a portion of the 
power available during the forthcoming marketing period for allocation 
to new, eligible preference entities, or returned to existing 
contractors if enough new preference contractors are not found. 
Allocations for the resource pool will be determined through a separate 
public process as described under Call for Resource Pool Applications 
herein.
    The 2028 resource pool will consist of two percent of the 
marketable resources available beginning October 1, 2028. When reducing 
existing allocations to create the resource pool, WAPA will first take 
energy from existing contractors' withdrawable allocations up to the 
total reduction, when available. The remaining reductions will come 
from nonwithdrawable energy.
C. Eligibility Criteria for Resource Pool Allocations
    WAPA will apply the following Eligibility Criteria to all 
applicants seeking a resource pool allocation under the new marketing 
plan.
    1. Qualified applicants must meet the preference requirements under 
Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 
485h(c)), as amended and supplemented.
    2. Qualified applicants will be located within the P-DP marketing 
area that includes: (1) all of the drainage area considered tributary 
to the Colorado River below a point one mile downstream from the mouth 
of the Paria River (Lees Ferry); (2) the State of Arizona, excluding 
that portion lying in the Upper Colorado River Basin; (3) that portion 
of the State of New Mexico lying in the Lower Colorado River Basin and 
the independent Quemada Basin lying north of the San Francisco River 
drainage area; (4) those portions of the State of California lying in 
the Lower Colorado River Basin and in drainage basins of all streams 
draining into the Pacific Ocean south of Calleguas Creek; and (5) those 
parts of the States of California and Nevada in the Lahontan Basin 
including and lying south of the drainages of Mono Lake, Adobe Meadows, 
Owens Lake, Amargosa River, Dry Lakes, and all closed independent 
basins or other areas in southern Arizona not tributary to the Colorado 
River.
    3. Qualified applicants must not have an existing allocation of 
Federal power or be a member of a parent entity that has an allocation 
of Federal power.
    4. Qualified applicants, except Native American tribes, must be 
ready, willing, and able to receive and distribute or use power from 
WAPA. Ready, willing, and able means that the potential allottee has 
the facilities needed for the receipt of power or has made the 
necessary arrangements for transmission and/or distribution service; 
and the potential allottee's power supply contracts with third parties 
permit the delivery of WAPA power.
    5. Qualified applicants that desire to purchase power from WAPA for 
resale to consumers, including cooperatives, public utility districts, 
public power districts and municipalities, must achieve electric 
utility status and have necessary arrangements for transmission and/or 
distribution service in place by January 31, 2028. Native American 
tribes are not subject to this requirement. Electric utility status 
means the applicant has responsibility to meet load growth, has a 
distribution system, and is ready, willing, and able to purchase P-DP 
Federal power from WAPA on a wholesale basis for resale to retail 
customers.
    6. Qualified Native American applicants must be a Native American 
tribe as defined in the Indian Self Determination Act of 1975 (25 
U.S.C. 5301, et seq., as amended or supplemented).
    7. Qualified applicants must apply in response to the Call for 
Resource Pool Applications, as described in the Call for Resource Pool 
Applications section herein. Completed applications must be received by 
WAPA within the time required in the DATES section.
D. Allocation Criteria for Resource Pool Allocations
    WAPA will apply the following Allocation Criteria to all applicants 
seeking a resource pool allocation under the new marketing plan.
    1. Allocations will be made in amounts as determined solely by WAPA 
in exercise of its discretion consistent with its governing authorities 
and considered to be in the best interest of the United States.
    2. Allocations will be based on the applicant's load during the 
calendar year prior to the Call for Resource Pool Applications or the 
amount requested, whichever is less.
    3. WAPA will base allocations made to Native American tribes on the 
actual

