Provo River ProjectProposed Rate Methodology of Annual Charges

DEPARTMENT OF ENERGY

Western Area Power Administration

Provo River Project--Proposed Rate Methodology of Annual Charges

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Provo River Project Rate Methodology of

Annual Charges.

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SUMMARY: The Western Area Power Administration (Western) is proposing a

methodology to determine annual charges to accompany the independent

marketing of Provo River Project (PRP) resources. A previous proposal

to integrate this project and its resources with Western's Salt Lake

City Area/Integrated Projects (Integrated Projects) was not supported

by customers. To date, PRP's resources have been sold to the Colorado

River Storage Project (CRSP) at a rate to cover project costs. Western

proposes that capacity and energy produced by the PRP be marketed to

those members of two Western customers, Intermountain Consumers Power

Association (ICPA) and Utah Municipal Power Agency (UMPA), located in

the area of the Provo River drainage, in Utah and Wasatch Counties in

Utah. Power will be allocated to these two customers proportional to

the electrical sales of their members who meet the criteria for

receiving it. These customers will pay all of the annual expenses of

the PRP, including an amount to be used to assist the Provo River Water

Users Association's (Water Users) timely repayment of the original

Federal investment in the PRP. In return, these customers will receive

all of the total marketable output of the PRP.

The proposed rate methodology constitutes a minor rate adjustment

as defined by the procedures for public participation in general rate

adjustments covered in 10 CFR 903.2(f). The PRP annual sales are less

than 100 million kilowatthours and installed capacity is less than

20,000 kilowatts. A 30-day comment period will begin with the

publication of this Federal Register notice and end 30 days thereafter.

After review of public comments, Western will recommend a proposed rate

methodology for establishing the annual charge to be approved on an

interim basis by the Deputy Secretary of DOE. The proposed rate

methodology will be sent to the Federal Energy Regulatory Commission

for approval on a final basis. The proposed rate methodology for

marketing capacity and energy is expected to become effective November

1, 1994, and it will remain in effect until October 31, 1999, unless

superseded by another rate action.

At present there is no existing PRP rate. Energy has been sold to

the CRSP at an amount that meets the PRP's annual revenue requirements

for expenses and repayment obligations.

The following table shows the investment repayment status:

Cost Evaluation Period

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Estimated

Estimated paid Estimated paid unpaid balance

Total through FY from FY 1995- at the end of

1994 99 FY 1999

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Project & Additions............................. $1,070,952 $1,070,952 $0 $0

Replacements through 1994....................... 521,989 85,593 62,340 374,056

Projected Replacements 1995-1999................ 98,385 N/A 8,918 89,467

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Total..................................... 1,691,326 1,156,545 71,258 463,523

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DATES: The consultation and comment period will begin with publication

of this notice in the Federal Register and will end August 11, 1994.

Written comments should be received by Western by the end of the

consultation and comment period to be assured consideration and should

be sent to the address below.

A related notice appears in today's Federal Register.

FOR FURTHER INFORMATION CONTACT: Acting Area Manager, Salt Lake City

Area Office, Western Area Power Administration, P.O. Box 11606, Salt

Lake City, UT 84147-0606, (801) 524-5493.

Background Information

Construction of the PRP was begun in May 1938, with the powerplant

completed in 1958. It has a present generating capacity of 5 megawatts

of power. The Water Users, a corporation of stockholders owning

prorated water entitlements, executed contract No. Ilr-874 in 1936,

with the Federal Government to construct and repay project facilities.

Contract No. Ilr-1082, dated December 20, 1938, established a contract

among several entities to compensate the Utah Power and Light Company

with PRP power in exchange for power foregone at its powerplant. Only

energy excess to project purposes has been available for Federal

marketing. Since 1963, CRSP has needed additional energy and has

purchased the available PRP energy at an amount established annually

for the PRP to cover its costs, including operation, maintenance, and

replacement costs and repayment expenses. These expenses have included

$1.623 million of irrigation assistance to the Water Users. PRP's

original power investment has been repaid.

