Provo River Project--Rate Order No. WAPA-87

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: March 2, 2000 (Volume 65, Number 42)]
[Notices]
[Page 11300-11303]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02mr00-55]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Western Area Power Administration

Provo River Project--Rate Order No. WAPA-87

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order.

-----------------------------------------------------------------------

SUMMARY: Notice is given of the confirmation and approval by the Deputy
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-87
placing a rate formula extension into effect on an interim basis
beginning on April 1, 2000, for power marketed by the Western Area
Power Administration (Western) from the Provo River Project (PRP). The
rate formula will remain in effect on an interim basis until the
Federal Energy Regulatory Commission (FERC) confirms, approves, and
places it into effect on a final basis or until it is replaced by
another rate formula.

DATES: The provisional rate formula extension will be placed into
effect on an interim basis on April 1, 2000, and will be in effect
until the FERC approves the rate formula extension or a substitute rate
formula and places the formula in effect on a final basis for a 5-year
period ending March 31, 2005, or until superseded.

FOR FURTHER INFORMATION CONTACT: Ms. Carol Loftin, Rates Manager,
Colorado River Storage Project Management Center, Western Area Power
Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City,
UT 84111-1534, telephone (801) 524-6380, email loftinc@wapa.gov.

SUPPLEMENTARY INFORMATION: By Amendment No. 3 to Delegation Order No.
0204-108, published November 10, 1993 (58 FR 59716), the Secretary of
Energy delegated (1) the authority to develop long-term power and
transmission rates on a nonexclusive basis to the Administrator of
Western; (2) the authority to confirm, approve, and place such rates
into effect on an interim basis to the Deputy Secretary of Energy; and
(3) the authority to confirm, approve, and place into effect on a final
basis, to remand, or to disapprove such rates to FERC.
Delegation Order No. 0204-172, effective November 24, 1999,
reinstates the authority delegated to the Deputy Secretary in Amendment
No. 3 to Delegation Order No. 0204-108, which authority was rescinded
in the Secretary's Order of April 15, 1999. Existing DOE procedures for
public participation in power rate adjustments are located at 10 CFR
part 903, effective on September 18, 1985 (50 FR 37835).

[[Page 11301]]

DOE procedures have been followed by Western in developing this
provisional firm power rate formula.
The Provo River Project was authorized in 1935. Construction on the
PRP, which includes Deer Creek Dam and Powerplant on the Provo River in
Utah, began in 1938, but was not completed until 1951. The powerplant,
authorized on August 20, 1951, was completed and generation began in
1958. Its maximum operating capacity is 5,300 kilowatts (kW).
Provo River Project power is now marketed independently from the
Salt Lake City Area/Integrated Projects pursuant to a marketing plan
that was approved and published in the Federal Register on November 21,
1994. This marketing plan allows Western to market the output of the
PRP to Utah Municipal Power Agency and Utah Associated Municipal Power
Systems (Customers), located in the Provo River drainage area.
Contract Nos. 94-SLC-0253 and 94-SLC-0254 (Contracts) require that
the amount of each annual installment be established in advance by
Western and submitted to the Customers on or before August 31 of the
year preceding the appropriate fiscal year (FY). Each FY Western
estimates Deer Creek Powerplant (DCP) expenses by preparing a power
repayment study that includes estimates of operation, maintenance, and
replacement (OM&R) costs for the DCP.
Each annual installment pays the annual amortized portion of the
United States investment in the Deer Creek Dam and Reservoir
hydroelectric facilities with interest, and the associated OM&R costs.
This repayment schedule does not depend upon the power and energy made
available for sale or the rate of generation each year, but is a
contract in which the Customers pay all OM&R expenses of the PRP and,
in return, receive all of the energy produced by the PRP. Western will
continue to provide the Customers a revised annual installment by
August 31 of each year using the same methodology.
Rate Order No. WAPA-87, confirming, approving, and placing the
proposed Provo River firm power rate formula extension into effect on
an interim basis, is issued, and the extension will be promptly
submitted to FERC for confirmation and approval on a final basis.

