Record of Decision for the Energy Planning and Management Program

DEPARTMENT OF ENERGY

Western Area Power Administration

Record of Decision for the Energy Planning and Management Program

AGENCY: Western Area Power Administration, DOE.

ACTION: Record of decision.

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SUMMARY: The Department of Energy, Western Area Power Administration

(Western) completed a draft and final environmental impact statement

(EIS), DOE/EIS-0182, on its Energy Planning and Management Program

(Program). Western is publishing this Record of Decision (ROD) to adopt

the Program, which will require the preparation of integrated resource

plans (IRP) by Western's long-term firm power customers, and establish

a framework for extension of existing firm power resource commitments

to customers.

DATES: Western will proceed to take action with the publication of this

ROD. All parties who have previously expressed an interest in the

Program will be notified and copies of the ROD made available to them.

FOR FURTHER INFORMATION CONTACT: Robert C. Fullerton, Western Area

Power Administration, P.O. Box 3402, A3100, Golden, CO 80401-0098,

(303) 275-1610.

SUPPLEMENTARY INFORMATION: Western has prepared this (ROD) pursuant to

the National Environmental Policy Act of 1969 (NEPA), Council on

Environmental Quality NEPA implementing regulations (40 CFR Parts 1500-

1508), and DOE NEPA implementing regulations (10 CFR Part 1021). This

ROD is based on information contained in the ``Energy Planning and

Management Program Environmental Impact Statement,'' DOE/EIS-0182, and

related coordination with agencies, power customers, interested groups,

and individuals. Western has considered all comments received on the

proposed Program in preparing this ROD. The final Program also

implements the provisions of section 114 of the Energy Policy Act of

1992 (EPAct), Public Law 102-486.

Background

Western proposed the Program in concept on April 19, 1991 (56 FR

16093). The goal of the Program was, and is, to require planning and

efficient energy use by Western's long-term firm power customers and to

extend Western's firm power resource commitments as contracts expire.

Western published its notice of intent to prepare an EIS in the Federal

Register on May 1, 1991 (56 FR 19995).

Combined public information/environmental scoping meetings on the

proposed Program were held in seven states in June 1991. Based on the

feedback received from these meetings, Western developed alternatives

to be analyzed in the EIS. Public alternatives workshops were held in

eight cities in Western's service area during March and April 1992.

President Bush signed EPAct into law on October 24, 1992. Section

114 of EPAct requires the preparation of IRPs by Western's customers,

and amends Title II of the Hoover Power Plant Act of 1984. Western

adjusted its proposed Program to fully incorporate the provisions of

this law.

The draft EIS was printed and distributed during March of 1994.

Notices of availability for the draft EIS were published in the Federal

Register by Western on March 31, 1994 (59 FR 15198), and by the

Environmental Protection Agency (EPA) on April 1, 1994 (59 FR 15409).

Eight public hearings were held throughout Western's service area

during the 45-day public comment period. Western did not identify a

preferred alternative in the draft EIS, but solicited input from

interested parties and the public as to what they thought the

appropriate alternative should be.

Because the Program is also a rule-making action, Western conducted

a public process under the Administrative Procedure Act (APA),

coordinated with the ongoing NEPA process. A notice of the proposed

Program was published in the Federal Register on August 9, 1994 (59 FR

40543), with seven public information/comment forums held at various

locations during September 1994.

With input from oral and written comments from both the NEPA and

APA processes, Western modified the EIS alternatives where appropriate,

and revised the draft EIS. The final EIS was distributed to the public

on June 27, 1995. The EPA notice of availability was published on July

21, 1995 (60 FR 37640). The final EIS identified an agency preferred

alternative, a combination of features from Alternatives 5 and 6, as

presented in the draft EIS. The alternatives considered in the EIS are

described in the following section.

Alternatives

The EIS evaluated a total of 13 alternatives, including a no-action

alternative. All but the no-action alternative comprised different

approaches to implementing the proposed Program. The two parts of the

proposed Program are the IRP provision and the Power Marketing

Initiative (PMI). The IRP provision requires customers to prepare IRPs,

and establishes administrative procedures and requirements. Small

customers could be exempt from the IRP requirement, but would still

have to accomplish some resource planning on a simpler scale as needed.

