DEPARTMENT OF ENERGY

Western Area Power Administration

AGENCY: Western Area Power Administration, Department of

Energy.

51 FR 4012

January 31, 1986

Post-1989 General Power Marketing and Allocation Criteria; Pick-Sloan
Missouri Basin Program-Western Division

ACTION: Final marketing criteria and call for applications for power.

SUMMARY: The Post-1989 General Power Marketing and Allocation Criteria
(Criteria) for the sale of energy with capacity from the Pick-Sloan
Missouri Basin Program-Western Division (P-SMBP-WD) and the
Fryingpan-Arkansas Project (Fry-Ark) by the Western Area Power
Administration (Western) is published herein, together with a discussion
of the issues raised during the public comment process, and a discussion
of revisions made to the Proposed Post-1989 General Power Marketing
Criteria (Proposed Criteria) published in the Federal Register on August
23, 1983 *(48 FR 38279).* Most of the current contracts for the two
projects expire at the end of the 1989 summer billing period; therefore,
Western\'s Loveland Area Office (LAO), formerly known as the
Loveland-Fort Collins Area Office, will market energy with capacity
under these Criteria beginning no later than the 1989-90 winter season.
The LAO expects the allocations to be completed and the contracts ready
for signature by allottees in 1987.

EFFECTIVE DATE: March 3, 1986.

DATES: Applications for an allocation of both energy and associated
capacity must be received in Western\'s LAO by close of business on
April 1, 1986. See V.E. for further details.

Signed contracts for previously allocated long-term energy and/or
capacity from the LAO must be received in Western\'s LAO by close of
business April 1, 1986, to establish eligibility as an existing
contractor under these criteria.

Applicant Profile Data must be submitted by potential applicants in the
southwest portion of Kansas by April 1, 1986. Applicant Profile Data
requirements may either be obtained from the Area Manager, Loveland Area
Office, or found at *48 FR 38279, 38282* (August 23, 1983). The
southwest portion of Kansas is defined as the area south of the Missouri
River Basin and west of the eastern boundaries of the counties
intersected by the 100th Meridian.

FOR FURTHER INFORMATION CONTACT: Mr. Mark N. Silverman, Area Manager,
Loveland Area Office, Western Area Power Administration, P.O. Box 3700,
Loveland, CO 80539, (303) 224-7201.

TEXT: SUPPLEMENTARY INFORMATION:

Contents of Supplementary Information Section:

I. Regulatory Procedural Requirements.

A. Determination Under Executive Order 12291.

B. Regulatory Flexibility Analysis.

C. Environmental Assessment.

D. Statutory Basis of the Criteria.

II\. Background of the Development of the Criteria.

III\. Summary of Revisions.

A. Term of Contract.

B. Applicant Qualifications.

C. Special Eligibility Requirements for Wholesale Utilities.

D. Significant and Tangible Steps Toward Becoming Eligible.

E. Purchased Energy Option.

F. Marketable Resource.

G. Load Diversity Adjustment.

H. Opportunity to Discuss Contract Provisions.

I. Means to Receive and Distribute Power.

J. Market Area.

K. Costs for Firming Purchases.

L. Limitation of Allocations.

IV\. Public Comment Issues.

A. Ten-Year Contract Term.

B. Applicant Qualifications.

C. LAO Project Integration.

D. Derivation of Marketable Resources.

E. Classes of Service.

F. Reallocation.

G. Limitation of Allocations.

H. Shaping and Storage for Renewable Energy Resources.

V. Post-1989 General Power Marketing and Allocation Criteria.

A. General.

1\. Applicability.

2\. Marketable Resources.

B. Marketing Considerations.

1\. Market Area.

2\. Service Seasons.

3\. Classes of Service.

4\. Derivation of Marketable Resources.

5\. Allocation Priorities.

C. Allocation of Marketable Resources.

1\. Basis of Allocation.

2\. Limit on Energy Allocation.

3\. Reallocations.

D. Contract Arrangements.

1\. General Contract Terms.

2\. Long-Term Firm Energy with Capacity Obligations.

3\. Scheduling, Accounting, and Billing.

4\. Delivery Conditions.

E. Application Procedures.

VI\. Appendix A \-- Derivation of Marketable Resources.

VII\. Appendix B \-- Market Area Map.

I. Regulatory Procedural Requirements

A. Determination Under Executive Order 12291: The Department of Energy
has determined that this is not a major rule because it does not meet
the criteria of section 1(b) of Executive Order 12291, *46 FR 13193*
(February 19, 1981). Western has been exempted from sections 3, 4 and 7
of Executive Order 12291.

B. Regulatory Flexibility Analysis: Pursuant to the Regulatory
Flexibility Act of 1980 *(5 U.S.C. 601* et seq.), each agency, when
required by *5 U.S.C. 553* to publish a proposed rule, is further
required to prepare and make available for public comment an initial
regulatory flexibility analysis to describe the impact of the proposed
rule on small entities. In this instance, the marketing plan relates to
electric services provided by Western. Under *5 U.S.C. 601*(2), services
are not considered \"rules\" within the meaning of the Act. Therefore,
Western believes that no flexibility analysis is required.

C. Environmental Assessment: An Environmental Assessment (EA)
(DOE/EA-0266) was prepared by Western in April of 1985. Further
refinements to the Criteria necessitated supplemental environmental
analysis, which was completed in December of 1985. A Finding of No
Significant impact (FONSI) determination covering the EA and the
supplemental analysis has been made by the Department of Energy in
accordance with the Council on Environmental Quality regulations for
implementing the procedural provisions of the National Environmental
Policy Act of 1969 (NEPA), 40 CFR Parts 1500-1508. The EA evaluates the
potential environmental effects of the Criteria. Copies of the EA and
FONSI may be obtained by contacting the LAO Area Manager whose address
appears above.

D. Statutory Basis of the Criteria: These Criteria are based upon the
provisions of the Reclamation Act of 1902, approved June 17, 1902 (ch.
1093, 32 Stat. 388); the Reclamation Project Act of 1939, approved
August 4, 1939 *(43 U.S.C. 485h*(c)); and the Department of Energy
Organization Act of 1977, approved August 4, 1977 *(42 U.S.C. 7152,*
7191); and are more specifically based upon the provisions of the Flood
Control Act of 1944, approved December 22, 1944 (58 Stat. 891); the
Fryingpan-Arkansas Project Acts of 1962 and 1974, approved August 16,
1962 (Pub. L. 87-590, 76 Stat. 389), and October 27, 1974 (Pub. L.
93-493, 88 Stat. 1497); and acts amending or supplementing all of the
foregoing legislation.

II\. Background of the Development of the Criteria

The LAO is responsible for marketing power in a region encompassing
portions of Colorado, Wyoming, Nebraska, and Kansas, which is roughly
equivalent to the Lower Missouri River Basin and the Arkansas River
Basin in Colorado and Kansas. The power resources to be marketed
pursuant to these Criteria are produced by 18 federally owned and
constructed powerplants located in Colorado, Wyoming, and Montana. All
but one of the powerplants were constructed as features of the North
Platte, Shoshone, Riverton, Kendrick, and Colorado-Big Thompson Projects
and the Pick-Sloan Missouri Basin Program (P-SMBP). In the 1950\'s the
first five of these projects were integrated with the power features of
the P-SMBP for marketing purposes. They are sometimes referred to as the
Integrated Projects for this reason. The power features of all six of
these projects are collectively referred to as the Pick-Sloan Missouri
Basin Program-Western Division. the addition of the words \"Western
Division\" to the project name distinguishes these powerplants from
those P-SMBP powerplants whose output is marketed by Western\'s Billings
Area Office in the Eastern Division.

The remaining powerplant, Mt. Elbert, is the principal power feature of
Fry-Ark located in central Colorado.

The development of these Criteria began with the identification of 24
alternative marketing plans, which were presented at a February 18,
1982, public information forum. The LAO held this forum to discuss
potential criteria for the marketing of Federal hydroelectric power
resources. Interested parties were requested to submit written comments
by March 20, 1982, and data on their loads and resources by April 8,
1982. After analyzing the data and considering all public comments, both
written and oral, the LAO began to draft the proposed Criteria. The
Proposed Criteria were published in the Federal Register on August 23,
1983 *(48 FR 38279).* This same publication included an announcement of
public information and public comment forums on the Proposed Criteria
and a final request for Applicant Profile Data. These Applicant Profile
Data were necessary for any applicant to be considered eligible for an
allocation of energy with capacity from P-SMBP-WD and Fry-Ark under the
Proposed Criteria. Interested parties were initially given until
November 15, 1983, to submit this data. The deadline was later extended
to December 30, 1983 *(48 FR 54880,* December 7, 1983). A second public
information forum was held on September 8, 1983. At that forum, the
Proposed Criteria were presented and questions from contractors and
other interested parties were addressed. A public comment forum was held
on October 4, 1983. At this forum, contractors and other interested
parties were invited to state their views on the Proposed Criteria. In
addition to public comments presented at this forum, written comments
were accepted until November 15, 1983.

The Applicant Profile Data and the comments from all meetings and
correspondence have been analyzed. The Criteria for marketing energy
with capacity from P-SMBP-WD and Fry-Ark are published herein. They
supersede the 1962 P-SMBP-WD power marketing plan; the June 23, 1981,
power marketing plan for Fry-Ark; and the August 30, 1982, power
marketing plan for the sale of P-SMBP-WD excess capacity (P-SMBP-WD
Excess).

III\. Summary of Revisions

Certain editorial and format changes have been made to the Proposed
Criteria for the sake of clarity and consistency. Other changes were
made after evaluating all of the comments received. The major revisions
to the Proposed Criteria are:

A. The Term of Contract article has been modified to provide for a
contract term of 15 years, but with provision for Western to adjust
contracted amounts of capacity and energy at the end of 10 years based
on the marketable resource. (See IV.A. for further discussion.)

B. Allocation priorities and eligibility requirements have been
clarified and modified to recognize a third level of priority for
nonpreference entities acting as agents for public entities over other
nonpreference entities. Western\'s Salt Lake City Area Office (SLCAO)
has received an application for an allocation from an investor-owned
utility on behalf of 143 cities, counties, and towns. Western believes
this application does not constitute a situation meriting equal
eligibility with consumer-owned utilities, but the arguments in its
favor persuade Western that such an arrangement is superior to direct
sales to investor-owned utilities and should have priority within the
nonpreference category.

C. Special eligibility requirements for wholesale utilities have been
eliminated in favor of contract provisions applicable to all
contractors. (See IV.B.2.b. for further discussion.)

