[Federal Register Volume 76, Number 81 (Wednesday, April 27, 2011)]
[Notices]
[Pages 23583-23586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10081]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Western Area Power Administration
Application of the Energy Planning and Management Program Power
Marketing Initiative to the Boulder Canyon Project
AGENCY: Western Area Power Administration, Department of Energy.
ACTION: Notice of Decision and Notice of Proposal.
-----------------------------------------------------------------------
SUMMARY: The Western Area Power Administration (Western), a Federal
power marketing agency of the Department of Energy (DOE), will apply
the Energy Planning and Management Program (Program) Power Marketing
Initiative (PMI), as modified in this notice, to the Boulder Canyon
Project (BCP), as proposed in a Federal Register notice (FRN) published
on November 20, 2009. As a result, Western will extend a major
percentage of the marketable capacity and energy to existing BCP
customers. The remaining marketable resource shall form a resource pool
that shall be marketed by Western to eligible customers by means of a
public process. Western has determined that all BCP electric service
contracts resulting from this effort shall have a term of thirty (30)
years commencing October 1, 2017.
Western is also making new proposals relative to the BCP
remarketing effort including marketable capacity and energy, a resource
pool percentage, and excess energy provisions, as described in this
notice. Western is accepting public comments on these proposals. All
comments previously submitted in response to Western's November 20,
2009, notice will be considered in this process and are not required to
be resubmitted.
DATES: Western's decisions as described in this notice will become
effective upon May 27, 2011.
The comment period for these proposals begins today and ends June
16, 2011. Western will hold a public information forum and a public
comment forum on the proposals contained in this FRN. The public
information forum will be held on May 25, 2011, 10 a.m., MST, in
Phoenix, Arizona. The public comment forum will be held on May 25,
2011, 1 p.m., MST, in Phoenix, Arizona.
Western will accept written comments on or before June 16, 2011.
Western reserves the right to not consider any comments received after
this date.
ADDRESSES: Comments may be submitted to: Mr. Darrick Moe, Western Area
Power Administration, Desert Southwest Regional Manager, P.O. Box 6457,
Phoenix, AZ 85005-6457. Comments may also be faxed to (602) 605-2490 or
e-mailed to [email protected]. The public information and comment
forum location will be the Sheraton Crescent Hotel, 2620 West Dunlap
Avenue, Phoenix, Arizona.
FOR FURTHER INFORMATION CONTACT: Mr. Mike Simonton, Public Utilities
Specialist, Desert Southwest Region, Western Area Power Administration,
P.O. Box 6457, Phoenix, AZ 85005, telephone (602) 605-2675, e-mail
[email protected]. Information regarding Western's BCP Post 2017
remarketing efforts, the Program, and the Conformed General
Consolidated Power Marketing Criteria or Regulations for Boulder City
Area Projects (Conformed Criteria) published in the Federal Register
(49 FR 50582) on December 28, 1984, are available at http://www.wapa.gov/dsw/pwrmkt.
SUPPLEMENTARY INFORMATION:
Authorities: Western markets the BCP power resources under the
Department of Energy Organization Act (42 U.S.C. 7101-7352); and the
Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended and
supplemented by later acts; and other acts that apply specifically to
BCP, particularly section 5 of the Boulder Canyon Project Act of 1928
(45 Stat. 1057, as amended, 43 U.S.C. 617 et seq.).
Background: Existing BCP electric service contracts are set to
expire on September 30, 2017. On November 20, 2009 (74 FR 60256),
Western published its proposals: (1) To apply the Program's PMI to the
BCP; (2) to market 2,044 megawatts (MW) of contingent capacity
[[Page 23584]]
with an associated 4,116,000 megawatt-hours (MWh) of annual firm energy
from the BCP; (3) to extend 100 percent of the existing contractors'
contingent capacity allocations, totaling 1,951 MW, and 95 percent of
the proposed marketable firm energy, totaling 3,910,200 MWh annually to
the existing contractors based proportionally upon their existing
allocations of marketed annual firm energy and to create a single, one-
time resource pool consisting of 93 MW of contingent capacity with an
associated 205,800 MWh of annual firm energy; and, (4) that electric
service contracts resulting from this effort will have a term of 30
years commencing on October 1, 2017.
Public information and comment forums were held in Las Vegas,
Nevada; Phoenix, Arizona; and Ontario, California. Western received
comments from existing power contractors, Native American tribes,
electric cooperatives, municipals, and other potential contractors.
