Proposed Salt Lake City Area Integrated Projects Firm Power Rate and Colorado River Storage Project Transmission and Ancillary Services Rates Adjustments

DEPARTMENT OF ENERGY

Western Area Power Administration

Proposed Salt Lake City Area Integrated Projects Firm Power Rate

and Colorado River Storage Project Transmission and Ancillary Services

Rates Adjustments

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration's (Western) Colorado

River Storage Project (CRSP) Customer Service Center (CSC) is proposing

rates (Proposed Rates) for long-term sales of Salt Lake City Area

Integrated Projects (SLCA/IP) firm power, CRSP transmission service,

and ancillary services. The current firm power rate expires November

30, 1999. The current firm transmission rate expires September 30,

1997, but is expected to be extended for 1 additional year, through

September 30, 1998, or until superseded by the proposed firm point-to-

point transmission rate. The proposed rates will provide sufficient

revenue to pay all annual costs, including operation, maintenance,

replacement, and interest expenses, and to repay investment and

irrigation assistance obligations within the required period. The rates

and their impacts are explained in greater detail in a rate brochure to

be provided to all interested parties. The proposed rates are scheduled

to go into effect on April 1, 1998. This Federal Register notice

initiates the formal process for the proposed rates.

DATES: The consultation and comment period will begin on the date of

publication of this Federal Register notice and will end September 23,

1997. The public information forums and public comment meeting dates

are:

1. Public information forum--August 1, 1997, 1 p.m., Salt Lake City,

Utah; Public comment forum--September 19, 1997, 1 p.m., Salt Lake

City, Utah.

2. Public information forum--August 5, 1997, 1 p.m., Golden,

Colorado; Public comment forum--September 16, 1997, 1 p.m., Golden,

Colorado.

3. Public information forum--August 6, 1997, 1 p.m., Albuquerque,

New Mexico; Public comment forum--September 17, 1997, 1 p.m.,

Albuquerque, New Mexico.

4. Public information forum--August 7, 1997, 1 p.m., Phoenix,

Arizona; Public comment forum--September 18, 1997, 1 p.m., Phoenix,

Arizona.

ADDRESSES:

1. Doubletree Hotel (Previously Red Lion), 255 South West Temple,

Salt Lake City, Utah.

2. Marriott Denver West, 1717 Denver West Boulevard, Golden,

Colorado.

3. Albuquerque Marriott, 2101 Louisiana Boulevard NE, Albuquerque,

New Mexico.

4. Western Area Power Administration, Desert Southwest Region, 615

South 43rd Avenue, Phoenix, Arizona.

Western must receive written comments by the end of the

consultation and comment period to be assured consideration. Oral

comments will be received at the public comment meetings. Written

comments are to be sent to: Mr. David Sabo, CRSP Manager, CRSP Customer

Service Center, Western Area Power Administration, P.O. Box 11606, Salt

Lake City, Utah, 84121-0606, or e-mail [email protected].

FOR FURTHER INFORMATION CONTACT: Carol Tafoya-Loftin, Rates Manager,

CRSP Customer Service Center, Western Area Power Administration, P.O.

Box 11606, Salt Lake City, Utah, 84121-0606, (801) 524-6380; e-mail:

[email protected], or visit CRSP CSC's home page at: www.wapa.gov/crsp/

crsp.htm.

Proposed Rate for SLCA/IP Firm Power

SLCA/IP Firm Power Rate

The proposed rate for SLCA/IP firm power is designed to recover an

annual amount of revenue requirement that includes the repayment of

power investment, payment of interest, purchased power, operation,

maintenance and replacement expenses, and the repayment of irrigation

assistance costs, as required by law.

The Deputy Secretary of the Department of Energy (DOE) approved the

existing Rate Schedule SLIP-F5 for SLCA/IP firm power on October 25,

1994 (Rate Order No. WAPA-63). The Federal Energy Regulatory Commission

(FERC) confirmed and approved the rate schedule on April 1, 1996, in

FERC Docket No. EF95-5171-000. The existing Rate Schedule will expire

on November 30, 1999. Under Rate Schedule SLIP-F5, the energy rate is

8.9 mills/kWh, and the capacity rate is $3.83 per kW-month. The

composite rate (revenue requirements per kWh) is

[[Page 34256]]

20.17 mills/kWh. The proposed rate for SLCA/IP firm power is 8.20

mills/kWh for energy and $3.48 per kW-month for capacity. The proposed

composite rate is 17.75 mills/kWh. This firm power rate is to be

applied to all firm power customers, and is to become effective April

1, 1998.