Dated: February 14, 2000
T. J. Glauthier,
Deputy Secretary.

Order Confirming, Approving, and Placing a Rate Formula Extension
for the Provo River Project Into Effect on an Interim Basis (April
1, 2000)

This rate formula extension is established pursuant to the
Department of Energy (DOE) Organization Act, 42 U.S.C. 7101-7352,
through which the power marketing functions of the Secretary of the
Department of the Interior and the Bureau of Reclamation under the
Reclamation Act of 1902, ch. 1093, 32 Stat. 388, as amended and
supplemented by subsequent enactments, 9(c) of the Reclamation Project
Act of 1939, 43 U.S.C. 485h(c), and acts specifically applicable to the
PRP, were transferred to and vested in the Secretary of Energy
(Secretary).
By Amendment No. 3 to Delegation Order No. 0204-108, published
November 10, 1993 (58 FR 59716), the Secretary delegated (1) the
authority to develop long-term power and transmission rates on a
nonexclusive basis to the Administrator of the 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; 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).
By subsequent Order, effective April 15, 1999, the Secretary
rescinded all delegation of authority to the Deputy Secretary, whether
contained in Delegation Orders, Departmental Directives, or elsewhere,
concerning the Department's Power Marketing Administrations, including,
but not limited to, authority delegated or affirmed in Delegation Order
No. 0204-108, as amended.
Delegation Order No. 0204-172, effective November 24, 1999,
reinstates the authority delegated to the Deputy Secretary in Amendment
No. 3 to Delegation Order No. 0204-108, which authority was rescinded
in the Secretary's Order of April 15, 1999. Existing Department of
Energy procedures for public participation in power rate adjustments
are located at 10 CFR part 903, effective on September 18, 1985 (50 FR
37835). Filing requirements and procedures for approving Power
Marketing Administration rates by FERC are found at 18 CFR part 300.

Acronyms and Definitions

As used in this rate order, the following acronyms and definitions
apply:
CRSP: Colorado River Storage Project.
Contracts: Contract No. 94-SLC-0254 with Utah Municipal Power
Agency effective December 22, 1994, and Contract No. 94-SLC-0253 with
Utah Associated Municipal Power Systems effective January 19, 1995.
Customers: Utah Associated Municipal Power Systems and Utah
Municipal Power Agency.
DCP: Deer Creek Powerplant.
DOE: Department of Energy.
DOE Order RA 6120.2: A Department of Energy order dealing with
power marketing administration financial reporting.
FERC: Federal Energy Regulatory Commission.
FY: Fiscal year, October 1 to September 30.
kW: Kilowatt--the electrical unit of capacity that equals 1,000
watts.
NEPA: National Environmental Policy Act of 1969.
OM&R: Operation, maintenance, and replacement.
PRP: Provo River Project.
PRS: Power Repayment Study.
Reclamation: United States Department of the Interior, Bureau of
Reclamation.
SLCA/IP: Salt Lake City Area/Integrated Projects.
Western: United States Department of Energy, Western Area Power
Administration.

Effective Date

This extension will become effective on an interim basis beginning
April 1, 2000, and will be in effect pending FERC's approval of this or
a substitute rate formula on a final basis for a 5-year period ending
March 31, 2005, or until superseded.

Public Notice and Comment

On February 4, 1999, and again on March 26, 1999, Western met with
the Customers and notified them of Western's intent to extend the
present rate formula. This request is for approval of an extension of
the present methodology used for calculating the annual installment.
Western also discussed the FY 2000 budget and capital expenditures.
Western has met with the Customers, and the Customers want to continue
the present rate formula.