[[Page 89009]]

load experienced during the calendar year prior to the Call for 
Resource Pool Applications or the amount requested, whichever is less. 
WAPA may use estimated load values if actual load data is not 
available. WAPA will review and adjust, where necessary, inaccurate 
estimates received during the allocation process.
    4. WAPA will consider allocations below 1,000 kW.
    5. Qualified applicants seeking an allocation as an aggregated 
group must demonstrate to WAPA's satisfaction the existence of a 
contractual aggregation arrangement prior to WAPA's notice of final 
allocations. Members of an aggregated group must individually and 
collectively meet preference status and all other eligibility 
requirements. Qualified applicants aggregating their loads will be 
required to enter into a single firm power contract with WAPA, with the 
aggregated group entity as the contracting party.
    6. An allottee will have the right to purchase power from WAPA only 
upon execution of an electric service contract between WAPA and the 
allottee, and satisfaction of all conditions in that contract.

IV. General Criteria and Contract Principles

    WAPA will apply the following criteria and contract principles to 
all contracts executed under the new marketing plan:
    A. Electric service contracts shall be executed no later than May 
31, 2028, unless otherwise agreed to in writing by WAPA.
    B. Contracts will include clauses specifying criteria that 
contractors must meet on a continuous basis to be eligible to receive 
electric service from WAPA.
    C. All power supplied by WAPA will be delivered pursuant to MSI, 
which will be part of contractors' electric service contracts.
    D. Contracts shall provide for WAPA to furnish electric service 
effective October 1, 2028, through September 30, 2048.
    E. Contracts shall incorporate WAPA's standard provisions for 
electric service contracts, integrated resource plans, and General 
Power Contract Provisions, as determined by WAPA.
    F. WAPA will adopt a new minimum scheduling requirement that aligns 
with Reclamation's generation schedule and how energy is scheduled 
within the Western Interconnection. WAPA intends for contractors to 
receive the maximum benefit of their resource allocations while 
accommodating the following goals: meeting Reclamation's water 
requirements; reducing purchase power and wheeling costs; and 
minimizing sales of energy in low load hours. WAPA will develop a tool 
that uses Reclamation's 24-Month Study data, the status of generators, 
water volumes and elevation, reduced water releases, hourly pricing and 
projected hourly load, and other relevant information to model and 
produce an optimized monthly capacity and monthly minimum energy 
requirement for each contractor. Prior to the execution of contracts 
for the 2028-2048 marketing period, WAPA will provide examples of 
methods being considered, seek feedback from existing contractors and 
potential new allottees, and select which option provides the greatest 
flexibility and achieves the goals identified herein. Minimum 
scheduling requirements will be included in the MSI.
    G. WAPA may, as it deems reasonable and necessary, enter into other 
agreements such as: transmission service agreements, interchange 
agreements, reserve agreements, load regulation agreements, exchange 
agreements, maintenance and emergency service agreements, power pooling 
agreements, or other transactions.
    H. P-DP will remain operationally integrated with the Boulder 
Canyon Project, subject to applicable operational restraints of the 
Bureau of Reclamation, applicable laws, and the other requirements of 
the marketing plan.
    I. WAPA, at its discretion and sole determination, reserves the 
right to adjust the CROD on five years' written notice in response to 
changes in hydrology and river operations. Such adjustments will take 
place only after WAPA conducts a public process.
    J. Renewable energy certificates associated with P-DP power will be 
made available to contractors and may be sold or transferred to third 
parties, provided such sale or transfer is consistent with WAPA policy 
and documented in electric service contracts.
    K. Each entity is ultimately responsible for obtaining its own 
delivery or other arrangements to its load. Transmission service over 
the P-DP system will be provided in accordance with Part V of this 
Final 2028 Plan.
    L. WAPA may develop rate schedules for services provided under the 
Final 2028 Plan. Such rates will be developed through a separate public 
process.
    M. Contractors must pay all applicable rates and charges in the 
manner and within the time prescribed in the contract.
    N. P-DP will remain financially segregated for the purposes of 
accounting and project repayment. Beginning June 1, 2005, and until the 
end of the repayment period for the Central Arizona Project, P-DP 
provides for surplus revenues by including the equivalent of 4\1/2\ 
mills per kWh in the rates charged to contractors in Arizona and by 
including the equivalent of 2\1/2\ mills per kWh in the rates charged 
to contractors in California and Nevada. After the repayment period for 
the Central Arizona Project, the equivalent of 2\1/2\ mills per kWh 
shall be included in the rate charged to all contractors in Arizona, 
Nevada, and California.
    O. Consistent with the current P-DP Advancement of Funds contract, 
new allottees will be required to reimburse existing contractors for 
undepreciated replacement advances, to the extent existing contractors' 
allocations are reduced as a result of creating the resource pool. New 
allottees who receive an allocation will be required to prepay for 
service according to the applicable rate schedule and may participate 
in advance funding of WAPA's and Reclamation's operation and 
maintenance expenses, consistent with the existing Advancement of Funds 
contract, or an updated version of the contract that addresses the 
status of P-DP, as appropriate.
    P. Deficits for costs incurred during a previous marketing period 
will not be passed through to new allottees.

