Robert Douglas Willis Hydropower Project Power Rate

DEPARTMENT OF ENERGY

Southwestern Power Administration

Robert Douglas Willis Hydropower Project Power Rate

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of power rate increase.

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SUMMARY: The Secretary of Energy, pursuant to Sections 301(b) and

302(a) of the Department of Energy Organization Act (Pub. L. 95-91) and

section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s) has

approved and placed into effect on an interim basis Rate Order No.

SWPA-41.

SUPPLEMENTARY INFORMATION: Southwestern Power Administration

(Southwestern) currently has marketing responsibility for 2.2 million

kilowatts of power from 24 multiple-purpose reservoir projects, with

power facilities constructed and operated by the U.S. Army Corps of

Engineers, generally in all or portions of the states of Arkansas,

Kansas, Louisiana, Missouri, Oklahoma and Texas. The Integrated System,

comprised of 22 of the projects, is interconnected through a

transmission system presently consisting of 138-kV and 161-kV high-

voltage transmission lines, 69-kV transmission lines, and numerous bulk

power substations and switching stations. In addition, contractual

transmission arrangements provide for integration of other projects

into the system.

The remaining two projects, Sam Rayburn and Robert Douglas Willis,

are isolated hydraulically and electrically from the Southwestern

transmission system, and their power is marketed under separate

contracts through which the customer purchases the entire power output

of the project at the dam. A separate Power Repayment Study (PRS) is

prepared for each isolated project.

The existing rate schedule for the Robert Douglas Willis Hydropower

Project was confirmed and approved on a final basis by the Federal

Energy Regulatory Commission (FERC) on April 28, 1998, for the period

January 1, 1998, through September 30, 2001. The FY 1999 Robert Douglas

Willis Hydropower Project PRS indicates the need for a rate adjustment

of $35,004 annually, or 11.6 percent.

Pursuant to implementing authority in sections 301(b) and 302(a) of

the Department of Energy Organization Act (Pub. L. 95-91) and section 5

of the Flood Control Act of 1944 (16 U.S.C. 825s), the Secretary of

Energy may approve the rate on an interim basis. The Administrator,

Southwestern, published notice in the Federal Register on July 12,

1999, 64 FR 37529, announcing a 30-day period for public review and

comment concerning the proposed interim rate. Written comments were

accepted through August 11, 1999. In a letter dated August 10, 1999, a

Sam Rayburn Municipal Power Agency (SRMPA) representative stated that

SRMPA has no objection to the proposed rate extension. No other

comments were received.

Information regarding this rate proposal, including studies and

other supporting material, is available for public review and comment

in the offices of Southwestern Power Administration, Suite 1400, One

West Third Street, Tulsa, Oklahoma 74103.

Following review of Southwestern's proposal within the Department

of Energy, I hereby approve on an interim basis, Rate Order No. SWPA-

41, which increases the existing Robert Douglas Willis Hydropower

Project Rate for the sale of power and energy to $337,932 per year for

the period October 1, 1999, through September 30, 2003.

Dated: September 15, 1999.

Bill Richardson,

Secretary.

Order Confirming, Approving and Placing Increased Power Rate in

Effect on an Interim Basis

October 1, 1999.

[Rate Order No. SWPA-41]

In the matter of: Southwestern Power Administration--Robert D.

Willis

Pursuant to Sections 301(b) and 302(a) of the Department of Energy

Organization Act, Public Law 95-91, the functions of the Secretary of

the Interior and the Federal Power Commission under Section 5 of the

Flood Control Act of 1944, 16 U.S.C. 825s, for the Southwestern Power

Administration (Southwestern) were transferred to and vested in the

Secretary of Energy. By Delegation Order No. 0204-108, effective

December 14, 1983, 48 FR 55664, the Secretary of Energy delegated to

the Deputy Secretary of Energy on a non-exclusive basis the authority

to confirm, approve and place into effect on an interim basis power and

transmission rates, and delegated to the Federal Energy Regulatory

Commission (FERC) on an exclusive basis the authority to confirm,

approve and place in effect on a final basis, or to disapprove power

and transmission rates. Amendment No. 1 to Delegation Order No. 0204-

108, effective May 30, 1986, 51 FR 19744, revised the delegation of

authority to confirm, approve and place into effect on an interim basis

power and transmission rates to the Under Secretary of Energy rather

than the Deputy Secretary of Energy. This delegation was reassigned to

the Deputy Secretary of Energy by Department of Energy (DOE) Notice

1110.29, dated October 27, 1988, and clarified by Secretary of Energy

Notice SEN-10-89, dated August 3, 1989, and subsequent revisions. By

Amendment No. 2 to Delegation Order No. 0204-108, effective August 23,

1991, 56 FR 41835, the Secretary of Energy revised Delegation Order No.

0204-108 to delegate to the Assistant Secretary, Conservation and

Renewable Energy, the authority which was previously delegated to the

Deputy Secretary in that Delegation Order. By Amendment No. 3 to

Delegation Order No. 0204-108, effective November 10, 1993, 58 FR

59717, the Secretary of Energy revised the delegation of authority to

confirm, approve and place into effect on an interim basis power and

transmission rates by delegating that authority to the Deputy Secretary

of Energy. By notice dated April 15, 1999, the Secretary of Energy

rescinded the authority of the Deputy Secretary of Energy under

Delegation Order 0104-108. This rate order is issued by the Secretary

of Energy pursuant to Section 642 of the Department of Energy

Organization Act.

