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Proposed Rates for Loveland Area Projects Transmission and Ancillary Services
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: June 13, 2003 (Volume 68, Number 114)]
[Notices]
[Page 35398-35401]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jn03-70]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Proposed Rates for Loveland Area Projects Transmission and
Ancillary Services
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of proposed rates.
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SUMMARY: The Western Area Power Administration (Western) is proposing
rates for Loveland Area Projects (LAP) transmission and ancillary
services. Current rates have been extended through March 31, 2004. The
proposed rates, which are formula based, will provide sufficient
revenue to pay all annual costs, including interest expense, and
repayment of required investment within the allowable period. Rate
impacts are detailed in a brochure to be made available to all
interested parties. The proposed rates are scheduled to go into effect
on January 1, 2004, and will remain in effect through December 31,
2008. This Federal Register notice begins the formal process for the
proposed rates.
DATES: The consultation and comment period begins today and will end
September 11, 2003. Western will present a detailed explanation of the
proposed rates at the following public information forums:
1. July 14, 2003, 9 a.m. MDT, Denver, Colorado.
2. July 15, 2003, 1 p.m. CDT, Lincoln, Nebraska.
Western will receive oral and written comments at the following
public comment forum:
3. August 6, 2003, 11 a.m. MDT, Denver, Colorado.
ADDRESSES: The public information forums will be held at the following
locations:
1. Denver, Radisson Stapleton Plaza Hotel, 3333 Quebec Street,
Denver, Colorado.
2. Lincoln, Southeast Community College, 11th and O Street,
Lincoln, Nebraska.
The public comment forum will be held at the following location:
3. Denver, Radisson Stapleton Plaza Hotel, 3333 Quebec, Denver,
Colorado.
Written comments should be sent to: Joel K. Bladow, Regional
Manager, Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, e-mail: LAPTransAdj@wapa.gov. Official comments received via
letter and e-mail, as well as other pertinent information, will be
posted to our Web site located at http://www.wapa.gov/rm/rm.htm
after the comment period has closed. To assure consideration
of written comments, Western must receive them by the end of the
consultation and comment period.
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:
Proposed Rates for LAP Transmission
Western does not propose to change the formula-based rate
methodology for calculating the revenue requirement for Network, Firm,
and Non-Firm transmission services. Rates for these services will be
recalculated each year to incorporate the most recent financial and
load information and will be applicable to all transmission customers.
Proposed Revenue Requirement for Transmission Service
An annual fixed charge rate methodology is used to determine the
revenue requirement to be recovered from Network, Firm, and Non-Firm
transmission services. The annual transmission costs included are
operation and maintenance expenses, administrative and general
expenses, interest expense, and depreciation expense. Transmission
expenses, which increase transmission capacity, are also included in
the revenue requirement. These expenses are estimated to be $500,000
for FY 2004.
[[Page 35399]]
Proposed Rate for Network Transmission Service
The methodology for calculating the Network Transmission Service
rate is unchanged from Western's previously approved filing with the
Federal Energy Regulatory Commission (FERC). The current methodology
derives a network customer's monthly charge by multiplying a customer's
load ratio share times one-twelfth (\1/12\) of the annual network
transmission revenue requirement. The proposed revenue requirement for
Fiscal Year 2004 is decreasing from $40,570,808 to $38,776,237 or 4.4
percent, based on FY 2002 financial data.
Proposed Rate for Firm Point-to-Point Transmission Service
The proposed rate for Firm Point-to-Point Transmission Service is
decreasing from $2.88 per kilowattmonth (kW-month) to $2.68 per kW-
month, or 6.9 percent. The proposed rate for this service is the annual
revenue requirement for transmission divided by the 12-month coincident
monthly peak (12-cp) of the LAP transmission system, and divided again
by 12 months. The 12-cp for the LAP transmission system for Fiscal Year
2004, is 1,206,771 kW, based on FY 2002 load data.
Proposed Rate for Non-Firm Point-to-Point Transmission Service
Non-Firm Point-to-Point Transmission Service is available for
periods ranging from 1 hour to 1 month. The proposed maximum rate is
3.75 mills/kWh.
Proposed Rates for Ancillary Services
There is no change in the proposed formula-based rate methodologies
for calculating revenue requirements for Scheduling, System Control,
and Dispatch Service, or the Reactive Supply and Voltage Control
Service from Generation Sources. The rates for Operating Reserves, both
Supplemental and Spinning, are also unchanged.
The proposed rates do include changes to the formula-based rate
methodologies for Regulation and Frequency Response Service and Energy
Imbalance Service as outlined below. Additionally, a separate rate for
Regulation and Frequency Response Service for Intermittent Renewable
Resources has been added.
