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Energy Imbalance Service
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: December 20, 2001 (Volume 66, Number 245)]
[Notices]
[Page 65703-65706]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de01-48]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Energy Imbalance Service
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of proposed rate.
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SUMMARY: The Western Area Power Administration (Western) is proposing a
revision to the current rate schedule for Energy Imbalance Service for
the Western Area Colorado Missouri control area (WACM).
The Department of Energy (DOE) Deputy Secretary approved rates for
Transmission and Ancillary Services, including Energy Imbalance
Service, on March 23, 1998 (Rate Order No. WAPA-80, published in the
Federal Register on April 6, 1998). The Federal Energy Regulatory
Commission (FERC) confirmed and approved the rate schedule on July 21,
1998, under FERC Docket No. EF98-5181-000. Rate Schedule L-AS4, the
rate schedule for Energy Imbalance Service, was contained within Rate
Order No. WAPA-80 and became effective on April 1, 1998, for the period
ending March 31, 2003.
The proposed rate is a revision to L-AS4 and provides sufficient
revenue to pay annual costs incurred in WACM's management of control
area resources and obligations. The proposed rate is scheduled to go
into effect on April 1, 2002, and will remain in effect through March
31, 2003. This Federal Register notice begins the formal process for
the proposed rate.
DATES: The consultation and comment period begins with the publication
of this notice and ends on January 31, 2002. An informal public
information meeting will be held on January 15, 2002. No public comment
forum will be held.
ADDRESSES: If you wish to submit comments, please do so in writing and
address them to: Mr. Joel K. Bladow, Regional Manager, Rocky Mountain
Customer Service Region, Western Area Power Administration, 5555 East
Crossroads Boulevard, Loveland, CO 80538-8986. Western must receive
written comments by January 31, 2002, to be assured consideration.
FOR FURTHER INFORMATION CONTACT: Mr. Daniel T. Payton, Rates Manager,
Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7442, e-mail dpayton@wapa.gov.
SUPPLEMENTARY INFORMATION: The proposed rate is needed to adequately
recover the cost of energy purchased when entities conducting business
within WACM are unable to match their resources and obligations
accurately.
The current rate schedule L-AS4 provides for the ability to charge
100 mills per kilowatt-hour for under deliveries occurring more than
five times per month outside of a bandwidth of ±1.5%. Within
the bandwidth, the customer returns energy to Western. For over
deliveries, the current rate schedule provides for the Transmission
Customer to be credited up to 50 percent of the regional average
monthly price for non-firm purchases.
WACM has experienced a great deal of price volatility over the last
year, with prices ranging from a high of $575 per megawatt (MW) on-peak
to a low of $22 per MW on-peak. WACM, as a control area operator, has
final responsibility for balancing resources against obligations. As
such, in times of deficit energy, WACM is required to purchase energy
to keep the control area in balance. The existing 100-mill charge is
inadequate to repay the costs of balancing energy in a high-cost
market. At other times, it may be excessive. This proposed pass-through
cost methodology will result in an equitable recovery of expenses.
Any change to Energy Imbalance Service will be as set forth in a
revision to this schedule pursuant to applicable Federal laws,
regulations, and policies and made part of the applicable service
agreement.
Formula Rate
Western provides Energy Imbalance Service when there is a
difference between a customer's resources and obligations. Energy
Imbalance is calculated as resources minus obligations (adjusted for
losses) for any combination of scheduled transfers/transactions located
within WACM over each hour. Resources are defined as the quantity of
actual generation plus scheduled resources, imports, or receipts.
Obligations are defined as the quantity of actual deliveries plus
scheduled obligations, exports or deliveries plus losses not accounted
for separately. Some deviation from zero is expected, and a bandwidth
is established to accommodate reasonable variations from an exact match
of obligations and resources. Deviation beyond that bandwidth is not
considered to be prudent utility practice.
