Load Forecasts

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710

RIN 0572-AB05

Load Forecasts

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its

regulations to revise requirements for borrower load forecasts and load

forecast work plans (historically referred to as power requirements

studies and power requirements study work plans). The proposed changes

would reduce the level of detail required in load forecasts filed by

small power supply borrowers and their members and by distribution

borrowers unaffiliated with a large power supply borrower. The proposed

changes also would give borrowers greater flexibility in preparation of

load forecasts required to be submitted to RUS.

DATES: Written comments must be received by RUS or carry a postmark or

equivalent by September 7, 1999.

ADDRESSES: Written comments should be addressed to Georg A. Shultz,

Chief, Energy Forecasting Branch, Electric Staff Division, Rural

Utilities Service, U. S. Department of Agriculture, 1400 Independence

Ave., SW., Room 1246-SBldg., STOP 1569, Washington, DC 20250-1569. RUS

requests a signed original and three copies of all comments (7 CFR

1700.4). Comments will be available for public inspection during

regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Georg A. Shultz, Chief, Energy

Forecasting Branch, Electric Staff Division, Rural Utilities Service,

U.S. Department of Agriculture, 1400 Independence Ave., SW., Room 1246-

SBldg., STOP 1569, Washington, DC 20250-1569, telephone number: (202)

720-1920, fax: (202) 720-7491, E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be not significant for

purposes of Executive Order 12866 and, therefore, has not been reviewed

by the Office of Management and Budget (OMB).

Executive Order 12988

This proposed rule has been reviewed in accordance with Executive

Order 12988, Civil Justice Reform. RUS has determined that this

proposed rule meets the applicable standards provided in Section 3 of

the Executive Order. In accordance with the Executive Order and the

rule: (1) all state and local laws and regulations that are in conflict

with this rule will be preempted; (2) no retroactive effect will be

given to this rule and (3) in accordance with Sec. 212(e) of the

Department of Agriculture Reorganization Act of 1994 (7 U.S.C.

Sec. 6912(e)) administrative appeal procedures, if any are required

must be exhausted prior to initiating litigation against the Department

or its agencies.

Regulatory Flexibility Act Certification

The Administrator of RUS has determined that a rule relating to

RUS' electric loan program is not a rule as defined in the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.) and, therefore, the Regulatory

Flexibility Act does not apply to this rule. RUS borrowers, as a result

of obtaining Federal financing, receive economic benefits that exceed

any direct economic costs associated with complying with RUS

regulations and requirements.

Information Collection and Recordkeeping Requirements

The reporting and recordkeeping requirements contained in the

proposed rule were approved by the Office of Management and Budget

(OMB) pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C.

Chapter 35) under control number 0572-0032.

Send questions or comments regarding this burden or any other

aspect of this collection of information, including suggestions for

reducing the burden to F. Lamont Heppe, Director, Program Development

and Regulatory Analysis, Rural Utilities Service, 1400 Independence

Ave., SW, Room 4034-SBldg., STOP 1522, Washington, DC 20250-1522.

Unfunded Mandates

This proposed rule contains no Federal mandates (under the

regulatory provision of Title II of the Unfunded Mandates Reform Act)

for State, local, and tribal governments, or the private sector. Thus,

this proposed rule is not subject to the requirements of section 202

and 205 of the Unfunded Mandates Reform Act.

National Environmental Policy Act Certification

The Administrator of RUS has determined that this proposed rule

will not significantly affect the quality of the human environment as

defined by the National Environmental Policy Act of 1969 (42 U.S.C.

4321 et seq.). Therefore, this action does not require an environmental

impact statement or assessment.

Catalog of Federal Domestic Assistance

The program described by this proposed rule is listed in the

Catalog of Federal Domestic Assistance Programs under number 10.850,

Rural

[[Page 36610]]

Electrification Loans and Loan Guarantees. This catalog is available on

a subscription basis from the Superintendent of Documents, U.S.

Government Printing Office, Washington, DC 20402-9325, telephone number

(202) 512-1800.

Executive Order 12372

This proposed rule is excluded from the scope of Executive Order

12372, Intergovernmental Consultation which may require consultation

with state and local offices. A final rule related notice entitled

``Department Programs and Activities Excluded from Executive Order

12372,'' (50 FR 47034) determined that RUS loans and loan guarantees

were not covered by Executive Order 12372.

