Collections From Central Valley Project Power Contractors To Carry Out the Restoration, Improvement, and Acquisition of Environmental Habitat Provisions of the Central Valley Project Improvement Act of 1992

DEPARTMENT OF ENERGY

Western Area Power Administration

Collections From Central Valley Project Power Contractors To

Carry Out the Restoration, Improvement, and Acquisition of

Environmental Habitat Provisions of the Central Valley Project

Improvement Act of 1992

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of final procedures for the assessment and collection of

restoration fund payments from the Central Valley Project power

contractors.

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SUMMARY: The Central Valley Project (CVP) Improvement Act of 1992 (Act)

(Pub. L. 102-575, 106 Stat. 4706 et seq.) establishes in the Treasury

of the United States the ``Central Valley Project Restoration Fund'' to

carry out the habitat restoration, improvement, and acquisition

provisions of the Act. The Act further requires the Secretary of the

Interior to assess and collect annual mitigation and restoration

payments from CVP water and power contractors. The Secretary of the

Interior, through the Bureau of Reclamation (Reclamation), is

responsible for determining the CVP water contractors' share and the

CVP power contractors' share of the Restoration Fund payments. Because

Western Area Power Administration (Western) is responsible for the

marketing of CVP power and maintains all CVP power contracts, Western

has agreed to assess and collect the total CVP power contractors' share

of the Restoration Fund payments, as determined by Reclamation, from

the CVP power contractors. By publication of this notice, Western

establishes procedures to accomplish the assessment and collection of

Restoration Fund payments from the CVP power contractors as required by

the Act.

DATES: The final procedures will become effective May 9, 1994 and will

remain in effect until superseded.

ADDRESSES: Information regarding this final procedure, including

spreadsheet analysis, comments, letters, memorandums, and other

supporting documents made or kept by Western for the purpose of

developing these procedures, is available for public inspection and

copying at Western's Sacramento Area Office located at 1825 Bell

Street, suite 105, Sacramento, CA 95825-1097.

FOR FURTHER INFORMATION CONTACT:

James C. Feider, Area Manager, Sacramento Area Office, Western Area

Power Administration, 1825 Bell Street, suite 105, Sacramento, CA

95825-1097, (916) 649-4418.

SUPPLEMENTARY INFORMATION: Section 3407 of the Act establishes in the

Treasury of the United States the ``Central Valley Project Restoration

Fund'' to carry out the habitat restoration, improvement, and

acquisition provisions of the Act. The Act further requires the

Secretary of the Interior to assess and collect annual mitigation and

restoration payments from CVP water and power contractors. The

Secretary of the Interior, through Reclamation, is responsible for

determining and collecting the CVP water contractors' share and the CVP

power contractors' share of the annual Restoration Fund payments.

Because Western is responsible for the marketing of CVP power,

Western has agreed to administer the assessment and collection of the

Restoration Fund payments from the CVP power contractors. Western has

executed a Letter of Agreement with Reclamation to establish procedures

for depositing the collections from the CVP power contractors into the

Restoration Fund.

The total power Restoration Fund payment obligation, determined by

Reclamation, will be assessed to the CVP power contractors. Every month

each CVP power contractor will receive a bill reflecting the amount to

be paid into the Restoration Fund. The CVP power contractor will pay

that amount to Western, who will deposit all amounts collected from the

CVP power contractors into the Restoration Fund.

Acronyms and Definitions

Descriptions of the acronyms and definitions used in this Federal

Register notice may be found in the Final Procedures.

Public Notice and Comments

The process used by Western to ensure involvement of interested

parties in the development of these final procedures for assessing and

collecting Restoration Fund payments from the CVP power contractors is

summarized below.

1. On October 1, 1993, Western issued a letter to all CVP customers

announcing Reclamation's determination of a total power Restoration

Fund payment obligation of $7,092,800 for fiscal year (FY) 1994.

2. On October 29, 1993, in a letter to all CVP power customers,

Western announced the plans to implement collections from the CVP power

contractors for the Restoration Fund on an interim basis, beginning

with a November 24, 1993, bill.

3. A Federal Register notice was published at 58 FR 62343, November

26, 1993, officially announcing the proposed procedures for the

assessment and collection of the Restoration Fund payments from the CVP

power contractors, initiating the public consultation and comment

period, announcing the public information forum and public comment

forum, and presenting procedures for public participation.

