[Federal Register Volume 62, Number 182 (Friday, September 19, 1997)]
[Notices]
[Pages 49218-49221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24950]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Transmission and Ancillary Services Rates, Loveland Area 
Projects, Notice of Proposed Rate Adjustments

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
transmission service and ancillary service rate adjustments (proposed 
rates) for the Loveland Area Projects (LAP). This action is necessary 
because the existing transmission rate (1993) is no longer sufficient 
to recover annual costs (including interest expense) and capital 
requirements.
    The Proposed Rates are scheduled to go into effect April 1, 1998. 
Western requests approval of a rate methodology for each service. Once 
approved, the rates will be adjusted on or about October 1 each year by 
updating the revenue requirement and load data to the most currently 
available. This Federal Register notice initiates the formal process 
for the proposed rates.
    The current firm transmission rate for LAP expires January 31, 
1999, but will be superseded by this rate adjustment for new and 
existing transmission service. Heretofore, there have been no rates for 
the six ancillary services defined by Federal Energy Regulatory 
Commission (FERC) Order 888. Please refer to Table 1 for a summary of 
the Proposed Rates and their methodology.

DATES: The consultation and comment period will begin on the date of 
publication of this Federal Register notice and will end December 18, 
1997. Written comments should be received by Western by the end of the 
comment period to be assured consideration. Western will present a 
detailed explanation of the proposed rate at the public information 
forum which will be held at the following date and time:
    1. October 23, 1997--1 p.m. MDT, Denver, CO.
    Western will receive written and oral comments at the public 
comment forum which will be held at the following date and time:
    2. November 18, 1997--1 p.m. MST, Denver, CO.

ADDRESSES: Western's public information forum will be held at the 
following place:

1. Fairfield Inn, 6851 Tower Road, Denver, CO 80249, (303) 576-9640

    Western's public comment forum will be held at the following place:

2. Fairfield Inn, 6851 Tower Road, Denver, CO 80249, (303) 576-9640

    Written comments are to be sent to: Regional Manager, Rocky 
Mountain Region (RMR), Western Area Power Administration, P.O. Box 
3700, Loveland, Colorado 80539-3003 or faxed to the Regional Manager at 
(970) 490-7213.

FOR FURTHER INFORMATION CONTACT: Daniel T. Payton, Rates Manager, RMR, 
Western Area Power Administration, P.O. Box 3700, Loveland, CO 80539-
3003, (970) 490-7442, or e-mail (<a href="/cdn-cgi/l/email-protection#a4c0d4c5ddd0cbcae4d3c5d4c58ac3cbd2"><span class="__cf_email__" data-cfemail="d6b2a6b7afa2b9b896a1b7a6b7f8b1b9a0">[email protected]</span></a>).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Proposed Rates for LAP Transmission
    A. Proposed Revenue Requirement for Transmission Service
    B. Network Transmission Service
    C. Firm Point-to-Point Transmission Service
    D. Non-Firm Point-to-Point Transmission Service
II. Proposed Rates for Ancillary Services
    A. Proposed Rate for Scheduling, System Control, and Dispatch 
Service
    B. Proposed Rate for Reactive Supply and Voltage Control from 
Generation Sources
    C. Proposed Rate for Regulation and Frequency Response Service
    D. Proposed Rate for Energy Imbalance Service
    E. Proposed Rate for Operating Reserves: Spinning, Supplemental, 
and Emergency Use
III. Table 1--Summary of LAP Proposed Service Rates
IV. Authorities

[[Page 49219]]

I. Proposed Rates for LAP Transmission

    The RMR will offer network, firm point-to-point, and non-firm 
point-to-point transmission service to all Transmission Customers. The 
proposed rates will be applicable to existing and future transmission 
service. As demonstrated in the rate methodology, Western will be 
taking transmission service on the same basis as other Transmission 
Customers. The cost of transmission service for serving Western's 
Contract Rates of Delivery will continue to be included in the LAP firm 
power rate, consistent with existing contracts. These contracts will 
expire in the year 2024.
    The RMR proposes to implement the LAP transmission rates in three 
steps:

Step 1--April 1, 1998

    The first step will be: the existing rate ($1.88/kW-Month) plus 
one-third of the difference between the existing transmission rate 
($1.88/kW-Mo) and the proposed rate. The revenue requirement for the 
first step is based on FY 1996 financial data; the load is based on 
1995 data.

Step 2--October 1, 1998

    The second step will be: the existing rate ($1.88/kW-Month) plus 
two-thirds of the difference between the existing rate and the 
recalculated rate based on financial and load data for FY 1997 (October 
1, 1996, to September 30, 1997).

Step 3--October 1, 1999

    The third step will be: the recalculated rate based on financial 
and load data for FY 1998 (October 1, 1997, to September 30, 1998).
    The transmission rates will be recalculated and revised every year 
effective October 1, based on the methodologies presented in the 
following sections. Western will provide notice of changes in rates no 
later than July 1 of each year.

I.A. Proposed Revenue Requirement for Transmission Service

    An annual fixed charge methodology was used to determine the 
revenue requirement to be recovered from network, firm, and non-firm 
transmission service. The annual transmission costs included are 
operation and maintenance expenses, administrative and general 
expenses, interest expense, and depreciation expense.

