Boulder Canyon ProjectProposed Firm Power Rate Adjustment

DEPARTMENT OF ENERGY

Western Area Power Administration

Boulder Canyon Project--Proposed Firm Power Rate Adjustment

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Boulder Canyon Project Power Rate

Adjustment.

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SUMMARY: On October 7, 1994, the Western Area Power Administration

(Western) published a notice terminating WAPA-58-2, the public process

for the Boulder Canyon Project (BCP) second annual rate adjustment

under Rate Order WAPA-58 (see Notice to Terminate, 59 FR 51192). Rate

Order WAPA-58 was approved by the Federal Energy Regulatory Commission

(FERC) on November 3, 1993, to be effective from January 1, 1993,

through September 30, 1997 (65 FERC Sec. 61,186). The methodology

utilized in the Order requires Western to adjust the BCP power rate on

an annual basis. On February 4, 1994, the Order was confirmed and Rate

Schedule BCP-F4/2 was placed into effect by the Administrator of

Western by Rate Order No. WAPA-58-1 (59 FR 10629, March 7, 1994). Rate

Schedule BCP-F4/2 established a composite power rate of 12.62 mills per

kilowatthour (mills/kWh), which is comprised of an energy charge of

6.31 mills/kWh and a capacity charge of $1.07 per kilowatt per month

(kW/month).

Western, BCP Contractors1, and the Bureau of Reclamation

(Reclamation) have successfully concluded negotiations on a BCP

Implementation Agreement. Based on that Agreement, Western is now

proposing a revised rate methodology for the BCP which results in a

rate increase in the composite rate and energy charge, and a rate

decrease in the capacity charge. The power repayment spreadsheet study

(PRSS), based on the estimated annual revenue requirement for fiscal

year (FY) 1996, indicates that the proposed composite rate increases by

0.04 mills/kWh, the proposed energy charge increases by 0.02 mills/kWh,

and the proposed capacity charge decreases by $0.03/kW/month since the

last rate adjustment. The proposed rates for energy and capacity are

expected to become effective October 1, 1995, and will supersede the

existing BCP rates. [[Page 22576]]

\1\The BCP Contractors include the Arizona Power Authority;

Colorado River Commission of Nevada; City of Boulder City, Nevada;

Department of Water and Power of the City of Los Angeles; The

Metropolitan Water District of Southern California; Southern

California Edison Company; and the Cities of Anaheim, Azusa,

Banning, Burbank, Colton, Glendale, Pasadena, Riverside, and Vernon.

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During the last rate adjustment process (WAPA-58-2), the BCP

Contractors requested that Western re-evaluate the annual costs in the

PRSS for the ratesetting period. As a result of this re-evaluation,

Western terminated the public process for proposed Rate WAPA-58-2 on

October 7, 1994 (59 FR 51192). Termination was based on the following:

(1) The BCP currently had a rate in effect that would satisfy FYs 1994

and 1995 annual costs; and (2) the BCP Implementation Agreement which

became effective February 17, 1995, was in the final stage of

negotiations with the BCP Contractors and Reclamation, and those

negotiations included a revised methodology for establishing BCP power

rates on an annual basis. The Implementation Agreement addresses eleven

issues: (1) Replacements; (2) Visitor Facilities; (3) Amendment to

Regulations; (4) Multi-Project Benefits and Costs; (5) Engineering &

Operating Committee (E&OC) and Coordinating Committee; (6) Billing and

Payment; (7) Operating Amount and Working Capital; (8) Audits; (9)

Principal Payments; (10) Annual Rate Adjustments; and (11) Uprating

Credits.

The major differences between the existing rates and methodology,

compared to the proposed rates and methodology, resulted from several

activities which involve Western and Reclamation working in partnership

with the BCP Contractors. First, the BCP Implementation Agreement

revises the methodology for determination of the power rate to an

annualized rate, from the higher of either: (1) The 5-year-average for

the cost evaluation period; or (2) the rate in the first year of the

cost evaluation period. Second, future revenue requirements were

reduced by continuing to review Western's and Reclamation's operating

and maintenance costs, and by reviewing and monitoring the construction

and replacement program through the E&OC. Third, the BCP Implementation

Agreement establishes the method by which the dollar imbalance between

total capacity and total energy revenues is resolved. Fourth, a new

rate making revenue requirements and billing methodology will be

implemented. Under the current rate making and billing methodology,

rates were determined each year based on projected hydrology for the

project and bills were issued monthly based on actual hydrology and

resulting energy production. Under the new methodology, revenue

requirements will be calculated and billed regardless of the projected

or actual hydrology and resultant energy generation.

The proposed rates are based on a composite rate of 12.66 mills/

kWh. The composite rate consists of an energy charge of 6.33 mills/kWh

and a capacity charge of $1.04/kW/month.