Background

The Rural Utilities Service (RUS) makes and guarantees loans to

furnish and improve electric service in rural areas pursuant to the

Rural Electrification Act of 1936, 7 U.S.C. 901 et seq. (RE Act). Under

the RE Act, RUS may make or guarantee a loan only if the Administrator

determines that the security for the loan is reasonably adequate and

that the loan will be repaid within the time agreed. Most borrowers

apply for a new loan to meet system needs every two to three years. The

security for these loans is generally a first lien on the borrower's

electric system, evidenced through the filing of a mortgage. In order

to determine the feasibility of a new loan and whether borrowers will

have sufficient revenues to repay existing loans, RUS requires most

borrowers to file load forecasts, historically called ``power

requirements studies'' by RUS, containing current and detailed

information and analyses on existing and expected future loads.

Detailed information from the load forecasts are used in RUS'

independent analysis and oversight of borrower systems.

RUS regulations on the preparation and approval of power

requirements studies and power requirements work plans, contained at 7

CFR part 1710, subpart E, were last revised in 1992, at 57 FR 1053 and

57 FR 4513. Since then, the business and regulatory environment in the

electric industry has undergone rapid change. State regulatory

agencies, power supply systems, power pools, and other entities are

modifying their power planning processes and requirements in the light

of competitive changes in the industry. Even greater transformations

lie ahead as many states move to adopt retail competition. In the years

since the existing regulations were adopted, both RUS and our borrowers

have gained greater familiarity with the development and use of load

forecasts, and supporting analyses and data and the experience and

sophistication of RUS financed systems have increased.

In response to changes in the industry and the Administration's

ongoing commitment to improving customer service, RUS has amended a

number of its regulations and practices involving its oversight of

borrower systems to update and streamline these requirements. This

proposed regulation is part of RUS' continuing effort to improve

customer service.

This proposed rule implements recommendations to modify load

forecast requirements which arose out of the RUS strategic planning

process. The proposed changes simplify the procedure and minimize the

detail of information RUS needs for loan feasibility determinations.

The proposed revisions to the existing rule balance RUS' continuing

need to maintain current up-to-date load forecast information for

electric borrowers with its goal of reducing regulatory requirements

and burdens on borrowers.

In the usual course of business, all prudent utilities engage in a

continuing planning process incorporating objective load forecasts in

order to provide reliable electric service for their existing and

future customers. Borrowers submit their load forecasts and load

forecast work plans to RUS in order to provide the necessary support

for RUS approval of loans and a basis for RUS to monitor future

borrower performance for loan security purposes. The proposed rule

would modify the existing requirements and reduce the number of

borrower systems required to maintain current load forecasts on file

with RUS. The proposed changes would allow borrowers greater

flexibility in preparation of the load forecasts and supporting

information submitted to RUS. The proposed changes will reduce burdens

on both borrowers and the RUS electric program.

Summary of Proposed Changes

Definitions

The proposed rule makes several conforming changes to the

definitions in 7 CFR part 1710, subpart A. The terms ``load forecast''

and ``load forecast work plan'' are added to conform with overall

electric industry usage of these terms. The terms ``power requirement

study'' and ``power requirement study work plan'' will continue to be

defined in 7 CFR part 1710, subpart A, since these terms continue to be

used in other subparts. The term ``load forecast'' has the same

definition as ``power requirements study'' and the term ``load forecast

work plan'' has the same definition as ``power requirement study work

plan.'' The terms ``approved load forecast'' and ``approved load

forecast work plan'' have been added to clarify those load forecasts

and load forecast work plans that RUS has determined are current for

RUS purposes and have been approved by RUS pursuant to 7 CFR part 1710,

subpart E.

Requirements to File Load Forecasts and Load Forecast Work Plans

Load forecasts are one of four primary documents required to be

submitted in support of applications for RUS loans and loan guarantees

(Sec. 1710.152). Load forecasts aid in RUS analysis of feasibility for

loan approval and RUS review of loan security. RUS has required the

larger power supply borrowers and their member systems to maintain an

approved load forecast and approved load forecast work plan. As a

result, approved load forecasts for these borrower's systems are in

place and allow more expeditious review of requests for RUS assistance.