4. On December 1, 1993, in a letter to all CVP customers and

interested parties, Western announced that the public consultation and

comment period had begun; announced the dates, times, and locations of

the public information forum and the public comment forum; and enclosed

a copy of the November 26, 1993, Federal Register notice.

5. At the public information forum held on December 16, 1993,

Western's staff presented the proposed procedures for the assessment

and collection of Restoration Fund payments and discussed the

methodologies and studies that were used in developing the proposed

procedures.

6. A public comment forum was held on December 16, 1993, to give

the public the opportunity to comment for the record. Three persons

representing customers made oral comments.

7. Fifteen comment letters were received during the 30-day

consultation and comment period. The consultation and comment period

ended December 26, 1993. All formally submitted comments have been

considered in the preparation of the final procedures.

8. On December 30, 1993, copies of all written comments received

during the 30-day comment period were sent to all CVP customers and

interested parties.

9. Based on customer comments regarding the proposed assessment and

collection method, Western analyzed various alternative methods to

address certain concerns. Upon request, Western shared these analyses

at a Northern California Power Agency members meeting on January 13,

1994, and a CVP Customer Technical Committee Meeting on January 19,

1994.

10. On February 3, 1994, in a letter addressed to the Restoration

Fund commentors, Western provided copies of all handouts distributed

during the meetings specified in item 9 above.

Comments

During the 30-day consultation and comment period, Western received

15 written comments from 14 different sources. In addition, three

persons commented during the December 16, 1993, public comment forum.

Written comments were received from the following sources:

Alameda, City of (California)

Arvin Edison Water Storage District (California)

Calaveras Public Power Agency (California)

Modesto Irrigation District (California)

Palo Alto, City of (California)

Petershagen, Mr. George F. (California)

Redding, City of (California)

Roseville, City of (California)

Sacramento Municipal Utility District (California)

Santa Clara, City of (California)

Shasta Lake, City of (California)

Trinity County Public Utility District (California)

Tuolomne County Public Power Agency (California)

Westlands Water District (California).

Representatives of the following organizations made oral comments:

Redding, City of (California)

Roseville, City of (California)

Sacramento Municipal Utility District (California).

Most of the comments Western received dealt with assessing the

total Restoration Fund payment obligation to scheduled or delivered

energy, the authority to collect interim bills and assess late payment

charges during the interim period, the issuance of separate bills, and

establishing a review process for the final procedures. Additional

comments were received regarding assessing excess energy and capacity

sales, excluding first preference customers from the assessment,

assessing project use, changing the amount allocated to power by

Reclamation, and conducting an informal workshop. Discussion of the

comments will be grouped by these issues, with all other comments

placed under the heading of ``Other.'' In some cases Western will

address several comments with one response. The comments, paraphrased

for brevity, and responses are presented below.

Assessing to Scheduled or Delivered Energy

Comment: The agricultural power users consider Western's proposal

to be a fair and equitable method of allocating Restoration Fund

payment obligations.

Comment: The proposal states that total collections will be the

same each month which could penalize seasonally diverse customers. It

seems appropriate that the collections more nearly reflect monthly

revenues.

Comment: Energy alone is not an adequate assessment factor to

reflect utilization of the CVP. Factors such as actual demand and CVP

allocation used either separately or together could be more

representative than just energy alone.

Comment: The proposal is likely to foster a market environment in

which Western's scheduling power contractors compete against other

Western power contractors to minimize the impact of the Restoration

Fund. Establish the assessment based on a system-wide per-kilowatthour

(kWh) basis.

Comment: By assessing monthly energy, Western would distort

recently approved rates by effectively increasing the energy rate but

not the other charges included in bills. This could cause an

undesirable and/or unexpected response by customers who have resource

flexibility.

Comment: An assessment of the payment as a fixed surcharge based on

a percentage of monthly energy entitlement would totally eliminate the

incentive to avoid restoration payments through reducing scheduled

energy.

Comment: Assess the Restoration Fund payment obligation based on

total Contract Rate of Delivery (CRD). Under the proposed plan,

contract users could direct their energy needs from other sources in

order to evade payment of the Restoration Fund assessment leaving

customers with limited resource options to pay a larger portion of the

payment.

Comment: The recent CVP rate process found that a 40-percent

capacity and 60-percent energy split is most equitable. The Restoration

Fund collections should also be assessed in this manner.

Comment: Western has considered the cost allocation issue in

length, in the CVP general rate case proceeding, and determined that

the appropriate allocation of revenue requirements (costs) is 40

percent to capacity/60 percent to energy. We recommend Western utilize

this same methodology to allocate the Restoration Fund costs.