Transcripts of the public information and comment forums, as well as
all the comments received, may be viewed on Western's website at http://www.wapa.gov/dsw/pwrmkt.
In an April 16, 2010, Federal Register Notice (75 FR 19966),
Western extended the comment period of the November 20, 2009, FRN from
January 29, 2010, to September 30, 2010. This extension provided
Western additional time to examine the issues raised in the comments it
received, and allowed interested parties additional opportunity to
consult with Western and comment on the proposals.
Decision: Based on comments received and a review of available
resources, Western will: (1) Apply the PMI, as modified in this notice,
to the Boulder Canyon Project remarketing effort including the
establishment of a resource pool and, (2) establish a term of 30 years
for all BCP electric service contracts beginning October 1, 2017.
Western presents further proposals in the Proposals section of this
FRN.
Comments and Discussion
Western received a significant number of comments on Western's
proposals during the comment period. Western reviewed and considered
all comments received. This section summarizes and responds to the
comments received on the applicability of the PMI to BCP, the length of
the contract term, and the other topics appropriate to the proposals.
All written comments and transcripts from the public comment forums are
available on Western's website at http://www.wapa.gov/dsw/pwrmkt.
Comment: Several comments were received requesting Western to
suspend or delay the administrative remarketing process in order to
either ensure all tribes in the BCP service area have sufficient time
to become familiar with the effort or to provide pending legislation an
opportunity to be enacted by Congress in the 111th congressional
session.
Response: Based upon comments received, Western extended the
comment period of the November 20, 2009, FRN from January 29, 2010, to
September 30, 2010. In that time, Western identified 59 Federally
recognized Native American tribes in the BCP marketing area and sent
letters to each tribe notifying them of the BCP remarketing effort and
extending an opportunity to consult with Western regarding the tribes'
potential interests and participation in the public process.
To date, the legislative efforts to amend the Hoover Power Plant
Act of 1984 (Hoover Act) (43 U.S.C. 619a) to make specific allocations
of BCP power after September 30, 2017, have not come to fruition.
Western acknowledges future legislation is possible, but also notes
that Western has a statutory obligation to market BCP power pursuant to
section 5 of the Boulder Canyon Project Act (Project Act) (43 U.S.C.
617d) in conjunction with section 302 of the Department of Energy
Organization Act of 1977 (42 U.S.C. 7152). Therefore, Western will
proceed to fulfill its marketing responsibilities related to BCP power
through a public administrative process under current statutory
authority.
Comment: Current legal authority does not preclude the application
of the PMI to the BCP and Western has applied this protocol to other
Federal power projects since its implementation in 1995. Western should
continue with its proposal to apply the PMI to the BCP for this
remarketing effort.
Response: Western agrees with this comment. The PMI was developed
by Western through a public process and has been applied to other
Federal projects as an appropriate means of balancing existing
contractors' resource stability while also encouraging the widespread
public use of the Federal generation. Western believes it is
appropriate to apply the PMI, as modified herein, to the BCP at this
time.
Comment: Comments were received questioning Western's authority
under current law to apply the PMI to the BCP. Unlike other projects
where Western has applied its PMI, the allocation of Hoover power has
been the sole province of Congress. Western should explain its legal
theories that may support the application of the PMI.
Response: Hoover power was originally allocated by the Secretary of
Interior by regulation and administrative action and was not directly
determined through legislation until the Hoover Act. To date
legislative proposals to extend the specific allocations in the Hoover
Act have not been enacted. Moreover, section 5 of the Project Act and
the Department of Energy Organization Act of 1977 authorizes Western to
establish and apply regulations governing BCP allocations, including
the application of the PMI and the creation of a resource pool.
Application of the PMI to the BCP expressly protects and reserves a
major portion of the existing contractors' allocations while also
providing potential contractors an opportunity to acquire an
allocation. Western believes that application of the PMI has
historically provided for a balancing of the needs of the existing
contractors with those of prospective contractors. Therefore, it is
consistent with the Hoover Act and appropriate for Western to apply the
PMI to the BCP.
Comment: 43 U.S.C. section 617d(b) provides that holders of Hoover
contracts shall be entitled to a renewal upon such terms and conditions
as may be authorized or required under the then existing laws and
regulations. This language provides Western express authority to apply
its current regulations to the marketing of the BCP.
Response: Western agrees and is herein deciding on the application
of the PMI in conformance with its existing regulations.