Under both the existing regulations and the proposed rule changes,

whether and when a borrower must maintain an approved load forecast or

approved load forecast work plan is generally determined by the value

of the borrower's assets or total utility plant and whether a borrower

is affiliated with a power supply borrower that is required to maintain

an approved load forecast and approved load forecast work plan.

Under existing regulations, power supply borrowers with total

assets over $300 million and distribution borrowers that own generation

and transmission plant valued at over $300 million are required to

maintain an approved load forecast and an approved load forecast work

plan. Other RUS borrowers with total assets over $300 million must

maintain an approved load forecast and submit it to support requests

for RUS financing, approval of long-term power contracts, and other

actions. Power supply borrowers with total assets over $300 million and

their member power supply and distribution borrowers must coordinate

their load forecasts in accord with an approved load forecast work

plan.

The proposed rule uses total utility plant instead of total assets

to determine these thresholds. Use of total utility plant instead of

total assets conforms with other RUS requirements and relates directly

to the borrowers utility plant which is used to service the loads. The

proposed rule would raise the

[[Page 36611]]

threshold from $300 million to $500 million for borrowers required to

maintain an approved load forecast and approved load forecast work plan

on an ongoing basis. All power supply borrowers with total utility

plant of less than $500 million (and their affiliated members that are

RUS borrowers) will no longer be required to maintain and update load

forecasts on a periodic basis. These borrowers will be required to have

an approved load forecast when they apply for new financing and under

certain other circumstances. This change is proposed to reduce the

number of borrowers required to submit load forecasts on a routine

basis and to closely monitor borrowers with large loans made or

guaranteed by RUS.

The existing regulations provide that power supply borrowers with

total assets of less than $300 million that are not members of any

other power supply borrower with total assets over $300 million are not

required to maintain an approved load forecast or approved load

forecast work plan on an ongoing basis. However, these power supply

borrowers must have an approved load forecast to support a request for

any loan or loan guarantee over $25 million or more than ten percent of

the borrower's total utility plant, whichever is smaller, and for RUS

approval of a long-term power contract. The proposed rule would raise

from $25 million to $50 million the loan value requiring an approved

load forecast by power supply borrowers not otherwise required to

maintain an approved load forecast.

The existing regulations provide that distribution borrowers with

total assets of less than $300 million that are not affiliated with a

power supply borrower are not required to maintain an approved load

forecast or approved load forecast work plan. On an ongoing basis,

these smaller unaffiliated distribution borrowers must have an approved

load forecast for loans of $3 million or 10 percent of utility plant,

whichever is smaller. Under the proposed rule, the minimum loan

application for distribution borrowers that would require an approved

load forecast would be $3 million or 5 percent of total utility plant,

whichever is greater. These changes are being proposed to reduce

burdens on small borrowers with minimal outstanding loans made or

guaranteed by RUS.

Requirements for Load Forecasts

The proposed rule revises requirements for the contents of load

forecasts and approval criteria to give borrowers and RUS greater

flexibility in compliance with RUS regulations. Changes in the electric

utility industry are likely to dramatically alter utility planning and

forecasting practices. RUS recognizes that, in addition to complying

with RUS requirements, borrowers need to prepare load forecast and

planning documents for a variety of other external reporting purposes

such as for state utility commissions, regional reliability planning,

or to comply with terms of power supply agreements. To reduce burdens

on borrowers, where practicable, RUS will accept load forecasts

prepared for those other purposes as long as the information and

analyses needed by RUS are included and are compatible with RUS

applications. As is the practice at present, RUS expects that borrowers

will continue to consult with RUS during the preparation and review of

their load forecasts to resolve any uncertainties.

Under the existing rules, all borrower load forecasts must meet the

same requirements for scope, content, and supporting analysis and

models, unless waived by RUS. Under the proposed rule, load forecasts

and supporting data submitted by small distribution borrowers that are

unaffiliated with large power supply borrowers would not have to meet

the same standards as forecasts submitted by large power supply

borrowers and their members.

RUS does not believe reducing the load forecasting filing

requirements will lead to any reduction in borrower's attention to the

importance of load forecasting in their overall financial and system

planning needed to assure reliable, affordable service for their

customers. Borrowers will continue to conduct load forecasting as part

of prudent utility practice in the ordinary course of business.

