Pacific Northwest-Pacific Southwest Intertie ProjectProposed Firm and Nonfirm Transmission Service Rates for the Phoenix Area

DEPARTMENT OF ENERGY

Western Area Power Administration

Pacific Northwest-Pacific Southwest Intertie Project--Proposed

Firm and Nonfirm Transmission Service Rates for the Phoenix Area

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Rates for Firm Transmission Service and

Nonfirm Transmission Service for the Pacific Northwest-Pacific

Southwest Intertie Project Rate Adjustment.

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

two rates for firm transmission service and a rate for nonfirm

transmission service for the Pacific Northwest-Pacific Southwest

Intertie Project (AC Intertie).

The power repayment study indicates that the proposed rates for

firm and nonfirm transmission service are necessary because of

increases in operation and maintenance expenses, and the anticipated

decrease in current marketable capacity from the 500-kilovolt (kV)

transmission lines. The proposed rates for firm and nonfirm

transmission service will supersede the existing rates that became

effective August 1, 1993, and were extended on May 17, 1995 (60 FR

26433) until October 1, 1996. The proposed rates for firm and nonfirm

transmission service are to become effective January 1, 1996.

The existing firm transmission service rate for the 230/345-kV

transmission lines is $4.46 per kilowatt per year (kW/year) and the

existing nonfirm transmission service rate is 1.00 mills per

kilowatthour (mills/kWh).

The proposed firm transmission service rate for the 230/345-kV

transmission lines is $7.37/kW/year; the proposed rate for the 500-kV

transmission lines is $16.00/kW/year; and the proposed combined nonfirm

transmission service rate is 2.11 mills/kWh.

The Acting Assistant Secretary of Energy for Energy Efficiency and

Renewable Energy of the Department of Energy (DOE), approved the

existing rates on an interim basis for firm and nonfirm transmission

service on July 14, 1993. The Federal Energy Regulatory Commission

(FERC) confirmed and approved the rates on a final basis for firm and

nonfirm transmission service on March 24, 1994 (66 FERC para.62,180).

The existing rates were designed to recover all annual costs and

investment repayment of both the existing 230/345-kV lines and the new

500-kV lines. The existing rates for firm and nonfirm transmission

service were placed in effect on August 1, 1993, and consisted of a

two-step rate adjustment process. Step one of the firm transmission

service rate was approved to be in effect through September 30, 1995,

and step two of the existing rates was to become effective on October

1, 1995, and continue through July 31, 1998.

During the last AC Intertie rate adjustment process (WAPA-56), the

Colorado River Commission of Nevada, the Arizona Power Authority, the

Arizona Subcontractor Group, the Arizona Power Pooling Association,

Inc., and the Salt River Project Agricultural Improvement and Power

District filed a Motion to Intervene and Protest FERC confirmation and

approval of the AC Intertie rates described in Rate Order No. WAPA-56.

On December 28, 1993, Western filed a Stipulation Agreement signed by

Western and these customers in which the intervenors withdrew their

protests and Western agreed to re-examine the issues raised as well as

commence a new rate adjustment proceeding during fiscal year 1995.

Western has re-examined the issues raised during the last rate

adjustment process along with the current issues regarding the rate

impact from the additional capacity. Due to customer request, Western

has developed and is proposing two firm transmission service rates and

a nonfirm transmission service rate for the AC Intertie Project to

supersede step one of the existing rates which were extended for firm

and nonfirm transmission service. The major difference between step two

of the existing rates and the proposed rates is the separate marketing

and rate-setting design of the 500-kV system.

In response to additional AC Intertie customer requests, Western is

proposing a rate design for the firm transmission

[[Page 38996]]

service that consists of (1) a rate for the firm transmission service

from the existing 230/345-kV transmission lines and (2) a rate for the

firm transmission service of the 500-kV transmission lines. The firm

transmission service rate for the 500-kV transmission lines is designed

to recover all annual costs for repayment of the new investment. Based

upon its studies, Western expects that the marketable capacity used in

the rate calculation for the 500-kV transmission lines to be 668

megawatts (MW). Western is proposing a firm transmission service rate

of $7.37/kW/year for the 230/345-kV system and a firm transmission

service rate of $16.00/kW/year for the 500-kV system.