Comment: Section 18 of the Reclamation Project Act of 1939
(Reclamation Act) provided that ``nothing in this Act shall be
construed to amend the Boulder Canyon Project Act of 1928 (45 Stat.
1057), as amended.'' 43 U.S.C. 485j footnote. Reclamation law,
including the preference provisions contained in 43 U.S.C. 485h, is not
applicable to the BCP allocation process.
Response: Western's decision to apply the PMI means the majority of
the resources will continue to be allocated to existing BCP customers.
The criteria under which the resources in the resource pool will be
allocated shall be determined in a subsequent public process. Western
will comply with all applicable laws during that process.
Comment: Section 5 of the Project Act governs allocation of power
from Hoover Dam. The first priority to that power goes in equal
opportunity to the states of Arizona, California, and Nevada.
Subsequently, the power may
[[Page 23585]]
be further allocated within the marketing area primarily pursuant to
priorities developed by the Solicitor of the U.S. Department of the
Interior in the 1930's.
Response: Section 5 of the Project Act (43 U.S.C. 617d(c)) provides
that ``the States of Arizona, California, and Nevada shall be given
equal opportunity as * * * applicants'' for BCP power. It does not
require equal distribution of BCP power among the three states, as
evidenced by the Hoover Act which did not reallocate BCP power in equal
portions to Arizona, California, and Nevada.
Comment: Under section 5 (c) of the Project Act, Western lacks the
statutory authority to withhold capacity and associated energy in order
to create a resource pool.
Response: Section 5 specifically grants the Secretary broad
discretion to allocate power in accordance with the public interest and
this authority provides for the necessary administrative flexibility to
reserve capacity and energy for the creation of a resource pool.
Comment: Consistent with current U.S. Department of Energy Native
American policy, Western must maintain a government-to-government
relationship with Federally-recognized Native American governments.
Native American tribes should have the option to seek an allocation
directly from Western.
Response: Western agrees with this comment and intends to accept
applications from Federally-recognized tribes for consideration of a
BCP allocation after an official call for applications has been made in
the Federal Register.
Comment: Western should allocate all of the 2,074 MW of nameplate
capacity of the BCP. The maximum dependable operating capacity should
be marketed to the contractors who are paying for the continued
operations and maintenance of the dam. If the lake conditions ever
return to optimal, then the full capacity should be made available to
those who have been paying for the full contract amounts but have not
received it.
Response: Western has historically marketed the BCP capacity as
contingent capacity. BCP contractors have always been delivered the
capacity they have contracted for when the supporting generating units
are available. Western has and will continue to deliver contracted
contingent capacity to the extent it is available. As proposed, Western
would market 2,044 MW of contingent capacity from the BCP. The
remaining 30 MW would be used for project integration and reliability
purposes. The BCP contractors would not be responsible for the expenses
associated with the 30 MW as determined by Western. Western will
determine the final marketable contingent capacity after considering
the public comments it receives resulting from this notice.
Comment: Many comments requested Western to allocate the existing
contractual amount of 4,527,001 MWh of annual firm energy while another
comment supported the proposed 4,116,000 MWh.
Response: Western typically seeks to market an amount of energy
that is commensurate with that which Western deems to be reasonably
attainable as projected in hydrologic studies. Western and the Bureau
of Reclamation (Reclamation) reviewed recent hydrologic studies
provided by Reclamation. Several analyses were performed on the
projected output of the BCP over the proposed term. The study results
yielded an estimated average generation of approximately 3,650,000 MWh
annually. Western proposed 4,116,000 MWh after considering factors such
as average energy projections, resource stability, and frequency of
excess energy. Comments received were predominantly in favor of
maintaining the existing 4,527,001 MWh of annual firm energy
irrespective of projected generation or an alternate logic. Western
anticipates that just as it is today, all energy generated will be
delivered to the BCP contractors based on their respective allocations
regardless of the specific amount of energy marketed. It is noted that
in the case of the BCP, the level of marketable energy has an impact on
the amount of excess energy that is achieved. Due to this excess energy
impact, Western believes that the best course of action is to propose
marketable energy, excess energy provisions, and a resource pool
percentage in a coordinated fashion with all impacting variables
simultaneously considered. Western will determine the final marketable
energy after considering the public comments it receives resulting from
this notice.
Comment: Some comments suggested a 30-year term for contract offers
taking effect after September 30, 2017, while several others requested
50 years.