Options for the PMI include PMI Extensions, PMI Limited Extensions,

and PMI Non-extensions. These options, which are explained more fully

in the EIS, include varying amounts of existing resources (from 90 to

100 percent of the present commitments) that would be extended to

Western's power customers, varying the lengths of contracts (from 10 to

35 years), determining the existence and size of a resource pool

ranging from 0 to 10 percent, establishing options for how pooled

resources would be generally allocated, and setting penalties for

noncompliance.

The alternatives in the EIS consisted of various reasonable

combinations of the above components. The summary of the EIS contains a

table, Table S.3, which concisely describes the principal attributes of

each alternative. That table is reprinted here. The no-action

alternative assumes the continuation of Western's Guidelines and

Acceptance Criteria for the Conservation and Renewable Energy Program.

The alternatives are not described in further detail here, as they are

combinations of the components discussed above, and the EIS analysis

did not reveal any important differences in impacts among the

alternatives, except with the no-action alternative.

All alternatives had positive impacts when compared to no action,

as each alternative would encourage energy efficiency on the part of

Western's customers. The predicted effect of the Program within

Western's service territory is reduced energy usage of approximately 2

to 6 percent in the year 2015, depending on the alternative. Western's

customers are forecast to use 5 to 15 percent less energy in 2015,

depending on the alternative. Within Western's service territory, the

savings varies from area to area, depending primarily on the amount of

conservation activity already accomplished and the number and type of

existing energy-efficient buildings.

[[Page 53182]]

The energy saved reduces the need for generation which, in turn,

reduces pollution as compared with the no action alternative. Although

small when compared with regional generation needs, the reduction of

emissions in absolute terms is important. A typical 500-megawatt coal

plant produces about 2,600 tons of sulphur oxides, 5,200 tons of oxides

of nitrogen, 500 tons of total suspended particulates, and 3.2 million

tons of carbon dioxide annually. The Program alternatives are estimated

to reduce annual emissions by the equivalent of one to two such coal

plants in 2015.

With the exception of the no-action alternative, the effects among

alternatives are very similar, positive, and in many cases within the

level of uncertainty of the analyses. The summary tables of impacts

included in the EIS (Tables S.5 and S.6) show that each alternative

except the no-action alternative is environmentally preferable in some

impact category. Because of the small differences in impacts, their

positive nature, and the uncertainty inherent in the future

projections, none of the alternatives was clearly superior to the

others in terms of overall environmental impact. Therefore, although

none of the action alternatives can be regarded as environmentally

preferable overall, each of them is environmentally preferable when

compared to the no-action alternative.

Scoping Issues Not Addressed

A number of issues were raised during the scoping process that were

determined to be outside the scope of the EIS. These issues included

transmission access, incentive rates and rate design, and river and dam

operations. Western already has an open transmission access policy.

Rates and rate design are accomplished under a separate public rate-

setting process as set forth in 10 CFR 903, and are not a part of a

power marketing plan. River and dam operations are not determined by

Western, but by the operating agencies, usually the Bureau of

Reclamation (Reclamation) or the Corps of Engineers.

Modifications to the Preferred Alternative

Two minor modifications to the preferred alternative were found to

be necessary to make the final EIS consistent with the final Program

regulations, which will be published in the Federal Register shortly

after publication of this ROD. The modifications are procedural or

administrative in nature, and do not affect the analyses in the EIS.

The first modification involves the timing of extension contract

offers to customers of the Pick-Sloan Missouri Basin Program-Eastern

Division and the Loveland Area Projects. The EIS indicates that

extension contracts would be offered upon publication of the ROD in the

Federal Register, subject to subsequent approval of the submitted IRP/

small customer plan. Under the final rule contracts signed pursuant to

the PMI would not be subject to termination if an IRP/small customer

plan is disapproved. In recognition of the fact that extension

contracts will make the penalty provisions of section 114 of EPAct

applicable to customers immediately, the final rule will allow

extension contracts to be unconditionally offered for execution no

sooner than the effective date of the final regulations.

