[Federal Register Volume 75, Number 184 (Thursday, September 23, 2010)]
[Notices]
[Pages 57912-57915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23807]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Boulder Canyon Project-Rate Order No. WAPA-150
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of Extension of Existing Rate-setting Formula and
Approval of FY 2011 Base Charge and Rates.
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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate
Order No. WAPA-150 and Rate Schedule BCP-F8 extending on an interim
basis the existing Boulder Canyon Project (BCP) rate-setting formula
and approving the base charge and rates for FY 2011. The existing
Electric Service Rate Schedule, BCP-F7, expires September 30, 2010. The
Electric Service Rate Schedule contains a rate-setting formula that is
recalculated annually based on updated financial and load data. The
existing rate-setting formula is being extended under Rate Order No.
WAPA-150 and Rate Schedule BCP-F8.
DATES: Rate Schedule BCP-F8 will be placed into effect on an interim
basis on the first day of the first full billing period beginning on
October 1, 2010, and will be in effect until the Federal Energy
Regulatory Commission (FERC) confirms, approves, and places the rate
schedule in effect on a final basis up to September 30, 2015, or until
the rate schedule is superseded.
FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Rates Manager, Desert
Southwest Customer Service Region, Western Area Power Administration,
P.O. Box 6457, Phoenix, AZ 85005-
[[Page 57913]]
6457, (602) 605-2442, e-mail [email protected].
SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved on
an interim basis existing Electric Rate Schedule BCP-120 for BCP
electric service on August 11, 2005 (Rate Order No. WAPA-120, 70 FR
50316 (August 26, 2005)). FERC confirmed and approved the rate schedule
on June 22, 2006, in FERC Docket No. EF05-5091-000 (115 FERC ] 61,362).
The rate schedule became effective on October 1, 2005, and expires
September 30, 2010.
The existing base charge and rates for BCP electric service under
Rate Schedule BCP-F7 expire September 30, 2010. Effective October 1,
2010, Rate Schedule BCP-F7 will be superseded by the new base charge
and rates in Rate Schedule BCP-F8. Under the existing formula, the
rates for BCP electric service consist of a base charge, a capacity
rate, and an energy rate. The provisional base charge is $75,182,522,
the provisional capacity rate is $1.90 per kilowattmonth (kWmonth), and
the provisional energy rate is 9.86 mills/kWh.
The adjusted base charge and rates reflect increases in the overall
O&M program costs, visitor services, uprating program principal
payments, replacement costs, and investment principal and interest
payments. In addition to the annual expenses increasing, the offset of
other revenues is decreasing. The new base charge and rates will
provide sufficient revenue to pay all annual costs, including interest
expense, and repayment of power investment within the allowable
periods.
Western's existing rate-setting formula for electric service
requires recalculation of the base charge and rates annually to ensure
sufficient recovery of project expenses, including interest, and
capital requirements up to September 30, 2015.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to Western's Administrator, (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. Under Delegation Order No. 00-037.00 10
CFR part 903, and 18 CFR part 300, I hereby approve Rate Order No.
WAPA-150, which extends the existing rate-setting formula on an interim
basis up to September 30, 2015 and approve the FY 2011 proposed BCP
electric service base charge and rates. Rate Order No. WAPA-150 will be
submitted to the FERC for confirmation and approval on a final basis.
Dated: September 16, 2010.
Daniel B. Poneman,
Deputy Secretary.
Department of Energy
Deputy Secretary
In the matter of: Western Area Power Administration Rate
Extension for the Boulder Canyon Project; Rate Order No. WAPA-150;
Electric Service Rate Schedule Order Confirming and Approving an
Extension of the Boulder Canyon Project Electric Service Rate-
Setting Formula and FY 2011 Base Charge and Rates Rate Schedule
The extension of the existing rate-setting formula and the approval
of base charge and rates for FY 2011 were conducted in accordance with
section 302 of the Department of Energy (DOE) Organization Act (42
U.S.C. 7152). This Act transferred to and vested in the Secretary of
Energy 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 laws, particularly section 9(c) of the Reclamation Project
Act of 1939 (43 U.S.C. 485h(c)), and other Acts that specifically apply
to the project involved.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to Western's Administrator, (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 the Federal Energy Regulatory Commission
(FERC). Existing DOE procedures for public participation in electric
service rate adjustments are located at 10 CFR part 903, effective
September 18, 1985 (50 FR 37835), and 18 CFR part 300. Western followed
the DOE procedures in developing the rate formula approved by FERC on
June 22, 2006, at 115 FERC 61362.