D. Certain entities who have taken significant and tangible steps to
acquire the means to receive and distribute power within a designated
period of time are now recognized as qualified applicants for Federal
power, provided they meet other applicable requirements as described in
V.B.5.b. of the Criteria.

E. The proposed options to purchase and allocate approximately 308
gigawatthours (GWh) of additional energy and to purchase offpeak energy
required for maintenance of contractors\' pumped-storage energy accounts
have been combined and simplified. Western may purchase energy over and
above the amount of Western\'s firm monthly energy obligation, at the
contractor\'s request and on a passthrough cost basis, up to an amount
associated with the contractor\'s load factor and its firm Federal
capacity entitlement from the LAO. Western will honor individual
contractor energy requests until the LAO system capability to support
such purchases is reached. (See IV.D.2.b. for further discussion.)

F. Modifications were made to certain generation capacity, energy
production capability, and marketable resource quantities contained in
Appendix A. The generation capacity of the P-SMBP-WD and Fry-Ark were
modified to reflect recent changes in the maintenance schedules for
these powerplants by the Bureau of Reclamation (Reclamation).

The annual energy production capability of the Mt. Elbert Powerplant
(table 1, appendix A) has been reduced from 63,751 MWh to 58,247 MWh
based on updated information concerning the energy production capability
of flowthrough water provided by Reclamation. Certain project and
existing special use designations, which the generation capacity and
energy production capability quantities in proposed appendix A were
subject to, have been defined and quantified in the final appendix A.

In table 1 of appendix A, the energy requirements for the P-SMBP-WD
pumps at Lake Granby, Willow Creek, and Flatiron were added to the
available energy of the P-SMBP-WD and subtracted as project use load.
This was done so as to be consistent in the handling of project and
existing special use loads. Reserve requirements have been reduced from
100 MW to 48 MW. (For further discussion of reserves, see IV.D.2.c.)

G. Statements were added to indicate that diversity among capacity
allocations will be retained by Western and that long-term capacity
commitments will be subject to reductions if diversity and losses are
not equal, as assumed.

H. A statement was added indicating that a reasonable opportunity to
discuss contract provisions would be provided prior to Western\'s
contract offer. Allottees will have 6 months to accept the contract
offer or until September 30, 1987, whichever is later.

I. The Criteria now state that the right to receive power pursuant to a
contract would terminate if means to receive and distribute power are
not acquired by September 30, 1988, unless the LAO agrees otherwise in
writing.

J. The marketing area for LAO resources has been modified to include the
Mountain Parks Rural Electric Association (Mountain Parks REA) service
territory, which is located in Colorado, west of the Continental Divide.
Mountain Parks REA is a long-standing firm power contractor for capacity
and energy from the P-SMBP-WD as a member of Tri-State Generation and
Transmission Association, Inc., and the exclusion of this territory in
the Proposed Criteria was an oversight.

Additionally, the southwestern portion of Kansas has been added to the
marketing area. This part of the State was excluded in the Proposed
Criteria. It is currently part of the Fry-Ark marketing area, and
Western believes the integration of the P-SMBP-WD and Fry-Ark resources
in these Criteria indicates the need to combine the marketing areas as
well. Because the marketing area defined in the Proposed Criteria did
not include this section of Kansas, entities in this section were not
afforded an opportunity to submit Applicant Profile Data. We believe it
is appropriate, therefore, to accept Applicant Profile Data from
entities in Kansas who are located west of the eastern borders of the
counties intersected by the 100th Meridian, and south of the Missouri
River Basin until 60 days after publication of the Criteria in the
Federal Register. The deadline for entities in all other portions of the
marketing area to submit Applicant Profile Data was December 30 1983.

K. The statement that purchase costs incurred in meeting Western\'s
energy and capacity commitments would be on a passthrough cost basis for
contractors desiring the service has been modified. Western will
purchase any energy required to meet its monthly obligations based upon
average water conditions (firming energy) and will not pass the cost
through directly to contractors. The rate charged to the contractor for
these purchases will be the firm energy rate. The anticipated costs for
firming energy purchases will be considered when the firm energy rate is
established. Costs incurred by Western in purchasing capacity required
to meet its contractors\' monthly entitlements due to adverse hydrologic
conditions (firming capacity), up to a maximum of 37 MW for any month of
the winter season and 38 MW for any month of the summer season, will
continue to be on a passthrough cost basis for the contractors who
request this service. The maximum monthly capacity purchase each
contractor would be subject to, on a passthrough cost basis, will be
specified in each electric service contract. While passthrough costs
will be incurred as a result of capacity purchase expenses up to the
90-percent probability of exceedence level, purchases up to 99-percent
probability water conditions would be blended into the firm power rate.

L. The statement that capacity entitlements would be limited to the
allottee\'s average seasonal demand for 1980, 1981, and 1982 has been
changed to indicate the limitation will be on the energy allocation
instead of the capacity entitlement. The limitation provision now
indicates that no applicant will receive a seasonal energy allocation
from the LAO that, when combined with its post-1989 firm energy
entitlements from other Federal sources, exceeds its average use for
1980, 1981, and 1982. It also indicates that the historical energy use
figures will be adjusted to include additional energy which the
applicant can demonstrate was not used during that period as a result of
its conservation or energy management efforts. The change was made
necessary by the fact that limiting the capacity entitlement after an
energy allocation had been made resulted, in certain instances, in a
relatively large energy allocation being associated with a relatively
small capacity entitlement. The load factor associated with such an
allocation could be greater than 100 percent. This change is in keeping
with the original intent of the limitation in that it tends to
redistribute any inordinately large allocations that may have been made
in the past. (See IV.G. for further discussion.)

IV\. Public Comment Issues

A. Ten-Year Contract Term

Western proposed to offer resources for sale for a 10-year period
beginning in October 1989 and ending in September 1999.

1\. Comments: a. A 10-year contract term is too short. It should be
extended to 20 years.

b\. A 10-year contract term requires and excessive administrative and
financial expense on the part of Western and its contractors in almost
continual allocation proceedings. The contract term should be at least
20 years even if this means adjustment of allocations after 10 years due
to system hydrology.

2\. Discussion: The proposed term of contract was a subject of comment
by many of the respondents, most of whom urged a term of 20 years or
longer. A few of the respondents proposed the adjustment of amounts of
energy with capacity under contract during the contract period based on
changed hydrologic conditions. This suggestion offers a potential middle
ground, removing the concern Western has about being locked into
contractual commitments not supportable by current hydrology. However,
the concept of adjusting the amounts of energy and capacity under
contract based solely upon \"changed hydrology\" does not give Western
the flexibility to meet potentially changed circumstances other than
hydrology. These include, but are not limited to, possible future
allocations in support of conservation and renewable energy projects or
changing national priorities or economic conditions that would be likely
to occur in a 20-year or longer contract term.

Western recognizes the strong desire of contractors to have as much
certainty as possible about future resources. However, there is no
absolute certainty about the long-term availability of any resource.
Federal power offers some obvious benefits over construction of
additional general generating facilities, principally its reasonable
cost. In addition, Western is willing to obtain firming capacity or
energy in the event the hydroelectric resources are not available when
required.

One of the drawbacks of Federal power is the limited time for which it
is committed.

A 15-year contract term with the provision of Western to adjust
allocations after 10 years provides a reasonable planned commitment.
Since commitments are planned to be made in the early part of 1986 for
the period ending in the latter part of 2004, the know commitment will
actually be for nearly 19 years.

Western is also interested in minimizing administrative procedures which
are costly and will not unnecessarily initiate the development of new
marketing criteria. However, it is equally important that Western
reserve options so that Federal resources in the future can be applied
where they are required to meet changing requirements.

While Western does not now foresee any conditions which might dictate
the need to adopt policies other than those expressed in these Criteria
and in the discussion of Criteria issues, it is prudent that Western
retain the flexibility which will enable it to be responsive to future
changing circumstances. Western, therefore, cannot support a contract
term of 20 years or longer.

3\. Summary and Conclusion: After consideration of the many comments
provided, Western concludes that the most prudent course of action is to
offer a 15-year of contract with provision for adjustment of contract
commitments (due to changes in the marketable resource) at the end of 10
years. Western will provide contractors with a minimum of 3 years\'
notice of any necessary changes and the changes will be made through an
appropriate public process. This compromise will give Western the
flexibility to meet changed circumstances, which may impact the
availability of resources.

B. Applicant Qualifications

In the Proposed Criteria, Western stated that resources would be
allocated in accordance with preference provisions of Reclamation law in
the following order of priority: (1) Preference entities in the market
area; (2) preference entities outside the market area; and (3)
nonpreference entities. To have been eligible for an allocation, a
preference entity must be an electric utility, a Federal or State
ultimate consumer load of a defined type, or an existing LAO contractor
for long-term firm power. For an entity to have been considered as an
existing contractor under the Proposed Criteria, that entity must have
had an executed contract for capacity and/or energy from the P-SMBP-WD
or Fry-Ark generation resources as of July 15, 1984.

The Proposed Criteria also contained special requirements for potential
new contractors and wholesale utilities. Potential new contractors must
have had a 1982 load greater than 100 kilowatts and, except for State or
Federal ultimate consumer type loads, all potential contractors must
take steps no later than April 1, 1986, to achieve utility status by
September 30, 1988. Wholesale utilities were required to satisfy
Western\'s Administrator: (1) That the benefits of federal financed
power are distributed at the lowest possible rates to consumers
consistent with sound business principles; (2) that consumers can
identify their true power supply costs from all sources so that the
costs of growth and the benefits of conservation are identifiable; and
(3) that \"accountability\" for the cost and management of the Federal
investment is directly linked between Western and the retailing utility,
so that retailing utilities can identify cost and other significant
characteristics of each of its power supplies.

1\. Comments:

\-- Criteria for eligibility of wholesale utilities are not clear, are
unfair, unnecessary, and unduly burdensome. The methods that will be
used to apply the criteria are uncertain and these criteria could create
legal and financial problems for some existing contractors.

\-- Objectives that the Administrator would use to evaluate wholesale
utility applications have been accomplished by contract terms.

\-- Conservation and renewable energy criteria should be established for
determining eligibility for an allocation.

\-- Support Conservation and Renewable Energy (C&RE) program and concur
with these provisions as proposed.

\-- Contractors who have executed Fry-Ark or P-SMBP-WD Excess contracts
anytime prior to executing post-1989 contracts should be defined as
existing contractors.

\-- In order to be eligible as an existing contractor, an entity should
be required to have executed Fry-Ark or P-SMBP-WD Excess contracts prior
to July 15, 1984.

\-- In order to be eligible as an existing contractor, an entity should
be required to have executed Fry-Ark or P-SMBP-WD Excess contracts prior
to August 23, 1983.

