Proposed Rate Formulas for Desert Southwest Customer Service Region Transmission and Ancillary Services

DEPARTMENT OF ENERGY

Western Area Power Administration

Proposed Rate Formulas for Desert Southwest Customer Service

Region Transmission and Ancillary Services

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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

Southwest Region (DSW) is initiating a rate adjustment process for

network integration transmission service for both the Parker-Davis

Project (P-DP) and the Pacific Northwest-Pacific Southwest Intertie

Project (Intertie) and for ancillary services from the P-DP, Boulder

Canyon Project (BCP), and part of the Colorado River Storage Project

(CRSP) located in DSW's Control Area. This action is necessary to bring

DSW into compliance with the intent of Federal Energy Regulatory

Commission (FERC) Order Nos. 888 and 888-A. To date, DSW has not

developed charges for the long term sales of the six ancillary services

defined by FERC, or for network integration transmission service.

The proposed rate and its impact are explained in greater detail in

a rate brochure which will be made available to all interested parties.

The proposed rate is scheduled to go into effect on November 1,

1998. This Federal Register notice initiates the formal process for the

proposed rate.

DATES: Submit comments on or before September 17, 1998.

The forum dates are:

1. Public Information Forum, June 30, 1998, 10 a.m. MST, Phoenix,

Arizona.

2. Public Comment Forum, July 30, 1998, 10 a.m. MST, Phoenix,

Arizona.

ADDRESSES: Written comments should be sent to Mr. J. Tyler Carlson,

Regional Manager, Desert Southwest Customer Service Region, Western

Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457.

Western should receive written comments by the end of the consultation

and comment period to be assured consideration. The public forums will

be held at the Desert Southwest Regional Office, 615 South 43rd Avenue,

Phoenix, Arizona.

FOR FURTHER INFORMATION CONTACT: Mr. Maher A. Nasir, Rates Team Lead,

Desert Southwest Customer Service Region, Western Area Power

Administration, P.O. Box 6457, Phoenix, AZ 85005-6457; telephone (602)

352-2768.

SUPPLEMENTARY INFORMATION:

Proposed Rate for Network Integration Transmission Service

The DSW will offer, subject to provisions in its Open Access

Transmission Service Tariff (OAT), Network Integration Transmission

Service (NTS) to eligible transmission customers. The customer must

obtain ancillary services for NTS pursuant to Western's OAT. The NTS

charge for Intertie and P-DP will be calculated independently. The

monthly charge for NTS is the product of the network transmission

customer's load-ratio share times one-twelfth of the annual revenue

requirement allocated to transmission. The customer's load-ratio share

is calculated on a rolling 12-month basis (12 CP). It is equal to the

network transmission customer's hourly load coincident with DSW's

monthly transmission system peak divided by the resultant value of

DSW's monthly transmission system peak minus the coincident peak (CP)

for all firm point-to-point transmission service plus firm point-to-

point reservations. Service for point-to-point transmission service can

be obtained through rate schedules PD-FT6 and INT-FT2.

The projected annual revenue requirement allocated to transmission

for Fiscal Year (FY) 1999 for P-DP is $23,001,589, and for Intertie the

projected annual revenue requirement is $21,943,150. The annual power

repayment study derives the revenue requirement to be recovered from

network and firm point-to-point transmission service. The annual

transmission costs included in the revenue requirement are operation

and maintenance expenses, administrative and general expenses, interest

expense, and principal expenses associated with transmission.

Proposed Rates For Ancillary Services

Western will provide ancillary services subject to provisions in

the OAT. The proposed rates are designed to recover only the costs

incurred for the service(s). The annual generation costs included in

the revenue requirement for Reactive Supply and Voltage Control,

Regulation and Frequency Response, and Spinning and Supplemental

Reserves are operation and maintenance expenses, administrative and

general expenses, interest expense, and principal expense associated

with providing ancillary services.

