Stampede Division, Washoe Project Notice of Rate Order No. WAPA- 67

DEPARTMENT OF ENERGY

Stampede Division, Washoe Project Notice of Rate Order No. WAPA-

67

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of rate order.

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[[Page 53786]]

SUMMARY: Notice is given of the confirmation and approval by the Deputy

Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-67

and Rate Schedule SNF-4 placing the revised nonfirm energy rates for

energy from the Stampede Division, Washoe Project (Stampede) of the

Western Area Power Administration (Western) into effect on an interim

basis. These rates are the interim rates, called the provisional rates,

and they will remain in effect on an interim basis until the Federal

Energy Regulatory Commission (FERC) confirms, approves, and places them

into effect on a final basis or until they are replaced by other rates.

Western has executed agreements with the Sierra Pacific Power

Company (Sierra), the U.S. Department of the Interior, Fish and

Wildlife Service (FWS) and the U.S. Department of the Interior, Bureau

of Reclamation (Reclamation) to provide service to project use

facilities. The costs associated with such service will be

nonreimbursable, and will not be recovered through the power revenues.

The remaining reimbursable costs and the energy remaining after meeting

project use service are used to calculate the cost recovery rate. This

rate ensures payment of all reimbursable expenses and investments

within the required time frames. The cost recovery rate is above the

current market price for nonfirm energy.

Under Rate Schedule SNF-4, nonfirm energy that is available after

project use service has been met will be sold at a rate that is equal

to or higher than the Stampede Energy Exchange Account (SEEA) rate but

no greater than the cost recovery rate. Rate Schedule SNF-4 provides

the formulae to determine the SEEA and cost recovery rates for Stampede

nonfirm energy. These formulae are:

The SEEA rate will be 85 percent of the then-effective non-time

differentiated rate as provided in Sierra's California Quarterly

Short-Term Purchase Price Schedule for As-Available Purchases from

Qualifying Facilities with Capacities of 100 kilowatts or less.

The cost recovery rate is calculated by dividing the revenue

requirement needed to repay all reimbursable power costs by the

nonfirm energy remaining after meeting project use service.

A comparison of existing and provisional rates follows:

----------------------------------------------------------------------------------------------------------------

Existing rate as of July Provisional rate October Percentage of

1, 1994 1, 1995 change

----------------------------------------------------------------------------------------------------------------

Rate Schedule............................ SNF-3 SNF-4

Floor (SEEA) Rate (mills/kWh)............ 27.69 19.26* -30.44

Ceiling (Cost Recovery) Rate (mills/kWh). 67.39 80.44** 19.36

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*The average SEEA rate for FY 1995.

**The estimated cost recovery rate for FY 1996 through FY 2000.

Under the existing rate schedule, Stampede nonfirm energy is sold

through an annual bidding process on a short-term nonfirm basis. A

floor and ceiling rate for the bidding process is calculated each year.

The floor rate is based on annual operation and maintenance expenses

plus two mills per kilowatthour, and the ceiling rate is the rate

required to repay annual expenses and investment within the required

time frames.

DATES: Rate Schedule SNF-4 will be placed into effect on an interim

basis on October 1, 1995, and will be in effect until FERC confirms,

approves, and places the rate schedule in effect on a final basis, or

until the rate schedule is superseded.

FOR FURTHER INFORMATION CONTACT:

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

Power Administration, 114 Parkshore Drive, Folsom, CA 95630, (916) 353-

4418

Mr. Joel Bladow, Assistant Administrator for Washington Liaison,

Western Area Power Administration, Room 8G-027, Forrestal Building,

1000 Independence Avenue SW., Washington, DC 20585-0001, (202) 586-

5581.

SUPPLEMENTARY INFORMATION: By Amendment No. 3 to Delegation Order No.