Response: Western considered 20-, 30-, 40-, and 50-year contract
terms. While the PMI calls for 20 years, based upon comments received,
a longer term would be preferred by existing and potential new
customers. With the dynamic nature of the electric industry in the last
few decades, Western believes that a remarketing effort will be in
order for less than 50 years to ensure that the most widespread use of
the Federal generation is maintained. Therefore, Western will extend
contract offers to existing and new contractors with the term of 30
years commencing October 1, 2017. Western anticipates that a 30-year
term will allow sufficient resource planning horizons and added
stability compared to a term less than 30 years, yet will also provide
an allocation opportunity for future entities at an appropriate time.
Comment: Several comments requested that Western maintain the
existing excess energy provisions consisting of Schedules A, B, and C
as described in the Hoover Act and the Conformed Criteria. Contrary
comments requested that all contractors should share in the allocation
of excess energy in proportion to their respective energy allocation
percentage. Another comment stated that Native American tribes and
other new preference applicants should receive a first right of refusal
to excess energy.
Response: Western considered all of these potential methods in
creating the proposed excess energy provisions. Several impacting
factors were identified and contemplated to derive what Western
believes to be fair and equitable excess energy provisions. Western
will determine the final excess energy provisions after considering the
public comments it receives resulting from this notice.
Comment: The PMI should state specifically that contractors will be
permitted to transact Hoover power, including ancillary services, with
an Independent System Operator, including the California Independent
System Operator (CAISO).
Response: Western is committed to working with the contractors and
related entities to ensure BCP power, including the associated
ancillary services, are able to be utilized in a suitable fashion.
Comment: Western should clarify in this initiative that contractors
will obtain the same ancillary services such as ramping, regulation,
and reserves that are presently provided for under the existing
contracts.
Response: In Western's November 20, 2009, FRN, Western stated that
``If by means of a public process, Western applies the PMI to the BCP,
the current long-term contractors of the project would receive an
extension of a major portion of the resources available to them at the
time their contracts expire.'' While the capability to dynamically
receive the BCP resource and these associated ancillary services is not
[[Page 23586]]
explicitly described here, it is currently Western's intent to continue
to provide these capabilities to the existing and new BCP contractors
into the next contract term.
Proposals: Western is making additional proposals and is seeking
further comments on the amount of marketable contingent capacity and
firm energy, the amount of marketable contingent capacity and firm
energy to be extended to existing contractors, the size of the resource
pool to be created, and excess energy provisions. Western proposes the
following:
(1) To market 2,044 MW of contingent capacity with an associated
4,527,001 MWh of annual firm energy from the BCP; (2) to extend 100
percent of the existing contractors' contingent capacity
allocations, totaling 1,951 MW, and 95 percent of the proposed
marketable firm energy, totaling 4,300,651 MWh annually based
proportionally upon their existing allocations of marketed annual
firm energy; (3) to create a single, one-time resource pool
consisting of 93 MW of contingent capacity with an associated
226,350 MWh of annual firm energy; and; (4) that excess energy
provisions contain a first and second priority defined as:
First Priority: The Arizona Power Authority (APA) shall have a
first priority right to delivery of excess energy, which is equal in
each year of operation to 200,000 MWh; provided, however, that in
the event excess energy in the amount of 200,000 MWh is not
generated during any year of operation, APA shall accumulate a first
right to delivery of excess energy subsequently generated in an
amount not to exceed 600,000 MWh, inclusive of the current year's
200,000 MWh. The first right of delivery shall accrue at a rate of
200,000 MWh per year for each year excess energy in the amount of
200,000 MWh is not generated, less amounts of excess energy
delivered.
Second Priority: Any remaining excess energy available after the
first priority has been satisfied shall be allocated to each BCP
contractor based on a proportionate share of its annual firm energy
percentage allocation.
Western will consider all comments received pertaining to its
proposals since the initiation of the public process when making its
final decisions. Western will publish its final decisions and further
address the comments received on these proposals in a separate Federal
Register notice.
Regulatory Procedure Requirements
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.
Environmental Compliance
In accordance with the DOE National Environmental Policy Act
Implementing Procedures (10 CFR part 1021), Western has determined that
these actions fit within class of action B4.1 Contracts/marketing
plans/policies for excess electric power, in Appendix B to Subpart D to
Part 1021--Categorical Exclusions Applicable to Specific Agency
Actions.
Dated: April 19, 2011.
Timothy J. Meeks,
Administrator.
[FR Doc. 2011-10081 Filed 4-26-11; 8:45 am]
BILLING CODE 6450-01-P