Although the proposed composite rate reflects a decrease from the

existing composite rate, the net effect does not necessarily result in

an equivalent reduction in cost to the SLCA/IP firm power contractors.

Two primary factors account for this decrease. First, annual net

revenue requirements have reduced by $6.4 million. Second, due to

constraints at Glen Canyon Dam, as a result of the long-term Glen

Canyon Dam Operating Criteria, and generating constraints on other

SLCA/IP facilities, the contractor will normally be receiving less

Federally generated resource during on-peak hours. In order to receive

its full SLCA/IP resource allocation the contractor must purchase

replacement power from other sources through Western Replacement Power

(WRP) and/or Customer Displacement Power (CDP) as outlined in amended

contracts with Western. In addition to the actual costs of the

replacement power purchased on the open market, the contractor will pay

the incremental administrative costs that Western incurs for providing

this service. Due to the restrictions of the Federal hydro facilities

and resulting replacement resource costs, the total overall costs to

the contractors may in fact increase.

Lastly, the proposed firm power rate does not include pension

benefits from Civil Service Retirement System and health benefits,

which were included in the last rate adjustment. The inclusion of these

costs will depend upon the outcome of a final legal decision of

Western's authority to include these costs in the rate base. Should

these costs be included, it is anticipated that they will increase the

composite rate by .07 mills/kWh.

WRP and CDP Administrative Charges

The first year the WRP and CDP replacement options are effective,

April 1, 1998, through March 31, 1999, will be considered the base year

for cost determination. Estimated costs for charges will be used during

the base year. Prior to and during the base year, Western, in

consultation with Colorado River Energy Distributors Association

(CREDA) and other interested SLCA/IP firm power customers, will develop

a method for tracking actual incremental WRP and CDP administrative

costs. Subsequent years' charges will be based upon base year costs and

streamlining experiences.

Adjustment Clauses Associated With the Proposed Rates for SLCA/IP Firm

Power

Transformer Losses Adjustment

This provision contained in Rate Schedule SLIP-F5 will remain the

same under the proposed rates for SLCA/IP firm power.

Power Factor Adjustment

This provision contained in Rate Schedule SLIP-F5 will remain the

same under the proposed rates for SLCA/IP firm power.

Purchased Resources Adjustment

This provision contained in Rate Schedule SLIP-F5 will remain the

same under the proposed rates for SLCA/IP firm power; however, it will

be applicable only to those contractors who are not receiving service

under the amendment to the firm power sales contract effective April 1,

1997.

WRP Adjustment

Each contractor electing to receive WRP will pay for its share of

the incremental administrative costs Western incurs as a direct result

of providing this service to the firm SLCA/IP power contractor. The

contractor will also pay for its proportionate share of the costs of

the purchased replacement resource. These costs are not included in the

firm power base rate.

CDP Adjustment

Each contractor electing to receive CDP will pay for its share of

the incremental administrative costs Western incurs as a direct result

of providing this service to the contractor. This cost is not included

in the firm power base rate.

Proposed Rates for CRSP Transmission

The proposed rates for CRSP transmission service are based on a

revenue requirement that recovers: (i) The CRSP transmission system

investment and interest costs for facilities associated with providing

all transmission service; and (ii) the operation, maintenance, and

replacement costs allocated to transmission service. These revenue

requirements are offset by appropriate CRSP transmission system

revenues. The proposed rates are applicable to existing and future CRSP

point-to-point transmission service.

The rates for CRSP transmission service include the cost for

scheduling, system control, and dispatch service.

Firm Point-to-Point

The firm point-to-point rate is based on revenue requirements of a

5-year cost evaluation period. CRSP transmission related investments

are annualized. Transmission-related annual costs such as operation,

maintenance and replacements and interest costs to arrive at the total

annual transmission cost need to be recovered. The annual costs are

reduced by revenue credits such as non-firm wheeling revenues and phase

shifter revenues. The resultant net annual cost to be recovered is

divided by the capacity reservation needed to meet firm power and

transmission commitments in kW to derive a cost/kW-year. This is done

for 5 future years, the results averaged, and the cost/kW-year average

used as the firm point-to-point transmission rate. The proposed rate

for firm point-to-point CRSP transmission service is $2.07 per kW-month

for 1998, beginning April 1, 1998. This proposed rate may be adjusted

each year by a recalculation based on the formula below, as needed. The

rate formula is expected to be in effect until March 31, 2003.