0204-108, published November 10, 1993 (58 FR 59716), the Secretary of

Energy (Secretary) delegated (1) the authority to develop long-term

power and transmission rates on a nonexclusive basis to the

Administrator of Western; (2) the authority to confirm, approve, and

place such rates into effect on an interim basis to the Deputy

Secretary; and (3) the authority to confirm, approve, and place into

effect on a final basis, to remand, or to disapprove such rates to

FERC. Existing DOE procedures for public participation in power rate

adjustments are contained in 10 CFR Part 903.

These power rates were developed pursuant to section 302(a) of the

DOE Organization Act, 42 U.S.C. 7152(a), through which the power

marketing functions of the Secretary of the Interior and Reclamation

under 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 Project Act of 1939, 43 U.S.C. Sec. 485h(c), and other

acts specifically applicable to the project involved, were transferred

to and vested in the Secretary.

Under Western's contract with Sierra, all Stampede nonfirm energy

is debited to the SEEA, at the SEEA rate. The cost of project use

service is then credited to the SEEA. Power remaining after meeting

project use service will be offered to other entities, giving priority

to preference customers, through an annual bidding process. Bids will

be accepted only if the bid rate is equal to or higher than the SEEA

rate, and less than the cost recovery rate. If no bid meets this

criteria, the nonfirm energy will be deemed sold to Sierra at the SEEA

rate.

If the SEEA arrangements with Sierra are terminated, Western will

offer all available nonfirm energy for sale at the cost recovery rate,

or the highest rate bid that is below the cost recovery rate.

Stampede power costs associated with providing project use service

are nonreimbursable pursuant to Public Law 84-858 (70 Stat. 777) and

Public Law 101-618 (104 Stat. 3289) and are not recovered through power

revenues. The amount of the annual nonreimbursable costs is calculated

by multiplying the total annual power costs by a ratio of the cost of

providing project use service to the revenues from Stampede generation

as recorded in the SEEA. The remaining reimbursable costs and energy

remaining after project use service has been provided are used to

calculate the cost recovery rate. The power repayment study and other

analyses indicate the revised cost

[[Page 53787]]

recovery rate provides sufficient revenue to pay all reimbursable

annual costs including interest expense, plus repayment of required

investment within the allowable time period.

Rate Order No. WAPA-67 confirming, approving, and placing the

proposed Stampede rate adjustment into effect on an interim basis, is

issued, and the new Rate Schedule SNF-4 will be submitted promptly to

FERC for confirmation and approval on a final basis.

Issued in Washington, DC, September 29, 1995.

Charles B. Curtis,

Deputy Secretary.

Department of Energy Deputy Secretary

In the matter of: Western Area Power Administration Rate

Adjustment for Stampede Division, Washoe Project.

[Rate Order No. WAPA-67]

Order Confirming, Approving and Placing the Stampede Division, Washoe

Project Nonfirm Power Rates Into Effect on an Interim Basis

October 1, 1995.

These power rates were developed pursuant to section 302(a) of the

Department of Energy (DOE) Organization Act, 42 U.S.C. 7152(a), through

which the power marketing functions of the Secretary of the Interior

and the Bureau of Reclamation (Reclamation) under 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

Project Act of 1939, 43 U.S.C. 485h(c), and other acts specifically

applicable to the project involved, were transferred to and vested in

the Secretary of Energy (Secretary).

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

November 10, 1993 (58 FR 59716), the Secretary delegated (1) the

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

nonexclusive basis to the Administrator of the Western Area Power

Administration (Western); (2) the authority to confirm, approve, and

place such rates into effect on an interim basis to the Deputy

Secretary; and (3) the authority to confirm, approve, and place into

effect on a final basis, to remand, or to disapprove such rates to the

Federal Energy Regulatory Commission (FERC). Existing DOE procedures

for public participation in power rate adjustments are contained in 10

CFR Part 903.

Acronyms and Definitions

As used in this rate order, the following acronyms and definitions

apply:

DOE: U.S. Department of Energy

DOE Order RA 6120.2: A Department of Energy order dealing with power

marketing administration financial reporting.