\-- In order to be eligible as an existing contractor, an entity should
be required to have executed a Fry-Ark contract by October 4, 1983, or a
P-SMBP-WD Excess contract prior to December 1983.

\-- Allocations to existing contractors should not be reduced.

\-- Inclusion of Fry-Ark in the allocation formula reduces the capacity
and energy allocations to existing contractors.

\-- Allocations should not be made to new contractors.

\-- Allocation formula should be the same for new and existing
contractors and allocations should be based on need.

\-- Support allocations to new and existing contractors in proportions
proposed.

\-- Oppose any allocation directly to members of a joint action group.

2\. Discussion: The comments have been grouped for discussion into the
following categories:

a\. Distribution among Qualified Preference Entities;

b\. Special Eligibility Requirements for Wholesale Utilities;

c\. Other Special Eligibility Requirements.

a\. Distribution among Qualified Preference Entities: Western is mindful
of the need to balance the requirements of existing purchasers of
Federal power against the requirements of potential new purchasers.
Existing contractors will, in most cases under the Criteria, experience
a limited reduction in individual allocations. This reduction is a
result of the expansion of the number of qualified existing contractors
who will receive energy allocations and of offering some benefits to
potential new contractors.

The amount of energy available to each potential new contractor is
limited to the energy associated with 5 MW of capacity at the LAO system
plant factor; 7,295 MWh in the winter season and 8,059 MWh in the summer
season. These amounts are probably not sufficient to encourage entities
without distribution systems to acquire a system in order to qualify for
a share of the available Federal power. This limitation is appropriate
because it would be unduly disruptive economically to withdraw large
amounts of Federal power from existing contractors. In addition, since
the commitment of Federal power is for a limited contract period only,
the prospect of acquiring a Federal power allocation today may not be a
prudent basis for making a decision to create a consumer-owned utility.
Amounts available to potential new contractors are intended to provide
some benefit to those preference entities who, for some other reason,
have already initiated actions to acquire utility systems or who already
have utility systems. On the other hand, it would be equally unjust to
completely exclude qualified preference organizations from participating
in the benefits of Federal power simply because the economic
circumstances of past years precluded purchasing Federal power. The
appropriate distribution of power between existing contractors and
potential new contractors is a discretionary decision committed by law
to this agency. Western\'s distribution between these two groups
reflects our best judgment of what is appropriate and fair under the
circumstances.

Western has extended the deadline for execution of P-SMBP-WD Excess or
Fry-Ark contracts in order to be eligible for existing contractor status
under these Criteria. This was considered appropriate because these
contracts were the first offered by the LAO that had no provisions for
delivery of power to load, other than for Colorado River Storage Project
(CRSP) power. Instead, the contracts offered delivery only to specified
points on the P-SMBP-WD transmission system, leaving the transmission to
load as the responsibility of the contractor. Western\'s Administrator
approved the reallocation of Fry-Ark resources on July 31, 1984. Western
believes that it is reasonable to offer additional time for execution of
these contracts in light of the need for the arrangement for delivery of
this power. The Criteria identifies the deadline as 60 days after
publication of the Criteria in the Federal Register, rather than the
previously stated date of July 15, 1984.

b\. Special Eligibility Requirements for Wholesale Utilities: This
proposed requirement was opposed by some wholesale utilities.

Western is committed to promoting the objectives of assuring that the
benefits of federally financed power are distributed as widely as
possible to consumers and that power supply cost information is
available to retailing utilities and retail level consumers. In pursuing
these objectives, Western previously singled out wholesale utilities
because they add another organizational level through which these
objectives must be filtered. The suggestion that requirements should be
the same for retail and wholesale utilities is well taken. The basic
objectives apply to both types of utilities.

The observation that the objectives proposed for use by the
Administrator of Western to evaluate wholesale utility applications are
related to existing contract terms is accurate. The existing resale of
electric energy provision in existing contracts promotes these
objectives, but does not provide for any penalties in the event of
noncompliance. Since the exact requirements of this provision have been
questioned in the past, a detailed discussion of it is warranted.

The existing resale of electric energy provision requires the Federal
power contractor to take five steps to encourage the widespread use of
low-cost Federal power.

First, the contractor contractually agrees to make the benefits of
Federal power available at fair and reasonable terms to all of its
customers at the lowest possible rates consistent with sound business
principles. Second, the contractor agrees to maintain books of account
in accordance with the system of accounts prescribed for public
utilities and licensees by the Federal Energy Regulatory Commission.
Third, the contractor agrees to provide Western with copies of its
schedules of retail rates. Fourth, the contractor agrees to submit to
Western as annual statement indicating, among other things, that the
charges to contractors are consistent with the principles set forth in
the first subsection of the resale provision. Firth, the contractor
agrees either to publish operating and financial data annually in a
newspaper of general circulation in the member\'s electrical service
area, or to furnish such information by mailing copies of the data to
each of its electrical customers.

The underlying philosophy of the existing resale provision is set forth
in section 5 of the Flood Control Act of 1944 *(16 U.S.C. 825s).* This
philosophy requires the passing on of the benefits of low-cost Federal
power to consumers, under fair and reasonable terms, at the lowest
possible rates consistent with sound business principles. This concept
is related to the preference clause, but goes beyond the establishment
of preference to public bodies and cooperatives. This principle allows
Western to verify that the ultimate consumer is receiving the benefits
of low-cost Federal power.

Western believes there is merit in comments made by wholesale utilities
objecting to the use of the resale of electric energy provisions as a
criterion for allocation. Since the objectives of the resale provision
can be accomplished through appropriate contractual language, Western
has eliminated the special eligibility requirements for wholesale
utilities as a criterion for allocation prior to the signing of a
contract. Rather, Western will develop contractual provisions to be used
with both wholesale and retail utilities to achieve the goals of
ensuring that the benefits of Federal power are passed on to consumers
and informing consumers of the source and cost of various components of
their power supply. While the existing principles contained in the
resale contractual article will be part of this new language, emphasis
will be placed on providing information to the power consumer in
accordance with flexible but objectively defined standards.

Noncompliance with the contractual provision may result in a penalty of
the loss of all or a part of the contractor\'s energy allocation and
associated capacity.

As a result of the deletion of the resale provision as a criterion for
allocation to wholesale entities, Western has deleted the provision in
the Criteria that provided for allocation directly to the members of a
wholesale entity in the event the wholesale entity were to be
disqualified for an allocation. As a matter of general policy, however,
Western expects the benefits of Federal power will be distributed
proportionally by a wholesale entity to each of its preference members
who are located within the marketing area of the resource being
distributed.

c\. Other Special Eligibility Requirements: Western received several
comments about adopting eligibility requirements which might more
effectively encourage conservation and the development of renewable
energy resources. It was suggested that Federal hydropower be sold to
those preference entities that develop the best Conservation and
Renewable Energy programs. Under this approach, conservation would
become an eligibility criterion rather than a goal to be encouraged
after an allocation is made and a contract signed.

Western fully supports the need to utilize energy efficiently and the
importance of encouraging cost-effective and meaningful conservation
efforts, as well as the development of alternative methods for the
generation of power. However, Western believes that its C&RE program is
effective in attaining national, regional, and agency conservation
goals. In the absence of an acceptable program, the contractual penalty
provision of a potential reduction in the amount of power sold to a
contractor offers an adequate incentive to develop C&RE programs of
particular relevance to each contractor and its consumers.

Western also believes that Congress has endorsed this approach in
encouraging C&RE efforts through contractual provision, as opposed to
making conservation an allocation criterion. In the course of debate on
the floor of the House of Representatives on the Hoover Power Plant Act
of 1984, a conservation amendment was offered by Representative Udall of
Arizona. 130 Cong. Rec. H3336-37 (May 3, 1984). That conservation
amendment, which applied to all power sold by Western, adopted the
approach of striving for conservation goals through contractual
provisions with a power allottee with reductions if predefined goals are
not realized. The amendment was approved by Congress and became Title II
of the Hoover Power Plant Act of 1984. Given the congressional passage
of affirmative legislation which requires accomplishing conservation
through contractual provisions, Western believes that it is
inappropriate to modify long-standing allocation practices by making
conservation the overriding factor in allocating all Federal power
resources. (See IV.H. for further discussion of C&RE.)

3\. Summary and Conclusion: Some commenters pointed out the lack of
clarity in defining eligibility requirements for receiving an allocation
of long-term firm resources. Western recognizes the need for further
clarification. The applicant qualifications have been revised to include
the following:

a\. Each potential applicant must have submitted substantially complete
Applicant Profile Data to the LAO on or before December 30, 1983. The
only exceptions to this deadline being those potential applicants in the
southwest portion of Kansas, who must submit substantially complete
Applicant Profile Data by April 1, 1986.

b\. Each potential applicant must have had a 1982 load greater than 100
kilowatts.

c\. Each potential applicant must be an existing contractor for LAO
long-term firm power or, by April 1, 1986, must:

\(1\) Be a utility, primarily engaged in retail or wholesale sales of
electricity, with power supply responsibility for the load to be served;
or

\(2\) Be a Federal or State ultimate consumer type load, including such
loads of State agencies whose use of power enhances the available
Federal power resource; or

\(3\) Have taken significant and tangible steps to acquire the means to
distribute power by September 30, 1988, or have taken initial steps to
acquire the means to distribute power by that date and have requested an
extension of time for taking significant and tangible steps.

Contractors must have the means to receive and distribute power by
September 30, 1988, in order to avoid termination of a contract right to
receive power unless the LAO specifically agrees otherwise in writing
prior to this date.

In response to the potential hardships of requiring wholesale utilities,
for the purpose of qualifying for an allocation, to verify their
compliance with the proposed special eligibility requirements for
wholesale utilities which identified several specific objectives
(selling Federal power at the lowest possible rates to consumers
consistent with sound business principles, assuring that consumers can
identify true power costs from all sources and assuring that retailing
utilities have provided detailed power supply information), Western will
depend instead upon contract provisions to accomplish these objectives.

The Criteria have been revised to indicate that the contracts will
contain a resale of electric energy provision requiring purchasers of
Federal power to demonstrate that:

\(1\) The benefits of Federal power are distributed to its customers at
the lowest possible rates consistent with sound business principles.

\(2\) Consumers can identify the costs of Federal power and non-Federal
power.

When the contractor consists of members or principals who are retail
distributors of Federal power, these retail distributors as well as the
parent organization will be directly accountable to Western for
complying with these requirements. One of the ways these requirements
may be satisfied by the contractor and its members or principals is to
furnish to customers, on a seasonal basis, a breakdown of the amounts
and costs of Federal power and non-Federal power and of the magnitude
and type of other costs which constitute the composite costs charged to
the customer. Failure to comply with this provision may result in the
loss of all or a part of the resources committed to the contractor.