Comment: Diversify the proposal to collect 50 percent on capacity

sales and 50 percent on energy sales; this will distribute and dilute

any uncontrollable price signals and discourage defensive gaming.

Response: Western shares in the concerns of customers who felt the

proposed method would (1) penalize seasonally diverse customers, (2)

send adverse pricing signals, and/or (3) allow for adverse actions on

behalf of certain customer groups. Therefore, Western has decided to

prorate the total Restoration Fund payment obligation among actual

delivered or scheduled energy and capacity on a 50/50 basis.

Western considered the comments recommending the allocation be

based on actual energy entitlement or CRD. Western believes the

assessment should reflect actual use of the CVP power system and not a

customer's upper limit on use of the CVP system.

Western agrees that extensive analyses for the recent CVP rate

process indicated that Western's costs are best represented in a 40-

percent capacity 60-percent energy ratio. Western also agrees that

heavily assessing CVP energy costs may send adverse pricing signals.

However, as stated above, it is Western's position that the Restoration

Fund should be assessed based on the actual use of the resource

provided rather than the costs associated with that resource use. The

50/50 basis was chosen because it reflects an assessment to both types

of long-term power services available from the CVP. Adverse pricing

signals that may be caused by an inequitable assessment to capacity or

energy will be reduced with a 50-percent delivered or scheduled energy,

50-percent delivered or scheduled capacity assessment.

Authority To Assess and Collect Interest on Interim Bills

Comment: Will interest accrue on interim billing or after the

public process becomes final?

Comment: Western does not have the authority to require customers

to pay interim bills or assess interest before a final procedure is

adopted.

Comment: Western should formally acknowledge that payment during

the interim period is optional.

Comment: We appreciate your interest to minimize cash flow impacts

by starting collections as soon as possible. However, some customers

may prefer to wait until the public process is complete. We suggest

that the interim procedures be made optional.

Comment: Current contract provisions do not provide for the

assessment of the Restoration Fund fees.

Response: Western initiated the interim assessment and collection

process during the public process to reduce the economic impact to the

CVP power contractors, to proactively support the provisions of the

Act, and to assist Reclamation. Payments made by the CVP power

contractors during the interim period are considered by Western to be

optional. Bills not paid during the interim period did not accrue

interest. All billing notices sent to the CVP power contractors during

the interim period stated, ``Interim billing is not subject to a late

charge assessment.'' Although Restoration Fund payments are not

included in the CVP power sales contracts, collection is mandated by

the Act. Adoption of these final procedures provides Western the legal

authority to collect Restoration Fund payments. Interest will accrue on

Restoration Fund bills in the first billing cycle 30 days after the

publication of the final procedures in the Federal Register.

Separate Billing

Comment: Are the bills separate? Why is there a separate bill

versus inclusion in the current power bill from Western?

Comment: Does the Act mandate monthly payments? What governed the

timing of the collection? Could collections be made on a quarterly

basis?

Comment: The Act provides for annual, not monthly, payments to be

collected from the CVP water and power customers.

Comment: We would like to avoid the administrative burden of an

additional monthly bill.

Comment: We support the Western proposal to utilize a separate

billing for the Restoration Fund. This approach allows all parties to

clearly identify the payments that are being made pursuant to the

Central Valley Project Improvement Act.

Comment: We support the proposed separate billing; this will aid in

tracking our share of the Restoration Fund.

Response: Western will use separate bills to assess the Restoration

Fund payments to the CVP power contractors. The Secretary of the

Interior, through Reclamation, is responsible for determining and

collecting the CVP water contractors' share and the CVP power

contractors' share of the annual Restoration Fund payments. Because

Western is responsible for the marketing of CVP power, Western has

agreed to administer the assessment and collection of the Restoration

Fund payments from the CVP power contractors on behalf of Reclamation.

Western is assessing the total Restoration Fund payment obligation

among the CVP power contractors as a pass-through surcharge from

Reclamation. The Restoration Fund assessment is not associated with

current CVP rates or power revenues; the funds will not flow through

the CVP power repayment study, nor will they be deposited into the

Reclamation Fund to be applied to the repayment of CVP investment. In

addition, the amounts collected for the Restoration Fund are deposited

into a separate Treasury account and late payment interest charges are

assessed in a different manner than those imposed by the General Power

Contract Provisions included in the CVP power contractors' power sales

contracts. Western has adopted assessment and collection of the

Restoration Fund payments on a monthly basis to assure adequate cash

flow to Reclamation to carry out the goals of the Act.