On April 1, 1998, the Western Area Upper Colorado Control Area,

which includes the Salt Lake City Area Integrated Projects (SLCA/IP)

generation and most of the CRSP transmission system, was merged with

two other Control Areas: The Western Area Colorado Missouri, operated

by Western's Rocky Mountain Region, and the Western Area Lower Colorado

(WALC) Control Area, operated by DSW. As a result, regulation and

frequency response and reactive supply and voltage control ancillary

services will include certain SLCA/IP generation costs as well as DSW

generation costs.

Proposed Rate for Scheduling, System Control, and Dispatch Service

Scheduling, System Control and Dispatch ancillary service is

required to schedule the movement of power through, out of, within, or

into a Control Area. This ancillary service can be provided only by the

Control Area operator or transmission provider.

Scheduling, System Control and Dispatch ancillary service costs are

calculated as an annual cost of all personnel, capital costs (such as

the dispatch center building), and other related costs involved in

providing the service. The cost is divided by the number of schedules

per year to derive a rate per schedule per day. Up to five schedule

changes per transaction, per day will be allowed at no additional

charge.

The rates charged for the Scheduling, System Control and Dispatch

ancillary service are contingent on the type of service required. The

range of the service on a cost per schedule per day

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is up to $34.10 for an existing schedule, which requires no Supervisory

Control and Data Acquisition (SCADA) programming or intra-bus transfer,

and up to $56.20 for a new schedule which requires both SCADA

programming and intra-bus transfer. Intermediate rates are available

for schedules requiring combinations of the two. This ancillary service

is included in the transmission customer's rate.

Proposed Rate for Reactive Supply and Voltage Control from Generation

Sources

In order to maintain transmission voltages on the transmission

provider's transmission facilities within acceptable limits, generation

facilities under the control of the Control Area operator are operated

to produce or absorb reactive power. Thus, Reactive Supply and Voltage

Control from generation sources service must be provided for each

transaction on the transmission provider's transmission facilities.

This ancillary service is required to be offered to the transmission

customer by the transmission provider in order to maintain transmission

voltages on the transmission provider's transmission facilities within

acceptable limits.

The rate for Reactive Supply and Voltage Control ancillary service

is calculated by combining the revenue requirements of P-DP, BCP, and

SLCA/IP. This total revenue requirement is then divided by the sum of

the long-term firm transmission reservations, yielding a rate of $0.08/

kilowattmonth (kWmo). The transmission customer is required to maintain

a power factor between 95 percent leading and 95 percent lagging. The

rate of $0.08/kWmo will be applied to all transmission customers taking

service under Western's OAT.

Proposed Rate for Regulation and Frequency Response Service

Regulation and Frequency Response service is necessary to provide

for the continuous balancing of resources, generation and interchange,

with load and for maintaining scheduled interconnection frequency at 60

cycles per second (60 Hz). The transmission provider must offer this

service when the transmission service is used to serve load within its

Control Area. The transmission customer must either purchase this

service from the transmission provider or make alternative comparable

arrangements to satisfy its regulation and frequency response service

obligation.

DSW will offer regulation from its own resources, if available. The

charge for this service from DSW resources is calculated based on P-DP,

BCP, and SLCA/IP data. The total annual revenue requirement of P-DP,

BCP, and SLCA/IP is divided by the nameplate plant capacities to derive

an average revenue requirement per kilowatt (kW) result. The resultant

average revenue requirement per kW is multiplied by the capacity used

to provide regulation service and then divided by the CP of the Control

Area load. This result is divided by 12 to derive a monthly rate of

$0.20/kWmo. If DSW cannot supply this service from its resources, it

will purchase the service on the market adding a 10 percent

administrative charge.

Proposed Rate for Energy Imbalance Service

Energy Imbalance service is provided when a difference occurs

between the scheduled and the actual delivery of energy to a load

located within a Control Area over a single hour. The transmission

provider must offer this service when the transmission service is used

to serve load within its Control Area. The transmission customer must

either purchase this service from the transmission provider or make

alternative comparable arrangements to satisfy its Energy Imbalance

service obligation.

