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) 1998 Base Charge and its components for BCP firm power

are based on an Annual Revenue Requirement of $43,479,183. The Base

Charge consists of an energy dollar amount of $22,527,359 and a

capacity dollar amount of $20,951,824. 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, 1997, and will be in effect through FY

1998.

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. On April 18, 1997, 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 April 18, 1997.

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

initiated at an informal BCP Contractor meeting held on May 6, 1997, 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.

3. A Federal Register Notice (FRN) was published on May 7, 1997 (62

FR 24913), 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.

4. At the public information forum held on May 15, 1997, in

Phoenix, Arizona, Western and Reclamation representatives explained the

proposed Base Charge and its components for Rate Year 1998 in greater

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

attending. A response to a data request from the public information

forum was mailed to the customers on June 2, 1997.

5. A public comment forum was held on June 12, 1997, in Phoenix,

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

Three persons representing customers and customer groups made oral

comments. A response to the comments and data requests from the public

comment forum was mailed to the customers on July 18, 1997.

6. Three comment letters were received during the 90-day

consultation

[[Page 50923]]

and comment period. The consultation and comment period ended August 5,

1997. All submitted written comments have been considered in the

preparation of this FRN. Most of the comments received during the

public meetings dealt with Hydrology (surplus water), Realistic and

Appropriate Costs, Rate Impacts and Philosophy, and Differences between

Financial Documents. All comments were considered in developing the

Base Charge for FY 1998. Additional written comments and responses,

paraphrased for brevity, are presented below.

Issue: Contractor raised concern with the status of dispute

regarding the blind vendor services at Hoover and requested to be kept

informed and provided with all pertinent correspondence.

Response: Reclamation will continue to further evaluate the

situation and will keep the contractors informed of the status to the

blind vendor litigation.

Issue: Contractor requested Western to ask Reclamation to convene

dialogue with Contractor representatives aimed at accelerating delivery

of a $5 million revenue stream to offset certain construction costs on

the visitors facilities.

Response: Western is committed to working with Reclamation in

partnership with the Contractors to recover revenues as soon as

possible to offset certain costs for the visitor facilities.

Substantial progress has been made in meeting the $5 million revenue

goal. Revenue opportunities, as well as expenses, are currently being

discussed with the BCP Engineering and Operations Committee (E&OC)

representatives utilizing the Revenue Subcommittee as the primary focal

point of exploring new opportunities. As dialogue continues,

Reclamation and Western will continue to support the E&OC process and

welcome all suggestions for meeting the revenue goal as quickly as

possible. Western will initiate an agenda item relating to this request

at the October 1997 E&OC meeting.

Issue: Contractors shared concern on the estimates of, and cost

responsibility for, Highway 93 rehabilitation work.

Response: Three bids received from local contractors were evaluated

by a contract specialist and found to be reasonable. The evaluation

revealed that the engineer's estimate appeared to be low in the areas

of mobilization and removal/disposal of existing pavement. Mobilization

bids were significantly higher. The low bidder plans to set up a batch

plant on site. The engineer's estimate did not include cost

consideration for offsite disposal requirements. Recognizing that cost

estimates are not exact, cost estimating practices will be continually

reviewed for improvement.

The cost responsibility for rehabilitation of Highway 93 has been

the topic of previous discussions and correspondence with the BCP E&OC

representatives. Reclamation attempted to obtain separate funding for

rehabilitation of the roadway with no results.

The BCP E&OC was made aware of this effort by a letter dated June

2, 1994. It is critical the subject work be accomplished due to concern

for public safety. Because no alternate funding sources have been

identified, funding must come from revenues authorized under the

Boulder Canyon Project Act.

Issue: The House and Senate committee reports on the Energy and

Water Development Appropriation bills contain directions to Reclamation

to involve customers in developing cost estimates prior to budget

submission. Western is to initiate dialogue with Reclamation to ensure

proper coordination with existing E&OC process.

Response: Western will initiate this dialogue and believes that

both Western and Reclamation are committed to ensure the congressional

directives to Reclamation and the E&OC process are consistent.

Issue: Contractor requested an assessment to determine

justification for a specific replacement cost, and a reduction in costs

for certain replacements.

Response: The assessment regarding the Station Service Electrical

item was initially in the 1995 Ten Year Operating Plan scheduled for

FY97 and budgeted at $445,000. The scope of work was to replace the

station service transformer and station service circuit breaker. The

transformer was being replaced due to age, and the circuit breaker was

being replaced due to problems operating the breaker and inability to

procure repair parts. The station service transformer provides the only

tie to system power to augment and stabilize frequency for station

power. Hoover had experienced power fluctuations when operating

isolated on station service power that tripped equipment and limited

operation of equipment that drew large amounts of power such as cranes,

elevators and pumps. It was felt, at that time, these problems could be

eliminated by replacing the transformer and the circuit breaker.

The first Technical Review Committee (Blue Ribbon Task Force)

commented, unless testing showed the transformer was nearing the end of

its service life, it should not be replaced. The committee also

commented, replacing the transformer would not eliminate the problems

encountered in running the plant isolated on station service. If the

new transformer failed, instability would still be a problem.

Reclamation agreed with these comments and focused on minimizing

the need to run the plant isolated on station service. Funding of

$300,000 was budgeted for FY98 to eliminate the station service breaker

and to procure a spare single phase transformer. Eliminating the

station service breaker and providing a tie to the existing circuit

breakers was a lower cost alternative to purchasing a new circuit

breaker. Purchasing a spare single phase transformer would eliminate

long lead times in procuring a new transformer in case of an in-service

failure. The Project believes that the probability of multiple failures

of the single phase transformer is unlikely and would accept that risk.

The Technical Review Committee that met in June 1997 questioned the

need for a spare transformer since there were new governors on the

Arizona station service generator and the Nevada station service

generator that would likely correct frequency instability.

Reclamation will be simulating operating the plant isolated on

station service in September. Based on this simulation, the Project

will assess the need for a spare transformer. Reclamation will report

on this assessment and our decision on the transformer at the October

1997 BCP E&OC meeting. If it is determined a spare transformer is not

necessary, the program expenditures for the transformer would become

carryover in the next fiscal year. The work to tie to existing circuit

breakers also funded under this item would still proceed in FY 1998.

A meeting with customer representatives was held August 13, 1997,

to review the communication and control system upgrades related to the

Reclamation Alternative Modular SCADA System (RAMS) in use at Hoover

Dam. No changes will be made to estimated costs in the proposed FY 1998

revenue requirements at this time, however, should the existing plans

for future RAMS related investments be modified as a result of this

review, changes to the items in the level of FY 1998 expenditures for

these items may result. And lastly, the FY 1998 rate includes $150,000

for the piping replacements. In 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

[[Page 50924]]

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. Sec. 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. Sec. 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

system involved, were transferred to and vested in the Secretary.

Dated: September 19, 1997.

Elizabeth A. Moler,

Deputy Secretary.

[FR Doc. 97-25749 Filed 9-26-97; 8:45 am]

BILLING CODE 6450-01-P