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Background

Dam B (Town Bluff Dam), located on the Neches River in eastern

Texas downstream from the Sam Rayburn Dam, was originally constructed

in 1951 by the U.S. Army Corps of Engineers (Corps) and provides

streamflow regulation of releases from the Sam Rayburn Dam. The Lower

Neches Valley Authority contributed funds toward construction of both

projects and makes established annual payments for the right to

withdraw up to 2000 cubic feet of water per second from Town Bluff Dam

for its own use. Power was legislatively authorized at the project, but

installation of hydroelectric facilities was deferred until justified

by economic conditions. A determination of feasibility was made in a

1982 Corps study. In 1983 the Sam Rayburn Municipal Power Agency

(SRMPA) proposed to sponsor and finance the development of hydropower

at Town

[[Page 54293]]

Bluff Dam in return for the output of the project to be delivered to

its member municipalities and participating member cooperatives of the

Sam Rayburn Dam Electric Cooperative. Since the hydroelectric

facilities at the Town Bluff Dam have been completed, the facilities

have been renamed the Robert Douglas Willis Hydropower Project (Robert

D. Willis).

The Robert D. Willis rate is unique in that it excludes the costs

associated with the hydropower design and construction performed by the

Corps, because all funds for these costs were provided by SRMPA. Under

the Southwestern/SRMPA power sales Contract No. DE-PM75-85SW00117,

SRMPA will continue to pay all annual operating and marketing costs, as

well as expected capital replacement costs, through the rate paid to

Southwestern, and will receive all power and energy produced at the

project for a period of 50 years.

Discussion

The 1999 Current Robert D. Willis Power Repayment Study (PRS) tests

the adequacy of the existing rate based on the evaluation period

extending from FY 1999 through FY 2003, to recover annual expenses for

marketing, operation and maintenance, and to amortize additions to

plant and major replacements of the generating facilities. Since the

project's design and construction were financed in their entirety by

SRMPA, no component for amortization of the original investment of some

$18 million is included in the rate determination. The Current PRS for

the Robert D. Willis project, using the existing annual rate of

$302,928, indicates that the legal requirements to repay all costs will

not be met and an increase in revenue is necessary.

The additional revenue needed is, in part, a result of the increase

in replacement costs required to be recovered. In addition, the Corps

had projected a significant increase in its estimates of large

maintenance items included in the operations and maintenance (O&M)

costs for the Robert D. Willis project.

The existing annual Robert D. Willis project power rate of $302,928

was confirmed and approved on a final basis by the FERC on April 28,

1998, for the period January 1, 1998, through September 30, 2001. The

1999 Robert D. Willis Current Power Repayment Study (PRS) indicates

that the present rate does not meet the cost recovery criteria for the

isolated project. Over the entire repayment period the current rate

will underpay requirements by $9,840,156. The 1999 Robert D. Willis

Revised PRS indicates that an annual rate of $337,932 will satisfy

repayment criteria in accordance with Department of Energy Order No. RA

6120.2 and Section 5 of the Flood Control Act of 1944. The proposed

increase in revenue amounts to $35,004 or 11.6 percent annually to

begin October 1, 1999.

Pursuant to Title 10, Part 903, Subpart A of the Code of Federal

Regulations (10 CFR 903), ``Procedures for Public Participation in

Power and Transmission Rate Adjustments and Extensions'', 50 FR 37837,

the Administrator, Southwestern, published notice in the Federal

Register (64 FR 37529), on July 12, 1999, announcing a 30-day period

for public review and comment. Southwestern held informal meetings and

a Public Information Forum on July 20, 1999, where Southwestern

provided copies of supporting data for the 1999 Robert D. Willis PRS to

interested parties. A letter was received on behalf of SRMPA,

indicating no opposition to the proposed rate increase. Southwestern

did not receive any request to convene a formal Public Comment Forum

and, as a result, did not convene such a meeting. Information regarding

this rate proposal, including studies, comments and other supporting

material, is available for public review and comment in the offices of

the Southwestern Power Administration, One West Third Street, Tulsa,

Oklahoma 74103.

Administrator's Certification

The 1999 Revised Robert D. Willis PRS indicates that the annual

power rate of $337,932 will repay all costs of the project including

amortization of additions to plant and major replacements of the

generating facilities consistent with provisions of DOE Order No. RA

6120.2. In accordance with Section 1 of Delegation Order No. 0204-108,

as amended November 10, 1993, 58 FR 59717, and Section 5 of the Flood

Control Act of 1944, the Administrator has determined that the proposed

Robert D. Willis power rate is consistent with applicable law and is

the lowest possible rate consistent with sound business principles.

Environment

The environmental impact of the rate increase proposal was

evaluated in consideration of DOE's guidelines for implementing the

procedural provisions of the National Environmental Policy Act and was

determined to fall within the class of actions that are categorically

excluded from the requirements of preparing either an Environmental

Impact Statement or an Environmental Assessment.

Order

In view of the foregoing and pursuant to authority vested in me, I

hereby confirm, approve and place in effect on an interim basis,

effective October 1, 1999, the proposed annual rate of $337,932 for the

sale of power and energy from the Robert D. Willis project to the Sam

Rayburn Municipal Power Agency, under Contract No. DE-PM75-85SW00117,

as amended. The rate shall remain in effect on an interim basis through

September 30, 2003, or until the FERC confirms and approves the rate on

a final basis.

Dated: September 15,1999.

Bill Richardson,

Secretary.

[FR Doc. 99-26029 Filed 10-5-99; 8:45 am]

BILLING CODE 6450-01-P