Finally, because of Western\'s view that there has been congressional
support for the approach taken in its existing C&RE program, these
Criteria continue to reflect the approach of encouraging conservation
efforts through contractual provisions as opposed to making conservation
a criterion for allocation.

C. LAO Project Integration

The Criteria reflect the consolidation of the P-SMBP-WD with the Fry-Ark
Project to increase the firm marketable resources, simplify contract
development and administration, and establish a blended rate for LAO
power. Repayment requirements would continue to be determined
separately.

1\. Comments:

\-- Oppose operational integration. The resulting blended rate will
penalize existing P-SMBP-WD contractors who have not elected to purchase
Fry-Ark pumped storage capacity.

\-- Blended rate is contrary to statutory restrictions, and the
resulting reduction in rates to Fry-Ark contractors encourages
consumption rather than conservation with subsequent adverse impact on
the environment.

\-- Support operational integration and blended rate because it achieves
the widest practicable and beneficial use of available resources and
assures long-term sources of revenue to repay all projects.

\-- Oppose operational integration and blended rate because of the
difficulty in determining who actually uses the power from Fry-Ark. This
power will no longer be cost-based, and this will confuse Fry-Ark\'s
repayment status.

2\. Discussion: Western does not agree that a blended rate among
projects will encourage consumption. The principal purchasers of LAO
power draw on a variety of other resources to meet their power needs.
Because the rate paid by the end-user is a blend of these various
wholesale rates, the impact of the proposed rate change will be greatly
reduced by the time the end user receives the blended product. Moreover,
the marginal prices paid by the LAO\'s contractors for new resources to
meet load growth promotes conservation over consumption.

The conservation provision, which will be incorporated into Western\'s
electric service contracts, further encourages efficient consumption.
Furthermore, Western\'s environmental analysis indicates that the
proposed integration and blended rate will have no significant impact on
the environment.

Western sees no legal obstacles to the integration of the resources as
reflected in these Criteria with the power marketed at a uniform,
blended rate. No provision in Reclamation law prohibits such an
integration. In fact, rates for two Western projects have been
administratively integrated with smaller Federal power resources in the
past.

The integration of the Colorado-Big Thompson, Kendrick, North Platte,
and Shoshone Projects into the power repayment study for the P-SMBP-WD
is one example. The integration of the Pacific Northwest-Pacific
Southwest intertie into the Central Valley Project repayment study is a
second instance where administrative integration took place. Under
Reclamation law, the Secretary of the Department of Energy has the
authority to perform \"any and all acts\" for the purpose of putting his
statutory responsibilities into full force and effect *(43 U.S.C. 485i;*
*43 U.S.C. 373).* In Western\'s judgment, this flexibility includes the
ability to integrate projects and to charge a uniform rate for the
resulting power.

Western also does not agree that operational integration and a blended
rate, as reflected in these Criteria, will cause difficulty in
determining who is using power from Fry-Ark and that Fry-Ark will no
longer be cost based, thereby confusing its repayment status. Under
these Criteria, firm resources from Fry-Ark will be proportionally
allocated to all firm power contractors. Therefore, there will be no
need to differentiate between the firm energy with capacity allocated
from the two projects. The blended rate will be determined by the
individual power repayment studies (PRS) and revenues from the
integrated projects will be divided between the projects in the
proportions dictated by these individual PRS. Since these PRS are based
on project costs, the blended rate and revenues provided for repayment
will be cost based. Part of the administrative cost benefits associated
with integration of the projects is reflected in the fact that there is
no longer a need for differentiating between the firm power from the two
projects. There will no longer be a need to account for interchanges
between the projects as capacity and energy sales from one project to
the other. Integration will therefore simplify the need for determining
who uses firm power from Fry-Ark. The requirement for contractors to
submit hourly schedules 24 hours in advance for the use of the
pumped-storage energy features of Fry-Ark will make accounting for this
use manageable.

Integration of the projects will assure repayment of project costs. The
slight additional cost to current P-SMBP-WD contractors under an
integrated marketing approach is reasonable considering the efficiencies
and additional power to be gained.

3\. Summary and Conclusion: Western concludes that operational
integration of the LAO resources and the blended rate achieves the
widest practical and most beneficial use of the available resource and
assures long-term sources of revenue to repay all projects. Western
believes that these benefits outweigh the opposition to integrating the
resource as proposed.

D. Derivation of marketable resources

Western proposed on August 23, 1983, that capacity available from the
LAO projects would be based on the maximum operating capacity of Fry-Ark
and on the capacity of the P-SMBP-WD powerplants based on a 90-percent
probability level. Energy would be based on forecasts of average
hydrologic conditions. Western proposed to purchase firming capacity and
energy on a passthrough cost basis and to allocate approximately 308 GWh
of purchased energy.

1\. Comments:

\-- Support opinion to purchase energy to increase the load factor of
the available resource.

\-- Oppose purchase energy option. Suggest purchasing energy only for
those contractors who request it.

\-- Western should base its reserve requirements on its share of the
projected Inland Power Pool (IPP) total reserve obligation and market
the resulting additional capacity.

\-- The combined total reserve of 200 MW for the Loveland Area and Salt
Lake City Area could be reduced by 50 MW if the operations of the two
Areas were integrated.

\-- Western should use a hydrologic probability lower than 90 percent.
This would increase available capacity by 15 to 20 MW.

\-- Opposes marketing maximum amounts of capacity and energy because
that may affect the environment. Maximum amounts are reduced only in 1
month to reflect adverse hydrologic conditions.

2\. Discussion: These comments have been grouped for discussion into the
following categories:

a\. Hydrology Studies

b\. Purchases

c\. Reserves

a\. Hydrology Studies: The proposed Criteria indicated that the
generation capacity of the P-SMBP-WD would be marketed based upon a
90-percent probability level (i.e., 10-percent risk each year of having
insufficient capacity available). The formula used, however, for
determining the marketable capacity of the integrated resources defined
marketable capacity as the lesser of the maximum available capacity
minus reserves, or the capacity at the 90-percent probability level.
After reviewing the comments and reevaluating this position, Western has
determined that this method resulted in a higher risk of not being able
to meet its contractors\' monthly entitlements than was intended under
the 90-percent probability level scenario. Western has therefore
modified appendix A. Marketable capacity is now determined by
subtracting reserves, project use, and existing special use loads from
the capacity determined to be available using 90-percent hydrologic
probability. A column was added to the capacity table in appendix A to
indicate the magnitude of the project use and existing special use
loads. The values for the monthly 90-percent hydrologic probability
quantities now include reductions for scheduled maintenance.

Western was influenced by a number of factors in adopting the use of a
90-percent hydrologic probability as a basis for determination of
marketable capacity. Recognition of the need to provide existing
contractors a resource as similar as possible to their current supply
and the need to offer new contractors an opportunity to participate in
the post-1989 allocation induced Western to depart from the historic
policy of using \"most adverse\" as marketable capacity.

The 90-.percent probability level represents a statistical application
for P-SMBP-WD only. Fry-Ark is included at maximum operating capacity
because of the pumped-storage nature of this resource.

When the 10-percent risk condition of being short of capacity occurs
and/or hydroelectric energy is in short supply because a less than
average water year has occurred, thermal resources are often called upon
to meet the loads normally served from hydrogeneration. This reduces the
availability of thermal generation and could increase its cost. If poor
hydrologic conditions are experienced in adjoining river basins, the
situation is worsened as far as the costs related to the risks are
concerned. When other utilities in the area are also experiencing heavy
demand and competing for any remaining resources the possibility of
capacity not being available at any price must also be considered in
determining the marketable resource. For this reason, Western concluded
that it would not be prudent to offer marketable capacity with a higher
risk of unavailability than 10 percent.

b\. Purchases: The proposed option to purchase and allocate
approximately 308 GWh of additional energy received wide support from
commenters, although some contractors voiced concern over the impact it
could have on the rates of those contractors who might not want or need
this additional allocated energy. They suggested that additional energy
be purchased and paid for by only those contractors who requested such
service. These comments are well taken and the Criteria has been
modified to reflect the fact that the purchase energy option has been
adopted in a modified form reflecting the comments received.

Western is not persuaded by comments that question the legal authority
to purchase capacity and energy supplemental to the Federal resource.
Power marketing administrations have inherent authority to purchase
capacity and/or energy reasonably incidental to the integrated marketing
of power from a hydroelectric project. *Kansas City Power and Light
Company v. McKay, 115 F. Supp. 402 (D.D.C. 1953),* judgment vacated for
lack of standing to sue, *225 F.2d 924* (D.C. Cir.), cert. denied, *350
U.S. 884 (1955).* The past practice had been to sell hydroelectric
energy based upon average water conditions. For many years, the United
States has purchased energy to firm up commitments under electric
service contracts. In fact, the practice of maximizing the amount of
power to be sold at firm power rates is statutorily required for the
Colorado River Storage Project. *43 U.S.C. 620f.* The final criteria
constitute a reasonable extension of these same historical purchase
principles. Western believes that full legal authority exists to market
capacity which is available 90 percent of the time and energy which is
available much of the time.

c\. Reserves: Western is a participant in the IPP and a member of the
Western System Coordinating Council (WSCC). The requirements of the IPP
are identified in the revised IPP Agreement dated November 23, 1983, and
the WSCC criteria contain prescribed reserve requirements. The revised
IPP Agreement states that IPP reserve requirements will always meet or
exceed WSCC requirements. The IPP reserve requirements are currently
about 30 MW. IPP reserve requirements are subject to change depending on
the largest single hazard in the pool and on the size of the membership.
Since the members of the pool have the latitude to withdraw their
membership under certain conditions, Western has determined it to be
prudent to establish its reserve requirement in the post-1989 period
based on IPP requirements and on the assumption that Western\'s Salt
Lake City, Loveland, and Boulder City Area Offices would be the only
remaining members of the pool. Under this approach, the Loveland Area
Office\'s reserve requirement would be 48 MW.

3\. Summary and Conclusion: In response to comments received, Western
will purchase energy over and above the amount of Western\'s firm
monthly energy obligation, at the contractor\'s request and on a
passthrough cost basis, up to an amount associated with the
contractor\'s capacity entitlement at the contractor\'s load factor,
until the limit of the LAO system to support such purchases is reached.
This procedure will remove this purchased energy from the allocation
process, allow the contractor to use the energy in ways it deems
appropriate under contractual restrictions, including use as pump-back
energy, and allow the contractor to decide on the amount of energy
required.