WACM will establish a bandwidth of ±4 percent (8 percent
bandwidth), with a minimum deviation of 2 megawatts (MW) to be applied
hourly to any energy imbalance that occurs as a result of a difference
in the customers' resources and obligations. WACM has proposed this
increase in the bandwidth because the original rate schedule's
bandwidth of ±1.5 percent was not reasonable with regard to
current industry instrumentation accuracy, which is approximately 1
percent. WACM proposes to increase the bandwidth to ±4
percent to accommodate a wider range of customers' imbalances in a non-
punitive manner, while still recovering WACM's expenses to balance
energy. Four percent was determined to be the maximum capacity risk
that WACM was willing to consider. With an estimated average control
area load of 2,900 MW, the selection of a 4 percent bandwidth creates a
capacity risk of 116 MW for WACM. The 2 MW minimum deviation
accommodates a situation where entities with smaller loads are not
harmed by the industry standard of scheduling in whole megawatts.
All Energy Imbalance Service provided, both inside and outside the
bandwidth, will be handled through financial settlement, accounted for
hourly, at the end of each month.
Within the established bandwidth, charges for under deliveries or
compensation for over deliveries will be aggregated and distributed to
customers on a pass-through cost basis. The intent is to keep the
control area whole within this range. Prices inside the bandwidth will
be based on WACM's weighted average of nonfirm purchases and sales.
Outside the bandwidth, WACM will provide disincentives for those
exceeding the established limits. These disincentives will be in the
form of higher charges for under deliveries and lower compensation for
over deliveries. Prices outside the bandwidth will be based on WACM's
marginal nonfirm purchases or sales.
Within the Bandwidth
Within the bandwidth, the gross energy imbalance for each
applicable entity within WACM shall be totaled and netted to determine
an aggregate energy imbalance for WACM. The sign of the net amount will
determine which of the following pricing mechanisms will apply:
For excursions by individual customers during hours of WACM net
over-delivery, WACM will provide the customer with a financial charge
for under deliveries or credit for over deliveries, as applicable,
equal to 100 percent of the weighted average of nonfirm Loveland Area
Projects (LAP) energy sale prices for that hour made by Western's
Energy Management and
[[Page 65704]]
Marketing Office (EMMO) in Montrose. If during the hour in question,
there are no LAP sales by EMMO, WACM will use the daily on-or off-peak
weighted average nonfirm energy LAP sale prices. If there were no LAP
sales made by EMMO during the day in question, then the Palo Verde
nonfirm index will be used for on- and off-peak hours.
For excursions by individual customers during hours of WACM net
under-delivery, for each hour, WACM will provide the customer with a
financial charge for under deliveries or credit for over deliveries, as
applicable, equal to 100 percent of the weighted average of nonfirm
energy LAP purchase prices for that hour made by EMMO. If during the
hour in question, there are no LAP purchases by EMMO, WACM will use the
daily on-or off-peak weighted average of nonfirm LAP purchase prices.
If there were no LAP purchases made by EMMO during the day in question,
then the Palo Verde nonfirm index will be used for on- and off-peak
hours.
Transmission expenses incurred in the sale or purchase of balancing
energy will be factored in the sale and purchase prices.
Outside the Bandwidth
Outside the bandwidth, aggregated WACM energy imbalance will not be
taken into account. Each entity within WACM will be charged or credited
independently for energy imbalance service taken.
For positive excursions (over deliveries) outside the bandwidth,
WACM will credit the customer for 90 percent of the weighted average of
the lowest marginal nonfirm energy LAP sale prices for that hour made
by EMMO. If during the hour in question, there are no LAP sales, WACM
will use 90 percent of the weighted average of the lowest marginal
nonfirm energy LAP sale prices for the day. If there were no LAP sales
made by EMMO during the day in question, WACM will use 90 percent of
the Palo Verde nonfirm index for on- and off-peak hours.
For negative excursions (under deliveries) outside the bandwidth,
WACM will charge the customer 110 percent of the weighted average of
the highest marginal nonfirm energy LAP purchase prices for that hour
made by EMMO. If during the hour in question, there are no LAP
purchases, WACM will use 110 percent of the weighted average of the
highest marginal nonfirm LAP purchase prices for the day. If there were
no LAP purchases made by EMMO during the day in question, WACM will use
110 percent of the Palo Verde nonfirm index for on- and off-peak hours.
Transmission expenses incurred in the sale or purchase of balancing
energy will be factored in the sale and purchase prices.
WACM reserves the right to offer no financial credit during periods
when control area operations are compromised by over-delivery; e.g.,
during periods of high water or other operating constraints.