Western is also proposing a nonfirm transmission service rate of

2.11 mills/kWh for both the 230/345-kV and 500-kV system that will

supersede the existing nonfirm transmission service rate of 1.00 mills/

kWh. The non-firm transmission service rate combines the rate of 1.40

mills/kWh for the 230/345-kV system and a rate of 3.04 mills/kWh for

the 500-kV system for a combined rate of 2.11 mills/kWh.

The following table displays the existing rates, the step two of

the previously approved rates, the proposed AC Intertie 230/345-kV

transmission system rates, and the proposed 500-kV transmission system

rates:

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Existing rates 230/345-kV Existing rates step two Proposed rates 230/345-kV Proposed rates 500-

Type of service system extended through 10/ 230/345/ 500-kV system 07/ system 01/01/1996 through kV system 01/01/1996

01/1996 31/98 09/30/2000 through 09/30/2000

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Firm Transmission Service..................... $4.46/kW/year............. $8.01/kW/year............. $7.37/kW/year............. $16.00/kW/year.

Combined Nonfirm Transmission Service......... 1.00 mills/kWh............ 1.52 mills/kWh............ 2.11 mills/kWh............ 2.11 mills/kWh.

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The proposed rates for the 500-kV transmission lines are based on

investments, an estimated marketable capacity, and a percentage

distribution of the projected expenses and revenues. The final

marketable capacity that will be contracted is not yet determined.

Should there be contracts for more than the estimated marketable

capacity of 668 MW, Western would foresee an increase in firm revenue,

thereby, providing for a decrease to the proposed rate of $16.00/kW/

year. Conversely, if less than the estimated capacity is contracted,

Western would increase the proposed rate of $16.00/kW/year to ensure

that the revenue requirement is satisfied. The proposed rate for the

230/345 kV system represents an 8.68 percent decrease from the existing

step two rate of $8.01/kW/year. The non-firm transmission rate

represents an increase of 39 percent from the existing non-firm

transmission service rate.

Since the proposed rates constitute a major rate adjustment for

transmission service, as defined by the procedures for public

participation in general rate adjustments, as cited below, both a

public information forum and a public comment forum will be held. After

review of public comments, Western will recommend the final proposed AC

Intertie rates to the Deputy Secretary of the Department of Energy

(Deputy Secretary). If approved by the Deputy Secretary, the

provisional rates would remain in effect on an interim basis until

confirmed and approved as final rates by FERC.

DATES: The consultation and comment period will begin with the

publication of this notice in the Federal Register and will end not

less than 90 days later, or October 17, 1995, whichever occurs later. A

public information forum will be held at 1 p.m. on August 24, 1995, at

Western's Phoenix Area Office, 615 South 43rd Avenue, Phoenix Arizona.

A public comment forum at which Western will receive oral and written

comments will be held at 1 p.m. on September 18, 1995, also at

Western's Phoenix Area Office.

Written comments regarding the proposed rates should be received by

the end of the consultation and comment period to be assured

consideration and should be sent to the address below.

ADDRESSES: For Further Information Contact: Mr. J. Tyler Carlson, Area

Manager, Phoenix Area Office, Western Area Power Administration, P.O.

Box 6457, Phoenix, AZ 85005, (602) 352-2521.

SUPPLEMENTARY INFORMATION: Transmission rates for the AC Intertie are

established pursuant to the Department of Energy Organization Act (42

U.S.C. 7101 et seq.); and the Reclamation Act of 1902 (43 U.S.C. 371 et

seq.), as amended and supplemented by subsequent enactments,

particularly section 9(c) of the Reclamation Act of 1939 (43 U.S.C.

485h(c)), and section 8 of the Act of August 31, 1964 (16 U.S.C. 837g).

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

November 10, 1993 (58 FR 59716), the Secretary of DOE 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 in 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 FERC. Existing DOE procedures for public participation in 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 rates for transmission service are and will be available for

inspection and copying at the Phoenix Area Office, located at 615 South

43rd Avenue, Phoenix, AZ 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 (NEPA) of

1969, 42 U.S.C. 4321 et seq.; Council On Environmental Quality (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, July 18, 1995.

J.M. Shafer,

Administrator.

[FR Doc. 95-18736 Filed 7-28-95; 8:45 am]

BILLING CODE 6450-01-P