Establish a Review Process for the Final Procedures

Comment: What would happen if the Act is overturned or its

implementation is delayed?

Comment: Is there a sunset clause? What will happen if Congress

increases the limit significantly?

Comment: Is the proposed procedure permanent for the duration of

the Fund?

Comment: Include an opportunity to reopen the public process in the

final methodology, in case of unforeseen problems.

Comment: Build in the flexibility to review every 2, 3, or 5 years

at the longest.

Comment: We recommend that the final procedures include a statement

that Western will automatically reopen the surcharge matter for comment

and revision, in conjunction with the CVP's normal 5-year ratemaking

process.

Comment: The assessment method should include a review process to

accommodate change and improvements that will become necessary as we

gain experience with the method and its effects.

Response: Western agrees with customer comments and concerns and

has included a review process in the final procedures. Minimally,

Western will review the assessment method every 5 years from the

effective date of the final procedures or if one of the following

occurs:

(1) If there is a significant change to or suspension of the

legislation,

(2) If a material issue arises, or

(3) If an apparent inequity in the assessment method is discovered.

Assess Excess Capacity and Energy Sales

Comment: Why were Energy Account Number 2 (EA2) and excess capacity

sales excluded from the allocation?

Comment: Does Western do any other sales to Pacific Gas and

Electric Company (PG&E)?

Comment: Entities receiving excess energy may escape an assessment;

this will increase the assessment to long-term power contractors, and

the increased assessment would be for energy not yet received. This

does not appear equitable.

Comment: Seasonal CVP capacity is provided by CVP generating

facilities and ``impacts'' the CVP waterways in the same manner normal

sales of CVP capacity and energy might ``impact'' waterways. To

disregard an allocation to this type of sale would allow certain

customers to benefit from CVP power without paying for a portion of the

Restoration Fund.

Comment: Excess power sales should be assessed because those end

users are also benefiting from the CVP.

Response: Western sells two types of surplus power: surplus energy

and surplus capacity. Surplus power is only available for sale by

Western after contractual obligations are fulfilled. Western proposed

the total power Restoration Fund payment obligation be assessed to the

CVP power contractors that purchase power on a long-term basis because

Western believes that the assessment should be made on power sales that

are predictable during the year and should be billed to customers that

are fully benefiting from the CVP resource. By definition, this

excludes sales of surplus power because surplus power is not normally

available for a period in excess of 1 year.

Surplus energy is normally sold to PG&E, under contract number 14-

06-200-2948A, into EA2. Later, Western may repurchase the energy from

PG&E at rates that reflect savings incurred by PG&E in the original

purchase price from Western. If EA2 sales are assessed a portion of the

total power Restoration Fund payment obligation, the increased cost to

PG&E would be reflected in the repurchase of the energy upon withdrawal

from EA2, which would result in a higher cost for energy. Such higher

costs will be passed on to the CVP power customers in future power

rates or the revenue adjustment clause.

Excess capacity sales may be offered to scheduling utilities

normally at rates that reflect Western's costs associated with

capacity. Revenues from these sales increase the total revenue

available for CVP repayment. If the excess capacity sales included the

Restoration Fund assessment, less revenue would be available for the

repayment of CVP investment. Furthermore, Western's excess capacity

sales compete in the market and the addition of the Restoration Fund

assessment may make this service noncompetitive.

Exclude First Preference Customers From the Assessment

Comment: Western's proposed procedures for the collection of

Restoration Fund payments provides for two exclusions: EA2 sales and

excess capacity sales. A third exclusion should be added for first

preference customers because these customers' counties natural

resources were appropriated to build facilities of the CVP and because

the fish and wildlife restoration goals for the Trinity River are not

funded by the Restoration Fund, but by the Trinity River Basin Fish and

Wildlife Restoration Program (Pub. L. 98-541).

Response: The Act was designed to benefit many interests within the

State of California. In section 3402 of the Act, Congress provided for

a wide variety of purposes. These purposes include the protection,

restoration, and enhancement of fish, wildlife, and associated habitats

in the Central Valley and Trinity River basins of California; an

attempt to achieve a reasonable balance among competing demands for the

use of CVP water; and other benefits to particular areas of the State

of California, and to the State as a whole. Because the Act and the

Restoration Fund were designed to service varied interests, including

those within the first preference customers' home counties, Western has

chosen not to make payment into the Restoration Fund connected to

benefits to be received from the Restoration Fund.