The cost/kW-year is calculated using the following formula:

[GRAPHIC] [TIFF OMITTED] TN25JN97.000

Non Firm Point-to-Point Rate

The proposed rate for non firm point-to-point CRSP transmission

service is a kWh rate based on market conditions but never higher than

the firm point-to point rate. This rate will remain in effect

concurrently with the firm point-to-point rate.

Network Transmission Service Rate

The proposed rate for network transmission, if offered by CRSP CSC,

would be consistent with the CRSP CSC

[[Page 34257]]

Tariff Equivalent Package, and the rate methodology in FERC Order 888.

Western is not currently providing network transmission on its CRSP

transmission system and only has available transmission capacity on

isolated portions of the CRSP transmission system.

Proposed Rates for Ancillary Services

Western will provide ancillary services, subject to availability,

as described below and as listed in Table 1. The proposed rates are

designed to recover only the costs incurred for providing the

service(s).

It is anticipated that in June 1998, the Western Area Upper

Colorado (WAUC) control area, within which most of the CRSP

transmission system lies, currently operated by the CRSP CSC, will be

merged into two other control areas, the Western Area Colorado Missouri

(WACM) control area operated by Western's Rocky Mountain Region (RMR)

and the Western Area Lower Colorado (WALC) control area operated by

Western's Desert Southwest Region (DSWR).

Proposed Rate for Scheduling, System Control, and Dispatch Service

Scheduling, system control, and dispatch costs are accumulated as

an annual cost of all personnel and other related costs involved in

providing the service for the CRSP CSC. That cost is divided by the

number of yearly schedules performed to derive a rate per schedule. Up

to five schedule changes per transaction per day are allowed at no

extra charge.

The proposed rate will be applied to all schedules which must be

pre-scheduled and/or real-time dispatched within or out of the WACM

control area and do not pertain to a SLCA/IP firm electric service or

CRSP transmission schedule.

The rate for the WAUC control area is $21.35 per schedule per day

and will be in effect only until the WAUC control area merges. At that

time, the tariffs developed by Western's RMR and DSWR Regions as

operators of the WACM and WALC control areas, respectively, will apply.

Proposed Rate for Reactive Supply and Voltage Control

Applicable tariffs are being developed by Western's RMR and DSWR

Regions as operators of the WACM and WALC control areas, respectively,

in which CRSP transmission facilities reside. This ancillary service is

not included in any CRSP CSC transmission service rate, and the CRSP

transmission customer will be required to purchase this service from

RMR and/or DSWR.

Proposed Rate for Regulation and Frequency Response Service

The CRSP CSC may obtain regulation on the open market for the

customer and pass through the cost, with an added 10 percent

administrative charge, if regulation is unavailable from SLCA/IP

facilities. If the CRSP CSC has regulation available for sale, based on

hydrological conditions, it will charge the SLCA/IP firm power capacity

rate currently in effect. The transmission customer serving loads

within the transmission provider's control area is required to acquire

this ancillary service either from Western, from a third party, or by

self supply.

Proposed Rate for Energy Imbalance Service

The energy imbalance tariff will be based on a 2.5

percent deadband, with a maximum of five deviations outside the band

per month. Net deviations within the deadband limits will be

accumulated through the time period. Energy imbalance will be settled

on a seasonal basis, either in cash or energy return as mutually agreed

upon. Energy returns will be returned in like hours, onpeak for onpeak

and offpeak for offpeak. Cash settlements will be based on SLCA/IP's

average like-hour purchase costs during the season. Positive or

negative excursions outside the deadband greater than the five times

per month maximum will be assessed a penalty charge of 100 mills/kWh.

This rate will not apply under system emergency conditions. This

ancillary service is not included in any CRSP CSC transmission service

rate. The transmission customer serving loads within the transmission

provider's control area is required to acquire this ancillary service

either from Western, from a third party, or by self supply.

Proposed Rate for Operating Reserve--Spinning Reserve Service

It is unlikely that spinning reserves will be available from SLCA/

IP resources. If spinning reserves are unavailable from SLCA/IP

resources, the CRSP CSC may obtain spinning reserves on the open market

for the customer and pass through the cost, with an added 10 percent

administrative charge.

If the CRSP CSC has spinning reserves available for sale from SLCA/

IP resources, it will charge the SLCA/IP firm power capacity rate

currently in effect. Energy taken with the spinning reserve capacity

will be settled on a seasonal basis, either in cash or energy as

mutually agreed upon. Energy returns will be returned in like hours,

onpeak for onpeak and offpeak for offpeak, unless otherwise mutually

agreed. Cash settlements will be based on SLCA/IP's average like-hour

purchase costs during the season.