FERC: Federal Energy Regulatory Commission

FWS: U.S. Department of the Interior, Fish and Wildlife Service

FY: Fiscal Year

kW: Kilowatt

kWh: Kilowatthour

mills/kWh: Mills per kilowatthour

PRS: Power repayment study

Reclamation: U.S. Department of the Interior, Bureau of Reclamation

SEEA: Stampede Energy Exchange Account

Sierra: Sierra Pacific Power Company

Stampede: Stampede Division, Washoe Project

Western: U.S. Department of Energy, Western Area Power Administration

Effective Date

The rates will become effective on an interim basis on October 1,

1995, and will be in effect pending FERC's approval of them or

substitute rates on a final basis for a 5-year period, or until

superseded.

Public Notice and Comment

The Procedures for Public Participation in Power and Transmission

Rate Adjustments and Extensions, 10 CFR Part 903, have been followed by

Western in the development of these nonfirm power rates. Stampede is a

power system which normally has annual sales less that 100 million kWh

and an installed capacity of less than 20,000 kW; therefore this rate

adjustment constitutes a minor rate adjustment as defined by 10 CFR

Part 903.2(f). Since this is a minor rate adjustment, no public

meetings were scheduled; however, Western accepted comments from

interested parties.

The following summarizes the steps Western took to allow

involvement of interested parties in the rate process:

1. A Federal Register notice was published on June 5, 1995 (60 FR

29586), officially announcing the proposed nonfirm power rate

adjustment, initiating the public consultation and comment period.

2. On June 14, 1995 a letter was mailed from Western's Sacramento

Area Office to all interested parties announcing the publication of the

Federal Register notice on June 5, 1995.

3. On June 15, 1995 a rate adjustment brochure was available to all

interested parties upon request.

4. The comment period ended on July 5, 1995; no comments or

requests for information were received during the comment period.

Project History

The Stampede Dam was authorized under the Washoe Project Act of

August 1, 1956 (70 Stat. 775). Power facilities were not constructed

when Stampede Dam was built because the power function was determined

not economically justified at the time. A re-evaluation of a powerplant

at Stampede was conducted and published in a special Reclamation

report, Adding Powerplants at Existing Federal Dams in California, in

July 1976. Reclamation recommended construction of the Stampede

powerplant, and construction was completed in 1987. Since 1988, energy

produced at the Stampede powerplant has been sold to the highest bidder

on a short-term nonfirm basis, as the preference entity, defined in the

marketing plan for Stampede power, has been unable to contract for

transmission from Stampede to their point of delivery. In addition, the

Stampede floor and ceiling rates calculated in accordance with the

existing rate schedule has been higher than the market rate for nonfirm

energy.

FWS facilities at Stampede were authorized by the Washoe Project

Act of August 1, 1956 (70 Stat. 775). Lahonton Fish Hatchery and the

Marble Bluff Fish Facility were designated as project use facilities by

Reclamation, but Western has been unable to provide project use service

because transmission service was not available. On April 1, 1994

Western executed Contract No. 94-SAO-00010 with Sierra which

established the SEEA and provides Western the mechanism necessary to

provide project use power to FWS. Western entered into an agreement

with FWS for project use service on June 29, 1994. Subsequently, on

December 19, 1994, Western and Reclamation entered into Letter of

Agreement No. 94-SAO-00036 which provides the method to determine the

percentage of the annual costs of Stampede operation, maintenance,

interest expense and capital cost repayment associated with providing

project use service to be nonreimbursable. Nonreimbursable costs are

not recovered through power revenues. The nonreimbursable costs are

based on the ratio of the annual cost of project use service to the

total annual revenue recorded in the SEEA from Stampede nonfirm energy.

This percentage has been applied to all current and future year costs

in the Stampede PRS.