Two ancillary service rates, not part of the original portfolio of
ancillary services filed in 1998, are also being proposed under this
filing: (1) Unauthorized Use of Transmission and Control Area Resources
service, and (2) Transmission Losses service.
The rates for all of these services, as proposed, are applicable to
all customers within the Western Area Colorado Missouri (WACM) control
area.
Proposed Rate for Scheduling, System Control, and Dispatch Service
The rate methodology for calculating the revenue requirement for
the Scheduling, System Control, and Dispatch Service is unchanged from
Western's previously approved filing with FERC. However, the charging
basis for this rate will change from per-schedule-per-day, to per-tag-
per-day. The rate for this service, as proposed, is applicable to those
operating within the control area with schedules/tags that do not
include any segment of the Federal transmission system.
The revenue requirement for this service in Fiscal Year (FY) 2004
will decrease from $3,970,226 to $3, 796,470, a decrease of 4 percent.
This, combined with the change in the charging basis from schedule to
tag, will reduce the rate from $43.09 per schedule per day, to $25.22
per tag per day.
Western will continue to apply this rate against the number of
daily tags submitted for transmission transactions that are off the
Federal system; i.e., other than LAP or Colorado River Storage Project
transmission, and charge the transmission provider.
Proposed Rate for Reactive Supply and Voltage Control Service From
Generation Sources
The rate methodology for calculating the revenue requirement for
the Reactive Supply and Voltage Control Service from Generation Sources
is unchanged from Western's previously approved filing with FERC. The
rate is applicable to all transmission transactions within WACM.
Customers agreeing to respond to WACM's request for Reactive Supply and
Voltage Control Service from Generation Sources will receive a waiver
from this charge.
The revenue requirement for this service in FY 2004 is proposed to
increase from $1,644,071 to $1,682,672, or 2 percent. In addition, the
percentage of LAP capacity used to provide Reactive Supply and Voltage
Control Service from Generation Sources is also proposed to increase
from 2.3 percent to 2.5 percent, resulting in a slight increase in the
FY 2004 rate, from $0.103/kW-month to $0.108/kW-month, or 4.9%.
Proposed Rate for Regulation and Frequency Response Service
Western proposes several changes to the rate methodology for
Regulation and Frequency Response Service. The rate is applicable to
all transmission transactions with load served within WACM.
Western is proposing a revised annual operational analysis to more
accurately determine the amount of capacity needed to meet WACM's
regulation requirements. The current analysis determined that WACM
needs 75 megawatts (MW) or regulating capacity. Due to the limited
availability of hydroelectric capacity, Western has determined that
purchases must become a substantial part of the revenue requirement for
regulation. Therefore, Western is proposing a mix of Federal resources
and non-Federal purchases to provide this capacity. The amount of
regulation and cost of these purchases will be revised annually to
accurately reflect the capacity needed to supplement hydroelectric
resources. The unit cost and revenue requirement for Federal facilities
will continue to be calculated each year using the existing
methodology's annual fixed charge rate.
Using the proposed methodology, the revenue requirement for
Regulation and Frequency Response Service will increase from $3,727,782
to $5,031,873, an increase of 35 percent. The current rate for this
service is $0.164/kW-month, and the proposed rate will be $0.185/kW-
month, an increase of 13 percent.
Proposed Rate for Regulation and Frequency Response Service for
Intermittent Renewable Resources
Western supports the installation of renewable sources of energy,
but recognizes certain operational constraints exist in managing the
significant fluctuations that are a normal part of their operation.
These fluctuations require that a rate be developed and implemented
that will recover the expenses associated with such variation in
capacity. Therefore, Western is also proposing a rate for the
regulation requirement associated with intermittent renewable
resources.
The rate would be derived from the revenue requirement established
for load-based Regulation and Frequency Response Service, $5,031,873;
however, the basis would be a charge per unit of capacity. The rate is
proposed to be $5.59/kW-month, and would be applied against the amount
of capacity used.
An analysis done by Western to measure the variation of
intermittent renewable resources within WACM indicates that 27 percent
of the nameplate capacity of those units is required for regulation.
Western plans to offer resource owners a credit for more closely
matching generation schedules with
[[Page 35400]]
actual output. Also, Western is proposing additional charges for
resource owners utilizing more than the 27 percent of nameplate
capacity.
Proposed Rate for Energy Imbalance Service
No significant changes are proposed for Energy Imbalance Service,
but minor modifications are being proposed as a result of public
feedback since implementation in July 2002. The rate is applicable to
customers with resources and obligations within WACM. Three
modifications to the existing rate are being proposed.
The first proposed modification is the expansion of the minimum
deviation from 2 MW TO 4 MW.
The second proposed modification is that the hourly energy
imbalance will be rounded to the nearest whole number; e.g., 0.4 and
below will be rounded down to the nearest whole number, and 0.5 and
above will be rounded up to the nearest whole number.