Background
On June 22, 2006, in Docket No. EF05-5091-000 at 115 FERC ] 61,362,
FERC issued an order confirming, approving and placing into effect on a
final basis the Electric Service Rate Schedule BCP-F7 for the Boulder
Canyon Project (BCP). The Electric Service Rate Schedule, Rate Order
No. WAPA-120, was approved for 5 years beginning October 1, 2005,
through September 30, 2010. With this interim approval, the existing
rate-setting formula will be extended up to September 30, 2015 under
Rate Order No. WAPA-150.
In addition, new base charge and rates will take effect on the
first day of the first full billing period beginning on or after
October 1, 2010, and will remain in effect until September 30, 2011.
When compared to the existing BCP electric service base charge and
rates under Rate Schedule BCP-F7, the proposed base charge and rates
for BCP electric service reflect an overall composite rate increase of
approximately 4.20 percent effective October 1, 2010. The existing
composite rate under Rate Schedule BCP-F7 is 18.93 mills per
kilowatthour (mills/kWh). The proposed composite rate under Rate
Schedule BCP-F8 is 19.73 mills/kWh.
BCP Electric Service Base Charge and Rates
BCP electric service rates are designed to recover an annual
revenue requirement that includes operation and maintenance expenses,
payments to states, visitor services, the uprating program,
replacements, investment repayment and interest expense. Western's
Power Repayment Study (PRS) allocates the projected annual revenue
requirement for electric service equally between capacity and energy.
The existing formula for developing electric service rates would
sufficiently recover all project expenses (including interest) and
capital requirements up to September 30, 2015.
The BCP electric service base charge and rates are increasing in FY
2011 due to the increase of $5 million in annual expenses from FY 2010
to FY 2011. In addition to the annual expense increase, other revenues,
which act as an offset to total expenses, are also decreasing $2.5
million. A projected carryover at the end of FY 2010 results in
mitigating the increase in the base charge to $4.5 million in FY 2011.
The existing base charge and rates for BCP electric service under
Rate Schedule BCP-F7 expire September 30, 2010. As stated above, Rate
Schedule BCP-F7 will be superseded by the new base charge and rates in
Rate Schedule BCP-F8, effective October 1, 2010. Under the existing
formula, the rates for BCP electric service consist of a base charge, a
capacity rate, and an energy rate. The provisional base charge is
$75,182,522, the provisional capacity
[[Page 57914]]
rate is $1.90 per kilowattmonth (kWmonth), and the provisional energy
rate is 9.86 mills/kWh.
The adjusted base charge and rates reflect increases in the overall
O&M program costs, visitor services, uprating program principal
payments, replacement costs, and investment principal and interest
payments. In addition to the annual expenses increasing, the offset of
other revenues is decreasing. The new base charge and rates will
provide sufficient revenue to pay all annual costs, including interest
expense, and repayment of power investment within the allowable
periods.
Western followed the Procedures for Public Participation in Power
and Transmission Rate Adjustments and Extensions set forth in 10 CFR
part 903.23(a)(2) in extending the BCP rate-setting formula and setting
the new base charge and rates for FY 2011. The steps Western took to
involve interested parties in the rate process were:
1. On February 2, 2010, Western published a notice in the Federal
Register announcing the proposed base charge and rates for BCP,
beginning the public consultation and comment period, and announcing
the public information and public comment forums. (75 FR 5315) Western
also announced the public forum dates as well as access to the BCP rate
adjustment Web site at http://www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.