Confidentiality of Load Forecasts and Supporting Information

Restructuring of the electric power industry will likely increase

the potential competitive harm to a borrower from the disclosure of

commercially sensitive and confidential business information in the

load forecast. RUS understands that borrowers may consider the

information contained in the load forecasts and supporting data as

commercially valuable, proprietary and confidential business

information. RUS will not release information contained in the load

forecast except as provided by law pursuant to 7 CFR part 1, The

Freedom of Information Act (5 U.S.C. 552). When, in the course of

responding to a Freedom of Information Act request, RUS cannot readily

determine whether the information obtained from the borrower is

privileged or confidential business information, RUS will obtain and

consider the views of the borrower concerning the information and

provide the borrower an opportunity to object to any decision to

disclose the information. Borrowers should be aware that in order for

RUS to withhold release of information it must be determined that such

release will result in substantial harm to the borrower.

List of Subjects in 7 CFR Part 1710

Electric power, Electric utilities, Loan programs--energy,

Reporting and recordkeeping requirements, Rural areas.

For the reasons set out in the preamble, RUS proposes to amend 7

CFR chapter XVII as follows:

PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO

INSURED AND GUARANTEED ELECTRIC LOANS

1. The authority citation for part 1710 is revised to read as

follows:

Authority: 7 U.S.C. et seq., 1921 et seq., and 6941 et seq.

2. Section 1710.2(a) is amended by revising and adding the

following definitions in alphabetical order:

Sec. 1710.2 Definitions and rules of construction.

* * * * *

Approved load forecast means a load forecast that RUS has

determined is current for RUS purposes and has been approved by RUS'

pursuant to 7 CFR part 1710, subpart E.

Approved load forecast work plan means a load forecast work plan

that RUS has determined is current for RUS' purposes and has been

approved pursuant to 7 CFR part 1710, subpart E.

* * * * *

Load forecast means the thorough study of a borrower's electric

loads and the factors that affect those loads in order to determine, as

accurately as practicable, the borrower's future requirements for

energy and capacity.

Load forecast work plan means the plan that contains the resources,

methods, schedules, and milestones to be used in the preparation and

maintenance of a load forecast.

* * * * *

Power requirements study (PRS) has the same meaning as load

forecast.

* * * * *

PRS work plan has the same meaning as load forecast work plan.

* * * * *

3. Revise paragraph 1710.152(a) to read as follows:

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Sec. 1710.152 Primary support documents.

* * * * *

(a) Load forecast. The load forecast provides the borrower and RUS

with an understanding of the borrower's future system loads, the

factors influencing those loads, and estimates of future loads. The

load forecast provides a basis for projecting annual electricity (kWh)

sales and revenues, and for engineering estimates of plant additions

required to provide reliable service to meet the forecasted loads.

Subpart E of this part contains the information to be included in a

load forecast and when an approved load forecast is required.

* * * * *

4. Revise subpart E of part 1710 to read as follows:

Subpart E--Load Forecasts

Sec.

1710.200 Purpose.

1710.201 General.

1710.202 Requirement to prepare a load forecast-power supply

borrowers.

1710.203 Requirement to prepare a load forecast-distribution

borrowers.

1710.204 Filing requirements for borrowers that must maintain a

current RUS approved load forecast on an ongoing basis.

1710.205 Minimum requirements for all borrower load forecasts.

1710.206 Requirements for load forecasts prepared pursuant to RUS

approved load forecast work plans.

1710.207 RUS approval criteria for approval of load forecasts by

distribution borrowers not required to maintain a current load

forecast on an ongoing basis.

1710.208 RUS approval criteria for load forecasts submitted by all

power supply borrowers and by distribution borrowers required to

maintain a current load forecast on an ongoing basis.

1710.209 Requirements for load forecast work plans.

1710.210 Waiver of requirements or approval criteria.

1710.211--1710.249--[Reserved]

Subpart E--Load Forecasts

Sec. 1710.200 Purpose.

This subpart contains RUS policies for the preparation, review,

approval and use of load forecasts and load forecast work plans. A load

forecast is a thorough study of a borrower's electric loads and the

factors that affect those loads in order to estimate, as accurately as

practicable, the borrower's future requirements for energy and

capacity. The load forecast of a power supply borrower includes and

integrates the load forecasts of its member systems. An approved load

forecast, if required by this subpart, is one of the primary documents

that a borrower is required to submit to support a loan application.