Project History

Construction of the PRP began in May 1938. The powerplant was
completed in 1958 and has a generating capacity of

[[Page 11302]]

5,300 kW. Only energy excess to PRP purposes has been available for
Federal marketing. Between 1963 and 1994, SLCA/IP needed additional
energy and purchased the available PRP energy at an amount established
annually to enable the PRP to cover its costs, including OM&R costs and
repayment expenses. These expenses included $1.6 million of irrigation
assistance to the water users. PRP's original power investment has been
repaid, therefore the customers are responsible for only the
replacement investments of the project.
PRP power is now marketed independently from the SLCA/IP pursuant
to a marketing plan approved and published in the Federal Register on
November 21, 1994. This marketing plan allows Western to market the
output of the PRP to Utah Municipal Power Agency and Utah Associated
Municipal Power Systems, located in the Provo River drainage area.

Power Repayment Studies

The Contracts require that the amount of each annual installment be
established in advance by Western and submitted to the Customers on or
before August 31 of the year preceding the appropriate FY. Each FY,
Western estimates DCP expenses by preparing a PRS that includes
estimates of OM&R costs for the DCP for the next FY.
Each annual installment pays the annual amortized portion of the
United States investment in the Deer Creek Dam and Reservoir
hydroelectric facilities with interest and the associated OM&R costs.
This repayment schedule does not depend upon the power and energy made
available for sale or the rate of generation each year.
A PRS is prepared each FY to determine if power revenues will be
sufficient to pay, within the prescribed time periods, all costs
assigned to be repaid by the PRP power function. Repayment criteria are
based on law, policies, and authorizing legislation, in particular DOE
Order RA 6120.2.

Certification of Rate

Western's Administrator has certified that the PRP firm power rate
formula placed into effect on an interim basis herein is consistent
with applicable laws and that the rate is the lowest consistent with
sound business principles.

Discussion

According to Reclamation law, Western must establish power rates
sufficient to recover operation, maintenance, and purchase power
expenses, and to repay the Federal Government's investment in
generation and transmission facilities. Rates must also be set to cover
interest expenses on the unpaid balance of facilities' investments,
replacements and additions, and certain non-power costs in excess of
the irrigation users' ability to pay.
Western prepares an annual PRS that identifies the anticipated
expenses. In accordance with the Contracts, minor replacements and
additions are included in the annual expenses. The methodology of
annual charges satisfies the cost-recovery criteria set forth in DOE
Order RA 6120.2.

Statement of Revenue and Related Expenses

The revenue requirements for the PRP are based upon PRS
calculations for future requirements, which will be adjusted when FY
actuals are known. The following table provides a summary of revenues
and expenses for the current 6-year firm power rate formula and also
the actual revenues and expenses.

Provo River Comparison of 6-Year Revenue and Expenses FY 1995-2000
[$1,000]
----------------------------------------------------------------------------------------------------------------
Item Actual¹ Projected Difference²
----------------------------------------------------------------------------------------------------------------
Total Revenue................................................... 1,743 1,644 99
Expenses:
O&M......................................................... 1,233 1,158 75
Transmission................................................ ³96 185 (89)
Interest.................................................... 144 156 (12)
Investment Repayment........................................ ⁴76 145 (69)
Prior Year Adjustments...................................... 194 .............. 194
-----------------------------------------------
Total Expenses.................................................. 1,743 1,644 99
----------------------------------------------------------------------------------------------------------------
¹Amounts for FY 1999 and FY 2000 are estimates taken from the FY 1999 preliminary PRS.
²Reflects estimates to actual revenue requirements.
³The amount projected is the actual amount of transmission costs owed to CRSP. An adjustment to the financial
statements will be made in the future to reflect these costs.
⁴The projected replacements were overstated.

The following table provides a summary of revenue and expense data
through the 5-year proposed rate methodology approval period.

Provo River Project 5-Year Projections Revenues and Expenses
[$1,000]
------------------------------------------------------------------------
FY 2001--2005
Projections
------------------------------------------------------------------------
Total Revenues.......................................... 1,463
Costs:
O&M¹................................................ 1,151
Transmission........................................ 149
Interest............................................ 124
Investment Repayment................................ 39
---------------
Total Costs............................................. 1,463
------------------------------------------------------------------------
¹Includes $78,000 in FY 2001 to overhaul generators.