The first preference customers have, by legislation, been allowed a

significant benefit over other preference entities in Western's service

area. Other preference entities must compete for an allocation of

Federal power under each marketing plan, and many eligible preference

entities receive no allocation. Congress sought to compensate these

counties for the natural resources appropriated when the Trinity and

New Melones facilities were constructed by allowing them this first

preference. In all other respects, the first preference customers are

to be treated as any other CVP preference power customer. See, Trinity

County Public Utilities District, et al. v. Harrington, 781 F.2d 163

(9th Cir. 1986). Western has chosen not to administratively extend

benefits of the first preference customers by excusing them from

payments made into the Restoration Fund.

Project Use

Comment: Are project use sales being assessed?

Comment: Wouldn't the amount charged to preference customers be

less if project use was assessed by Western?

Response: Project use is assessed by Reclamation in the amount

allocated to the water contractors. Because the allocation percentage

used by Reclamation to determine the total power Restoration Fund

payment obligation if for commercial power only, and does not include

project use, these sales will not be assessed.

Changing the Amount Allocated to Power by Reclamation

Comment: Revise the proposed procedures and eliminate any reference

of the willingness to pay whatever Reclamation requests into the

Restoration Fund. Congress, not Reclamation, determined the amount to

be allocated to power and water.

Comment: The 18 percent that Reclamation has assessed to power

needs to be addressed and made more equitable to all CVP users by

placing a larger portion on water users and less on electric

contractors.

Comment: Establish a balancing account to ensure sufficient funds

by collecting 10 percent more than Reclamation assesses.

Response: Western does not have the legal authority to increase or

decrease the amount allocated to power by Reclamation. The Act states,

``* * * the Secretary shall assess and collect annual mitigation and

restoration fund payments * * * that will result in collection, during

each fiscal year, of an amount that can be reasonably expected to equal

the amount appropriated each year * * * the Secretary shall require the

CVP water and power contractors to make such additional annual payments

as are necessary to yield * * * the amount required * * *.'' Although

Western has in the past and will in the future attempt to work with

Reclamation to assure that Restoration Fund allocations are reasonable,

Reclamation has final authority under the Act to determine the level of

allocations. Western is collecting the Restoration Fund assessment to

the CVP power contractors under the terms of an agreement between

Western and Reclamation. Issues regarding the amount allocated to power

by Reclamation should be addressed to Reclamation.

Conduct an Informal Workshop Prior to Publication of Final Procedures

Comment: An informal workshop might help to develop a mutually

acceptable surcharge for the CVP power customers.

Comment: Allowing only 5 days between the public information

meeting and public comment forum and the final written comments is too

restrictive. We urge you to extend the comment period or hold an

additional workshop prior to publishing the final procedures in the

Federal Register.

Response: Western believes that interested parties had adequate

time to comment on its proposed procedures. In response to customer

comments regarding the proposed assessment and collection method,

Western attended informal workshops and analyzed various alternative

methods to address certain concerns. Upon request, Western shared these

analyses at a Northern California Power Agency members meeting on

January 13, 1994, and a CVP Customer Technical committee meeting on

January 19, 1994. On February 3, 1994, in a letter addressed to the

Restoration Fund commentors, Western provided copies of all handouts

distributed during the above-mentioned meetings.

Other

Comment: Will Restoration Fund payment impact the current CVP

rates?

Response: No. Western is assessing the total power Restoration Fund

payment obligation among the CVP power contractors as a pass-through

surcharge from Reclamation. The Restoration Funds are not associated

with current CVP rates or power revenues; the funds will not flow

through the CVP power repayment study nor will they be deposited into

the Reclamation Fund to be applied to the repayment of CVP investment.

Comment: The proposed procedure involves retroactive billing which

is precedent setting and undesirable.

Response: Western has revised the final procedures. Under the final

procedures, CVP power contractors will know the amount of the

Restoration Fund assessment at the time the power purchase is made. The

assessment month is now defined as the period 1 month prior to the

billing month. This is consistent with Western's other current power

billing practices.

Comment: The assessment to the power contractors should be based on

CVP revenue requirements.

Response: Western feels that basing the Restoration Fund assessment

on revenue requirements would reflect the cost of the resources rather

than the use of those resources. It is Western's position that the

Restoration Fund should be assessed based on the actual use of the

resource provided rather than the costs associated with that resource.

Comment: Western's assessment includes both water and electric

contract users, therefore users with both water and power contracts

receive a double assessment.

