[Federal Register Volume 75, Number 26 (Tuesday, February 9, 2010)]
[Notices]
[Pages 6380-6383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-2838]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Provo River Project Rate Order No. WAPA-149

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order Concerning a Power Rate Formula.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-149 placing a power rate formula for the Provo River 
Project (PRP) of Western Area Power Administration (Western) into 
effect on an interim basis. The provisional power rate formula will 
remain in effect on an interim basis until the Federal Energy 
Regulatory Commission (FERC) confirms, approves, and places it into 
effect on a final basis, or until the power rate formula is replaced by 
another power rate formula.

DATES: The provisional power rate formula will be placed into effect on 
an interim basis on April 1, 2010, and will be in effect until FERC 
confirms, approves, and places the provisional power rate formula in 
effect on a final basis for 5 years ending March 31, 2015, or until 
superseded.

FOR FURTHER INFORMATION CONTACT: Ms. LaVerne Kyriss, Acting CRSP 
Manager, Colorado River Storage Project Management Center, Western Area 
Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake 
City, UT 84111-1580, (801) 524-5493, e-mail <a href="/cdn-cgi/l/email-protection#bdd6c4cfd4cecefdcadccddc93dad2cb"><span class="__cf_email__" data-cfemail="bfd4c6cdd6ccccffc8decfde91d8d0c9">[email protected]</span></a>, or Mr. 
Rodney Bailey, Rates Manager, Colorado River Storage Project Management 
Center, Western Area Power Administration, 150 East Social Hall Avenue, 
Suite 300, Salt Lake City, UT 84111-1580, (801) 524-4007, e-mail 
<a href="/cdn-cgi/l/email-protection#8bf9e9eae2e7eef2cbfceafbeaa5ece4fd"><span class="__cf_email__" data-cfemail="1b69797a72777e625b6c7a6b7a357c746d">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The PRP, which includes Deer Creek Dam on 
the Provo River in Utah, was authorized in 1935. Construction of the 
dam began in 1938 and was completed in 1951. The Deer Creek Powerplant 
was authorized on August 20, 1951, construction began in 1956, and was 
completed in 1958; generation began that same year. Its maximum 
operating capacity is 5,300 kilowatts.
    The PRP power is marketed according to a marketing plan that was 
approved and published in the Federal Register on November 21, 1994. 
This marketing plan allows Western to market the output of the PRP to 
customers of Utah Municipal Power Agency, Utah Associated Municipal 
Power Systems, and Heber Light and Power (Customers) in the Provo River 
drainage area.
    Contract Nos. 94-SLC-0253, 94-SLC-0254, and 07-SLC-0601 between the 
United States and Customers require that the amount of each annual 
installment be established in advance by Western and submitted to the 
Customers on or before August 31 of the year preceding the appropriate 
fiscal year. Each fiscal year, Western will estimate the Deer Creek 
Powerplant (DCP) expenses by preparing a power repayment study, which 
will include estimates of operation, maintenance, and replacement costs 
for the DCP.
    Each annual installment pays the annual amortized portion of the 
United States' investment in the Deer Creek Dam and Reservoir 
hydroelectric facilities with interest and the associated operation, 
maintenance, and replacement (OM&R) costs. Since the repayment schedule 
does not depend upon the power and energy made available for sale or 
the rate of generation each year, the Customers pay all OM&R expenses 
of the PRP and, in return, receive all of the energy produced by the 
PRP. Western will continue to provide the Customers a revised annual 
installment by August 31 of each year using the same methodology.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and

[[Page 6381]]

transmission rates to Western's Administrator, (2) the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to the Deputy Secretary of Energy, and (3) the authority to confirm, 
approve, and place into effect on a final basis, to remand, or to 
disapprove such rates to FERC. Existing DOE procedures for public 
participation in power rate adjustments (10 CFR 903) were published on 
September 18, 1985.
    Under Delegation Order Nos. 00-037.00 and 00-001.00C, 10 CFR 903, 
and 18 CFR 300, I hereby confirm, approve, and place Rate Order No. 
WAPA-149 into effect on an interim basis. The renewal of the power rate 
formula will be promptly submitted to FERC for confirmation and 
approval on a final basis.

    Dated: February 1, 2010.
Daniel B. Poneman,
Deputy Secretary.

Order Confirming, Approving, and Placing the Power Rate Formula for the 
Provo River Project Into Effect on an Interim Basis

    This rate was established in accordance with section 302 of the 
Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This Act 
transferred to and vested in the Secretary of Energy the power 
marketing functions of the Secretary of the Department of the Interior 
and the Bureau of Reclamation under the Reclamation Act of 1902 (ch. 
1093, 32 Stat. 388), as amended and supplemented by subsequent laws, 
particularly section 9(c) of the Reclamation Project Act of 1939 (43 
U.S.C. 485h(c)), and other acts that specifically apply to the Provo 
River Project (PRP).
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to Western's Administrator, (2) the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to the Deputy Secretary, and (3) the authority to confirm, approve, and 
place into effect on a final basis, to remand, or to disapprove such 
rates to FERC. Existing DOE procedures for public participation in 
power rate adjustments (10 CFR part 903) were published on September 
18, 1985.