WACM will keep hourly records of Energy Imbalance Service amounts
by customer and will produce a monthly report showing such amounts.
In the case of a generator imbalance where the generator is jointly
owned, the charges/credits for Energy Imbalance Service will be
assigned to the operating agent of the generator, unless WACM has been
provided with a signed agreement from the generator owners designating
a specific methodology used to allocate among owners and entitlees, the
amount of aggregate energy imbalance due to the generator(s). Western
reserves the right to refuse a designation that does not provide for
the full and accurate recovery of all energy imbalance existing among
owners/entitlees.
Physical Resource Loss
Western recognizes that the loss of a physical resource/generator,
by virtue of an uncontrollable event (forced outage), can represent a
significant percentage of an entity's resource, and may result in an
out-of-bandwidth condition. Western proposes to lessen the impact of
such instances by widening the bandwidth an additional amount to
accommodate the amount of time required for an emergency response. This
would be equivalent to the entity's resource loss in MW, divided by 8.
The divisor of 8 is justified by the 15-minute response requirement,
divided in half. The period immediately preceding the resource loss
should have production on-schedule and the period after the loss should
have the group response on-schedule.
The 15-minute period immediately following the trip would begin
with an out-of-balance condition in the amount of the entity's
schedule/allocation from the off-line unit and end with a balanced
condition due to the group response. Thus, the amount of imbalance in
the 15-minute period would be one-half of the energy in that period,
for a total of one-eighth of the schedule from the tripped unit for
that hour. The standard bandwidth would be extended by that one-eighth
amount for either the hour of the trip or the hour of the trip and the
next hour, depending on whether or not the 15-minute period rested
entirely within an hour or overlapped into the following hour.
Western would also apply this expanded bandwidth to those cases
where there is the loss of a resource (either internal to or scheduled
into WACM) by virtue of an uncontrollable event, which is replaced for
1 or 2 hours by a coordinated response from a Western-recognized
reserve-sharing group.
Western would provide a similarly expanded bandwidth of 1 to 2
hours for those members of a bona fide reserve-sharing group whose
calculation of energy imbalance is pushed out of balance by virtue of a
response to another member's loss of a unit during a reserve group
activation. In this case, the expanded bandwidth would be the supplying
members' response level for the trip, divided by 8. Again, the divisor
of 8 is justified by the 15-minute response requirement, divided in
half.
Sample Calculations
Within the Bandwidth
Within the bandwidth, credits and charges will be based on the
weighted average of all nonfirm energy sales or purchases made within
the hour or day, as depicted in Table 1:
Table 1
------------------------------------------------------------------------
Credits for Over Deliveries: Charges for Under Deliveries:
Weighted Average Nonfirm Sale Price Weighted Average Nonfirm Purchase
(WANSP) Price (WANPP)
------------------------------------------------------------------------
Scenario: Aggregate over delivery Scenario: Aggregate under delivery
Sale #1 25 MW @ $200 ($5,000) Purchase #1 100 MW @ $200
($20,000)
Sale #2 25 MW @ $100 ($2,500) Purchase #2 50 MW @ $100
($5,000)
Sale #3 25 MW @ $ 43 ($1,075) Purchase #3 100 MW @ $ 65
($6,500)
Sale #4 25 MW @ $ 25 ($ 625) Purchase #4 50 MW @ $ 35
($1,750)
Calculation: Calculation:
($5,000+$2,500+$1,075+$625) = ($20,000+$5,000+$6,500+$1,750)
$9,200 = $33,250
[[Page 65705]]
$9,200/100 MW = $92 $33,250/300 MW = $110.83
WANSP: $92/MW WANPP: $110.83/MW
Or Palo Verde posted rate, if Or Palo Verde posted rate, if
no sales (Applicable no purchases (Applicable
transmission cost deducted) transmission cost added)
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Outside the Bandwidth
Reference is made above to the weighted average of the lowest and
highest marginal nonfirm sale and purchase price(s) for the hour or day
that a sale or purchase is made by EMMO. These prices will apply only
to imbalances outside the bandwidth. The weighted average of the lowest
and highest marginal nonfirm energy sale and purchase prices will be
derived as depicted in Table 2:
Table 2