Western is interested in marketing the maximum amount of capacity it can
without assuming a level of risk that could be harmful to either Western
or its contractors. After weighing the various probability levels,
Western concludes that the use of the 90 percent probability as a basis
for determining marketable capacity is appropriate. The use of average
hydrology is considered a reasonable basis for determining marketable
energy.

After carefully considering the various needs and requirements relative
to reserves, Western has provided for a reserve level of 48 MW for the
LAO. This will meet the WSCC and IPP requirements and should give
Western sufficient flexibility throughout the contract term to maintain
adequate reserves.

E. Classes of Service

Western will offer long-term firm energy with capacity, short-term firm
capacity with or without energy, or with the return of energy, and other
services such as providing pumped-storage energy, sales of surplus
energy, delivering or receiving interchange, emergency assistance,
maintenance service, and transmission service.

1\. Comment: Short-term power should be used in the resource
coordination program only after it is offered for sale to preference
contractors.

2\. Discussion: In the past, when Western determined that short-term
firm capacity with or without energy was available for sale, such
resources were offered to preference contractors first. Under these
Criteria, such resources will be marketed in accordance with the same
allocation priorities as any other \"available resource.\"

3\. Summary and Conclusion: Western will market short-term capacity with
or without energy, or with the return of energy in accordance with
priorities presented in V.B.5.a. of the Criteria.

F. Reallocation

The LAO\'s Proposed Criteria indicated in Part III.C. \"Reallocations,\"
that:

Long-term firm energy with associated capacity available for marketing
because an allocation(s) has been reduced or withdrawn may be
administratively reallocated by Western\'s Administrator without further
public process.

1\. Comments: Request a statement be included to define how
reallocations will be made. Suggest reallocations be distributed on a
pro-rata basis to the allottees found eligible during the initial
application of this Criteria.

2\. Discussion: Western believes that reallocating on a pro-rata basis
to those entities who were found to be eligible under initial
application of these Criteria is one appropriate way of redistributing
energy or capacity made available because an allocation has been reduced
or rescinded. Although this is the method that will be used in most
cases, flexibility of the Criteria would be lost if such a statement
were included. For instance, if a municipal contractor were to fail to
sign an offered contract that contained a relatively small allocation,
it would not be prudent to expend the resources that would be required
to redistribute such a small amount of energy on a pro-rata basis to all
initially eligible contractors. Such a redistribution could be
administratively burdensome.

3\. Summary and Conclusion: Western intends to make reallocations,
whenever possible, on a pro-rata basis to applicants who were found to
be eligible for an allocation of power under initial application of
these Criteria. We have, however, retained the original language in the
reallocations section which states that reallocations may be made by the
Administrator of Western without further public process. This was done
in order to retain flexibility to cover situations such as the one
discussed as well as any unforeseen situations that may arise.

G. Limitation of Allocations

Western has proposed a capacity allocation limitation from combined
Federal sources based on the average of 1980 through 1982 average peak
demands.

1\. Comment: Limitation should be based on 1989 loads. Some contractors
have been purchasing peaking capacity that has not yet been fully
utilized.

2\. Discussion: The purpose of the proposed limitation is to ensure fair
and equitable distribution of Federal resources. Since final allocations
are planned to be prepared in 1986, 1989 loads would be projected
figures. Western feels that the variety of forecasting techniques and
the inherent uncertainty of forecasting in general would insert an
unacceptable measure of uncertainty into the allocation process. The
only disadvantage in the proposed limitation would be to entities that
have experienced faster growth than the average applicant in the years
since 1980. Administrative delays in the finalization of the Criteria
have forced this limitation to be based on data that is more historic
than was originally anticipated, but Western feels that requesting
updated Applicant Profile Data would be unduly burdensome to Western and
the applicants for post-1989 Federal resources. Western has, however,
become aware that this restriction may be unfair to some applicants
whose 1980 through 1982 loads were reduced through conservation or load
management efforts. The Criteria have been modified to account for such
reductions. Applicants for power who have experienced historical load
reductions due to C&RE efforts are encouraged to substantiate such a
reduction as part of the application for energy. In recognition of the
fact that energy is the commodity being allocated pursuant to these
criteria, the capacity limitation has been changed to an energy
limitation.

3\. Summary and Conclusion: To ensure equitable distribution of Federal
resources, Western believes the most prudent course of action is to
retain the limitation, modified as indicated in the discussion in
section III.L. and as follows:

No applicant will receive a seasonal allocation of energy from Western
that, when combined with its total post-1989 Federal firm energy
entitlements from all Federal sources, exceeds its average seasonal
total energy use for 1980, 1981, and 1982. The average seasonal total
energy use for 1980, 1981, and 1982 will be adjusted to include
additional energy which the applicant can demonstrate was not used
during that period as a result of its conservation or energy management
efforts.

H. Shaping and Storage for Renewable Energy Resources

Western currently supports renewable energy projects by contractually
allowing integration of these resources into the LAO power system.

1\. Comment: Western should actively pursue the means to effectively
integrate renewable resources that may be seasonal in nature into the
Criteria.

2\. Discussion: Western supports the need to develop cost-effective
renewable energy resources. Support of this activity through Criteria
provisions would require that a capacity reservation be set aside for
this use. This capacity reservation would be deducted from the total
available resource and would result in a reduction in the allocations to
all preference contractors. Western is considering the institution of a
program of this type in the Salt Lake City Area, in which approximately
30 MW may be allocated to entities who have exemplary conservation
programs or who participate in renewable energy projects which meet
specific criteria. Western believes, however, that a program of this
type is premature in the Loveland Area due to the limited availability
or resources in this Area.

3\. Summary and Conclusion: Western believes its most prudent course of
action in the Loveland area, for the period 1989 to 2004, is to allocate
the available resource without a reservation for promotion of C&RE
projects and to continue to support conservation and renewable energy
projects that provide an economic resource to Western and its
contractors through separate agreements. This will permit Western to
support these projects on a case-by-case basis.

V. Post-1989 General Power Marketing and Allocation Criteria

A. General:

1\. Applicability: These Post-1989 General Power Marketing and
Allocation Criteria (Criteria) of the Western Area Power
Administration\'s (Western) Loveland Area Office (LAO) are established
in accordance with the provisions of the Reclamation Project Act of
1902, approved June 17, 1902 (ch. 1093, 32 Stat. 388); the Reclamation
Act of 1939, approved August 4, 1939 *(43 U.S.C. 485h*(c)); and the
Department of Energy Organization Act of 1977, approved August 4, 1977
*(42 U.S.C. 7152),* 7191); and are more specifically based upon the
provisions of the Flood Control Act of 1944, approved December 22, 1944
(58 Stat. 891); the Fryingpan-Arkansas Project Acts of 1962 and 1974,
approved August 16, 1962 (Pub. L. 87-590 76 Stat. 389), and October 27,
1974 (Pub. L. 93-493 88 Stat. 1497); and acts amending or supplementing
all of the foregoing legislation.

These Criteria shall become effective on the first day of the October
1989 billing period and will apply to all power marketed by Western\'s
LAO other than power from the Colorado River Storage Project (CRSP).
Contract arrangements existing on the effective date of these criteria
will only be affected upon amendment by the parties. These Criteria will
supersede the 1962 Pick-Sloan Missouri Basin Program-Western Division
(P-SMBP-WD) power marketing plan, the Fryingpan-Arkansas Project
(Fry-Ark) power marketing plan for the sale of power from the Mt. Elbert
Pumped-Storage Powerplant of Fry-Ark effective June 23, 1981, and the
power marketing plan for the sale of excess capacity in the P-SMBP-WD
effective August 30, 1992. These criteria are subject to change upon
reasonable notice by the Administrator of Western and the opportunity
for comment by interested parties.

2\. Marketable resources: a. PO-SMBP-WD Resources: The LAOP markets
power penetrated at 17 P-SMBP-WD powerplants situated in Colorado,
Wyoming, and Montana. The energy production and generation capacity
capability of these resources are:

[Winter]{.underline} [Summer]{.underline}

Energy (MWh) [1]{.underline}/ 1,022,100 1,254,400

Capacity (MW) [2]{.underline}/ 484.0 557.0

[1/]{.underline} At plant annual energy production based on average year
water, from table 1, appendix A.

[2/]{.underline} Generation capacity based on 90-percent hydrologic
probability, from table 2, appendix A.

b\. Fry-Ark Resources: The Mt. Elbert Powerplant, with two 100-MW
reversible pump/turbines, comprises the power feature of Fry-Ark. The
energy production and generation capacity capability of these units are:

[Winter]{.underline} [Summer]{.underline}

Energy (MWh) [1]{.underline}/ 33,478 24,769

Pumped Storage Energy (MWh) [2]{.underline}/ 2,800 2,800

Capacity (MW) [3]{.underline}/ 200 200

[1]{.underline}/ At plant annual energy production of flowthrough water
from table 1, appendix A.

[2]{.underline}/ Energy available each time the reservoir is refilled.
Return energy of 3,920 MWh is required to refill the reservoir.

[3]{.underline}/ Maximum available capacity from table 2, appendix A

c\. Operationally Integrated Resources: More effective utilization of
the resources of the P-SMBP-WD and Fry-Ark will be achieved by
continuing the operational integration of the two projects.

The marketable resources available annually at load by operationally
integrating the projects are found in table 3 of appendix A, and are
summarized below:

[Winter]{.underline} [Summer]{.underline}

Energy Production (MWh) 932,541 1,155,300

Generation Capacity (MW) 638.5 716.5

The P-SMBP-WD energy production and generation capacity capabilities are
subject to completion of the Shoshone Project modifications, water from
the Windy Gap Project, as well as various upgrades scheduled for
completion before 1989. Should Congress authorize any future P-SMBP-WD
irrigation projects requiring pumping power, such power will be
purchased until a new marketing plan is developed.