V. Transmission Service

    P-DP power will be delivered to designated points of delivery on 
WAPA's P-DP transmission system. Contractors must secure all necessary 
transmission service to deliver Federal power beyond WAPA's P-DP 
transmission system. WAPA may assist new contractors in obtaining 
third-party transmission arrangements for delivery of firm power 
allocated during the forthcoming marketing period. WAPA will determine 
the use of its transmission resources concurrently with further 
development of the products and services under this Final 2028 Plan. A 
list of designated delivery points will be provided on WAPA's website 
at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/. WAPA 
will market surplus transmission capacity on P-DP under WAPA's Open 
Access Transmission Tariff and other applicable arrangements.

Call for Resource Pool Applications

    The Final 2028 Plan describes how WAPA will market its P-DP power 
resources beginning October 1, 2028, through September 30, 2048. As 
part of

[[Page 89010]]

the Final 2028 Plan, WAPA is creating a resource pool to offer two 
percent of P-DP's marketable power resource to qualified applicants. 
WAPA, at its discretion, will allocate the resource pool to selected 
applicants that meet the Eligibility Criteria and Allocation Criteria 
defined in the Final 2028 Plan. The process by which WAPA will make 
final allocation decisions and implement such allocations is outlined 
below.

I. Applications for Power

    Through this Federal Register notice, WAPA formally requests 
applications from qualified preference entities seeking to purchase 
power from P-DP from October 1, 2028, through September 30, 2048. 
Existing contractors do not need to submit an application. All 
applicants must submit applications using the APD form so that WAPA has 
a uniform basis upon which to evaluate the applications. To be 
considered, applicants must meet the Eligibility Criteria and 
Allocation Criteria contained in the Final 2028 Plan and must submit a 
completed APD application form by the deadline specified in the DATES 
section. To ensure full consideration is given to all applicants, WAPA 
will not consider requests for power or applications submitted before 
publication of this Federal Register notice or after the deadlines 
specified in the DATES section.
    A list of designated delivery points will be provided on WAPA's 
website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.

II. Applicant Profile Data

    The APD form has been approved by the Office of Management and 
Budget under Control No. 1910-5136. Applications may be submitted by 
mail or email, as described in the ADDRESSES section. APD forms are 
available on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/ or by request to Jennifer Henn, Power Marketing 
Advisor, Desert Southwest Region, Western Area Power Administration, 
(602) 605-2572 or email: [email protected]. It is the 
applicant's responsibility to ensure it submits its application in a 
timely manner, so WAPA receives the applications before the date and 
time stated in the DATES section.
    Applicants must provide all information requested on the APD form, 
if available and applicable. Please indicate if the requested 
information is not applicable or not available. WAPA may request, in 
writing, additional information from any applicant whose application is 
deficient. The applicant will have 10 business days from the date on 
WAPA's request to provide the information. In the event an applicant 
fails to provide all information to WAPA, the application will not be 
considered.
    The information in the APD form should be answered as if prepared 
by the entity/organization seeking the allocation of Federal power.
    The information collected under this process will not be part of a 
system of records covered by the Privacy Act and may be available under 
the Freedom of Information Act. If you are submitting any confidential 
or business sensitive information, please mark such information before 
submitting your application.