Sec. 1710.201 General.

(a) The policies, procedures and requirements in this subpart are

intended to implement provisions of the loan documents between RUS and

the electric borrowers and are also necessary to support approval by

RUS of requests for financial assistance.

(b) Notwithstanding any other provisions of this subpart, RUS may

require any power supply or distribution borrower to prepare a new or

updated load forecast for RUS approval or to maintain an approved load

forecast on an ongoing basis, if such documentation is necessary for

RUS to determine loan feasibility, or to ensure compliance under the

loan documents.

Sec. 1710.202 Requirement to prepare a load forecast--power supply

borrowers.

(a) A power supply borrower with a total utility plant of $500

million or more must maintain an approved load forecast that meets the

requirements of this subpart on an ongoing basis and provide an

approved load forecast in support of any request for RUS financial

assistance. The borrower must also maintain an approved load forecast

work plan. The borrower's approved load forecast must be prepared

pursuant to the approved load forecast work plan.

(b) A power supply borrower that is a member of another power

supply borrower that has a total utility plant of $500 million or more

must maintain an approved load forecast that meets the requirements of

this subpart on an ongoing basis and provide an approved load forecast

in support of any request for RUS financial assistance. The member

power supply borrower may comply with this requirement by participation

in and inclusion of its load forecasting information in the approved

load forecast of its power supply borrower. The approved load forecasts

must be prepared pursuant to the RUS approved load forecast work plan.

(c) A power supply borrower that has total utility plant of less

than $500 million and that is not a member of another power supply

borrower with a total utility plant of $500 million or more must

provide an approved load forecast that meets the requirements of this

subpart in support of an application for any RUS loan or loan guarantee

which exceeds $50 million. The borrower is not required to maintain on

an ongoing basis either an approved load forecast or an approved load

forecast work plan.

Sec. 1710.203 Requirement to prepare a load forecast--distribution

borrowers.

(a) A distribution borrower that is a member of a power supply

borrower with a total utility plant of $500 million or more must

maintain an approved load forecast that meets the requirements of this

subpart on an ongoing basis and provide an approved load forecast in

support of any request for RUS financial assistance. The distribution

borrower may comply with this requirement by participation in and

inclusion of its load forecasting information in the approved load

forecast of its power supply borrower. The distribution borrower's load

forecast must be prepared pursuant to the approved load forecast work

plan of its power supply borrower.

(b) A distribution borrower that is a member of a power supply

borrower which is itself a member of another power supply borrower that

has a total utility plant of $500 million or more must maintain an

approved load forecast that meets the requirements of this subpart on

an ongoing basis and provide an approved load forecast in support of

any request for RUS financial assistance. The distribution borrower may

comply with this requirement by participation in and inclusion of its

load forecasting information in the approved load forecast of its power

supply borrower. The distribution borrower's approved load forecast

must be prepared pursuant to the approved load forecast work plan of

the power supply borrower with total utility plant in excess of $500

million.

(c) A distribution borrower that is a member of a power supply

borrower with a total utility plant of less than $500 million must

provide an approved load forecast that meets the requirements of this

subpart in support of an application for any RUS loan or loan guarantee

that exceeds $3 million or 5 percent of total utility plant, whichever

is greater. The distribution borrower may comply with this requirement

by participation in and inclusion of its load forecasting information

in the approved load forecast of its power supply borrower. The

borrower is not required to maintain on an ongoing basis either an

approved load forecast or an approved load forecast work plan.

(d) A distribution borrower with a total utility plant of less than

$500 million and that is unaffiliated with a power supply borrower must

provide an approved load forecast that meets the requirements of this

subpart in support of an application for any RUS loan or loan guarantee

which exceeds $3 million or 5 percent of total utility

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plant, whichever is greater. The borrower is not required to maintain

on an ongoing basis either an approved load forecast or an approved

load forecast work plan.

(e) A distribution borrower with a total utility plant of $500

million or more must maintain an approved load forecast that meets the

requirements of this subpart on an ongoing basis and provide an

approved load forecast in support of any request for RUS financing

assistance. The borrower must also maintain an approved load forecast

work plan. The distribution borrower may comply with this requirement

by participation in and inclusion of its load forecasting information

in the approved load forecast of its power supply borrower.