The second modification involves the applicability of penalty

provisions for nonsubmittal of annual progress reports in a timely

manner, as described in the EIS. In the final regulations, the penalty

provision will not be applied to nonsubmittal or untimely submittal of

annual reports. There are two reasons for this change: EPAct does not

provide for application of a penalty in this circumstance, and a

penalty would be harsh and out of proportion to the importance of

annual report submittal.

In the final regulations, two decisions will be made that are

within ranges set forth in the preferred alternative. The term of

contract is established at 20 years, within the range of 18-20 years

analyzed for the preferred alternative. For the Pick-Sloan Missouri

Basin Program-Eastern Division and the Loveland Area Projects, the

final rule establishes an initial resource pool of 4 percent, with two

additional increments of up to 1 percent each, 5 and 10 years into the

extension term.

Responses to Late Comments on the Program

Several comment letters were received postmarked after May 16,

1994, the close of the comment period on the EIS, and too late to be

incorporated in the final EIS. The following section summarizes those

comments and addresses them.

1. Comment: Program implementation in Texas should mean less need

for energy, which would lead to less water demand for power generation

at the Falcon and Amistad projects. Texas law permits but does not

mandate integrated resource planning, and the Texas Public Utility

Commission has many IRP elements in place. Comprehensive IRP rules are

under consideration in Texas. Several utilities are experimenting with

IRP processes. Texas requires biennial filings of long-term forecasts

and capacity resource plans from all generating utilities, including

municipal utilities. Several utilities in Texas have achieved

significant demand-side management program impacts since 1981, and the

PUC has had a biennial energy efficiency reporting rule since August of

1984. The Texas PUC has not completed an IRP review process for any

utility. Two footnotes in Chapter 3 of the draft EIS refer incorrectly

to a point of contact at the Texas PUC. Table 3.9 in the draft EIS does

not give sufficient recognition to the status of IRP in Texas. The

draft EIS does not adequately emphasize the Texas PUC's requirement for

demand and supply-side solicitation as part of its power plant

licensing regulations (Texas Office of State-Federal Relations).

Response: Since Western's resources are favorably priced in

comparison to other sources of power, energy efficiency improvements

resulting from IRP implementation would result in conservation of

thermal resources or purchased electricity other than hydropower. No

impact on hydropower generation will take place.

The information on the status of IRP in Texas was largely derived

from national surveys that are regarded as authoritative in the utility

industry. Obviously, the best source of information on the status of

Texas PUC practices and regulations is the PUC itself. Western accepts

the information provided by this commenter as authoritative.

2. Comment: The direct environmental impacts of thermal generation

cannot be known until the location and projected emission levels are

known. In the absence of this information, we can only express our

concern about the potential impacts of locating plants in ozone

nonattainment areas in the state of Texas (Texas Natural Resource

Conservation Commission).

Response: Western agrees that the location of new generation is an

important factor that influences air quality. Western's Program will

increase efficient energy use and, compared with no action, will reduce

the need for new generation. Any entity proposing new thermal

generation for construction must apply for necessary permits from

appropriate authorities such as the State of Texas.

3. Comment: It is more practical and environmentally sound to make

contract extension and allocation decisions on a project-by-project

basis, as Western has

[[Page 53183]]

done in the past. A project-by-project approach will make it easier for

Western to coordinate its efforts with those of the Bureau of

Reclamation. The power contract extension alternatives proposed by

Western may create unrealistic expectations among Western's customers,

which may be difficult to satisfy in the event of future changes in the

operations of Reclamation dams. Decisions should not be made now on the

marketing of power during time periods more than ten years into the

future. Western's draft EIS may lock in resources to an inappropriate

degree. Western needs to analyze the environmental effects of (1)

rewarding customers that conserve energy with a larger power

allocation, (2) providing power to entities that intend to meet future

power needs with fossil fuel-fired generation, and (3) providing more

Western power for fish and wildlife purposes. The impacts of increasing

the costs of Western's power also need to be evaluated (Bureau of

Reclamation).

