Amistad and Falcon Projects Rate Order No. WAPA-85

DEPARTMENT OF ENERGY

Western Area Power Administration

Amistad and Falcon Projects Rate Order No. WAPA-85

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of a rate order.

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

Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-85

placing a rate formula extension into effect on an interim basis

beginning on June 8, 1999, for power marketed by the Western Area Power

Administration (Western) from the Amistad and Falcon Projects under

Contract No. 7-07-50-P0890 (Contract). The rate formula will remain in

effect on an interim basis until the Federal Energy Regulatory

Commission (FERC) confirms, approves, and places it into effect on a

final basis or until it is replaced by another rate formula.

DATES: The provisional rate formula extension will be placed into

effect on an interim basis on June 8, 1999, and will be in effect until

FERC confirms, approves, and places the provisional rate formula

extension in effect on a final basis for a 5-year period ending June 7,

2004.

FOR FURTHER INFORMATION CONTACT: Ms. Carol Loftin, Rates Manager,

Colorado River Storage Project, Customer Service Center, Western Area

Power Administration, 257 East 200 South, Suite 475, Salt Lake City, UT

84111.

SUPPLEMENTARY INFORMATION: The Amistad and Falcon Dams are features of

international water storage projects located on the Rio Grande River

between Texas and Mexico. Western markets the power from these dams

under the terms of the Contract dated August 9, 1977, and amended on

April 10, 1986. The rate formula of that Contract was approved by the

Federal Power Commission, predecessor to FERC, for a 5-year period

beginning June 8, 1983, in Docket No. E-9566 on August 12, 1977. A 5-

year rate extension approving this same methodology through June 7,

1993, was ordered by FERC on July 20, 1988, in 44 FERC para. 62,058. A

subsequent 5-year rate extension approving this same methodology

through June 7, 1998, was ordered by FERC on September 29, 1993, in 64

FERC para. 62,225. Rate Order WAPA-81, which extended the rate formula

through June 7, 1999, was published in the Federal Register (63 FR

27278) on May 18, 1998.

According to article 9(a) of the Contract, Western calculates the

annual installment to be paid by the South Texas Electric Cooperative,

Inc. (STEC), and the Medina Electric Cooperative, Inc. (MEC), for the

power generated at the Amistad and Falcon Powerplants on or before

August 31 of the year preceding the fiscal year to which it pertains.

Each annual installment pays the annual amortized portion of the

United States' investment in the Falcon and Amistad hydroelectric

facilities with interest, and the associated operation, maintenance,

and administrative costs. This repayment schedule is not dependent upon

the power and energy made available for sale or the rate of generation

each year. Western will continue to provide STEC/MEC with a revised

Exhibit A by August 31 of each year using the same methodology.

[[Page 25321]]

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 into effect on an interim

basis to the Secretary of Energy; and (3) the authority to confirm,

approve, and place into effect on a final basis, to remand, or to

disapprove such rates to FERC.

By subsequent Order effective April 15, 1999, the Secretary

rescinded all delegation of authority to the Deputy Secretary, whether

contained in Delegation Orders, Departmental Directives, or elsewhere,

concerning the Department's Power Marketing Administrations, including,

but not limited to, authority delegated or affirmed in Delegation Order

No. 0204-108, as amended. Existing DOE procedures for public

participation in power rate adjustments are located at 10 CFR part 903,

effective on September 18, 1985 (50 FR 37835). DOE procedures have been

followed by Western in the development of these provisional rates.

Rate Order No. WAPA-85, confirming, approving, and placing the

proposed Amistad and Falcon firm power rate formula extension into

effect on an interim basis, is issued, and the extension will be

promptly submitted to FERC for confirmation and approval on a final

basis.

Dated: April 29, 1999.

Bill Richardson,

Secretary.

Order Confirming, Approving, and Placing a Rate Formula Extension

for Amistad and Falcon Projects Into Effect on an Interim Basis

June 8, 1999.

This power rate formula is established 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, section 9(c) of the Reclamation

Act of 1939, 43 U.S.C. 485h(c), and acts specifically applicable to the

Falcon Project and the Amistad Project, 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 to the

Administrator of the Western Area Power Administration (Western); (2)

the authority to confirm, approve, and place in effect such rates on an

interim basis to the Secretary of Energy; and (3) the authority to

confirm, approve, and place into effect on a final basis, to remand, or

to disapprove those rates to the Federal Energy Regulatory Commission

(FERC). By subsequent Order effective April 15, 1999, the Secretary

rescinded all delegation of authority to the Deputy Secretary, whether

contained in Delegation Orders, Departmental Directives, or elsewhere,

concerning the Department's Power Marketing Administrations, including,

but not limited to, authority delegated or affirmed in Delegation Order

No. 0204-108, as amended. Existing DOE procedures for public

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

Filing requirements and procedures for approving power marketing

administration rates by FERC are found at 18 CFR part 300.

