Salt Lake City Area Integrated Projects Firm Power, Colorado River Storage Project Transmission, and Ancillary Services Rates

[Federal Register: March 6, 2002 (Volume 67, Number 44)]
[Notices]
[Page 10189-10192]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr02-51]

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DEPARTMENT OF ENERGY
Western Area Power Administration

Salt Lake City Area Integrated Projects Firm Power, Colorado
River Storage Project Transmission, and Ancillary Services Rates

AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration's (Western) Colorado
River Storage Project Management Center (CRSP MC) is proposing
adjustments to the Salt Lake City Area Integrated Projects (SLCA/IP)
firm power, the CRSP transmission, and the ancillary services rates.
The SLCA/IP consists of the CRSP, Collbran, and Rio Grande projects,
which were integrated for marketing and ratemaking purposes on October
1, 1987. Two CRSP participating projects that have power facilities,
the Dolores and Seedskadee projects, are also integrated with CRSP. The
current firm power, transmission, and ancillary services rates expire
March 30, 2003. The current rate is not sufficient to pay all annual
costs including operating, maintenance, replacement, and interest
expenses, and to repay investment and irrigation assistance obligations
within the required period. The proposed rates will provide sufficient
revenue to pay all annual costs, including operation, maintenance,
replacement, purchased power, and interest expenses, and to repay
investment and irrigation assistance obligations within the allowable
period. A brochure that identifies the reasons for the rate adjustment
will be available in February 2002. Proposed rates are scheduled to
become effective on October 1, 2002, the beginning of Federal fiscal
year (FY) 2003. This Federal Register notice initiates the formal
process for the proposed rates.

DATES: The consultation and comment period begins today and ends June
4, 2002. Western representatives will explain the proposed rates at a
public forum on March 19, 2002, beginning at 10 a.m., Salt Lake City,
UT. Interested parties can provide oral and written comments at a
public forum on April 23, 2002, beginning at 10 a.m., at the same
location.

ADDRESSES: The meetings will be held at Hilton Salt Lake City Center,
255 South West Temple, Salt Lake City, UT. If you are interested in
sending comments, address them to: Mr. David Bennion, Acting CRSP
Manager, CRSP Management Center, Western Area Power Administration,
P.O. Box 11606, Salt Lake City, UT 84147-0606, e-mail bennion@wapa.gov.
Western must receive comments by the end of the consultation and
comment period to be assured consideration.

FOR FURTHER INFORMATION CONTACT: Ms. Carol Loftin, Rates Manager, CRSP
Management Center, Western Area Power Administration, P.O. Box 11606,
Salt Lake City, UT 84147-0606, telephone (801) 524-6380, e-mail
loftinc@wapa.gov, or visit CRSP MC's home page at: www.wapa.gov/crsp/
crsp.htm.

SUPPLEMENTARY INFORMATION:

Proposed Rate for SLCA/IP Firm Power

The proposed rate for SLCA/IP firm power is designed to return an
annual amount of revenue to meet the repayment of power investment,
payment of interest, purchased power, operation, maintenance and
replacement expenses, and the repayment of irrigation assistance costs,
as required by law. A brochure that identifies the reasons for the rate
adjustment will be available in February 2002.
The Department of Energy (DOE) Deputy Secretary approved Rate
Schedule SLIP-F6 for SLCA/IP firm power on March 23, 1998 (Rate Order
No. WAPA-78, April 6, 1998), and the Federal Energy Regulatory
Commission (FERC) confirmed and approved the rate schedule on July 17,
1998, in FERC Docket No. EF98-5171-000. Rate Schedule SLIP-F6 became
effective on April 1, 1998, for the period ending March 30, 2003. Under
Rate Schedule SLIP-F6, the energy rate is 8.10 mills/kilowatthour
(kWh), and the capacity rate is $3.44 per kilowattmonth (kWmonth). The
composite rate (revenue requirements per kWh usage) is 17.57 mills/kWh.
The proposed rate would consist of a base rate and a purchase adder
rate (PAR). The base rate would meet all estimated firm power revenue
requirements except the cost for purchased power. The proposed base
rate for SLCA/IP firm power under SLIP-F7, is 8.4 mills/kWh for energy
and $3.57 per kWmonth for capacity. The proposed composite base rate is
18.32 mills/kWh.
The PAR would be established for 2-year periods to meet the cost of
purchased power based on near-term projections of energy purchases and
prices. The PAR estimate would be based on current energy pricing
levels and the Bureau of Reclamation's (Reclamation) current 24-month
hydrological study.
Both the firm power base rate and the PAR will apply to all firm
power customers and become effective October 1, 2002.