In addition to the marketable resources to be allocated under these
Criteria, Western will offer the pumped-storage energy feature of
Fry-Ark to its contractors under the following conditions:

At the beginning of the contract period for contracts executed pursuant
to these Criteria, each contractor will be deemed to have 4.4 kWh/kW of
their seasonal capacity entitlements for the winter season and 3.9
kWh/kW of their seasonal capacity entitlement for the summer season as
pumped-storage energy in an energy account. Each contractor may schedule
energy into and out of its energy account by mutually agreed upon hourly
schedules which must be submitted to Western 24 hours in advance. The
energy account may never exceed the initial value and the account must
be restored to these initial levels at the end of each season. Energy
may be scheduled out of the energy account only when there is a positive
balance in the account. The combined rates of delivery of the
pumped-storage energy and the firm energy scheduled from combined LAO
sources may never exceed the contractor\'s monthly capacity entitlement.
For every kWh scheduled out of the energy account, 1.4 kWh must be
scheduled into the account. Energy will normally be scheduled into the
energy account during offpeak hour, which, for pump-back purposes, are
initially defined as the hours between 2200 hours on any day to 0800
hours of the next succeeding day. These hours are subject to change
should operating experience indicate that such a change is necessary.
Contractors, may schedule energy into the energy account at times other
than offpeak hours when special circumstances warrant, subject to
Western\'s approval. For contractors that are not directly
interconnected with Western\'s transmission system at Malta Substation,
losses and wheeling over the Public Service Company of Colorado system
will be assessed on schedules into and out of pumped-storage energy
accounts. The rate of energy scheduled into the energy account during
any season may not exceed 1.4 times the contractor\'s capacity
entitlement for that season unless the LAO grants prior written
permission for a contractor to do so.

d\. Future Resources: New or revised marketing criteria will be
developed as necessary when future power resources are available and
offered for sale.

B. Marketing Considerations

1\. Market Area: The market area for power from the LAO is described as
the portion of the State of Wyoming east of the Continental Divide, the
portion of the State of Colorado east of the Continental Divide,
Mountain Parks REA\'s service territory in Colorado west of the
Continental Divide, the portion of the State of Nebraska west of the
101st Meridian, the portion of the State of Kansas located in the
Missouri River Basin, and the portion of the State of Kansas west of the
eastern borders of the counties intersected by the 100th Meridian. These
marketing area boundaries are approximated on the map in appendix B.

2\. Service Seasons: a. Winter Season: The winter season is defined as
the 6-month period from the first day of the October billing period of
any calendar year through the last day of the March billing period of
the next succeeding calendar year.

b\. Summer Season: The summer season is defined as the 6-month period
from the first day of the April billing period of any calendar year
through the last day of the September billing period of the same
calendar year.

3\. Classes of Service: The classes of service to be offered by the LAO
are based upon operational integration of the P-SMBP-WD and the Fry-Ark
resources.

a\. Long-Term Firm Energy With Capacity: The LAO will offer firm energy
commitments based on average hydrologic conditions. Any energy in excess
of that available which is required by the LAO to meet its firm energy
commitments under these Criteria, would be purchased by Western. The
rate charged to the contractor for these purchases will be the firm
energy rate. The anticipated costs for firming energy purchases will be
considered when the firm energy rate is established.

Generation capacity offered by the LAO will be based upon the installed
capacity of Fry-Ark and upon the 90-percent probability level of the
powerplants of the P-SMBP-WD. A portion of any generation capacity which
may be required by the LAO to meet its monthly obligations, due to
unfavorable hydrologic conditions, would be purchased by Western\'s
contractors or by Western on a passthrough cost basis upon the
contractor\'s request. The portion of these purchases that would be
subject to passthrough costs is that portion between the 99-percent and
the 90-percent probability level, which amounts to a maximum purchase
risk to all contractors, collectively, of 37 MW for the worst case month
of the winter season and 38 MW for the worst case month in the summer
season. Any costs associated with required capacity purchases up to a
99-percent probability level will be incorporated into the rate base for
the LAO blended rate. The maximum purchase for each month that every
contractor would be subject to on a passthrough cost basis will be
specified in each electric service contract.

Western may utilize the pumped-storage feature of Fry-Ark during onpeak
hours to firm its long-term firm energy with capacity commitments.
Offpeak energy purchasers will be required to replenish any water used
during these onpeak hours. The costs for these purchasers will be
incorporated into the LAO blended rate base.

Table 3 of appendix A shows the seasonal energy production and
generation capacity to be allocated with the long-term firm energy with
capacity class of service.

b\. Short-Term Firm Energy and/or Capacity: To the extent that project
and existing special uses, as estimated in appendix A, have not
developed and/or annual stream-flow conditions and reservoir operations
result in the production of greater amounts of power than is committed
on a long-term basis, short-term firm energy and/or capacity may be
offered for sale on a monthly or seasonal basis. Such offers will be for
firm energy with or without capacity, capacity with the return of
energy, or capacity without energy. These resources may be integrated
with the resources of other entities.

c\. Other Services: In addition to marketing these classes of service,
the LAO will engage in other transactions, such as providing
pumped-storage energy as described in V.A.2.b. and c., sales of surplus
energy, delivering or receiving interchange, emergency assistance,
maintenance service, and/or regulation services to the extent that
resources permit.

Western will purchase energy over and above the amount of Western\'s
firm monthly energy obligation, at the contractor\'s request and on a
passthrough cost basis, up to an amount associated with the
contractor\'s monthly Federal capacity entitlement at the contractor\'s
load factor. Western will honor individual contractor energy purchase
requests until the LAO hydroelectric system capability to support such
purchasers is reached.

In order to conserve fossil fuels, enhance the environment, and/or
ensure the availability to preference contractors of contracted amounts
of energy and capacity, Western may purchase or exchange energy and/or
capacity, as necessary or desirable to supplement its resources. Nonfirm
energy service may be available as a result of these purchases or
exchanges. To the extent that transmission capacity is determined to be
available, the LAO will provide firm and nonfirm transmission service.

4\. Derivation of Marketable Resources: Capacity available from LAO
resources will be based on the installed capacity of Fry-Ark along with
the capacity of the P-SMBP-WD powerplants based on 90-percent hydrologic
probability. Energy available for load will be based on average
hydrologic conditions. Energy with associated capacity will be reserved
for certain project use and existing special use requirements.

The derivation of the marketable resources for LAO, the availability of
these resources by seasons, and identification of project use and
existing special use loads is contained in appendix A.

5\. Allocation Priorities: a. Available resources will be allocated in
accordance with these Criteria and the preference provisions of Federal
law in the following order of priority:

\(1\) Preference entities within the LAO market area.

\(2\) Preference entities outside the LAO market area.

\(3\) Nonpreference entities acting as agents for public entities
without distribution systems.

\(4\) Nonpreference entities acting on their own behalf.

These priorities may be recognized within pricing blocks for nonfirm
energy.

b\. Applicant Qualifications: The following requirements must be met in
order to be eligible for an allocation of long-term LAO resources:

\(1\) Each potential applicant must have submitted substantially
complete Applicant Profile Data to the LAO on or before December 30,
1983. The only exceptions to this deadline are those potential
applicants in the southwest portion of Kansas, who must submit
substantially complete Applicant Profile Data by April 1, 1986.

\(2\) Each potential new contractor must have had a 1982 load greater
than 100 kW.

\(3\) Each potential applicant must be an existing LAO contractor for
long-term firm power or, by April 1, 1986, must:

\(a\) Be a utility, primarily engaged in the retail or wholesale sale of
electricity, with responsibility for the load being served; or

\(b\) Be a Federal or State agency with an ultimate consumer type load,
including such loads of State agencies whose use of power enhances the
available Federal power resource; or

\(c\) Have provided evidence to the LAO that significant and tangible
steps to acquire the means to distribute power by September 30, 1988,
have been taken, or provided evidence that initial steps to acquire the
means to distribute power by that date have been taken and the
contractor has requested an extension of time for taking significant and
tangible steps.

Significant and tangible steps toward becoming a utility would include
one, or some combination, of the following:

\(i\) Evidence of a financial commitment to purchase or construct a
transmission system to distribute power;

\(ii\) Evidence of negotiations with a utility regarding distribution
system acquisition;

\(iii\) Action before a public service or public utility commission to
acquire a distribution system;

\(iv\) Initiation of condemnation proceedings; and/or

\(v\) Construction of a distribution system.

C. Allocation of Marketable Resources

1\. Basis of Allocation: To ensure widespread distribution of the
benefit of Federal power, the LAO will divide its net resources into two
parts representing a reservation for new contractors and a reservation
for existing contractors. Existing contractors are defined as those
eligible applicants in the market area described in V.B.1. who have a
contract for long-term firm capacity and/or energy from the P-SMBP-WD or
Fry-Ark generation resources as of April 1, 1986. The reservations for
each group are detailed in table 3 of appendix A. The portion of total
seasonal resources to be reserved is based upon the ratio of energy
currently available to existing contractors and the total energy
available for allocation: 1,918,247/2,087,841 MWh. Each contractor\'s
monthly capacity entitlement will be a percentage of the seasonal
capacity entitlement. These percentages are shown in appendix A, table
2, column (7).

a\. Allocation Criteria for New Contractors: The seasonal energy
reserved for new contractors, table 3 of appendix A, will be allocated
according to the proportion each new contractor\'s average energy
consumption in 1980, 1981, and 1982 bears to the total of all new
contractors\' average energy consumption in the same period.

Eligible applicants may request capacity with allocated energy based
upon its individual system characteristics. If there is insufficient
capacity in the reservation for this group to satisfy all of the
capacity requests, the LAO may limit the capacity entitlement, but not
below the capacity associated with the plant factors of the resources
reserved for this group: 33.4 percent in the winter season and 36.7
percent in the summer season.

New contractors may not receive a seasonal allocation of energy greater
than the energy associated with 5 MW of capacity at the seasonal plant
factors specified above: 7,295 MWh in the winter season and 8,059 MWh in
the summer season.

b\. Allocation Criteria for Existing Contractors: The seasonal energy
reserved for existing contractors, table 3 of appendix A, will be
allocated according to the proportion each existing contractor\'s
long-term firm Contract Rate of Delivery (CROD), in effect at the close
of business on April 1, 1986, from P-SMBP-WD and Fry-Ark resources,
bears to the total of all existing contractors\' long-term firm CRODs.

Eligible applicants may request capacity with allocated energy based
upon its individual system characteristics. If there is insufficient
capacity in the reservation for this group to satisfy all of the
capacity requests, the LAO may limit the capacity entitlement, but not
below the capacity associated with the plant factors of the resources
reserved for this group: 33.4 percent in the winter season and 36.7
percent in the summer season.

2\. Limit on Energy Allocation: No applicant will receive a seasonal
allocation of energy from Western that, when combined with its total
post-1989 Federal firm energy entitlements from all Federal sources,
exceeds its average seasonal total energy use for 1980, 1981, and 1982.
The average seasonal total energy use for 1980, 1981, and 1982 will be
adjusted to include additional energy the applicant can demonstrate was
not used during that period as a result of its conservation or energy
management efforts. Entities applying for power are encouraged to
document any conservation impact on historical energy consumption as
part of any application for power.

3\. Reallocations: Long-term firm energy with associated capacity made
available for marketing because an allocation(s) has been reduced or
withdrawn may be administratively reallocated by Western\'s
Administrator without further public process.