[[Page 53788]]

Power Repayment Studies

A PRS is prepared each year to determine if power revenues will be

sufficient to pay, within the prescribed time periods, all reimbursable

costs assigned to the power function. Repayment criteria are based on

law, policies, and authorizing legislation. DOE Order RA 6120.2,

section 12b, requires that:

In addition to the recovery of the above costs (operation and

maintenance and interest expenses) on a year-by-year basis, the

expected revenues are at least sufficient to recover (1) each dollar

of power investment at Federal hydroelectric generating plants

within 50 years after they become revenue producing, except as

otherwise provided by law; (2) each annual increment of Federal

transmission investment within the average service life of such

transmission facilities or within a maximum of 50 years, whichever

is less; plus, (3) the cost of each replacement of a unit of

property of a Federal power system within its expected service life

up to a maximum of 50 years.

Existing and Provisional Rates

A comparison of the existing and provisional rates follows:

Comparison of Existing and Provisional Rates

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Percentage

Existing rate as of July 1, 1994 Provisional rate October 1, 1995 of change

----------------------------------------------------------------------------------------------------------------

Rate Schedule................ SNF-3............................ SNF-4............................ ...........

Floor (SEEA) Rate (mills/kWh) 27.69............................ 19.26*........................... -30.44

Ceiling (Cost Recovery) Rate 67.39............................ 80.44**.......................... 19.36

(mills/kWh).

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*The average SEEA rate for FY 1995.

**The estimated cost recovery rate for FY 1996 through FY 2000.

The formula for the SEEA rate is:

The SEEA rate will be 85 percent of the then-effective non-time-

differentiated rate as provided in Sierra's California Quarterly Short-

Term Purchase Price Schedule for As- Available Purchases from

Qualifying Facilities with Capacities of 100 kW or less.

The formula for the cost recovery rate is:

The cost recovery rate is calculated by dividing the revenue

requirement needed to repay all reimbursable power costs by the nonfirm

energy remaining after meeting project use service.

Under the existing rate schedule, Stampede nonfirm energy is sold

through an annual bidding process on a short-term nonfirm basis. A

floor and ceiling rate for the bidding process is calculated each year.

The floor rate is based on annual operation and maintenance expenses

plus two mills per kilowatthour, and the ceiling rate is the rate

required to repay annual expenses and investment within the required

time frames.

Certification of Rate

Western's Administrator has certified that the Stampede nonfirm

power rates placed into effect on an interim basis herein are the

lowest possible rates consistent with sound business principles. The

rates have been developed in accordance with administrative policies

and applicable laws.

Discussion

Sierra has agreed to purchase all Stampede generation at the SEEA

rate. The dollar value from these sales are debited to the SEEA. Bills

for project use service at Lahonton Fish Hatchery and Marble Bluff Fish

Facility are then credited to the SEEA. During April of each year, any

balance in the SEEA may be converted to an energy amount and offered to

other entities, with priority given to preference customers.

The energy remaining after meeting project use service is

calculated by dividing the dollar balance in the SEEA by 85 percent of

the then-effective time-differentiated rate as provided in Sierra's

California Quarterly Short-Term Purchase Price Schedule for As-

Available purchases from Qualifying Facilities with Capacities of 100

kW or less. Power remaining after meeting project use service will be

offered to interested parties and preference customers through an

annual bidding process. Bids will be accepted only if the bid rate is

equal to or higher than the SEEA rate and less than the cost recovery

rate. If no bid meets this criteria, the nonfirm energy will be deemed

sold to Sierra at the SEEA rate. If the SEEA arrangements with Sierra

are terminated, Western will offer all available nonfirm energy for

sale at the cost recovery rate, or the highest rate bid that is below

the cost recovery rate.

Western prepared a PRS which identified power related costs for the

study period. A percentage equal to the ratio of the estimated cost for

project use service to the estimated revenue from Stampede generation

recorded in the SEEA was applied to the power costs to determine the

amount of nonreimbursable cost. The remaining reimbursable cost and the

estimated energy remaining after meeting project use service were used

to determine the cost recovery rate necessary for repayment of

Stampede. The cost recovery rate was designed to allow repayment of the

reimbursable portion of the plant investment, operation and maintenance

expenses, capitalized deficits, interest expenses, and replacements

based on the nonfirm energy available for sale after project use

service has been met.