Base Rate

The proposed base rate revenue requirements are based on the FY
2003 work plans for Western and Reclamation. These work plans form the
bases for the FY 2003 Congressional budgets for the two agencies. The
most current work plans will be included in the rate order submission.
The FY 1999 historical data are the latest available for the rate
proposal. As FY 2000 and FY 2001 historical data become available, they
will be incorporated into the final rate-setting study.
The rate increase results from the increase in net annual revenue
requirements of $2.9 million per year over the rate-setting period. The
increased revenue requirements primarily stem from an increase of $25.8
million in annual operation and maintenance (O&M) costs, which include
costs for both Western and Reclamation. The purchased power costs of
$5.4 million per year in the existing rate are no longer included in
the base rate. Other miscellaneous revenue requirement increases amount
to $2.1 million. These increases in projected annual expenses are
offset by an increase in projected revenues amounting to about $13.4
million per year, most of which are a result of the CRSP merchant
function activities, CRSP transmission sales, and ancillary services
sales. Furthermore, integrated projects' revenue requirements,
interest, and principal payments collectively decreased by about $6.2
million.

Purchase Adder Rate

The PAR is computed by reviewing Reclamation's 24-month
hydrological study for the Upper Colorado River Basin to project
generation resources. This amount is compared with contractual
Sustainable Hydro Power (SHP) customer commitments for energy to
determine purchase requirements. The purchased requirements are

[[Page 10190]]

multiplied by the forecasted future prices during the same time period.
The estimated purchased power costs based on these projections for
energy requirements and prices for the two future years are divided by
the total customer sales commitments (6,007 GWH) to determine the adder
energy rate.
At the end of the 2-year period, Western in consultation with the
SLCA/IP customers, will compare the actual purchased power costs with
what was projected for the same period. The surplus or deficit amount
resulting from this comparison will be combined with a recalculation of
the PAR formula for the following 2 years.
The following table is a comparison of the current and proposed
SLCA/IP firm power rate and an example of the PAR. For the PAR example,
the table assumes purchased power requirements of 514 GWH per year and
an energy price of 30 mills/kWh. For FY 2003 and FY 2004 the PAR would
be 2.6 mills/kWh.

Comparison of Current and Proposed Firm Power Rates and Purchase Adder Rate Example
----------------------------------------------------------------------------------------------------------------
Current rate Proposed rate
Rate schedule April 1, 1998- Oct. 1, 2002- 30- Increase
30-Mar-03 SLIP- Sep-07 SLIP-F7
----------------------------------------------------------------------F6----------------------------------------
Base Rate:
Energy (mills/kWh)...................................... 8.1 8.4 0.3
Capacity ($/kWmonth..................................... 3.44 3.57 0.13
Composite Rate:
Base Rate............................................... 17.57 18.32 0.75
PAR Example (mills/kWh)................................. N/A 2.6 N/A
---------------------------------------------------
Total............................................... 17.57 20.92 3.35
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Adjustment Clauses Associated With the Proposed Rate for SLCA/IP Firm
Power

All adjustment clauses for the proposed rate remain the same as
those included in the current rate with the exception of the purchased
resources adjustment. Since all customers have signed the Replacement
Purchase Options Amendment, it is no longer necessary to include the
statement that ``contractors who are not receiving service under the
Replacement Purchase Options Amendment will also receive additional
firming on a pass-through-cost basis. This adjustment is to ensure that
Western recovers the purchased power costs and any other associated
costs for the firming purchases.''

Proposed Rate Formula for CRSP Transmission Services

A new rate methodology is being proposed that is more consistent
with the methodology used at other Western regions and other utilities.
The proposed methodology is an annual fixed charge formula that will be
used to determine the revenue requirement to be recovered from firm and
non-firm transmission service. The annual transmission revenue
requirements include O&M expenses, administrative and general expenses,
interest expense, and depreciation expense. This revenue requirement is
offset by appropriate CRSP transmission system revenues. The proposed
rates apply to current and future CRSP transmission service and include
the cost for scheduling, system control, and dispatch service. The cost
of transmission service to provide Western's Firm Electric Service will
continue to be included in the SLCA/IP firm power rate, consistent with
existing contracts.