Response: The Act requires an assessment to both CVP power and

water contractors. While this type of customer may or may not be the

only customers receiving two separate Restoration Fund assessments,

these customers are receiving the benefit of two clearly separable

resources.

Changes to Proposed Procedures

Western has considered all comments received during the 30-day

consultation and comment period from the CVP customers and interested

parties and has made changes to the proposed procedures. While the

decisions outlined in the final procedures may not reflect a consensus

on every issue, Western believes the final procedures to be an

equitable distribution of the total Restoration Fund payment obligation

among the CVP power customers. The final procedures will provide the

mechanism required to assess and collect an amount that can be

reasonably expected to equal the amount appropriated by Congress and

allocated to power by Reclamation.

The proposed procedures provided that the total power Restoration

Fund payment obligation assigned by Reclamation be prorated over the FY

to determine a total monthly obligation. Each month the total monthly

obligation was assessed to the CVP power contractors as a ratio of the

individual power contractor's delivered or scheduled energy to the

total delivered or scheduled energy recorded in the assessment month.

The assessment month was previously defined as the month 2 months prior

to the billing month. This definition has been changed; the assessment

month will be 1 month prior to the billing month. In the final

procedures, the total power restoration fund payment obligation will be

assessed on a 50/50 basis to both delivered or scheduled energy and

capacity. An energy and capacity multiplier will be derived from the

prior FY actual delivered or scheduled energy and capacity, adjusted

for any anticipated changes to the CVP power contractor base. The

multiplier will then be applied during the assessment month to each

power contractor's actual current year delivered or scheduled energy

and capacity.

The final procedures include a mid-year review of the assessment

method. If the actual amount assessed is 25 percent greater or less

than the projected assessments, Western will adjust the energy and

capacity multipliers. The CVP power contractors will be notified by

letter, and the adjusted multipliers will be applied for the remaining

months of the current FY. All other deviations in the amounts actually

collected or assessed will be rolled into the following FY assessment.

Finally, Western has agreed to review the final procedures at a minimum

of every 5 years or to accommodate for unforeseen changes or problems.

Interim Billing Adjustments

The total power Restoration Fund payment obligation assigned by

Reclamation to the CVP power contractors for FY 1994 is $7,092,800. In

an effort to implement collections for the Restoration Fund, Western

began issuing bills during an interim period on November 24, 1993. The

total power Restoration Fund payment obligation was prorated among the

CVP power contractors, and since November 1993, each CVP power

contractor has received a bill reflecting this prorated amount. The

amount assessed and collected from the CVP power contractors during the

interim period will be compared retroactively to the amount that should

be assessed and collected under the terms of the final procedures, as

follows:

Western will prorate the FY 1994 total Restoration Fund payment

obligation of $7,092,800 assessing 50 percent of the total to delivered

or scheduled energy and 50 percent to delivered or scheduled capacity.

This results in an equal assessment of $3,546,400 to delivered or

scheduled energy and capacity. Western has determined the FY 1993 total

delivered or scheduled energy and capacity and has made adjustments for

anticipated changes to the CVP power contractor base. The FY 1994

energy multiplier will be equal to $3,546,400 divided by the adjusted

delivered or scheduled energy of 7,314,510 megawatt-hours, or 0.48

mills/kWh. The FY 1994 capacity multiplier will be equal to $3,546,400

divided by the adjusted delivered or scheduled capacity of 14,373

megawatts, or $0.25/kilowatt-year. These multipliers will then be

applied to each CVP power contractor's actual energy and capacity since

October 1, 1993, to determine the total Restoration Fund payment due

from the contractor.

The total Restoration Fund payment due will be netted with the

total Restoration Fund payments assessed and collected during the

interim period. Any resulting increase/decrease will be assessed in the

first Restoration Fund bill issued after the final procedures become

effective, which is 30 days after the publication of this notice in the

Federal Register. If a CVP power contractor has paid more during the

interim period than should have been collected under the terms of the

final procedures, that CVP power contractor will not receive an

additional FY 1994 assessment until the over-collection meets the

current FY 1994 obligation. Late payment charges will accrue on

delinquent Restoration Fund payments in accordance with the terms

outlined in the final procedures.

Final Procedures

Acronyms and Definitions

As used herein, the following acronyms and definitions apply:

Assessment Month: The service month which is 1 month prior to the

billing month. The data derived from this service month will serve as

the basis for calculating the monthly Restoration Fund bills.

