Boulder Canyon ProjectNotice of Firm Power Service Base Charge

DEPARTMENT OF ENERGY

Western Area Power Administration

Boulder Canyon Project--Notice of Firm Power Service Base Charge

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of base charge.

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

Secretary of the Department of Energy (DOE) of the Base Charge and its

components for the Boulder Canyon Project (BCP) firm power service. The

Fiscal Year (FY) 1997 Base Charge and its components for BCP firm power

are based on an Annual Revenue Requirement of $44,437,488. The Base

Charge consists of a rounded energy dollar of $22,976,823 and a rounded

capacity dollar of $21,460,664. This Base Charge and its components are

used for calculating the monthly charges and forecast rates pursuant to

Rate Schedule BCP-F5 as approved by the Federal Energy Regulatory

Commission (FERC) on April 19, 1996 (Rate Order No. WAPA-70).

DATES: The Base Charge and its components, used in calculating the

monthly charges and forecast rates pursuant to Rate Schedule BCP-F5,

will be effective on the first day of the first full billing period

beginning on or after October 1, 1996, and will be in effect through FY

1997.

FOR FURTHER INFORMATION CONTACT:

Mr. J. Tyler Carlson, Regional Manager, Desert Southwest Customer

Service Region, Western Area Power Administration, P.O. Box 6457,

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

Mr. Joel K. Bladow, Assistant Administrator for Power Marketing

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

Building, 1000 Independence Avenue, SW., Washington, DC 20585-0001,

(202) 586-5581.

SUPPLEMENTARY INFORMATION: The Base Charge and its components were

calculated in accordance with the methodology approved under Rate Order

WAPA-70. The Procedures for Public Participation in Power and

Transmission Rate Adjustments and Extensions, 10 CFR Part 903, have

been followed by Western Area Power Administration (Western) in

determining the Base Charge and its components. The following

summarizes the steps taken by Western to ensure involvement of all

interested parties in the determination of the Base Charge and its

components:

1. Discussion of the proposed Base Charge and its components was

initiated at an informal BCP Contractor meeting held on May 9, 1996, in

Phoenix, Arizona. At this informal meeting, representatives from

Western and the Bureau of Reclamation (Reclamation) explained the basis

for estimates used in the calculation of the Base Charge and its

components. A question and answer session was convened for those

persons attending.

2. A Federal Register Notice (FRN) was published on May 22, 1996

(61 FR 25664), officially announcing the proposed Base Charge

adjustment process, initiating the public consultation and comment

period, announcing the public information and public comment forums,

and presenting procedures for public participation.

3. On June 7, 1996, a letter was mailed from Western's Desert

Southwest Customer Service Regional Office to all BCP customers and

other interested parties. The letter provided a copy of the BCP

Proposed Rate Adjustment data, dated June 1996, which included a copy

of the FRN of May 22, 1996.

4. At the public information forum held on June 13, 1996, in

Phoenix, Arizona. Western and Reclamation representatives explained the

proposed Base Charge and its components for Rate Year 1997 in greater

detail. A question and answer session was convened for those persons

attending.

5. A public comment forum was held on July 15, 1996, in Phoenix,

Arizona, to give the public an opportunity to comment for the record.

Five persons representing customers and customer groups made oral

comments.

6. Ten comment letters were received during the 92-day consultation

and comment period. The consultation and comment period ended August

22, 1996. All formally submitted comments have been considered in the

preparation of this FRN.

Most of the comments received during the public meetings or in the

written correspondence dealt with the Visitor Facilities, hydrology,

and the BCP Initial Audit.

All comments were considered in developing the Base Charge for FY

1997. The comments and responses, paraphrased for brevity, are

presented below.

Hydrology

Issue: A request was made, asking that if the Master Schedule for

FY 97 is revised to reflect excess energy prior to the end of the rate

process, that it be used as the final Master Schedule for determining

the monthly energy ratios used to calculate the monthly energy charge.

Response: If Reclamation notifies Western of changes which result

in a revision of the Master Schedule for FY 97 prior to the start of

the fiscal year, Western will use the revised Master Schedule to

determine the monthly energy ratios used to calculate the monthly

energy charge.

Visitor Facilities

Issue: Concern was expressed regarding the potential for the BCP

customers being required to pay as much as $31 million as a result of

the suit filed in the Federal Claims Court by the PCL Company. Several

commentors stated that they believed that the BCP rates should not be

required to recover these costs.

Response: The Engineering and Operations Committee (E&OC) has

agreed to include the cost of defending the Government's position

regarding the PCL claim as part of the total Visitor Facilities costs.

Western, Reclamation, and BCP Contractors will address the issue of any

settlement or judgement costs if they are incurred by the Government.

Cost Containment

Issue: A request was made that the O&M expenses for both Western

and Reclamation be thoroughly reviewed by the E&OC and the Ten Year

Planning Committees. A goal of the review should be to see if high cost

activities could be spread out over more than 2 years and that these

costs are accounted for in the proper category (i.e., O&M,

replacements, etc).

Response: Western and Reclamation are committed to working with the

E&OC and the Ten Year Planning Committees to thoroughly review all O&M

and replacement activities. During the review of O&M and replacement

activities, Western and Reclamation will attempt to spread out the

expenditure schedules for high cost activities where feasible.

Issue: Western and Reclamation were cautioned that even though the

water forecasts project a water surplus condition over the next 5

years, they should not stop their efforts in cost containment and

finding alternative revenues.

Response: Western and Reclamation have committed to continue with

the various partnership activities with the BCP Contractors in keeping

the BCP costs down.

BCP Initial Audit

Issue: Concern was expressed over when the various recommendations

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from the BCP Initial Audit were going to be implemented. When was the

power repayment spreadsheet study going to be modified? All parties

were encouraged to accomplish this as soon as possible.

Response: Western and Reclamation are working with the BCP

Contractors and the auditors to resolve and implement the

recommendations from the BCP Initial Audit. There has been an on-going

effort in researching and reconciling the financial records with the

PRSS. Until the research is completed for such items as revenues,

expenses and cash, adjustments to the PRSS and the financial records

cannot be accomplished. It is Western's intent to have all research,

reconciliations, adjustments to financial records, and modifications to

the PRSS accomplished by the end of the FY 1997 rate process.

Project Partnership

Issue: Several commentors expressed their appreciation to Western

and Reclamation for their cooperative efforts in keeping the costs as

low as possible. They stated that they hoped that Western and

Reclamation would continue with those efforts.

Response: Western and Reclamation reaffirmed their commitment to

maintaining the cooperative spirit and partnership with the BCP

customers.

Power Repayment Spreadsheet Study

Issue: A request was made, asking that supporting schedules

separate Reclamation's O&M costs attributable to Hoover Dam and

appurtenances, from the O&M costs attributable to the power plant.

Response: As stated in the data request response mailed July 2,

1996, Reclamation's O&M cost accounts are set up to reflect the FERC

classifications. Reclamation's accounting system does not distinguish

between costs associated with the dam and appurtenances, and costs

associated with the power plant; therefore, this information cannot be

provided.

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 (10 CFR Part 903) became

effective on September 18, 1985 (50 FR 37835).

These charges and rates are established 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. 485h(c), and other acts

specifically applicable to the project system involved, were

transferred to and vested in the Secretary.

Issued in Washington, DC, September 23, 1996.

Charles B. Curtis,

Deputy Secretary.

[FR Doc. 96-24986 Filed 9-27-96; 8:45 am]

BILLING CODE 6450-01-P