Firm Point-to-Point

The firm point-to-point rate is based on a test year using an
annual fixed charge methodology. This test year relies upon the most
recent historical audited data available. The annual revenue
requirements are reduced by revenue credits such as non-firm
transmission and phase shifter revenues. The resultant net annual
revenue requirement is divided by the capacity reservation needed to
meet firm power and transmission commitments in kW, plus the total
network integration loads at system peak, to derive a cost/kilowattyear
(kWyear). As current FY financial data becomes available, they will be
incorporated and used as the test year. The proposed rate for firm
point-to-point CRSP transmission service is $25.96 per kWyear, which
equates to $2.14 per kWmonth for FY 2003, based on FY 1999 audited
data. As FY 2000 and FY 2001 audited data become available, these will
be incorporated and used as the test year. Each year, the formula will
be recalculated to determine if a revised rate needs to be implemented.
The rate formula is proposed to be in effect until September 30, 2007.
The cost/kWyear is calculated using the following formula:

(1) ARR--TRC = NARR
(2) NARR
------
TSTL
Where:

ARR = Annual Revenue Requirements
TRC = Transmission Revenue Credits
NARR = Net Annual Transmission Revenue Requirements
TSTL = CRSP Transmission System Total Load

Non-Firm Point-to-Point

The proposed rate for non-firm point-to-point CRSP transmission
service is a mills/kWh rate based on market conditions but never higher
than the firm point-to-point rate. This rate will remain in effect
concurrently with the firm point-to-point rate.

Network

The proposed rate for network transmission, if offered by CRSP MC,
will be consistent with Western's Tariff, the rate methodology in FERC
Order No. 888, and will be based on the annual revenue requirements
then in effect, as determined by the annual fixed charge methodology.
Western is not currently providing network transmission on its CRSP
transmission system and only has available transmission capacity on
isolated portions of the CRSP transmission system.

Adjustment Clauses Associated with the Proposed Rates for Firm and Non-
Firm Transmission Services

Reactive Power
This provision in Rate Schedules SP-PTP5, SP-NW1, and SP-NFT4 will
remain the same under the proposed rates for CRSP transmission.
Adjustment for Losses
The adjustment for losses provision contained in Rate Schedules SP-
PTP5, SP-NW1, and SP-NFT4 will remain the

[[Page 10191]]

same and also include a statement to allow for financial compensation
to recover losses. The following statement will be added to the
existing provision: ``If losses are not fully provided by a
transmission customer, charges for financial compensation may apply.''
This provides for compensation to Western for those instances in which
losses were not adequately provided for in the form of energy.
Adjustment for Industry Restructuring
The proposed rates for CRSP transmission include a provision to
pass through electric industry restructuring costs associated with
providing transmission service. These costs will be passed through to
each appropriate transmission customer. This provision will be included
as an adjustment clause in the transmission rate schedules for firm and
non-firm transmission.

Proposed Rates for Ancillary Services

On April 1, 1998, the Western Area Upper Colorado (WAUC) control
area, within which most of the CRSP transmission system lies, operated
by the CRSP MC, was merged into two other control areas. These control
areas are the Western Area Colorado Missouri (WACM), operated by
Western's Rocky Mountain Region (RMR), and the Western Area Lower
Colorado (WALC), operated by Western's Desert Southwest Region (DSWR).
The boundary between these control areas is the Shiprock Substation.
Six ancillary services will be offered by CRSP MC; they are (1)
scheduling, system control, and dispatch service, (2) reactive supply
and voltage control service, (3) regulation and frequency response
service, (4) energy imbalance service, (5) spinning reserve service,
and (6) supplemental reserve service. The first two, scheduling, system
control, and dispatch service, and reactive supply and voltage control
service are required to be purchased by the CRSP transmission customer.
The remaining four will also be offered either from the control area or
from the CRSP MC Merchant. The following table summarizes the ancillary
services available.