This ancillary service is not included in any CRSP CSC transmission

service rate. The transmission customer serving loads within the

transmission provider's control area is required to acquire this

ancillary service either from Western, from a third party, or by self

supply.

Proposed Rate for Operating Reserve--Supplemental Reserve Service

It is unlikely that supplemental reserves will be available from

the SLCA/IP resources. If supplemental reserves are unavailable from

SLCA/IP resources, the CRSP CSC may obtain supplemental reserves on the

open market for the customer, and pass through the cost, with an added

10 percent administrative charge.

If the CRSP CSC has supplemental reserves available for sale from

SLCA/IP resources, it may charge the SLCA/IP firm power capacity rate

currently in effect. Energy taken with the supplemental reserve

capacity will be settled on a seasonal basis, either in cash or energy

as mutually agreed upon. Energy returns will be returned in like hours,

onpeak for onpeak and offpeak for offpeak, unless otherwise mutually

agreed. Cash settlements will be based on SLCA/IP's average like-hour

purchase costs during the season.

This ancillary service is not included in any CRSP CSC transmission

service rate. The transmission customer serving loads within the

transmission provider's control area is required to acquire this

ancillary service either from Western, from a third party, or by self

supply.

Table 1.--Proposed Ancillary Service Rates

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Type of ancillary service Rate

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Scheduling, System Control and WAUC control area--$21.35/

Dispatch--is required to schedule the schedule/day (until merged).

movement of power through, out of, After consolidation, the WALC

within, or into a control area. and/or WACM charges will

apply.

[[Page 34258]]

Reactive Supply and Voltage Control--is DSWR and/or RMR Tariff.

reactive power support provided from

generation facilities that is

necessary to maintain transmission

voltages within acceptable limits of

the system.

Regulation and Frequency Control--is Market price plus 10 percent

providing generation to match administrative charge or, if

resources and loads on a real-time available, current firm power

continuous basis. capacity rate.

Energy Imbalance Service--is provided Deviations are accumulated at

when a difference occurs between the the end of the season and are

scheduled and actual delivery of to be exchanged with like

energy to a load or from a generation hours of energy or charged at

resource within a control area over a the average purchase rate,

single month. plus a penalty of 100 mills/

kWh.

Spinning Reserve Service--is providing Market price plus 10 percent

capacity that is available the first administrative charge or, if

10 minutes to serve load and is available, current firm power

synchronized with the power system. capacity rate.

Supplemental Reserve Service--is Market price plus 10 percent

providing capacity that is not administrative charge or, if

synchronized, but can be available to available, current firm power

serve loads within 10 minutes. capacity rate.

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Since the proposed rates constitute a major rate adjustment as

defined at 10 CFR Sec. 903.2, both public information forums and public

comment forums will be held. After review of public comments, Western

will recommend the proposed rates or revised proposed rates for

approval on an interim basis by the Deputy Secretary of DOE.

The proposed SLCA/IP firm power, CRSP transmission, and ancillary

service rates are being 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

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

applicable to the projects involved.

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 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 FERC. Existing DOE procedures for public

participation in power rate adjustments are found at 10 CFR part 903.

Availability of Information

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

documents made or kept by Western for developing the proposed rates are

and will be made available for inspection and copying at the CRSP

Customer Service Center, at 257 East 200 South, Suite 475, Salt Lake

City, Utah 84111.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601,

et seq.), each agency, when required by 5 U.S.C. 553 to publish a

proposed rule, is further required to prepare and make available for

public comment an initial regulatory flexibility analysis to describe

the impact of the proposed rule on small entities. In this instance,

the initiation of the SLCA/IP firm power rate, CRSP transmission rate

and ancillary service rate adjustments are related to nonregulatory

services provided by Western at a particular rate. Under 5 U.S.C.

601(2), rules of particular applicability relating to rates or services

are not considered rules within the meaning of the act. Since the SLCA/

IP firm power rate, CRSP transmission rates and ancillary service rates

are of limited applicability, no flexibility analysis is required.

Environmental Evaluation

In compliance with the National Environmental Policy Act (NEPA) of

1969 (42 U.S.C. 4321 et seq.), the Council on Environmental Quality

Regulations (40 CFR parts 1500 through 1508); and the 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.

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, and Western has an exemption from centralized regulatory review

under Executive Order 12866; accordingly, no clearance of this notice

by Office of Management and Budget is required.

Dated: June 13, 1997.

J.M. Shafer,

Administrator.

[FR Doc. 97-16644 Filed 6-24-97; 8:45 am]

BILLING CODE 6450-01-P