Acronyms and Definitions

    As used in this rate order, the following acronyms and 
definitions apply:
Administrator: The Administrator of the Western Area Power 
Administration.
CRSP: Colorado River Storage Project.
Contracts: Contract No. 94-SLC-0254 with Utah Municipal Power Agency 
effective December 22, 1994, Contract No. 94-SLC-0253 with Utah 
Associated Municipal Power System effective January 19, 1995, and 
Contract No. 07-SLC-0601 with Heber Light and Power effective April 
1, 2007. The Contracts are effective through September 30, 2024.
Customers: Utah Associated Municipal Power Systems, Utah Municipal 
Power Agency, and Heber Light and Power.
DCP: Deer Creek Powerplant.
DOE: Department of Energy.
DOE Order RA 6120.2: A Department of Energy order dealing with power 
marketing administration financial reporting and ratemaking 
procedures.
FERC: Federal Energy Regulatory Commission.
FY: Fiscal year; October 1 to September 30.
Heber: Heber Light & Power.
Interior: United States Department of the Interior.
kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
MW: Megawatt--the electrical unit of capacity that equals 1 million 
watts or 1,000 kilowatts.
NEPA: National Environmental Policy Act of 1969. (42 U.S.C. 4321, et 
seq.)
OM&R: Operation, Maintenance, and Replacement.
PRP: Provo River Project.
PRS: Power Repayment Study.
PRWUA: Provo River Water Users Association.
Reclamation: United States Department of the Interior, Bureau of 
Reclamation.
UAMPS: Utah Associated Municipal Power Systems.
UMPA: Utah Municipal Power Agency.
Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    This power rate formula takes effect on an interim basis beginning 
April 1, 2010, and will remain in effect pending FERC's approval of 
this or a substitute power rate formula on a final basis for a 5-year 
period ending March 31, 2015, or until superseded.\1\
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    \1\ FERC confirmed and approved the present Provo River Project 
rate on April 25, 2005, for a period through March 31, 2010 (111 
FERC ] 62089).
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Public Notice and Comment

    Paragraph 903.23(a) of 10 CFR 903 for rate extensions does not 
require either a consultation and comment period, or public 
information, or comment forums. Western considers this rate order a 
rate extension since the power rate formula is not changing; rather it 
is going through the course of a 5-year renewal. This request is for 
approval of the power rate formula renewal using the present 
methodology for calculating the annual installment. On April 20, 2009, 
Western met with the Customers and notified them of Western's intent to 
renew the present power rate formula. Western also discussed the FY 
2010 budget and capital expenditures. The Customers expressed their 
desire to continue using the power rate formula methodology through 
letter notifications.

Project Description

    Construction of the PRP began in May 1938, and the powerplant was 
completed in 1958. Presently, it has a generating capacity of 5,300 kW 
of power. Energy excess to the PRP purposes is marketed under a 
marketing plan published in the Federal Register on November 21, 1994. 
This marketing plan allows Western to market the output of the PRP to 
customers of UAMPS, UMPA, and Heber in the Provo River drainage area.

Power Repayment Studies

    Each FY, Western will estimate DCP expenses by preparing a PRS that 
will include estimates of OM&R costs for the DCP for the next FY. The 
PRS determines if power revenues will be sufficient to pay, within the 
prescribed time periods, all costs assigned to the PRP power function. 
Repayment criteria are based on law, policies (including DOE Order RA 
6120.2), and authorizing legislation.
    Western calculates the annual installment based on 2 years of data. 
The calculation includes the projected costs of the rate installment 
year (future FY) and an adjustment from the last historic FY. The 
adjustment is the surplus or deficit that occurs in the last historic 
year when actual costs and repayment obligations are compared with 
actual revenues. This surplus or deficit is combined with the costs for 
the projected rate installment year to arrive at the annual rate 
installment. Each annual installment pays the annual amortized portion 
of the United States' investment in the Deer Creek Dam and Reservoir 
hydroelectric facilities with interest and the associated OM&R. This 
repayment schedule does not depend upon the power and energy made 
available for sale or the rate of generation each year.

Certification of Rates

    Western's Administrator certified that the methodology for the 
provisional power rate formula renewal for the Provo River Project to 
calculate the annual installment is consistent with sound business 
principles. The methodology for the provisional power rate formula 
renewal was developed following administrative policies and applicable 
laws.

[[Page 6382]]

Statement of Revenue and Related Expenses

    The revenue requirements for the PRP are based on PRS calculations 
for future requirements, which will be adjusted when FY actuals are 
known. The following table summarizes revenues and expenses for the 
current 6-year power rate formula and the actual revenues and expenses 
for the same period.