Proposed SLCA/IP Ancillary Services Rates
------------------------------------------------------------------------
Ancillary service
Ancillary service type description Rate
------------------------------------------------------------------------
Scheduling, System Control, Required to schedule Included in
and Dispatch. the movement of transmission rate.
power through, out
of, within, or into
a control area.
Reactive Supply and Voltage Reactive power DSWR rate schedule--
Control. support provided DSW-RS1, or RMR
from generation rare schedule--L-
facilities that is AS2 or as
necessary to superseded will
maintain apply.
transmission
voltages within
acceptable limits
of the system.
Regulation and Frequency Providing generation If available from
Response. to match resources SLCA/IP resources,
and loads on a real- the firm capacity
time continuous rate will apply. If
basis. unavailable, DSWR
rate schedule--DSW-
FR1, or RMR rate
schedule--L-AS3 or
as superseded will
apply.
Energy Imbalance............ Provided when a Provided through
difference occurs DSWR rate schedule--
between the DSW-EI1 and RMR
scheduled and rate schedule--L-
actual delivery of AS4 or as
energy to a load or superseded, or the
from a generation customer can make
resource within a alternative
control area over a comparable
single hour. arrangements.
Spinning Reserve............ Needed to serve load Market-based rate.
immediately in the
event of a system
contingency.
Supplement Reserve.......... Needed to serve load Market-based rate.
in the event of a
system contingency;
however, it is not
available
immediately to
serve load, but
rather within a
short period of
time.
------------------------------------------------------------------------

Scheduling, System Control, and Dispatch

This is the only service included in the CRSP transmission rate.
Firm power and transmission customers receive this service at no
additional charge.

Reactive Supply and Voltage Control

This ancillary service is not included in the CRSP transmission
service rate. CRSP transmission customers will be required to purchase
this service from the WACM or WALC control area operator. The rate
schedules of DSWR or RMR will apply, according to which control area
provides this service.

Regulation and Frequency Response

If the CRSP MC has regulation available for sale, it will charge
the SLCA/IP firm power capacity rate currently in effect. If regulation
is unavailable from the CRSP MC, the customer may obtain it from the
WALC or WACM control areas. Transmission customers serving loads within
the transmission provider's control area must acquire this ancillary
service from Western, from a third party, or by self supply.

Energy Imbalance

This ancillary service is not included in the CRSP transmission
service rate. Transmission customers serving loads within the
transmission provider's control area must acquire this ancillary
service from Western, from a third party, or by self supply. If this
service is provided by Western, the rate schedules of DSWR or RMR will
apply, according to which control area provides this service.

Spinning and Supplemental Reserves

These ancillary services are not included in the CRSP transmission
service rate. The CRSP MC will charge current market rates for these
reserves. Transmission customers serving loads within the transmission
provider's control area must acquire these ancillary services from
Western, from a third party, or by self supply.

Procedural Requirements

Since the proposed rates constitute a major rate adjustment as
defined by the procedures for public participation in general rate
adjustments, as cited below, Western will hold both public information
forums and public comment forums. After considering comments, Western
will recommend proposed rates for interim approval by the DOE Deputy
Secretary.
The proposed SLCA/IP firm power, CRSP transmission, and ancillary
services rates are being established pursuant to the Department of
Energy Organization Act, 42 U.S.C. 7101-7352;

[[Page 10192]]

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 Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of DOE delegated (1) the authority to develop long-term power
and transmission rates on a nonexclusive basis to Western's
Administrator, (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 FERC. Existing DOE
procedures for public participation in power rate adjustments (10 CFR
part 903) became effective on September 18, 1985.

Availability of Information

Interested parties may review and copy all brochures, studies,
comments, letters, memorandums, or other documents made or kept by
Western in developing the proposed rates. These documents are at the
CRSP MC, located at 150 East Social Hall Avenue, Suite 300, Salt Lake
City, Utah.

Regulatory Prodedural 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. 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 has determined that this action is categorically
excluded from preparing an environmental assessment or an environmental
impact statement.

Determination Under Executive Order 12866

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

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: February 15, 2002.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 02-5308 Filed 3-5-02; 8:45 am]
BILLING CODE 6450-01-P

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Salt Lake City Area Integrated Projects Firm Power, Colorado River Storage Project Transmission, and Ancillary Services Rates

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