------------------------------------------------------------------------
Credits for Over Deliveries: Charges for Under Deliveries:
Weighted Average Lowest Marginal Weighted Average Highest Marginal
Nonfirm Sale Price (WALMNSP) Nonfirm Purchase Price (WAHMNPP)
------------------------------------------------------------------------
Scenario: Customer surplus 35 MW Scenario: Customer deficit 175 MW
Sale #1 25 MW @ $25 ($625) Purchase #1 100 MW @ $200
($20,000)
Sale #2 25 MW @ $43 ($1,075) Purchase #2 50 MW @ $100
($5,000)
Sale #3 25 MW @ $100 ($2,500) Purchase #3 100 MW @ $65
($6,500)
Sale #4 25 MW @ $200 ($5,000) Purchase #4 50 MW @ $35
($1,750)
Calculation keys off of surplus of Calculation keys off deficit of 175
35 MW: MW:
($625)+(10 MW x $43) = $1,055 ($20,000)+($5,000)+(25 MW x
$65) = $26,625
$1,055 / 35 MW = $30.14 $26,625 / 175 MW = $152.14
WALMNSP: $30.14/MW x 90 WAHMNPP: $152.14/MW x 110
percent = $27.13/MW percent = $167.36/MW
Or Palo Verde posted rate, if Or Palo Verde posted rate, if
no sales (Applicable no purchases (Applicable
transmission cost deducted) transmission cost added)
------------------------------------------------------------------------
Procedural Requirements
The proposed rate will result in a minor rate adjustment as defined
at 10 CFR 903.2. A minor rate adjustment is one that will not increase
annual revenue of the power system by more than 1 percent. The proposed
rate will accomplish a pass-through of costs incurred to purchase
energy to balance the control area, resulting in only incidental
changes in net revenue. An informal public information meeting will be
held on January 15, 2002, at the Rocky Mountain Customer Service Region
Office. No public comment forum will be held. The comment period will
end on January 31, 2002. All comments must be sent to the address
listed in the Addresses section. Western will review written comments
received during the comment period and will recommend that the proposed
rate or a revised proposed rate be approved on an interim basis by the
DOE Deputy Secretary.
The proposed rate for Energy Imbalance Service is being established
pursuant to the Department of Energy Organization Act, 42 U.S.C. 7101-
7352; the Reclamation Act of 1902, ch. 1093, 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 the projects involved.
By Amendment No. 3 to Delegation Order No. 0204-108, published
November 10, 1993 (58 FR 59716), the Secretary of DOE delegated (1) the
authority to develop long-term power and transmission rates on a
nonexclusive basis to Western's Administrator; and (2) the authority to
confirm, approve, and place into effect on a final basis, to remand, or
to disapprove such rates to FERC. In Delegation Order No. 0204-172,
effective November 24, 1999, the Secretary of Energy delegated the
authority to confirm, approve, and place such rates into effect on an
interim basis to the Deputy Secretary. Existing DOE procedures for
public participation in power rate adjustments are found at 10 CFR part
903.
Availability of Information
Comments, letters, memorandums, or other documents made or kept by
Western in developing the proposed rate will be made available for
inspection and copying at the Rocky Mountain Customer Service Region,
located at 5555 East Crossroads Boulevard, Loveland, CO 80538-8986.
Regulatory Procedural Requirements
Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601, et seq.)
requires Federal agencies to perform a regulatory flexibility analysis
if a final rule is likely to have a significant economic impact on a
substantial number of small entities and there is a legal requirement
to issue a general notice of proposed rulemaking. Western has
determined that this action does not require a regulatory flexibility
analysis since it is a rulemaking of particular applicability involving
rates or services applicable to public property.
Environmental Compliance
In compliance with the National Environmental Policy Act of 1969
(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 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
[[Page 65706]]
clearance of this notice by the Office of Management and Budget is
required.
Small Business Regulatory Enforcement Fairness Act
Western has determined that this rule is exempt from Congressional
notification requirements under 5 U.S.C. 801 because the action is a
rulemaking of particular applicability relating to rates or services
and involves matters of procedure.
Dated: December 5, 2001.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 01-31347 Filed 12-19-01; 8:45 am]
BILLING CODE 6450-01-P