Statement of Revenue and Related Expenses

The following table provides a summary of revenue and expense data

through the 5-year proposed rate approval period.

Stampede Division, Washoe Project, 5-Year Rate Period, Revenues and

Expenses

------------------------------------------------------------------------

Rate case

PRS

reimbursable

revenue and

expenses

1996-2000*

------------------------------------------------------------------------

Revenues.................................................. $1,357,713

Expenses:

O&M..................................................... $324,749

Interest................................................ 900,120

Capitalized Expenses.................................... 132,844

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Total............................................... $1,357,713

------------------------------------------------------------------------

*Data reflects costs remaining to be repaid through power revenues after

applying nonreimbursable percentage.

Comments

During the 30-day comment period, Western did not receive any

written comments either requesting information or commenting on the

rate adjustment.

Environmental Evaluation

In compliance with the National Environmental Policy Act of 1969,

42 U.S.C. 4321 et seq.; Council on Environmental Quality Regulations

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

[[Page 53789]]

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. A categorical

exclusion was issued on May 1, 1995.

Executive Order 12866

DOE has determined that this rate action is not a significant

regulatory action because it does not meet the criteria of Executive

Order 12866, 58 CFR 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.

Availability of Information

Information regarding this rate adjustment, including PRSs,

letters, memorandums, and other supporting material made or kept by

Western for the purpose of developing the nonfirm energy rate, is

available for public review in the Sacramento Area Office, Western Area

Power Administration, Office of the Assistant Area Manager for Power

Marketing, 114 Parkshore Drive, Folsom, California 95630; and Western

Area Power Administration, Office of the Assistant Administrator for

Washington Liaison, Room 8G-027 Forrestal Building, 1000 Independence

Avenue SW., Washington, DC 20585.

Submission to Federal Energy Regulatory Commission

The rates herein confirmed, approved, and placed into effect on an

interim basis, together with supporting documents, will be submitted to

FERC for confirmation and approval on a final basis.

Order

In view of the foregoing and pursuant to the authority delegated to

me by the Secretary of Energy, I confirm and approve on an interim

basis, effective October 1, 1995, Rate Schedule SNF-4 for the Stampede

Division, Washoe Project. The rate schedule shall remain in effect on

an interim basis, pending FERC confirmation and approval or a

substitute rate on a final basis, through September 30, 2000.

Issued in Washington, DC, September 29, 1995.

Charles B. Curtis,

Deputy Secretary.

Rate Schedule SNF-4

(Supersedes Schedule SNF-3)

United States Department of Energy, Western Area Power Administration,

Stampede Division, Washoe Project

Schedule of Rate for Nonfirm Energy

Effective: October 1, 1995, through September 30, 2000.

Available: Within the marketing area served by the Sacramento Area

Office.

Applicable: This rate is applicable to sales of nonfirm energy in

excess of project use service. Sales shall be subject to terms and

conditions among the respective entities specified at the time of sale.

Rate: The rate for nonfirm energy sales from Stampede will be equal

to or greater than the Stampede Energy Exchange Account (SEEA) rate and

less than the cost recovery rate. The SEEA rate is 85 percent of the

then-effective non-time-differentiated rate as provided in the Sierra

Pacific Power Company's California Quarterly Short-Term Purchase Price

Schedule for As-Available Purchases from Qualifying Facilities with

Capacities of 100 kilowatts or less.

The cost recovery rate is calculated by dividing the revenue

requirement needed to repay all annual reimbursable power costs by the

nonfirm energy remaining after providing project use service.

[FR Doc. 95-25687 Filed 10-16-95; 8:45 am]

BILLING CODE 6450-01-P