D. Contract Arrangements

Those entities receiving an allocation and taking any other required
steps, will be offered an electric service contract for the allocated
resources based on these Criteria after reasonable opportunity to
discuss proposed contract language has been provided to allottees.
Allottees will have 6 months to sign the offered contract or until
September 30, 1987, whichever is later.

1\. General Contract Terms: a. Effective Date and Contract Term:
Existing contracts will be allowed to expire by their own terms.
Contracts offered for the sale of newly allocated long-term firm energy
with capacity will become effective on the first day of the October 1989
billing period (or upon expiration of an existing contract, if later)
and will terminate on the last day of the September 2004 billing period.
However, at the end of the 1999 summer season billing period, the
provisions of the contracts concerning the amounts of energy and
capacity committed will be subject to revision based on the marketable
resource. Any necessary revisions to these contract provisions will be
determined by Western and presented to the contractors by the end of the
1996 summer season billing period.

b\. Power Receipt and Distribution: Contractors must have the means to
receive and distribute power by September 30, 1988, in order to avoid
termination of contract rights unless the LAO specifically agrees
otherwise in writing prior to this date.

c\. Conservation and Renewable Energy (C&RE) Program: An \"Announcement
of Final Guidelines and Acceptance Criteria for Customer Conservation
and Renewable Energy Programs\" was originally published in the Federal
Register *(46 FR 56140)* on November 13, 1981, and amended in the
Federal Register on August 21, 1985 *(50 FR 33892).* To achieve the
stated purposes, the LAO will guide and assist its firm contractors in
their C&RE development, as requested and to the extent possible. As
specified in the \"Final Guidelines,\" failure to develop a C&RE program
that meets Western\'s Acceptance Criteria may subject a contractor to
the potential loss of up to 10 percent of its allocation.

Existing contractors will implement the terms of Western\'s C&RE
program, or any that may supersede it, within 1 year of the date of
contract execution. New contractors will implement a C&RE program no
later than 1 year subsequent to the date of execution of a contract for
Federal power. The development of the program is the responsibility of
each contractor receiving long-term firm energy with capacity and its
member systems, if any, benefiting from the purchase of Federal
long-term firm power.

d\. Allottee Purchasing Agents: Western may contract with a single
purchasing agent for two or more allottees, under these Criteria, upon
request of the allottees. Western, however, will not be willing to
eliminate load diversity that permits it to meet its operating
obligations.

e\. Load Diversity Adjustment: Contract provisions shall permit Western
to adjust monthly capacity entitlements downward on a proportional basis
in the event total system load diversity does not cover transmission
system losses or other operating requirements.

f\. Resale Provisions: All contracts for long-term firm energy with
capacity under these Criteria will contain a resale of electric energy
provision. Existing contractors will implement the terms of this resale
provision upon contract execution. New contractors will implement them
upon receipt of Federal power. The resale of electric energy provision
will include, among other things, a requirement that the contractor
demonstrate that:

\(1\) The benefits of Federal power are distributed to the contractors\'
consumers at the lowest rates consistent with sound business principles,
and

\(2\) Consumers can identify the costs of Federal power and non-Federal
power.

When the contractor consists of members or principals who are retail
distributors, of Federal power, these retail distributors, as well as
the parent organization, will be directly accountable to Western for
complying with the resale provisions. One of the ways these requirements
may be satisfied by the contractor and its members or principals is to
provide cost information semiannually to their customers, including a
breakdown of the amounts and costs of Federal power and non-Federal
power, and of the magnitude and type of other costs which constitute the
composite costs charged to the customer.

Failure to comply with the resale provisions may result in the loss of
all or part of the resources committed to the contractor.

2\. Long-Term Firm Energy With Capacity Obligations: a. Monthly
long-term firm energy delivery obligations with associated capacity for
each season will be set forth in each contractor\'s electric contract.
Western\'s monthly energy obligation will reflect the same monthly
distribution of seasonal energy allocation as shown in table 1 of
appendix A for the monthly distribution of total marketable energy at
load. Monthly capacity entitlements will reflect the same monthly
distribution of seasonal capacity entitlements as is shown in table 2 of
appendix A for the monthly distribution of marketable capacity.

Western\'s capacity obligation for a given hour will be limited to the
capacity scheduled during that hour; i.e., contractors will not be
entitled to claim unscheduled capacity as operating expenses.

b\. The monthly energy obligations may be increased at Western\'s
discretion, should short-term conditions allow. If the established limit
is increased for any month, it may be subsequently decreased at
Western\'s discretion to the normal monthly energy delivery obligations
set forth in the electric service contract.

3\. Scheduling, Accounting, and Billing: The LAO its contractors will
establish mutually agreeable scheduling and accounting procedures, based
upon accepted utility industry practices, which will provide efficient
and practicable utilization of energy and capacity. These procedures
will be set forth in Western contracts or in separate written agreements
made a part thereof.

a\. Scheduling: (1) Each contractor\'s maximum scheduled rate of
delivery for long-term firm energy in each billing period will be the
monthly capacity entitlements as indicated by the percentages of
seasonal capacity entitlement in column (7) of table 2 of appendix A.

\(2\) All long-term energy with capacity contractors will be required to
maintain a minimum power schedule in order to meet water release
constraints and permit offpeak purchase of energy which may be required
to meet Western\'s total energy or capacity obligations. The minimum
schedule requirement may be changed as necessary to meet changing water
release constraints, resource constraints, or seasonal variation in
hydrologic conditions. Upon request by the contractor, the LAO may waive
or reduce the requirement for a minimum schedule.

\(3\) The monthly minimum percentage of each contractor\'s seasonal
capacity entitlement which must be scheduled is:

[Winter season/percentages]{.underline} [Summer
season/percentages]{.underline}

October \-\-- 19 April \-\-\-\-\-- 19

November \-- 19 May \-\-\-\-\-\-\-- 21

December \-- 22 June \-\-\-\-\-\-- 24

January \-\-- 21 July \-\-\-\-\-\-- 32

February \-- 17 August \-\-\-\-- 25

March \-\-\-\-- 17 September \-- 17

\(4\) Each contractor electing to utilize the pumped-storage energy
feature of Fry-Ark must schedule this energy into and out of the energy
account as described in part V.A.2.c. of these Criteria.

b\. Accounting and Billing: (1) The amounts of capacity to be paid for
by the contractor will be determined in accordance with accounting
procedures set forth in the contracts and will be based on the seasonal
capacity entitlement. Said accounting procedures will include
determining the amounts of energy delivered to the contractor at each
point of delivery and shall establish the amounts of Federal energy
delivered over the LAO transmission system to each contractor at each
point of delivery.

\(2\) Firm energy with associated capacity will be billed at a blended
P-SMBP-WD and Fry-Ark rate to recover the revenue requirements of the
individual projects.

\(3\) These procedures will also provide for billing at multiple points
of delivery. If the contractor\'s distribution system is operated as to
permit power to flow between points of delivery, accounting and billion
will be on a coincidental basis. Otherwise, accounting and billing will
be on a noncoincidental basis.

\(4\) The cost of energy purchased on behalf of a contractor, as
specified in V.B.3., \"Other Services,\" each month by the LAO in excess
of that necessary to meet LAO contractual obligations shall be the
average cost of such purchases during the month. The cost of capacity
purchased on a passthrough cost basis on behalf of a contractor each
month by the LAO to meet LAO contractual obligations shall also be the
average cost of such purchases during the month. Western\'s allocable
costs will be added to the cost of these purchases. These costs shall be
accrued during the month in which they are incurred. To the extent they
were not anticipated and collected during the same month, they will be
billed to contractors during the following month or portion thereof, as
the LAO deems appropriate, along with the regular monthly power bill.
Trust funds will be established prior to Western\'s expenditures for
such purchases.

4\. Delivery Conditions: a. Location and Voltage: All delivery points
will be on the LAO transmission system. Normal delivery will be made at
LAO transmission system voltages. Deliveries may continue to be made at
subtransmission voltages at power-plant, substation, and tap locations
where contractors already have systems operating at such lower voltage
levels.

b\. Modifications to Facilities: Modifications to existing facilities
and alternate or additional delivery points requested by contractors may
be permitted at the discretion of the LAO, with costs for such
modifications being assigned to the appropriate parties. Requests for
substations or taps will be considered on a case-by-case basis, with
final determination by the LAO.

c\. Federal Transmission: Energy other than LAO energy will be
transmitted over the LAO transmission system to the extent that
transmission capacity is determined by the LAO to be available. The
contractor shall pay for such service at the established rate for LAO
transmission service.

d\. Delivery Beyond the LAO Transmission System: All costs, including
losses, for delivery of energy beyond the LAO transmission system will
be the responsibility of the contractor.

The following alternatives are available to contractors for
accomplishing delivery of LAO energy beyond the LAO transmission system:

\(1\) The contractor(s) may construct all facilities to accept delivery
from the LAO transmission system at established voltage(s). The basic
design of any facilities which interconnect with the LAO transmission
system is subject to LAO approval.

\(2\) Arrangements may be made with a third party to transmit and
deliver energy to a contractor\'s point of use. Such arrangements will
normally be made by the contractor, or by a group of contractors. When
the contractor makes its own transmission arrangements, the contractor
will be billed directly by the transmission agent and will pay the
transmission charges directly to the transmission agent. If the LAO
contracts for the transmission on behalf of the contractor or group of
contractors, the LAO will pass the costs, along with associated
allocable costs, to the contractor(s).

\(3\) The LAO may construct the transmission facilities required beyond
the existing LAO transmission system. Payment for the constructed
facilities may be borne by the P-SMBP-WD, Fry-Ark, future projects, or
the beneficiaries thereof, as determined by Western.

E. Application Procedures

Western hereby requests all qualified applicants to apply to the Area
Manager, Loveland Area Office, in writing, for an allocation of energy
and capacity under these Criteria. Applications from each potential
allottee must be received in Western Loveland Area Office at P.O. Box
3700, Loveland, Colorado 80539, no later than the close of business on
April 1, 1986. Applicants must be identify the kWh/kW desired for both
the summer and winter seasons. Western\'s Administrator will allocate
the available resources under the terms of these Criteria only to those
applicants who are qualified and who provide a request for energy by the
specified data. Proposed allocations will be published in the Federal
Register for public comment prior to finalization.

VI\. Appendix A \-- Derivation of Marketable Resources:

A. Derivation of P-SMBP-WD Marketable Resources

Western and Reclamation have conducted a series of joint studies to
quantify post-1989 water systems operations and the corresponding
capabilities of the P-SMBP-WD power system, including its capabilities
for hydrothermal. This summary describes the methodology and procedures
for defining and quantifying the power resources of the P-SMBP-WD for
the post-1989 time period.