The third proposed modification is a reduction of the penalty
associated with excursions for over or under deliveries outside of the
bandwidth. The penalty will be reduced from 50 percent to 25 percent.
Western will continue to use a +/-5 percent bandwidth, the
application of aggregate control area pricing to under or over
deliveries within the bandwidth, and LAP average real-time pricing for
Energy Imbalance Service.
Proposed Rates for Operating Reserves Service--Spinning and
Supplemental
This proposed rate is unchanged. Western is only able to meet its
own internal requirements for reserves, and has no long-term reserves
available for sale. At a customer's request, Western will purchase and
pass through the cost of reserves and any activation energy, plus a fee
for administration. For all reserves purchased, the customer will be
responsible for purchasing adequate transmission to support the
purchase.
Proposed Rate for Unauthorized Use of Transmission and Control Area
Resources Service
This rate, currently approved as a rate for short-term sales by
Western's Administrator through March 31, 2004, is proposed to be
included in Western's ancillary services portfolio.
The proposed rate will be applicable to all transmission customers
utilizing Western-managed facilities without adequate reservation. The
charge will be 150 percent of the transmissions service at issue; i.e.,
hourly, daily, weekly, monthly, with a maximum levy of a monthly
charge.
Proposed Rate for Transmission Losses Service
This rate was also approved as a rate for short-term sales by
Western's Administrator through March 31, 2004, and is proposed for
transition into Western's ancillary service portfolio.
No significant changes are proposed for this service. The only
modification will be a pricing change to calculate the cost of the loss
energy. Currently, the pricing used for this valuation is Palo-Verde
on- and off-peak daily pricing. Western proposes changing to LAP
average real-time purchase prices.
These transmission and ancillary service rates for LAP are 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 Delegation Order No. 00-037.00, approved December 6, 2001, the
DOE Secretary of Energy delegated (1) the authority to develop 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 (50 FR 37835).
Comparison of Rates and Revenue Requirements
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Proposed January
2004 rate FY 2003 rate
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Transmission:
Point-to-Point Rates:
Firm Transmission....... $2.68/kW-month...... $2.88/kW-month.
Non-Firm Transmission... 3.75 mills/kWh...... 3.75 mills/kWh.
Network Revenue Requirement. $38,776,237......... $40,570,808.
Scheduling, System Control, $25.22/tag/day $43.09/schedule/day
and Dispatch Service. Revenue Revenue
Requirement: Requirement:
$3,796,470. $3,970,226.
Reactive Supply and Voltage $0.108/kW-month $0.103/kW-month
Control Service from Revenue Revenue
Generation Sources. Requirement: Requirement:
$1,682,672. $1,644,071.
Regulation and Frequency $0.185/kW-month $0.164/kW-month
Response Service. Revenue Requirement Revenue
$5,031,873. Requirement:
$3,727,782.
Regulation and Frequency $5.59/kW-month No rate developed.
Response Service for Revenue
Intermittent Renewable Requirement:
Resources. $5,031,873.
Energy Imbalance Service.... Bandwith: +/-5%..... Bandwith: +/-5%.
Minimum Deviation: 4 Minimum Deviation: 2
MW. MW.
Outside Bandwidth Outside Bandwidth
Penalty: 25%. Penalty: 50%.
Pricing: LAP average Pricing: LAP average
real-time purchase/ real-time purchase/
sales pricing with sales pricing with
defaults. defaults.
Operating Reserves Service None available for None available for
(Spinning/Supplemental). long-term purchase. long-term purchase.
Western will offer Western will offer
to purchase and to purchase and
pass through cost, pass through cost,
plus 10% for plus 10% for
administration. administration.
Unauthorized Use of 150% of monthly 150% of monthly
Transmission and Control demand charge for demand charge for
Area Resources Service. service-at-issue. service-at-issue.
Transmission Losses Service. Assessed WACM Assessed WACM
postage-stamp loss postage-stamp loss
rate to all rate to all
scheduled scheduled
transmission transmission
transactions. transactions.
Pricing: LAP average Pricing: Palo Verde
real-time purchase/ daily on-/off-peak
sale pricing with pricing.
defaults.
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[[Page 35401]]
Availability of Information
All brochures, studies, comments, letters, memorandums, or other
documents made or kept by Western in developing the proposed rates are
available for inspection and copying at the Rocky Mountain Customer
Service Regional Office, located at 5555 East Crossroads Boulevard,
Loveland, Colorado. Many of these documents, as well as supporting
information, are also available on our website at the following
address: http://www.wapa.gov/rm/rm.htm.
Regulatory Procedure 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
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; so 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
rulemaking of particular applicability relating to rates or services
and involves matters of procedure.
Dated: May 30, 2003.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 03-14947 Filed 6-12-03; 8:45 am]
BILLING CODE 6450-01-M