In December 1993, Western proposed to change the way it marketed

power and energy produced by PRP in response to customer interest in

its available resources. The part of the proposal that suggested

inclusion of the PRP in the Integrated Projects was not supported by

customers for various reasons, thereby requiring Western to modify its

original proposal to one which will market PRP's power and energy

independent of the Integrated Projects. Two Western customers, ICPA and

UMPA, pursued acquiring the available PRP capacity and energy. The

members of these customers are located in the PRP drainage area in Utah

and Wasatch Counties. Western proposes that these customers receive all

of the total marketable output, with the power allocated proportionally

to their eligible members' energy sales. ICPA and UMPA would pay all of

the annual expenses of the project. An amount to meet the repayment

assistance to the Water Users would be recovered under separate

agreement.

Proposed Methodology

If Western adopts the proposal, Western will prepare a power

repayment study (PRS) annually for PRP to establish the revenue needed

to meet annual costs, including operation, maintenance, and replacement

repayment costs and interest. Budgeted estimates of these future costs

will be used in the PRS. The power assistance to the Water Users will

not be included in the PRS but will, instead, be paid under a separate

arrangement among the Bureau of Reclamation, Western, ICPA, UMPA, and

the Water Users which will provide for equal annual installments of

$102,285.71 over 14 years.

If the proposed methodology is adopted and PRP energy is no longer

sold to the CRSP, it will be necessary to collect the PRP's share of

transmission costs in Utah under contract No. 2436 with PacifiCorp.

Assigning proportional shares of Western's Tier 1 and Tier 2 costs will

result in an annual transmission expense of approximately $30,348. This

amount also will be included as an annual expense of the PRP. The

annual revenue requirement of the PRP, as determined by the PRS, will

then be prorated between ICPA and UMPA and divided by 12 for monthly

billing to the customers. The rate methodology used to determine the

annual revenue requirement will be recalculated each year during the 5-

year period that the methodology is proposed to be in effect.

SUPPLEMENTARY INFORMATION: The PRP rate methodology is established

pursuant to the Department of Energy Organization Act (42 U.S.C. 7101

et seq.) and the Reclamation Act of 1902, 32 U.S.C. Sec. 388 et seq.,

as amended and supplemented by subsequent enactments, particularly

Sec. 9(c) of the Reclamation Project Act of 1939, 43 U.S.C.

Sec. 485h(c).

By Amendment No. 3 to Delegation Order No. 0204-108, published

November 10, 1993 (58 FR 58716), the Secretary of Energy delegated (1)

The authority to develop long-term power and transmission rates on a

nonexclusive basis to the Administrator of Western; (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 the Federal Energy Regulatory Commission.

Existing DOE procedures for public participation in power rate

adjustments (10 CFR Part 903) became effective on September 18, 1985

(50 FR 37835).

Availability of Information

All brochures, studies, comments, letters, memorandums, and other

documents made or kept by Western for the purpose of developing the

proposed rate methodology for capacity and energy are and will be made

available for inspection and copying at the Salt Lake City Area Office

located at 257 East 200 South, Salt Lake City, Utah.

Regulatory Flexibility Analysis

Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et

seq.), each agency, when required by 5 U.S.C. 553 to publish a proposed

rule, is further required to prepare and make available for public

comment an initial regulatory flexibility analysis to describe the

impact of the proposed rule on small entities. In this instance, the

initiation of the PRP rate proposal is related to nonregulatory

services provided by Western at a particular rate. Under 5 U.S.C.

601(2), rules of particular applicability relating to rates or services

are not considered rules within the meaning of the act. Since the PRP

capacity and energy rate methodology is of limited applicability, no

flexibility analysis is required.

Determination Under Executive Order 12866

DOE has determined that this is not a significant regulatory action

because it does not meet the criteria of Executive Order 12866, 58 FR

51735. Western has an exemption from centralized regulatory review

under Executive Order 12866; accordingly, no clearance of this notice

by Office of Management and Budget is required.

Environmental Evaluation

In compliance with the National Environmental Policy Act of 1969,

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

the preparation of an environmental assessment or an environmental

impact statement.

Issued in Golden, Colorado, June 24, 1994.

William H. Clagett,

Administrator.

[FR Doc. 94-16844 Filed 7-11-94; 8:45 am]

BILLING CODE 6450-01-P