1\. At-Plant Capability Basis for Existing Allocations: The firm power
allocations established in 1962 were based on Reclamation\'s 1956
hydrology study. The results of that study are summarized in table 2 of
\"Level 1 Report, Hydropower Capability and energy of P-SMBP-WD, August
1980.\" After considering losses and pumping requirements, the average
year energy production capability was 1,860 GWh. Based on the projected
load pattern of its preference contractors at that time, Reclamation
determined that this average year energy production capability would
support firm power allocations of 346 MW in the winter season and 384 MW
in the summer season. This allocation of resources included project use
loads.

After the allocations were made, each contractor\'s Federal entitlement
was a proportionate share of its total load. The proportionate share was
determined by the ratio of the contractor\'s seasonal CROD to its
seasonal peak demand.

From 1962 until 1983, the difference between the firm generation
capacity allocated and the actual available generation capacity was
marketed on a seasonal basis.

Since Reclamation\'s 1956 hydrology study and the 1962 allocation, there
have been many changes on the P-SMBP-WD system. Contractor loads and
load patterns have changed substantially. The expiration of most
existing contracts in 1989 and the requirement to develop a post-1989
marketing plan in conjunction with these changes and proposed further
changes before 1989 promoted the need for an update of the 1956
Reclamation hydrology study.

Western and Reclamation determined that three levels of study effort
were required. The first level was an update of the 1956 study assuming
initial water conditions and the system configuration existing in 1980.
The second level of effort was a followup of the 1980 update to
determine the hydrothermal integration capability of the P-SMBP-WD
system. The purpose of that effort was to provide the hydrologic and
load obligation basis for marketing unallocated firm generation capacity
and energy production capability between 1983 and 1989.

Following the second level study, additional generation capacity of 72
MW in the winter season and 79 MW in the summer season with non-Federal
energy supplied by other entities was allocated to preference
contractors through 1989. The total capacity allocated through the 1989
summer season now is 418 MW in the winter season and 463 MW in the
summer season. The total energy obligation associated with this
generation capacity is 1,860 GWh/year.

2\. At-Plant Capability for Projected 1990 Conditions: The third level
of study effort was a long-term hydrology study using a projected 1990
system configuration and an update of the hydrothermal integration
capability reflecting 1990 conditions (Task No. 2 Report, Hydrothermal
Integration Capability-Study of the P-SMBP-WD, June 1983). Table 1,
column (1), summarizes the results of this effort and is the basis for
determining the P-SMBP-WD resource to be allocated in the post-1989
period.

B. Derivation of Fry-Ark Resources

The Fry-Ark resources available were computed by Western, based upon a
1974 Reclamation study and an updated study done in 1983 by the Fry-Ark
Project Office. These studies determined average inflows available for
energy production at the Mt. Elbert Powerplant.

C. Derivation of marketable Resources From Operational Integration of
P-SMBP-WD and Fry-Ark Resources

Table 1 shows the at-plant and at-load energy production capability of
the operationally integrated P-SMBP-WD and Fry-Ark resources. These
resources, available for marketing, consist of the integrated energy
production capability of LAO resources minus losses, project use, and
existing special use loads.

Table 2, column (6), shows the marketable generation capacity of the
operationally integrated resources. The resources thus available for
marketing consists of the integrated generation capacity of LAO
resources minus necessary reserves, projects use and existing special
use loads.

Table 3 shows the reservations of marketable long-term firm energy with
capacity for new and existing contractors.

Project use and existing special use loads are quantified in tables 1
and 2 and are defined as:

Project Use

1\. P-SMBP-WD Pumps: Pumps at Lake Granby, Willow Creek, and Flatiron
operated by Reclamation, which are an integral part of the P-SMBP-WD
system. Power is supplied to operate these pumps as project use under
Federal Reclamation law.

2\. Burlington Northern Railroad: A Reclamation contract, with no
expiration date, for electric service for light and ventilation in
Boysen Tunnel; entered into as compensation for inundation of the
original tunnel by Reclamation when Boysen Dam was constructed.

3\. Colorado River Improvement Pumps: Seven Reclamation contracts with
no expiration date, for power to operate pumps used for gravity
irrigation purposes along the Colorado River. These contracts were made
as compensation for depletions of the Colorado River caused by the
Colorado-Big Thompson Project.

Existing Special Use

1\. Highland Hanover Irrigation District, Owl Creek Irrigation District,
Upper Bluff Irrigation District: Three Reclamation contracts which
Reclamation has advised Western to treat as project use loads.

2\. Goshen Irrigation District, Midvale Irrigation District: Two Western
contracts which will not expire prior to the effective date of these
criteria.

3\. U.S. Forest Service: Two Western contracts for electric service to
the Forest Service\'s Blue Ridge Repeater Station and to Arapahoe
National Recreation Area which will not expire prior to the effective
date of these Criteria.

4\. U.S. National Park Service: A Western contract with no expiration
date, for electric service to Rocky Mountain National Park.

Issued at Golden, Colorado January 17, 1986.

William H. Clagett,

Administrator.

Appendix A

Table 1

Energy Capability With

Operational Integration of

P-SMBP-WD and Fry-Ark

(MWh)

[                                                                                                   ]{.underline}

\(1\) (2) (3) (4) (5) (6) (7)

At Plant At Plant Project And Total

Energy Energy At Plant Total Energy Existing Special Marketable

P-SMBP-WD Fry-Ark Total Energy At Load Use Loads Energy At

[1]{.underline}/ [2]{.underline}/ [3]{.underline}/ Load %

[                                                                                                   ]{.underline}

October 172,400 5,957 178,357 166,423 8,464 157,960 16.9

November 173,800 5,617 179,417 167,430 9,479 157,951 16.9

December 188,700 5,542 194,242 181,288 9,215 172,073 18.5

January 184,500 5,504 190,004 177,329 9,668 167,661 18.0

February 144,500 5,429 149,929 139,879 7,492 132,387 14.2

# March 158,200 5,429 163,629 152,683 8,173 144,510 15.5   

# Winter total 1,022,100 33,478 1,055,578 985,031 52,490 932,541 100   

April 186,400 4,562 190,962 178,266 9,077 169,189 14.6

May 198,800 1,093 199,893 186,768 9,435 177,333 15.3

June 219,300 3,732 223,032 208,275 5,199 203,076 17.6

July 272,800 4,939 277,739 259,349 5,517 253,832 22.0

August 218,100 5,844 223,944 209,033 5,159 203,874 17.6

# September 159,000 4,599 163,599 152,692 4,695 147,996 12.9   

# Summer total 1,254,400 24,769 1,279,169 1,194,383 39,082 1,155,300 100   

Total 2,276,500 58,247 2,334,747 2,179,414 91,573 2,087,841

[1]{.underline}/ From Table 10 Task No. 2 Report. Annual energy of
80,100 MWh has been added to column (1) figures and subsequently added
to the figures in column (5). This is the load of the P-SMBP-WD pumps.

[2]{.underline}/ Based on long-term hydrology study performed by Bureau
of Reclamation \-- Fryingpan-Arkansas Project Office.

[3]{.underline}/ Total energy at load=\[(col 2/1.05)+col 1\]/1.07.

Appendix A

Table 2

Capacity With

Operational Integration

Of

P-SMBP-WD and Fry-Ark

(MW)

[                                                                                              ]{.underline}

\(1\) (2) (3) (4) (5) (6) (7)

P-SMBP-WD

Capacity Project and

At 90% Fry-Ark Maintenance Reserves Existing Special Marketable Percent

Probability Capacity Required Required Use Required Capacity Maximum

[1]{.underline}/ [3]{.underline}/

[                                                                                              ]{.underline}

October 484.0 200.0 67.7 48.0 1.023 591.3 92.6

November 477.0 200.0 70.3 48.0 0.413 582.3 91.2

December 483.0 200.0 20.0 48.0 0.532 638.5 [2]{.underline}/ 100.0

January 478.0 200.0 32.0 48.0 0.604 621.4 97.3

February 466.0 200.0 64.5 48.0 0.447 577.1 90.4

March 480.0 200.0 131.8 48.0 0.399 523.8 82.0

April 467.0 200.0 50.0 48.0 1.401 591.6 82.6

May 497.0 200.0 115.0 48.0 2.635 555.4 77.5

June 517.0 200.0 23.1 48.0 3.251 666.6 93.0

July 557.0 200.0 13.0 48.0 3.533 716.5 [2]{.underline}/ 100.0

August 531.0 200.0 73.9 48.0 3.266 629.8 87.9

September 505.0 200.0 65.6 48.0 3.223 612.2 85.4

[1]{.underline}/ Total reserve requirement is 48 MW \-- half of this
total required to be spinning, therefore only half, or 24 MW depletes
the available water supply and only half is subtracted from the
available capacity.

[2]{.underline}/ In December and July, the Contractor\'s monthly
capacity entitlement will equal its seasonal capacity entitlement. In
the other months it will be the indicated percentage of the appropriate
seasonal entitlement.

[3]{.underline}/ Includes no reduction for P-SMBP-WD pumps. These are
operated only during offpeak hours.

RESERVATION Appendix A

OF

RESOURCES Table 3

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

##  WINTER SUMMER YEAR     

Energy Capacity Energy Capacity Energy

(MWH) (MW) (MWH) (MW) (MWH)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

New Contractors 75,750 51.9 93,844 58.2 169,594

[5]{.underline}/ [4]{.underline}/ [5]{.underline}/ [4]{.underline}/
[2]{.underline}/

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Existing Contractors 856,791 586.6 1,061,456 658.3 1,918,247

[5]{.underline}/ [4]{.underline}/ [5]{.underline}/ [4]{.underline}/
[6]{.underline}/

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Totals
932,541 638.5 1,155,300 716.5 2,087,841

[1]{.underline}/ [3]{.underline}/ [1]{.underline}/ [3]{.underline}/
[1]{.underline}/

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[1]{.underline}/ Marketable Energy at Load from Column 6, Table 1.

[2]{.underline}/ Difference of total energy reserved for existing
contractors (see note 6) and total annual energy resource.

[3]{.underline}/ Marketable seasonal capacity (100% months, Table 2).

[4]{.underline}/ Capacity reservations for each contractor group are the
product of the total seasonal capacity and the ratio of each contractor
group\'s annual energy reservation to the total annual energy
reservation.

[5]{.underline}/ Energy reservations for each contractor group are the
product of the total seasonal energy and the ratio of each contractor
group\'s annual energy reservation to the total annual energy
reservation.

[6]{.underline}/ Annual energy reserved for existing contractors is
equal to the energy available for allocation in 1962 from the P-SMBP-WD
(1,860 GWh) plus the flowthrough energy from Fry-Ark (58.247 GWh).

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