The following table compares the existing BCP rates with the

proposed rates:

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Existing rates

February 1,

1994, thru Proposed rates Percent

September 30, October 1, 1995 change

1995

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Rate Schedule.................................................. BCP-F4/2 BCP-F5 --

Composite Rate (mills/kWh)..................................... 12.62 12.66 + 0.32

Energy Rate (mills/kWh)........................................ 6.31 6.33 + 0.32

Capacity Rate ($/kW/month)..................................... $1.07 $1.04 - 2.80

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Since the proposed rates and revised rate methodology constitute a

major rate adjustment as defined by the procedures for public

participation in general rate adjustments, both a public information

forum and a public comment forum will be held. A revised PRSS, which is

the basis for the proposed rate adjustment, has been distributed to the

BCP Contractors and other interested parties prior to publication of

this notice. After review of public comments, Western will recommend

the proposed rates for approval on an interim basis by the Deputy

Secretary of the Department of Energy (Deputy Secretary). Once the

Deputy Secretary approves the rates as provisional rates, they will be

submitted to FERC for approval on a final basis.

DATES: The consultation and comment period will begin on May 8, 1995

and will end no later than August 7, 1995. The public information forum

will be held at Western's Phoenix Area Office, 615 South 43rd Avenue,

Phoenix, Arizona, beginning at 10 a.m. on June 15, 1995. The public

comment forum at which Western will receive oral and written comments

will be held at the same location beginning at 10 a.m. on July 13,

1995.

Written comments should be received by the end of the consultation

and comment period to assure consideration and should be sent to the

address below.

[[Page 22577]] FOR FURTHER INFORMATION CONTACT: Mr. J. Tyler Carlson,

Area Manager, Western Area Power Administration, Phoenix Area Office,

P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 352-2453.

SUPPLEMENTARY INFORMATION: The power rates for the BCP are established

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

et seq.), the Reclamation Act of 1902 (43 U.S.C. 391 et seq.), as

amended and supplemented by subsequent enactments, particularly section

9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), the

Colorado River Basin Project Act of 1968 (43 U.S.C. 1501 et seq.), the

Colorado River Storage Project Act (43 U.S.C. 620 et seq.), the Boulder

Canyon Project Act (43 U.S.C. 617 et seq.), the Boulder Canyon Project

Adjustment Act (43 U.S.C. 618 et seq.), the Hoover Power Plant Act of

1984 (43 U.S.C. 619 et seq.), the General Regulations for Power

Generation, Operation, Maintenance, and Replacement at the Boulder

Canyon Project, Arizona/Nevada (43 CFR Part 431) published in the

Federal Register at 51 FR 23960 on July 1, 1986, and the General

Regulations for the Charges for the Sale of Power From the Boulder

Canyon Project, Final Rule (10 CFR Part 904) published in the Federal

Register at 51 FR 43124 on November 28, 1986, the Procedures for Public

Participation in Power and Transmission Rate Adjustments and Extensions

(10 CFR Part 903) published in the Federal Register at 50 FR 37837 on

September 18, 1985, and the DOE financial reporting policies,

procedures, and methodology (DOE Order No. RA 6120.2 dated September

20, 1979).

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

November 10, 1993 (58 FR 59716), 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 power 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 power rates to FERC.

The existing BCP rate methodology in WAPA-58 was approved by the

Assistant Secretary for Conservation and Renewable Energy on an interim

basis, effective January 1, 1993 (57 FR 61074). On November 3, 1993,

FERC approved the BCP rate methodology as a final rate effective from

January 1, 1993, through September 30, 1997 (65 FERC Sec. 61,186). The

Administrator of Western confirmed and approved the rate methodology in

Rate Order WAPA-58-1 (59 FR 10629, March 7, 1994). The methodology

utilized in Rate Order WAPA-58 requires that Western adjust the BCP

rates, either an increase or decrease, on an annual basis. The existing

BCP composite power rate set forth in Rate Schedule BCP-F4/2 is 12.62

mills/kWh comprised of an energy charge of 6.31 mills/kWh and a

capacity charge of $1.07/kW/month. See Notice of Rate Order WAPA-58-1,

59 FR 10629.

Availability of Information

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

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

proposed rates for energy and capacity are and will be made available

for inspection and copying at the Phoenix Area Office, 615 South 43rd

Avenue, Phoenix, Arizona 85005.

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 the Office of Management and Budget is required.

Environmental Evaluation

In compliance with the National Environmental Policy Act of 1969

(NEPA), 42 U.S.C. 4321 et seq.; Council on Environmental Quality

Regulations (40 CFR Parts 1500-1508); and DOE NEPA Regulations (10 CFR

Part 1021), Western has determined that this action is categorically

excluded from the preparation of an environmental assessment or an

environmental impact statement.

Issued in Golden, CO May 1, 1995.

J.M. Shafer,

Administrator.

[FR Doc. 95-11264 Filed 5-5-95; 8:45 am]

BILLING CODE 6450-01-P