Response: The final Program provides a general framework for

marketing Western's long-term firm hydroelectric resources. Many

project-specific determinations are necessary before any final

decisions can be made on marketing power. Such important issues as the

resource available for marketing in the future, the size of a resource

pool, any adjustments to the size of this pool, and allocation criteria

for new customers must be decided on a project-specific basis, with

public input and appropriate environmental documentation. Project-

specific decisions will need to be made on whether to apply the Power

Marketing Initiative to Western's projects in the future, such as the

Colorado River Storage Project and the Central Valley Project. All of

these decisions will be made in the future, and on a project-specific

basis. Western is not making decisions today about all of the specifics

of power marketing in the future.

The Program will not create unrealistic expectations among

Western's power customers. Project-specific extension percentages will

be applied to the marketable resource determined to be available at the

time future resource extensions begin. This approach will allow Western

to accommodate changes in operations by the generating agencies before

the extension term begins. The Program also allows Western to adjust

its marketable resources on 5 years' notice after the extension term

starts. This feature allows the flexibility to respond to changing

operations or hydrology. Western's customers have been made aware of

these Program features.

Suggestions on how Western might allocate its power to new

customers will be addressed during project-specific allocation

processes in the future. For the two projects initially covered by the

Power Marketing Initiative, resource pool size was determined based

upon meeting a fair share of the needs of new customers within a

project-specific marketing area. For other projects, the fair share

needs of new customers will be determined at a time closer to the

expiration date of existing contracts.

Rates are not analyzed as part of the Program EIS, as they are

outside the scope of the Program. Rate issues should be addressed

within Western's long-established public ratemaking process.

At a congressional hearing on June 16, 1994, the Commissioner of

Reclamation expressed support for the Program proposal as documented in

the testimony of Deputy Secretary of Energy White. At the hearing,

Commissioner Beard stated that Deputy Secretary White's testimony

``reflects a very thorough attempt to look at the problem and to come

forward with * * * a very unique and innovative set of solutions.''

Beard continued: ``I think the changes that [Deputy] Secretary

White is recommending and that Western is going to be pursuing will

help us * * * be able to deal with future problems * * * quicker and

faster.'' WAPA Allocation of Hydroelectric Power: Oversight Hearing

before the Subcommittee on Oversight and Investigations of the

Committee on Natural Resources, House of Representatives, 103rd

Congress, Second Session at 141-42 (June 16, 1994).

Decision

Western has selected the preferred alternative as described in the

final EIS, with the modifications described earlier in this document,

as its proposed action. This alternative best meets Western's Program

requirements and the needs of Western's customers, while being

responsive to the comments received on the proposed Program. The

proposed action falls between Alternatives 5 and 6, described in the

EIS, in terms of its component provisions. The specific impacts of the

proposed action will fall somewhere between those identified for

Alternatives 5 and 6, which are very similar to each other. Essential

elements of the proposed action include requiring IRPs for Western's

long-term firm power customers, with a small customer provision for

those customers with total energy sales or usage of 25 gigawatt-hours

or less. The extension period for Federal power resources will be 20

years.

Project-specific extensions over the entire contract term will be

not less than 94 percent of the resource determined to be available at

the time new contracts are signed for the Pick-Sloan Missouri Basin

Program--Eastern Division and the Loveland Area Projects; the

percentage will be determined later for other projects. A resource pool

of up to 6 percent will be established for these two projects,

consisting of an initial pool of 4 percent, with additional withdrawal

opportunities of up to 1 percent 5 and 10 years into the contract term.

The pool may be used for allocations to new customers, customer

development of new technologies for conservation or renewable

resources, and contingencies. Decisions on pools for other projects

will be made at a later date.