Sec. 1710.204 Filing requirements for borrowers that must maintain an

approved load forecast on an ongoing basis.

(a) Filing of load forecasts and updates. A power supply or

distribution borrower required to maintain an approved load forecast on

an ongoing basis under Sec. 1710.202 or Sec. 1710.203 may elect either

of the following two methods of compliance:

(1) Submitting a new load forecast to RUS for review and approval

at least every 36 months, and then submitting updates to the load

forecast to RUS for review and approval in each intervening year; or

(2) Submitting a new load forecast to RUS for review and approval

not less frequently than every 24 months.

(b) Extensions. RUS may extend any time period required under this

section for up to 3 months at the written request of the borrower's

general manager. A request to extend a time period beyond 3 months must

be accompanied by a written request from the borrower's general

manager, an amendment to the borrower's approved load forecast work

plan incorporating the extension, a board resolution approving the

extension request and any amendment to the approved load forecast work

plan, and any other relevant supporting information. RUS may extend the

time periods contained in this section for up to 24 months.

Sec. 1710.205 Minimum approval requirements for all load forecasts.

(a) Documents required for RUS approval of a borrower's load

forecast. The borrower must provide the following documents to obtain

RUS approval for a load forecast:

(1) The load forecast and supporting documentation;

(2) A memorandum from the borrower's general manager to the board

of directors recommending that the board approve the load forecast and

its uses; and

(3) A board resolution from the borrower's board of directors

approving the load forecast and its uses.

(b) Contents of load forecast. All load forecasts submitted by

borrowers for approval must include:

(1) A narrative describing the borrower's system, service

territory, and consumers;

(2) A narrative description of the borrower's load forecast

including future load projections, forecast assumptions, and the

methods and procedures used to develop the forecast;

(3) Projections of usage by consumer class, number of consumers by

class, annual system peak demand, and season of peak demand for the

number of years agreed upon by RUS and the borrower;

(4) A summary of the year-by-year results of the load forecast in a

format that allows efficient transfer of the information to other

borrower planning or loan support documents;

(5) The load impacts of a borrower's demand side management

activities, if applicable;

(6) Graphic representations of the variables specifically

identified by management as influencing a borrower's loads; and

(7) A database that tracks all relevant variables that might

influence a borrower's loads.

(c) Formats. RUS does not require a specific format for the

narrative, documentation, data, and other information in the load

forecast, provided that all required information is included and

available. All data must be in a tabular form that can be transferred

electronically to RUS computer software applications. RUS will evaluate

borrower load forecasts for readability, understanding, filing, and

electronic access. If a borrower's load forecast is submitted in a

format that is not readily usable by RUS or is incomplete, RUS will

require the borrower to submit the load forecast in a format acceptable

to RUS.

(d) Document retention. The borrower must retain its latest

approved load forecasts, and supporting documentation until RUS

approval of its next load forecast. Any approved load forecast work

plan must be retained as part of the approved load forecast.

(e) Consultation with RUS. The borrower must designate and make

appropriate staff and consultants available for consultation with RUS

to facilitate RUS review of the load forecast work plan and the load

forecast when requested by RUS.

(f) Correlation and consistency with other RUS loan support

documents. If a borrower relies on an approved load forecast or an

update of an approved load forecast as loan support, the borrower must

demonstrate that the approved load forecast and the other primary

support documentation for the loan were reconciled. For example, both

the load forecast and the financial forecast require input assumptions

for wholesale power costs, distribution costs, other systems costs,

average revenue per kWh, and inflation. Also, a borrower's engineering

planning documents, such as the construction work plan, incorporate

consumer and usage per consumer projections from the load forecast to

develop system design criteria. The assumptions and data common to all

the documents must be consistent.

(g) Coordination. Power supply borrowers and their members that are

subject to the requirement to maintain an approved load forecast on an

ongoing basis are required to coordinate preparation of their

respective load forecasts, updates of load forecasts, and approved load

forecast work plan. A load forecast of a power supply borrower must

consider the load forecasts of all its member systems.

Sec. 1710.206 Approval requirements for load forecasts prepared

pursuant to approved load forecast work plans.