Billing Month: The month each CVP power contractor will be billed for

the Restoration Fund payment.

CVP: Central Valley Project.

CVP Power Contractor: Any entity purchasing firm capacity and/or energy

from Western for a period in excess of 1 year.

CVP Power Contractor's Restoration Fund Payment: The amount recorded as

payable on the CVP power contractor's Restoration Fund bill.

FY: Fiscal year beginning October 1 and ending September 30.

kWh: Kilowatthour.

Reclamation: Bureau of Reclamation, United States Department of the

Interior.

Restoration Fund: The Central Valley Project Restoration Fund created

by section 3407 of Public Law 102-575, 106 Stat. 4726 et seq.

Restoration Fund Bill: The instrument prepared and issued monthly by

Western as a mechanism for collecting the Restoration Fund payments

from the CVP power contractors.

Total Power Restoration Fund Payment Obligation: The total annual

Restoration Fund payment obligation calculated and assigned to the CVP

power contractors by Reclamation.

Western: Western Area Power Administration, United States Department of

Energy.

Determination of the Total Power Restoration Fund Payment Obligation

Reclamation is responsible for determining the total power

Restoration Fund payment obligation for the CVP power and water

contractors. Prior to each FY Reclamation will, by written

communication, provide to Western's Area Manager, Sacramento Area

Office, the amount determined to be the total power Restoration Fund

payment obligation, and a detailed explanation of the computation of

the amount. Upon receiving the written communication from Reclamation,

Western will notify the CVP power contractors of the total power

Restoration Fund payment obligation, and the multipliers to be used in

assessing that obligation to the CVP power contractors.

Assessing the Total Power Restoration Fund Payment Obligation

Each FY, Western will prorate the total power Restoration Fund

payment obligation to both delivered or scheduled energy and capacity.

Western will assess 50 percent of the total power Restoration Fund

payment obligation to delivered or scheduled energy and 50 percent to

delivered or scheduled capacity. Western will determine an energy and

capacity multiplier based on the prior FY total delivered or scheduled

energy and capacity amounts, adjusted for any anticipated changes in

the CVP power contractor base. The total power Restoration Fund payment

obligation for the current FY to be prorated to energy will be divided

by the adjusted prior FY delivered or scheduled energy to determine the

energy multiplier. The same process will be repeated using the total

power Restoration Fund payment obligation prorated to capacity divided

by the adjusted prior FY delivered or scheduled capacity to determine

the capacity multiplier. During the assessment month, these multipliers

will then be applied to each CVP power contractor's scheduled or

delivered energy and capacity to determine the power contractor's

Restoration Fund payment. The total amount recorded in the assessment

month will be reflected in the CVP power contractor's Restoration Fund

bill.

Assessing the Total Power Restoration Fund Payment Obligation

Reclamation is responsible for determining the total power

Restoration Fund payment obligation for the CVP power and water

contractors. Prior to each FY Reclamation will, by written

communication, provide to Western's Area Manager, Sacramento Area

Office, the amount determined to be the total power Restoration fund

payment obligation, and a detailed explanation of the computation of

the amount. Upon receiving the written communication from Reclamation,

Western will notify the CVP power contractors of the total power

Restoration Fund payment obligation, and the multipliers to be used in

assessing that obligation to the CVP power contractors.

Assessing the Total Power Restoration Fund Payment Obligation

Reclamation is responsible for determining the total power

Restoration Fund payment obligation for the CVP power and water

contractors. Prior to each FY Reclamation will, by written

communication, provide to Western's Area Manager, Sacramento Area

Office, the amount determined to be the total power Restoration fund

payment obligation, and a detailed explanation of the computation of

the amount. Upon receiving the written communication from Reclamation,

Western will notify the CVP power contractors of the total power

Restoration Fund payment obligation, and the multipliers to be used in

assessing that obligation to the CVP power contractors.

Assessing the Total Power Restoration Fund Payment Obligation

Reclamation is responsible for determining the total power

Restoration Fund payment obligation for the CVP power and water

contractors. Prior to each FY Reclamation will, by written

communication, provide to Western's Area Manager, Sacramento Area

Office, the amount determined to be the total power Restoration fund

payment obligation, and a detailed explanation of the computation of

the amount. Upon receiving the written communication from Reclamation,

Western will notify the CVP power contractors of the total power

Restoration Fund payment obligation, and the multipliers to be used in

assessing that obligation to the CVP power contractors.