Allocations may be adjusted on 5 years' notice for changes in

operations and hydrology. This does not mean that any changes in

operations will have to be deferred for 5 years; changes can be

implemented immediately. Any shortfall in generation will be replaced

with purchases or other resources until allocation adjustments are

made. Purchased resources will be evaluated in an internal IRP process

recently adopted through a separate public process. Project use

withdrawals will be made in accordance with the principles set forth in

existing marketing plans and contracts. The Program will carry the

progressive penalty provisions prescribed in EPAct.

The IRP provision will be effective for all of Western's customers

following publication of the final rule under the APA process. The PMI

will be in effect for the Pick-Sloan Missouri Basin Program--Eastern

Division and the Loveland Area Projects initially. Its application to

the Salt Lake City Integrated Projects marketing plan will be

determined following completion of the separate NEPA process currently

under way on marketing before 2004. PMI application to the Central

Valley Project will be evaluated during the project-specific NEPA

process for the marketing of power after the year 2004. Application of

the PMI to projects in the Phoenix Area will be considered closer to

the time the existing power contracts expire.

No Mitigation Action Plan will be prepared for the Program, as the

proposal involves no construction, and no mitigation was identified as

necessary to implement the Program.

[[Page 53184]]

Issued at Golden, Colorado, September 21, 1995.

J.M. Shafer,

Administrator. .......................................................

Table S.3.--Summary of Energy Planning and Management Program Alternatives Including the Preferred Alternative

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No action Program alternatives

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Program PMI extension PMI limited extension PMI non-extension Preferred

components 1 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2 3 4 5 6 7 8 9 10 11 12 13

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EMP.............. C&E, G&AC......... IRP............... IRP............... IRP............... IRP with Small IRP with Small IRP with Small IRP............... IRP.............. IRP with Small IRP.............. IRP with Small IRP with Small

Customer Customer Customer Customer Customer Customer

Provision. Provision. Provision. Provision. Provision. Provision.

Extension Period. Variesa........... 15 yrsb........... 25 yrsb........... 35 yrsb........... 15 yrsb........... 25 yrsb........... 35 yrsb........... 25 yrsb........... 10 yrsc.......... 10 yrsc.......... Variesa.......... Variesa.......... 18-20 years.

Percentage Variesa........... 98%............... 95%............... 90%............... 98%............... 95%............... 90%............... 98%............... 100%e............ 100%e............ Variesa.......... Variesa.......... Variesf

Allocation.

Resource Pool.... Noned............. 2%................ 5%................ 10%............... 2%................ 5%................ 10%............... 2%................ Nonee............ Nonee............ Noned............ Noned............ Variesg

Adjustment Noned............. Limited........... 1 adjust.......... 2 adjust.......... Limited........... 1 adjust.......... 2 adjust.......... 5 yr notice....... Nonee............ None............. Noned............ Noned............ 5 year notice.

Provisions.

Penalty Provision 10% Withdrawal....

(11) 10% to 30%

surcharge, see

Figure 2.1 and

Table 2.4.

Optional 10%

power reduction.

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aTo be determined by project-specific marketing plan.

bContract extension begins at time of current expiration. Contracts are excluded upon receipt of IRP by Western.

cContract extensions are executed at the time of IRP approval; extension will provide resource certainty to a customer for 10 years from the date of IRP approval. After 10 years, power marketing will be determined by project-specific marketing plans.

dUnless provided by project-specific marketing plan.

eWestern assumes that the percent allocation after the limited extension period will be determined by project-specific marketing plans. For purposes of analysis, this draft EIS assumes a 90% allocation after the expiration of the 10-year extension period.

fProject-specific extensions of not less than 94% for the Pick-Sloan Missouri Basin Program-Eastern Division and the Loveland Area Projects; percentage to be determined for other projects.

gTotal resource pool of up to 6% for the Pick-Sloan Missouri Basin Program-Eastern Division and Loveland Area Projects, which includes both an initial pool followed by additional withdrawal opportunities 5 and 10 years into the contract; other projects to be determined.

[FR Doc. 95-25222 Filed 10-11-95; 8:45 am]

BILLING CODE 6450-01-P