III. Recordkeeping Requirement

    If WAPA accepts an application and the applicant receives an 
allocation of Federal power, the applicant must keep all information 
related to the APD for a period of 3 years after signing a contract for 
Federal power. There is no recordkeeping requirement for unsuccessful 
applicants who do not receive an allocation of Federal power.
    WAPA has obtained Office of Management and Budget Clearance Number 
1910-5136 for collection of the above information. The APD form is 
collected to enable WAPA to properly perform its function of marketing 
limited amounts of Federal hydropower. The data supplied will be used 
by WAPA to evaluate who will receive an allocation of Federal power.

IV. Contracting Process

    After WAPA has evaluated the applications, WAPA will publish a 
notice of Proposed 2028 Allocations in the Federal Register. The public 
will have an opportunity to comment on the Proposed 2028 Allocations. 
After reviewing the comments, WAPA will publish a notice of Final 2028 
Allocations in the Federal Register. WAPA will begin the contracting 
process with the new allottees after publishing final allocations in 
the Federal Register, tentatively scheduled for summer 2026. WAPA will 
offer a pro forma contract for power allocated under the Final 2028 
Allocations. Allottees will be required to sign their electric service 
contract for WAPA to execute no later than May 31, 2028. Electric 
service contracts will be effective upon WAPA's signature, and service 
will begin on October 1, 2028, and continue through September 30, 2048.

Legal Authorities

    WAPA developed the Final 2028 Plan and Call for Resource Pool 
Applications in accordance with its power marketing authorities 
pursuant to the Department of Energy Organization Act (42 U.S.C. 7101, 
et seq.); the Reclamation Act of June 17, 1902 (32 Stat. 388), as 
amended and supplemented by subsequent enactments, particularly section 
9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)); and 
other acts specifically applicable to P-DP.

Procedural Requirements

Review Under the Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501, et seq.), WAPA has received approval from the Office of 
Management and Budget for the collection of customer information under 
control number 1910-5136.

Environmental Compliance

    WAPA has determined this action fits within the following 
categorical exclusions listed in appendix B to subpart D of 10 CFR part 
1021: B4.1 (Contracts, policies, and marketing and allocation plans for 
electric power) and B4.4 (Power marketing services and activities). 
Categorically excluded projects and activities do not require 
preparation of either an environmental impact statement or an 
environmental assessment.\2\ A copy of the categorical exclusion 
determination is available on WAPA's website under the 2024 accordion 
menu at www.wapa.gov/about-wapa/regions/dsw/environment.
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    \2\ The determination was done in compliance with NEPA (42 
U.S.C. 4321 through 4347); the Council on Environmental Quality 
Regulations for implementing NEPA (40 CFR parts 1500 through 1508); 
and DOE NEPA Implementing Procedures and Guidelines (10 CFR part 
1021).
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Determination Under Executive Order 12866

    WAPA 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.

Signing Authority

    This document of the Department of Energy was signed on October 30, 
2024, by Tracey A. LeBeau, Administrator, Western Area Power 
Administration. For administrative purposes only, and in compliance 
with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in

[[Page 89011]]

electronic format for publication, as an official document of the 
Department of Energy. This administrative process in no way alters the 
legal effect of this document upon publication in the Federal Register.

    Signed in Washington, DC, on November 6, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2024-26162 Filed 11-8-24; 8:45 am]
BILLING CODE 6450-01-P