Basis for Rate Development

Each Customer is billed for electric service calculated every FY,
payable in 12 equal monthly payments. Every FY, Western estimates PRP
expenses by preparing a PRS that includes estimates of OM&R costs for
the DCP. The amount of each monthly payment is established in advance
by Western and submitted to the Customers on or before August 31 of the
year preceding the appropriate FY.
The calculation of the amount of the annual installment and the
monthly payments includes adjustments to the OM&R charges. These
adjustments are

[[Page 11303]]

the difference between estimated and actual OM&R expenses. If OM&R
charges are underestimated, an amount equal to the difference is added
to the next installment. Conversely, if OM&R charges are overestimated,
the amount is deducted from the next installment.
In accordance with the Contracts, minor replacements and additions
are included in the annual operation and maintenance expenses of the
DCP. If major replacements and additions exceeding $5,000, but not
greater than $25,000, in costs are needed, the Customers are given the
option of financing their individual shares of the cost or of having
the cost capitalized and amortized over the life of the replacement or
addition or over the life of the contract. If the Customer chooses the
latter, the cost is capitalized at the current interest rate prescribed
by the DOE, pursuant to RA 6120.2 11B ``Basic Policy for Rate
Adjustment; Interest Rate Formula,'' in the FY in which the replacement
or addition is made. Such costs are based on prudent and businesslike
management practices and in accordance with established electric
industry operation and maintenance practices. If extraordinary
replacements exceeding $25,000 in costs are needed, Western will
consult with Reclamation, the water users, and the Customers about
financing the replacement.
The rate is not dependent upon the power and energy made available
for sale. Instead, Customers will pay total PRP annual powerplant
expenses in return for the total marketable PRP production. Each
customer pays its proportional share of the OM&R expenses identified in
the PRS in 12 monthly installments.

Environmental Compliance

In compliance with NEPA, 42 U.S.C. 4321 et seq.; Council on
Environmental Quality Regulations 40 CFR parts 1500-1508; and DOE NEPA
Regulations 10 CFR Part 1021, Western has determined that this action
is categorically excluded from the preparation of an environmental
assessment or an environmental impact statement.

Determination Under Executive Order 12866

Western has an exemption from centralized regulatory review under
Executive Order 12866; accordingly, no clearance of this notice by the
Office of Management and Budget is required.

Availability of Information

Information regarding this rate formula extension, including PRSs,
letters, memorandums, and other supporting material made or kept by
Western for the purpose of extending provisional rate formulas, is
available for public review in the Colorado River Storage Project
Management Center, Western Area Power Administration, 150 East Social
Hall Avenue, Suite 300, Salt Lake City, UT 84111-1534; and in the
Corporate Services Office, Western Area Power Administration,12155 West
Alameda Parkway, Lakewood, CO 80228-2802.

Submission to Federal Energy Regulatory Commission

The rate formula extension herein confirmed, approved, and placed
into effect on an interim basis, together with supporting documents,
will be submitted to FERC for confirmation and approval on a final
basis.

Order

In view of the foregoing and pursuant to the authority vested in me
as the Deputy Secretary of Energy, I confirm and approve on an interim
basis, effective April 1, 2000, an extension of the rate formula for
the Provo River Project of the Western Area Power Administration. The
rate formula shall remain in effect on an interim basis, pending the
Federal Energy Regulatory Commission's confirmation and approval of it
or a substitute rate on a final basis through March 31, 2005.

Dated: February 14, 2000.
T.J. Glauthier,
Deputy Secretary.
[FR Doc. 00-5020 Filed 3-1-00; 8:45 am]
BILLING CODE 6450-01-P

Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994

Provo River Project--Rate Order No. WAPA-87

Local Navigation