Assessing the Total Power Restoration Fund Payment Obligation

Reclamation is responsible for determining the total power

Restoration Fund payment obligation for the CVP power and water

contractors. Prior to each FY Reclamation will, by written

communication, provide to Western's Area Manager, Sacramento Area

Office, the amount determined to be the total power Restoration fund

payment obligation, and a detailed explanation of the computation of

the amount. Upon receiving the written communication from Reclamation,

Western will notify the CVP power contractors of the total power

Restoration Fund payment obligation, and the multipliers to be used in

assessing that obligation to the CVP power contractors.

Collection of CVP Power Contractor's Restoration Fund Bill

Each CVP power contractor will receive a Restoration Fund bill on

or about the 25th, but no later than the 30th, of each billing month

designating the amount payable. Within 20 days of the date shown on the

Restoration Fund bill, the total amount payable as set forth on the

bill will be due. The first Restoration Fund billing cycle, for each

FY, will begin at least 30 days after (1) October 1 or (2) the date

written notification of the total power Restoration Fund payment

obligation is received from Reclamation, whichever occurs later.

Payment Due Date

All CVP power contractors' Restoration Fund payments are due and

payable by the CVP power contractors before the close of business on

the 20th calendar day after the date of issuance of each Restoration

Fund bill or the next business day thereafter if said day is a

Saturday, Sunday, or Federal holiday.

Late Payment Charges Assessed to Delinquent Restoration Fund Payments

Western will calculate and assess late payment charges on all CVP

power Restoration Fund payment obligations which are not paid in full

by the due date as specified above. The late payment charge will be the

interest accrued on all unpaid balances and will be compounded

quarterly at the average prime interest rate values published in the

Federal Reserve Bulletin for each calendar quarter.

Deposit of CVP Power Contractor's Restoration Fund Payments into the

Restoration Fund

On or about the 21st day of the month following each billing month,

Western will deposit all of the CVP power contractors' Restoration Fund

payments received, including late payment charges, into the Restoration

Fund.

Adjustment to Collections

By April 30, Western will review the Restoration Fund assessments,

for the period October 1 through March 31. If the actual amount being

assessed is 25 percent greater or less than projected assessments,

Western will adjust the delivered or scheduled energy and capacity

multipliers for the remaining months of the current FY. The CVP power

contractors will be notified by letter, no later than May 15, of any

adjustment to the multipliers. Beginning June 1, and continuing

throughout the balance of the current FY, the adjusted multipliers will

be applied to the CVP power contractors' delivered or scheduled energy

and capacity. All other deviations, in the amounts actually collected

or assessed, will be rolled into the following FY and added to or

subtracted from the amount to be assessed in that FY.

Review Process

Minimally, Western will review the assessment method every 5 years

or if one of the following occurs:

(1) If there is a significant change to or suspension of the

legislation,

(2) If a material issue arises, or

(3) If an apparent inequity in the assessment method is discovered.

Availability of Information

Information regarding this final procedure, including spreadsheet

analysis, comments, letters, memorandums, and other supporting

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

procedures, is available for public inspection and copying at Western's

Sacramento Area Office located at 1825 Bell Street, suite 105,

Sacramento, CA 95825-1097.

Regulatory Flexibility Analysis

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

seq., each agency, when required to publish proposed procedures, is

further required to prepare and make available for public comment an

initial regulatory flexibility analysis to describe the impact of the

procedures on small entities. Western has determined that (1) This

rulemaking relates to services offered by Western and, therefore, is

not a rule within the purview of the Act and (2) the impacts of an

assessment from Western would not cause a substantial adverse economic

impact to such entities. The requirements of this Act can be waived if

the head of the agency certifies that the rule will not, if

promulgated, have a significant economic impact on a substantial number

of small entities. By execution of this Federal Register notice,

Western's Administrator certifies that no significant economic impact

on a substantial number of small entities will occur.

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

procedure by the 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., and the Council on Environmental Quality

Regulations (40 CFR part 1500-1508), Reclamation is performing a

programmatic environmental impact statement (PEIS) on implementation of

the Act. Western is a cooperating agency in that PEIS. The proposed

procedures for the Restoration Fund payments covered by this notice

fall within Western's routine activities and operations categorical

exclusion issued January 7, 1993, and will have no environmental

impact.

Issued at Golden, Colorado, March 30, 1994.

William H. Clagett,

Administrator.

[FR Doc. 94-8478 Filed 4-7-94; 8:45 am]

BILLING CODE 6450-01-M