(a) Contents of load forecasts prepared under an approved load

forecast work plan. In addition to the minimum requirements for load

forecasts under Sec. 1710.205, load forecasts developed and submitted

by borrowers required to have an approved load forecast work plan shall

include the following:

(1) Scope of the load forecast. The narrative shall address the

overall approach, time periods, and expected internal and external uses

of the forecast. Examples of internal uses include providing

information for developing or monitoring demand side management

programs, supply resource planning, load flow studies, wholesale power

marketing, retail marketing, cost of service studies, rate policy and

development, financial planning, and evaluating the potential effects

on electric revenues caused by competition from alternative energy

sources or other electric suppliers. Examples of external uses include

meeting state and Federal regulatory requirements, obtaining financial

ratings, and participation in reliability council, power pool, regional

transmission group, power supplier or member system forecasting and

planning activities.

[[Page 36614]]

(2) Resources used to develop the load forecast. The discussion

shall identify and discuss the borrower personnel, consultants, data

processing, methods and other resources used in the preparation of the

load forecast. The borrower shall identify the borrower's member and,

as applicable, member personnel that will serve as project leaders or

liaisons with the authority to make decisions and commit resources

within the scope of the current and future work plans.

(3) A comprehensive description of the database used in the study.

The narrative shall describe the procedures used to collect, develop,

verify, validate, update, and maintain the data. A data dictionary

thoroughly defining the database shall be included. The borrower shall

make all or parts of the database available or otherwise accessible to

RUS in electronic format, if requested.

(4) A narrative for each new load forecast or update of a load

forecast discussing the methods and procedures used in the analysis and

modeling of the borrower's electric system loads as provided for in the

load forecast work plan.

(5) A narrative discussing the borrower's past, existing, and

forecast of future electric system loads. The narrative must identify

and explain substantive assumptions and other pertinent information

used to support the estimates presented in the load forecast.

(6) A narrative discussing load forecast uncertainty or alternative

futures that may determine the borrower's actual loads. Examples of

economic scenarios, weather conditions, and other uncertainties that

borrowers may decide to address in their analysis include:

(i) Most-probable assumptions, with normal weather;

(ii) Pessimistic assumptions, with normal weather;

(iii) Optimistic assumptions, with normal weather;

(iv) Most-probable assumptions, with severe weather;

(v) Most-probable assumptions, with mild weather;

(vi) Impacts of wholesale or retail competition; or

(vii) New environmental requirements.

(7) A summary of the forecast's results on an annual basis. Include

alternative futures, as applicable. This summary shall be designed to

accommodate the transfer of load forecast information to a borrower's

other planning or loan support documents. Computer-generated forms or

electronic submissions of data are acceptable. Graphs, tables,

spreadsheets or other exhibits shall be included throughout the

forecast as appropriate.

(8) A narrative discussing the coordination activities conducted

between a power supply borrower and its members, as applicable, and

between the borrower and RUS.

(b) Compliance with an approved load forecast work plan. A borrower

required to maintain an approved load forecast work plan must also be

able to demonstrate that both it and its RUS borrower members are in

compliance with its approved load forecast work plan for the next load

forecast or update of a load forecast.

Sec. 1710.207 RUS criteria for approval of load forecasts by

distribution borrowers not required to maintain an approved load

forecast on an ongoing basis.

Load forecasts submitted by distribution borrowers that are

unaffiliated with a power supply borrower, or by distribution borrowers

that are members of a power supply borrower that has a total utility

plant less than $500 million and that is not itself a member of another

power supply borrower with a total utility plant of $500 million or

more must satisfy the following minimum criteria:

(a) The borrower considered all known relevant factors that

influence the consumption of electricity and the known number of

consumers served at the time the study was developed;

(b) The borrower considered and identified all loads on its system

of RE Act beneficiaries and non-RE Act beneficiaries;

(c) The borrower developed an adequate supporting data base and

considered a range of relevant assumptions; and (d) The borrower

provided RUS with adequate documentation and assistance to allow for a

thorough and independent review.

Sec. 1710.208 RUS criteria for approval of all load forecasts by

power supply borrowers and by distribution borrowers required to

maintain an approved load forecast on an ongoing basis.