The Energy Imbalance Service rate will be a penalty-type rate which

DSW reserves the right to apply against deviations outside a 3 percent

bandwidth ( 1.5 percent deviations), with a 2 MW deviation

minimum. Negative excursions (under deliveries) greater than 1.5

percent and occurring more than five times per month will be assessed a

penalty charge of 100 mills/kilowatthour (kWh); e.g., the sixth time an

under delivery occurs within a month, the 100 mills/kWh charge will be

applied to the difference between the total excursion and 1.5 percent.

Any positive excursion (over delivery) will be credited to the

customer within thirty days for 50 percent of the market value of the

over delivery, provided the over deliveries do not impinge upon WALC

Control Area operations. For example, during times of high water or

operating constraints, DSW reserves the right to eliminate credits for

over deliveries. The market value determinant will be the average

monthly non-firm price from Western merchants operating within the WALC

Control Area.

Proposed Rate for Operating Reserves: Spinning Reserve Service

Spinning Reserve service is needed to serve load immediately in the

event of a system contingency. Spinning Reserve service may be provided

by generating units that are on-line and loaded at less than maximum

output. The transmission provider must offer this service when the

transmission service is used to serve load within its Control Area. The

transmission customer must purchase this ancillary service either from

DSW or make alternative comparable arrangements to satisfy its Spinning

Reserve service obligation. The transmission customer will be

responsible for the transmission service to get these reserves to their

destination.

These reserves will not be available from DSW resources on a long-

term basis. If Spinning Reserves are unavailable from WALC resources,

Western may obtain the reserves on the open market for the customer and

pass through the cost, with an added 10 percent administrative charge.

Proposed Rate for Operating Reserves: Supplemental Reserve Service

Supplemental Reserve service is needed to serve load in the event

of a system contingency; however, it is not available immediately to

serve load, but rather within a short period of time. Supplemental

Reserve service may be provided by generating units that are on-line

and unloaded, by quick-start generation or by interruptible load. The

transmission provider must offer this service when the transmission

service is used to serve load within its Control Area. The transmission

customer must purchase this ancillary service either from DSW or make

alternative comparable arrangements to satisfy its Supplemental Reserve

service obligation. The transmission customer will be responsible for

the transmission service to get these reserves to their destination.

These reserves will not be available from DSW resources on a long-

term basis. If Supplemental Reserves are unavailable from WALC

resources, Western may obtain the reserves on the open market for the

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

administrative charge.

Authorities

Since the proposed rates constitute a major rate adjustment as

defined in 10 CFR 903.2, both a public information forum and a public

comment forum 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 Department of

Energy (DOE).

The proposed Project transmission and ancillary service rates are

being established pursuant to the Department

[[Page 33651]]

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 section 8 of

the Act of August 31, 1964, (16 U.S.C. 837g).

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

November 10, 1993 (58 FR 59716), the Secretary of Energy 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 in 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 (10 CFR Part 903) became effective on September

18, 1985 (50 FR 37835).

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, requires

Federal agencies to perform a regulatory flexibility analysis if a

proposed rule is likely to have a significant economic impact on a

substantial number of small entities. Western has determined that this

action relates to rates or services offered by Western, and therefore

is not a rule within the purview of the act.

Environmental Compliance

In compliance with the National Environmental Policy Act of 1969

(NEPA), 42 U.S.C. 4321, et seq.; Council On Environmental Quality

Regulations, 40 CFR Parts 1500-1508; and DOE NEPA Regulations, 10 CFR

Part 1021, Western conducts environmental evaluations of the proposed

rates and develops the appropriate level of documentation.

Determination Under Executive Order 12866

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

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

documents made or kept by Western for the purpose of developing the

proposed rates will be made available for inspection and copying at

Western's Desert Southwest Regional Office at 615 South 43rd Avenue in

Phoenix, Arizona.

Dated: June 8, 1998.

Michael S. Hacskaylo,

Administrator.

[FR Doc. 98-16341 Filed 6-18-98; 8:45 am]

BILLING CODE 6450-01-P