             Provo River--Comparison of 6-Year Total Revenues and Revenue Distribution FY 2004-2009
                                                    [$1,000]
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                           Item                               Projected \1\      Actual \2\          Change
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Total Revenues............................................             1,857             1,532             (325)
Revenues Distribution:
    O&M...................................................             1,217             1,510               293
    Transmission..........................................               179               108              (71)
    Interest..............................................               165                23             (142)
    Investment Repayment..................................               264               316                52
    Surplus Revenues......................................                32             (425)             (457)
                                                           -----------------------------------------------------
        Total Revenues Distribution.......................             1,857             1,532             (325)
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\1\ Taken from FY 2003 Final PRS.
\2\ Although the rate process seeks approval for a 5-year period, 6 years of data are shown in the above table
  because FY 2009 is an estimate and is used for the current 2009 rate installment. Actual data is taken from
  the FY 2008 Final PRS.

    The following table provides a summary of the projected revenues 
and expenses during the provisional power rate formula period.

    Provo River Project 6-Year Projections Total Revenues and Revenue
                        Distribution FY 2010-2015
                                [$1,000]
------------------------------------------------------------------------
                                              FY 2010-2015 projections
------------------------------------------------------------------------
Total Revenues \1\........................                        $1,799
Revenue Distribution:
    O&M...................................                         1,799
    Interest \2\..........................                             0
    Investment Repayment \2\..............                             0
                                           -----------------------------
        Total Revenue Distribution........                         1,799
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\1\ Although the rate process seeks approval for a 5-year period (FY
  2010-2015), 6 years of data are shown in the above table because FY
  2010 is an estimate and is used for the current 2010 rate installment.
\2\ All capitalized investments are repaid and none are planned through
  2015; therefore, no interest or principal payments are projected.

Basis for Rate Development

    Each Customer is billed for electric service calculated every FY, 
payable in 12 equal monthly payments. Every FY, Western will estimate 
the PRP expenses by preparing a PRS which will include estimates of 
OM&R costs for the DCP. The amount of each monthly payment will be 
established in advance by Western and submitted to the Customers on or 
before August 31 of the year preceding the appropriate FY.
    The calculation of the annual installment and the monthly payments 
will include adjustments to the revenue requirements estimates. These 
adjustments deal with the difference between estimated and actual 
revenue requirements. If the revenue requirements are underestimated, 
an amount equal to the difference must be added to the next annual 
installment. Conversely, if revenue requirements are overestimated, the 
amount would be deducted from the next installment.
    In accordance with the Contracts, minor replacements and additions 
are included in the revenue requirements of the DCP. If major 
replacements and additions exceeding $5,000 but not greater than 
$25,000 are needed, the Customers will be given the option of financing 
their share of the cost or having the cost capitalized and amortized 
over the life of the replacement or addition. If the Customers select 
the latter, the costs will be capitalized at the current interest rate 
prescribed by DOE, under RA 6120.2, Paragraph 11B, ``Basic Policy for 
Rate Adjustment; Interest Rate Formula,'' in the fiscal year in which 
the replacement or addition is made. Such costs will be based on 
prudent and businesslike management practices and following established 
electric industry operation and maintenance practices. If extraordinary 
replacements exceeding $25,000 are needed, the Customers will consult 
with Reclamation, PRWUA, and Western about financing the replacement.
    The rate does not depend upon the power and energy made available 
for sale; instead, the Customers will pay the total PRP's annual 
powerplant revenue requirements in return for the total marketable PRP 
production. Each Customer will pay its proportional share of the 
revenue requirements identified in the PRS in 12 monthly installments.

Availability of Information

    Information about this power rate formula renewal is available for 
public review at the Colorado River Storage Project Management Center, 
Western Area Power Administration, 150 East Social Hall Avenue, Suite 
300, Salt Lake City, Utah or at http://www.wapa.gov/crsp/ratescrsp/adjustments.htm under CRSP rate adjustment documents for the Provo 
River Project's section.

[[Page 6383]]

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321, et seq.), Council on Environmental Quality 
Regulations (40 CFR parts 1500-1508), and DOE NEPA Regulations (10 CFR 
part 1021), Western has determined that this action is categorically 
excluded from the preparation of an environmental assessment or an 
environmental impact statement.

Determination Under Executive Order 12866

    Western has an exemption from centralized regulatory review under 
Executive Order 12866; accordingly, no clearance of this notice by the 
Office of Management and Budget is required.

Submission to Federal Energy Regulatory Commission

    The interim power rate formula renewal herein confirmed, approved, 
and placed into effect on an interim basis, together with supporting 
documents, will be submitted to FERC for confirmation and final 
approval.

Order

    In view of the above and under the authority delegated to me as the 
Deputy Secretary of Energy, I confirm and approve on an interim basis, 
effective April 1, 2010, a renewal of the rate formula for the Provo 
River Project of the Western Area Power Administration. The power rate 
formula shall remain in effect on an interim basis, pending FERC's 
confirmation and approval of it or a substitute rate on a final basis, 
through March 31, 2015.

    Dated: February 1, 2010.
Daniel B. Poneman,
Deputy Secretary.
[FR Doc. 2010-2838 Filed 2-8-10; 8:45 am]
BILLING CODE 6450-01-P


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