All load forecasts submitted by power supply borrowers and by

distribution borrowers required to maintain an approved load forecast

must satisfy the following criteria:

(a) The borrower objectively analyzed all known relevant factors

that influence the consumption of electricity and the known number of

customers served at the time the study was developed;

(b) The borrower considered and identified all loads on its system

of RE Act beneficiaries and non-RE Act beneficiaries;

(c) The borrower developed an adequate supporting database and

analyzed a reasonable range of relevant assumptions and alternative

futures;

(d) The borrower adopted methods and procedures in general use by

the electric utility industry to develop its load forecast;

(e) The borrower used valid and verifiable analytical techniques

and models;

(f) The borrower provided RUS with adequate documentation and

assistance to allow for a thorough and independent review; and

(g) In the case of a power supply borrower required to maintain an

approved load forecast on an ongoing basis, the borrower adequately

coordinated the preparation of the load forecast work plan and load

forecast with its member systems.

Sec. 1710.209 Approval requirements for load forecast work plans.

(a) In addition to the approved load forecast required under

Secs. 1710.202 and 1710.203, any power supply borrower with a total

utility plant of $500 million or more and any distribution borrower

with a total utility plant of $500 million or more must maintain an

approved load forecast work plan. RUS borrowers that are members of a

power supply borrower with a total utility plant of $500 million or

more must cooperate in the preparation of and submittal of the load

forecast work plan of their power supply borrower.

(b) An approved load forecast work plan establishes the process for

the preparation and maintenance of a comprehensive database for the

development of the borrower's load forecast, and load forecast updates.

The approved load forecast work plan is intended to develop and

maintain a process that will result in load forecasts that will meet

the borrowers' own needs and the requirements of this subpart. An

approved work plan represents a commitment by a power supply borrower

and its members, or by a large unaffiliated distribution borrower, that

all parties concerned will prepare their load forecasts in a timely

manner pursuant to the approved load forecast work plan and they will

modify the approved load forecast work plan as needed with RUS approval

to address changing circumstances or enhance the usefulness of the

approved load forecast work plan.

(c) An approved load forecast work plan for a power supply borrower

and its members must cover all member systems, including those that are

not borrowers. However, only members that are borrowers, including the

power

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supply borrower, are required to follow the approved load forecast work

plan in preparing their respective load forecasts. Each borrower is

individually responsible for forecasting all its RE Act beneficiary and

non-RE Act beneficiary loads.

(d) An approved load forecast work plan must outline the

coordination and preparation requirements for both the power supply

borrower and its members.

(e) An approved load forecast work plan must cover a period of 2 or

3 years depending on the applicable compliance filing schedule elected

under Sec. 1710.204.

(f) An approved load forecast work plan must describe the

borrower's process and methods to be used in producing the load

forecast and maintaining current load forecasts on an ongoing basis.

(g) Approved load forecast work plans for borrowers with

residential demand of 50 percent or more of total kWh must provide for

a residential consumer survey at least every 5 years to obtain data on

appliance and equipment saturation and electricity demand. Any such

borrower that is experiencing or anticipates changes in usage patterns

shall consider surveys on a more frequent schedule. Power supply

borrowers shall coordinate such surveys with their members. Residential

consumer surveys may be based on the aggregation of member-based

samples or on a system-wide sample, provided that the latter provides

for relevant regional breakdowns as appropriate.

(h) Approved load forecast work plans must provide for RUS review

of the load forecasts as the load forecast is being developed.

(i) A power supply borrower's work plan must have the concurrence

of the majority of the members that are borrowers.

(j) The borrower's board of directors must approve the load

forecast work plan.

(k) A borrower may amend its approved load forecast work plan

subject to RUS approval. If RUS concludes that the existing approved

load forecast work plan will not result in a satisfactory load

forecast, RUS may require a new or revised load forecast work plan.

Sec. 1710.210 Waiver of requirements or approval criteria.

For good cause shown by the borrower, the Administrator may waive

any of the requirements applicable to borrowers in this subpart if the

Administrator determines that waiving the requirement will not

significantly affect accomplishment of RUS' objectives and if the

requirement imposes a substantial burden on the borrower. The

borrower's general manager must request the waiver in writing.

Secs. 1710.211-1710.249 [Reserved]

Dated: June 29, 1999.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 99-17113 Filed 7-6-99; 8:45 am]

BILLING CODE 3410-15-P