Acronyms and Definitions

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

apply:

DOE: Department of Energy.

DOE Order RA 6120.2: An order dealing with power marketing

administration financial reporting used in determining revenue

requirements for rate development.

FPC: Federal Power Commission.

FY: Fiscal year; October 1 to September 30.

kWh: Kilowatthour.

MEC: Medina Electric Cooperative, Inc.

Mills/kWh: Mills per kilowatthour.

NEPA: National Environmental Policy Act of 1969.

O&M: Operation and maintenance.

PRS: Power repayment study.

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

STEC: South Texas Electric Cooperative, Inc.

U.S. Section: U.S. Section of the International Boundary and Water

Commission.

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

Effective Date

This extension will become effective on an interim basis on June 8,

1999, and will be in effect pending FERC's approval of this or a

substitute rate formula on a final basis for a 5-year period through

June 7, 2004, or until superseded.

Public Notice and Comment

Paragraph 903.23(a) of 10 CFR part 903 for rate extensions does not

require either a consultation and comment period, or public information

or comment forums. On August 20, 1998, Western met with the customers,

MEC and STEC, in Corpus Christi, Texas, and notified them of Western's

intent to extend the rate formula. Western also discussed the number of

years covered in the annual installments, operation and maintenance

funding, answered questions, and received comments and suggestions. The

customers expressed support for the rate formula extension.

Project History

The Amistad and Falcon Dams are features of international water

storage projects located on the Rio Grande River between Texas and

Mexico. Western markets the power from these dams under the terms of

Contract No. 7-07-50-P0890 (Contract), dated August 9, 1977, and

amended on April 10, 1986.

On August 12, 1977, in Docket No. E-9566, the FPC approved for a 5-

year period the rate formula contained in the Contract, between

Reclamation and the two electric cooperatives, to become effective on

the date of initial operation of Amistad Powerplant (June 8, 1983).

STEC and MEC agreed to purchase the output of the Amistad and Falcon

Powerplants for a 50-year period, beginning when initial electric

service became available from Amistad. The cooperatives agreed to take

all Amistad and Falcon power and to pay the United States the

following:

The amount of each annual installment shall be the sum of:

(1) A fixed annual payment of $313,178 as a contribution to the

amortization of the United States investment in the Falcon

hydroelectric facilities and in the penstocks at Amistad Dam. The

annual payment shown above will be adjusted at the time this

contract becomes effective; plus

(2) An amount necessary to repay in equal annual installments

amortized over a fifty-year period, the United States actual total

investment costs, with interest, for hydroelectric power

installation at Amistad Dam, not including penstocks, to be under

the jurisdiction of the Section, including the costs of engineering

plans, supervision, administration of construction, and interest

during construction * * * and

(3) The annual operation, maintenance, replacement, and

administration costs of the Section and the administration costs of

the Bureau related directly or indirectly to the United States power

facilities at Amistad Dam and at Falcon Dam, provided that such

costs shall be based on prudent and businesslike management

practices and in accordance with established electric industry

operation and maintenance practices * * *.

[[Page 25322]]

The power marketing functions of Reclamation were transferred to

Western on October 1, 1977, and Western became responsible for the

administration of the above Contract.

Western, STEC, and MEC executed Supplement No. 1 to the Contract on

April 10, 1986, to clarify the method for determining the annual

installment consistent with DOE Order No. RA 6120.2. Those

clarifications address repayment of Falcon hydroelectric facilities

within the remaining period, establish interest during construction at

7 percent, capitalize major replacements and additions at current

interest rates, and specify the actual date of initial service as June

8, 1983.

Supplement No. 1 requires that the amount of each annual

installment be established in advance by the contracting officer in

consultation with the U.S. Section and submitted to the cooperatives as

Exhibit A on or before August 31 of the year preceding the appropriate

fiscal year in accordance with the following:

The amount of each annual installment shall be the sum of:

(1) An annual repayment installment including interest, to

amortize within the remaining period, the unpaid United States

investment in the Falcon hydroelectric facilities and in the

penstocks at Amistad Dam; plus

(2) An annual installment to amortize over a fifty-year period,

the United States actual total investment costs with interest, for

hydroelectric power facilities, not including penstocks, at Amistad

Dam to be under the jurisdiction of the U.S. Section, including the

costs of engineering plans, supervision, administration of

construction, and interest during construction * * * and

(3) The annual operation, maintenance, replacement, and

administration costs of the U.S. Section and the administration

costs of Western related directly or indirectly to the United States

power facilities at Amistad Dam and at Falcon Dam, provided that

such costs shall be based on prudent and businesslike management

practices and in accordance with established electric industry

operation and maintenance practices * * *.

