Boulder Canyon Project-Base Charge and Rates

DEPARTMENT OF ENERGY

Western Area Power Administration

Boulder Canyon Project-Base Charge and Rates

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of base charge and rates.

-----------------------------------------------------------------------

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

Secretary of the Department of Energy (DOE) placing the Base Charge and

Rates for the Boulder Canyon Project (BCP) firm power into effect for

the fifth rate year under the current rate methodology pursuant to Rate

Schedule BCP-F5 as approved by the Federal Energy Regulatory Commission

(FERC) on April 19, 1996 (Rate Order No. WAPA-70). The Base Charge will

provide sufficient revenue to pay all annual costs, including interest

expense, and repayment of required investment within the allowable

period.

DATES: The Base Charge will be placed into effect on December 1, 1999,

and will be in effect through September 30, 2000.

FOR FURTHER INFORMATION CONTACT: Mr. Anthony Montoya, Power Marketing

Manager, Western Area Power Administration, Desert Southwest Customer

Service Region, 615 South 43rd Avenue, Phoenix, AZ 85009-5313, (602)

352-2789, or

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved the

existing Base Charge for firm power service on September 19, 1997. The

existing Base Charge was calculated in accordance with the methodology

approved under Rate Order WAPA-70. In accordance with Section 13.13 of

the BCP Implementation Agreement, the rate methodology and calculated

rates for the first rate year and each fifth fiscal

[[Page 70012]]

year (FY) thereafter shall become effective on an interim basis upon

approval by the Deputy Secretary of Energy, subject to final approval

by FERC. The rates for the second, third, and fourth FYS for the BCP-F5

became effective on a final basis upon approval by the Deputy

Secretary. The rates for the fifth FY (FY 2000) shall become effective

on a final basis upon approval by the Deputy Secretary. The FY 2000

Base Charge represents the charges for the fifth FY since FERC approval

of the current rate methodology.

The Procedures for Public Participation in Power and Transmission

Rate Adjustments and Extensions, 10 CFR part 903, have been followed by

Western in determining the Base Charge. The FY 2000 Base Charge for BCP

firm power is based on an Annual Revenue Requirement of $46,145,334.

The Base Charge consists of an energy dollar of $23,860,434.50, a

forecasted energy rate of 4.59 mills/kWh, a capacity dollar of

$22,284,899.50, and a forecasted capacity rate of $0.95 per

kilowattmonth (kWmonth).

The following summarizes the steps taken by Western to ensure

involvement of all interested parties in the determination of the Base

Charge and Rates:

1. The proposed rate adjustment was initiated on February 22, 1999,

when a letter announcing an informal customer meeting was mailed to all

BCP Contractors. The informal meeting was held on March 9, 1999, in

Phoenix, Arizona. At this informal meeting, Western explained the

rationale for the rate adjustment, presented the FY 2000 Base Charge

and Forecast Capacity and Energy Rates, and answered questions.

2. A Federal Register notice was published on March 24, 1999 (64 FR

14227), officially announcing the proposed rates for BCP, initiating

the public consultation and comment period, and announcing the public

information forum and public comment forum.

3. On March 24, 1999, letters were mailed from Western's Desert

Southwest Regional Office to all BCP Contractors and interested

parties, transmitting the Federal Register notice of March 24, 1999 (64

FR 14227), and announcing the times and locations for the two public

forums.

4. On April 13, 1999, letters were mailed from Western's Desert

Southwest Regional Office to all BCP Contractors and interested

parties, transmitting a package of updated information related to the

FY 2000 Base Charge and Forecast Capacity and Forecast Energy Rates

compiled since the March 9, 1999, informal customer meeting.

5. On April 21, 1999, beginning at 10 a.m., a public information

forum was held at Western's Desert Southwest Regional Office in

Phoenix, Arizona. At the public information forum, Western provided

detailed explanations of the proposed FY 2000 Base Charge and Forecast

Capacity and Forecast Energy Rates for BCP, identified the issues that

could change the proposed FY 2000 Base Charge and Forecast Capacity and

Forecast Energy Rates, and answered questions. A rate information

handout was provided at the forum.

6. On May 18, 1999, letters were mailed from Western's Desert

Southwest Regional Office to all BCP Contractors and interested

parties, transmitting a package of responses to data requests and

questions from the April 21, 1999, public information forum.

7. On June 2, 1999, beginning at 10:30 a.m., a public comment forum

was held at Western's Desert Southwest Regional Office in Phoenix,

Arizona. A handout containing information regarding the updated FY 2000

Base Charge and Forecast Capacity and Forecast Energy Rates was

provided. After providing this information, Western gave the public an

opportunity to comment for the record. Three representatives made oral

comments.

8. Two comment letters were received during the 90-day consultation

and comment period. The consultation and comment period ended June 22,

1999. All formally submitted comments have been considered in

developing the Base Charge for FY 2000. Written comments were received

from the following sources:

Irrigation and Electrical Districts Association of Arizona (Arizona)

Metropolitan Water District of Southern California (California)

The comments and responses, paraphrased for brevity, are presented

below:

Civil Service Retirement Costs and Post-Retirement Health and Life

Insurance Benefits

Comment: Western received comments related to Western's lack of

authority to collect the unfunded portion of the Civil Service

Retirement Costs and Post-Retirement Health and Life Insurance Benefits

in this rate process. Specifically, the Contractors assert that funds

collected for these costs for the BCP would have to be deposited into

the Colorado River Dam Fund (CRDF) and could not be transferred to a

general fund account managed by the Office of Personnel Management.