2. On March 10, 2010, Western hosted an informal customer meeting
in Phoenix, Arizona. At this informal meeting, Western explained the
rationale for the rate adjustment and answered questions.
3. On April 7, 2010, Western held a public information forum at the
Desert Southwest Regional Office in Phoenix, Arizona. Western provided
detailed explanations of the proposed base charge and rates for BCP and
answered questions. Western provided a copy of the rate presentation,
supporting documentation, and informational handouts.
4. On April 22, 2010, Western held a comment forum to give the
public an opportunity to comment for the record. Three individuals
representing entities commented at this forum.
5. Western received one comment letter during the consultation and
comment period, which ended May 3, 2010. All comments have been
considered in preparing this Rate Order.
Comments
Written comments were received from the following organization:
Irrigation & Electrical Districts Association of Arizona, Arizona.
Oral comments were made on behalf of the following organizations:
Arizona Municipal Power Users Association, Arizona.
Irrigation & Electrical Districts Association of Arizona, Arizona.
Metropolitan Water District of Southern California, California.
The comments and responses regarding the electric service base
charge and rates, paraphrased for brevity when not affecting the
meaning of the statement(s), are discussed below. Direct quotes from
comment letters are used for clarification where necessary.
Comment: A commenter stated that he objects to a 3 percent indexing
factor used by the Federal Agencies for increasing their annual
expenses when the Consumer Price Index (CPI) current year was less than
1 percent and the projected CPI for next year is flat, showing no
increase. It was expressed that under these circumstances a 3-percent
increase in expected expenditures is unrealistic.
Response: Reclamation and Western are sensitive to increased costs
to the customers. Although Western's and Reclamation's budgets are not
explicitly tied to the CPI or any other inflation index, both agencies
are conscious of these factors and work diligently to adhere to the
mandate of maintaining the lowest rates possible to the customer while
using sound business principles. Both agencies continue to provide
transparency in development of their annual budgets during the annual
Technical Review Committee process, the Engineering and Operating
Committee meetings and in the annual rate processes. Budgets are
estimated as conservatively as possible, taking into consideration any
increases in labor costs approved by Congress for the upcoming year.
All budgets are ultimately approved in close coordination with BCP
Contractors, to ensure all annual costs are covered while maintaining a
safe and reliable resource.
Comment: A commenter stated that the Bureau of Reclamation's post
September 11, 2001, security costs be adjusted upward or downward with
regard to the CPI. Since the CPI applicable to this budget declined, a
corresponding decline in the security costs should be reflected in this
budget.
Response: As stated in the notes for the Boulder Canyon Project
FY2011 Final Ten Year Operating Plan under Administrative and General
Expense (A&GE), an adjustment for the projected security non-
reimbursable costs has been incorporated into the final total for the
``Post 9/11 Security contract.'' Per the Reclamation Directives &
Standards (D&S) for Reimbursability of Security Costs, establishing
provisions for the reimbursability of Reclamation security costs, under
authority of the Reclamation Act of June 17, 1902 (32 Stat. 388; 43
U.S.C. 391) and acts amendatory thereof and supplementary thereto;
Section 513 of the Consolidated Natural Resources Act of 2008 (Pub. L.
110-229), the projected FY2011 non-reimbursable security projected
reduction in expense, utilizing the CPI as indicated in the D&S, and
totaling $275,000 ($239,000 reducing A&GE and $36,000 reducing Visitor
Services total) was factored into the FY2011 projected expenditures,
per the ``Report to Congress'' and based upon the reimbursability
ceiling for Reclamation. The D&S can be viewed at http://www.usbr.gov/recman/sle/sle05-01.pdf.
Comment: A commenter asked for an explanation of a notation made by
the Bureau of Reclamation regarding the total water scheduling account
being two and one half years in arrears. What impact does this
statement have on the Hoover rate? Why is this account in arrears? What
is being done about it?
Response: After discussions between Reclamation Water Operations,
Power Office and Financial Management, Reclamation notes that the
account itself is not two and one half years in arrears, and the
reference will be removed from the notes under Operations summary
spreadsheets in the Ten Year Operating Plan. It has no impact on the
Hoover rates.