The billing procedures contained in Supplement No. 1 require

Western to submit bills to the cooperatives for each monthly payment on

the annual installment on or before the tenth day of the month for

which such payment is due. Payments are due and payable by the

cooperatives on the first day of the following month. Western divides

the calculated annual installment by 12 and bills the customer monthly

for this amount.

The rate formula of that Contract was approved by the FPC,

predecessor to FERC, for a 5-year period beginning June 8, 1983, in

Docket No. E-9566 on August 12, 1977. A 5-year rate extension approving

the rate formula, as amended by Supplement No. 1, through June 7, 1993,

was ordered by FERC on July 20, 1988, in 44 FERC para. 62,058. A

subsequent 5-year rate extension approving this same rate formula

through June 7, 1998, was ordered by FERC on September 29, 1993, in 64

FERC para. 62,225. Rate Order No. WAPA-81, which extended the rate

formula through June 7, 1999, was published in the Federal Register (63

FR 27278) on May 18, 1998. FERC approval is now sought for another 5-

year extension through June 7, 2004, of this same rate formula.

Power Repayment Studies

Electric service Contract No. 7-07-50-P0890, dated August 9, 1977,

and Supplement No. 1 thereto require that Western calculate the annual

installment to be paid by STEC and MEC for the power generated at the

Falcon and Amistad Powerplants, by consultation with the U.S. Section,

and submit it to STEC and MEC in the form of a contract exhibit on or

before August 31 of the year preceding the FY to which it pertains.

Previously, the annual installment was calculated using data from 3

years. The previous FY reflected actual figures; the current year in

which the annual installment is being calculated reflected updated

estimates; and the first future year for which the annual installment

is being calculated reflects projected estimates. The previous FY

actual data is a final calculation for that year and normally does not

change in future calculations. Annual installments have been prepared

each year, and this 3-year methodology has been followed since the

Contract became effective in 1983.

In an effort to streamline and simplify the rate installment

computation process and in agreement with STEC, MEC, and the U.S.

Section, Western is calculating the annual installment based on 2

years' data. The calculation includes the projected costs of the rate

installment year (future fiscal year) and an adjustment from the last

historic fiscal year. The adjustment is the surplus or deficit that

occurs in the last historic year when actual costs and repayment

obligations are subtracted from actual revenues. This surplus or

deficit is combined with the projected rate installment year costs to

arrive at the rate installment.

Statement of Revenue and Related Expenses

The following table provides a summary of revenues and expenses for

the current 5-year rate formula and the actual revenues and expenses

for the same period.

Amistad/Falcon Comparison of 6-year Revenues and Expenses--FY 1993-1998

[$1,000]

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Item Projected Actual Difference

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Total Revenues................ 20,445 20,572 127R

Revenues Distribution:

O&M........................... 4,972 5,266 294

Interest...................... 13,893 13,634 (259)

Repayment..................... 1,580 1,947 367

(Deficit)/Surplus............. ............ (275) (275)

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Total Revenue Distribution 20,445 20,572 127

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[[Page 25323]]

The following table provides a summary of the projected revenues

and expenses during the provisional rate period.

Amistad/Falcon 6-year Projections\1\ Revenues and Expenses

[$1,000]

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FY 1999-

2004

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Total Revenues............................................... 20,550

Revenue Distribution:

O&M.......................................................... 4,912

Interest..................................................... 13,022

Investment Repayment......................................... 2,616

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Total...................................................... 20,550

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\1\ Although this rate process seeks approval for a 5-year period (FY

2000-2004), 6 years of data (including FY 1999) are shown in the above

table because FY 1999 data is an estimate.

Environmental Compliance

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 Regulations (10 CFR part 1021),

Western has determined that this action is categorically excluded from

the preparation of an environmental assessment or environmental impact

statement.

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

Information regarding this rate formula extension is available for

public review in the Colorado River Storage Project Customer Service

Center, Western Area Power Administration, 257 East 200 South, Suite

475, Salt Lake City, Utah, and in the Power Marketing Liaison Office,

Room 8G-027, 1000 Independence Avenue SW., Washington, D.C.

Submission to Federal Energy Regulatory Commission

The rate formula extension 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 vested in me

as the Secretary of Energy, I confirm and approve and place into effect

on an interim basis an extension of the rate formula provisions

contained in Contract No. 7-07-50-P0890 and Supplement No. 1 to that

Contract effective on June 8, 1999. The rate formula provisions shall

remain in effect on an interim basis, pending Federal Energy Regulatory

Commission confirmation and approval of this or a substitute rate on a

final basis or until superseded, through June 7, 2004.

Dated: April 29, 1999.

Bill Richardson,

Secretary.

[FR Doc. 99-11866 Filed 5-10-99; 8:45 am]

BILLING CODE 6450-01-P