Accordingly, the Contractors believe that collection of these costs is

inappropriate. The Contractors are also concerned that proper tracking

of these funds is also needed to ensure they are being used only for

BCP and are not lost in a general fund.

Response: Under a legal opinion provided by the General Counsel of

the DOE by memorandum dated July 1, 1998, the Power Marketing

Administrations (PMAs) have the authority to collect, through the

rates, the full costs of the Retirement Benefits. In addition, the FERC

has issued at least two orders approving the inclusion of such costs in

PMA rates; Western Area Power Administration (Intertie Project), 87

FERC para. 61,346, at 62,337-62,338 (1999), and Southeastern Power

Administration, 86 FERC para. 61,195, at 61,681 (1999). Based on the FY

1999 data currently available, a total of $1.3 million is expected to

be collected for these retirement costs for FY 2000, which represents

approximately 3 percent of the BCP revenue requirement. Western has

previously recovered $1.3 million for Civil Service Retirement Costs

and Post-Retirement Health and Life Insurance Benefits costs in FY 1998

and anticipates recovering another $1.3 million in FY 1999. Under the

provisions of the Boulder Canyon Project Adjustment Act, 43 U.S.C. 618,

et seq., all receipts from the BCP shall be paid into the CRDF and are

available for defraying the costs of operation. Western will continue

to deposit these funds into the CRDF in compliance with these

authorities.

Visitor Center

Comment: A Contractor continues to be concerned that the Visitor

Center net revenues are not yet sufficient to fund the agreed-upon 50

percent amortization of the Visitor Center investment.

Response: The Bureau of Reclamation is currently working toward

providing the detail necessary to show Government and Contractor

responsibility for repayment of the final cost of the Visitor

Facilities as required by the Implementation Agreement. Updated final

estimated cost information was presented at the August 1999

Coordination Meeting. There has been a dramatic increase in the amount

of revenue collected in recent years. Revenues collected in excess of

expenses totaled $900,000 in FY 1996, $2.4 million in FY 1997, and $5.2

million in FY 1998. Reclamation will continue to research and implement

new revenue proposals, and carefully monitor expenses, with a goal of

recovering 50 percent of the Visitor

[[Page 70013]]

Facilities investment with interest. Western will continue to include

these revenues in the power repayment study as they are received.

Joint Planning Study Costs

Comment: A Contractor continues to address concern for costs

incurred under the Joint Planning Agreement (JPA) for future

transmission and generation project studies, which the contractor

asserts are being allocated inappropriately to the BCP Contractors. The

Contractor believes these study costs, in addition to the costs

required for any transmission upgrades to the system (generator

addition, transmission interconnection, etc.), should be charged to the

project sponsors or included in Western's Open Access Tariff (OAT)

rates. The Contractor also states whether the study costs are charged

to the project sponsors or included in the OAT rates, the JPA study

costs to date should be tracked and reimbursed to the BCP Contractors.

Response: Western agrees that study work which is project specific

to a new line in Western's system, or an interconnection to Western's

system, should and will be charged to the entity requesting the

interconnection or to the Project (Parker-Davis, Intertie, Boulder

Canyon, Colorado River Storage Project) which is being upgraded. Study

work charges for the Mead Fault 230-kV duty studies will be charged to

the projects shown to impact the system causing the upgrade. After

completion of the contracts with those entities causing the impact,

Western will be able to move the charges from the BCP, and other

Projects, to the entities causing the needed upgrade.

If a project is not interconnecting to Western's system but could

potentially cause an impact from one or more busses away, Western will

have to perform studies and participate in study groups to assure our

needs are considered and met. Often these situations do not enable

Western to pass along study costs to the project. In these cases the

costs are applied to those Projects on Western's system that are most

impacted.

If studies work is of a general nature, Western reserves the

authority to assign costs to the Project influenced by the project

involved. Work on the California Independent System Operator, the

Nevada Independent Scheduling Administrator, and the Arizona

Independent Scheduling Administrator is of a general nature. BCP will

receive charges from work on these efforts since they pertain to the

use of Hoover in their operations, as well as other transmission and

generation issues. BCP's participation is 15 percent of the total cost

of the efforts. Western's efforts in the Western Systems Coordinating

Council and other reliability forums will also be charged based on the

distribution formula for general efforts. In recent years, due to

deregulation and significant systems changes, Western has been required

to expend an increasing effort to address and protect system

reliability.

Finally, the Contractor seems to have misconstrued the nature of

the JPA. The JPA is a forum to review projects being considered by JPA

signatories to coordinate and collaborate. Studies are performed on

upgrades or new initiatives, charged to the appropriate Project,

presented and discussed in the JPA committee meetings, and finalized in

the annual JPA meeting before becoming a part of Western's system

plans. The JPA has also been used as a forum to keep JPA signatories

and other interested parties aware of activities impacting the systems.

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 Deputy 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 delegations 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. However, on

November 24, 1999, in Delegation Order No. 0204-172 the Secretary

reinstate the authority delegated to the Deputy Secretary in Amendment

No. 3 to Delegation Order No. 0204-108, which had been rescinded by his

April 15, 1999, Order.

These charges and rates are established pursuant to section 302(a)

of the DOE Organization Act, 42 U.S.C. 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. 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 other acts

specifically applicable to the project system involved, were

transferred to and vested in the Secretary.

Dated: December 3, 1999.

T.J. Glauthier,

Deputy Secretary.

[FR Doc. 99-32411 Filed 12-14-99; 8:45 am]

BILLING CODE 6450-01-P