Comment: A commenter encouraged Western to file comments in FERC
Docket No. RM10-11-000, Notice of Inquiry into the Integration of
Variable Energy Resources, similar to those filed by the Bureau of
Reclamation since integration could increase costs to the BCP.
Response: Any costs to the BCP associated with the integration of
variable energy resources are speculative at this point, and therefore
are not included in these proposed base charge and rates.
Availability of Information
Information about this extension and adjustment of electric service
base charge and rates, including power repayment studies, comments,
letters, memoranda, and other supporting material made or kept by
Western used to develop the provisional base charge and rates, is
available for public review in the Desert Southwest Customer Service
Regional Office, Western Area
[[Page 57915]]
Power Administration, 615 South 43rd Avenue, Phoenix, Arizona.
Order
In view of the foregoing and under the authority delegated to me, I
hereby confirm and approve on an interim basis, effective October 1,
2010, Rate Schedule BCP-F8, for the Boulder Canyon Project of the
Western Area Power Administration. The rate schedule shall remain in
effect on an interim basis, pending FERC confirmation and approval of
it or substitute rates on a final basis up to September 30, 2015.
Dated: September 16, 2010.
Daniel B. Poneman, Deputy Secretary.
United States Department of Energy
Western Area Power Administration
Boulder Canyon Project, Arizona, Nevada, Southern California
Schedule of Rates for Electric Service
Effective
The first day of the first full billing period beginning on or
after October 1, 2010, and remaining in effect through September 30,
2015, or until superseded.
Available
In the marketing area serviced by the Boulder Canyon Project (BCP).
Applicable
To power Contractors served by the BCP supplied through one meter,
at one point of delivery, unless otherwise provided by contract.
Character and Conditions of Service
Alternating current at 60 hertz, three-phase, delivered and metered
at the voltages and points established by contract.
Base Charge
The total charge paid by a Contractor for annual capacity and
energy based on the annual revenue requirement. The base charge shall
be composed of an energy component and a capacity component:
Energy Charge: Each Contractor shall be billed monthly an energy
charge equal to the Rate Year Energy Dollar multiplied by the
Contractor's firm energy percentage multiplied by the Contractor's
monthly energy ratio as provided by contract.
Capacity Charge: Each Contractor shall be billed monthly a capacity
charge equal to the Rate Year Capacity Dollar divided by 12 multiplied
by the Contractor's contingent capacity percentage as provided by
contract.
Forecast Rates
Energy: Shall be equal to the Rate Year Energy Dollar divided by
the lesser of the total master schedule energy or 4,501.001 million
kWhs. This rate is to be applied for use of excess energy, unauthorized
overruns, and water pump energy.
Capacity: Shall be equal to the Rate Year Capacity Dollar divided
by 1,951,000 kWs, to be applied for use of unauthorized overruns.
Calculated Energy Rate
Within 90 days after the end of each rate year, a Calculated Energy
Rate shall be calculated. If the energy deemed delivered is greater
than 4,501.001 million kWhs, then the Calculated Energy Rate shall be
applied to each Contractor's energy deemed delivered. A credit or debit
shall be established based on the difference between the Contractor's
Energy Dollar and the Contractor's actual energy charge, to be applied
the following month calculated or as soon as possible thereafter.
Lower Basin Development Fund Contribution Charge
The contribution charge is 4.5 mills/kWh for each kWh measured or
scheduled to an Arizona purchaser and 2.5 mills/kWh for each kWh
measured or scheduled to a California or Nevada purchaser, except for
purchased power.
Billing for Unauthorized Overruns
For each billing period in which there is a contract violation
involving an unauthorized overrun of the contractual power obligations,
such overrun shall be billed at 10 times the Forecast Energy Rate and
Forecast Capacity Rate. The contribution charge shall be applied also
to each kWh of overrun.
Adjustments
None.
[FR Doc. 2010-23807 Filed 9-22-10; 8:45 am]
BILLING CODE 6450-01-P