I.B. Network Transmission Service

    The monthly charge for network transmission service is the product 
of the Transmission Customer's load-ratio share times one-twelfth of 
the annual transmission revenue requirement. The current revenue 
requirement is $43,554,579.
    The customer's load-ratio share is the ratio of a network 
customer's network load to Western's LAP transmission system total 
load, calculated on a rolling 12-month basis (12 coincident peak (12-
cp)). The network customer's monthly network load is its hourly load 
coincident with Western's LAP transmission system monthly transmission 
system peak. The LAP transmission system total load is the monthly 
system peak minus the coincidental peak usage of all firm point-to-
point transmission service customers, plus the reserved capacity for 
all firm point-to-point transmission service customers. The 12-cp for 
the LAP transmission system is 1,118,245 kW, based on 1995 data.

I.C. Firm Point-to-Point Transmission Service

    The rate for firm point-to-point transmission service is the annual 
revenue requirement for transmission divided by the 12-cp monthly peak 
of the LAP transmission system. The current estimate is $3.25/kW-Month 
($43,554,579 / 1,118,245 kW / 12 months). Western may discount these 
rates to promote short-term firm sales.

I.D. Non-Firm Point-to-Point Transmission Service

    Non-firm transmission service is available for periods ranging from 
1 hour to 1 month. The rate for non-firm transmission service may be 
discounted based upon market conditions, but never higher than the firm 
point-to-point rate, converted to energy equivalent at 100% load 
factor. The current maximum rate is 4.45 mills/kWh ($3.25/kW-Month/730 
hours).

II. Proposed Rates for Ancillary Services

    Western will provide ancillary services, subject to availability, 
as described in Table 1 of this notice. The proposed rates are designed 
to recover only the costs incurred for the service(s). The ancillary 
services, as defined by FERC, are control area-based rates.
    It is anticipated that in June 1998, the Western Area Lower 
Missouri (WALM) control area will be merged with a portion of the 
existing Western Area Upper Colorado (WAUC) control area operated by 
Western's Colorado River Storage Project Customer Service Center, to 
form the Western Area Colorado Missouri (WACM) control area which will 
be operated by Western's RMR. The following ancillary service rate 
calculations are for the WACM control area, effective June 1998.
    An annual fixed charge methodology was used to determine the 
revenue requirement to be recovered by each ancillary service. The 
annual generation costs included are operation and maintenance 
expenses, administrative and general expenses, interest expense, and 
depreciation expense.

II.A. Proposed Rate for Scheduling, System Control, and Dispatch 
Service

    Scheduling, system control, and dispatch costs are calculated as an 
annual cost of all personnel and other related costs involved in 
providing the service for RMR customers. That cost is divided by the 
number of schedules per year to derive a rate per schedule per day.
    The rate for the WACM control area is $25.71 per schedule per day 
and will be in effect in June 1998.

II.B. Proposed Rate for Reactive Supply and Voltage Control From 
Generation Sources

    RMR's Reactive Supply and Voltage Response Service costs are 
calculated as an annual cost of Bureau of Reclamation generation plant 
investment for both LAP and Salt Lake City Area-Integrated Projects 
(SLCA-IP), and applying to that cost the percentage of the generation 
resource required to provide reactive support in the control area to 
yield an annual cost. That annual cost is then divided by the 12-cp 
average of the total load that requires VAR support in the control 
area, yielding a rate for the combined WACM control area effective June 
1998 of $0.12/kW-Month (or .27 mills/kWh for non-firm service, based on 
a 60 percent annual load factor).

II.C. Proposed Rate for Regulation and Frequency Response Service

    Western's Regulation and Frequency Response Service rate is 
determined by considering the annual revenue requirement of Bureau of 
Reclamation regulating plants for both LAP and SLCA-IP, and dividing 
that by the load requiring regulation in the WACM control area 
(exclusive of those known loads that provide their own automatic 
generation control). The resulting rate for the WACM control area 
effective June 1998 is $0.15/kW-Month (or .34 mills/kWh for non-firm 
service, based on 60 percent annual load factor).

II.D. Proposed Rate for Energy Imbalance Service

    The Energy Imbalance Service rate will be applied against 
deviations outside a 3 percent bandwidth (<plus-minus> 1.5

[[Page 49220]]

percent deviations), with a 2 MW deviation minimum.
    Negative excursions (under deliveries) greater than 1.5 percent and 
occurring more than five times per month will be assessed a penalty 
charge of 100 mills/kWh; e.g., the sixth time an under delivery occurs 
within a month, the 100 mills/kWh charge will be applied.
    Any positive excursion (over delivery) will be credited to the 
customer for 50 percent of the market value of the over delivery within 
30 days.

II.E. Proposed Rate for Operating Reserves: Spinning, Supplemental, and 
Emergency Use

    It is unlikely that reserves will be available from WACM resources 
on a long-term basis.
    If Western has Spinning or Supplemental Reserves available for 
short-term sale from WACM resources, Western will charge the LAP or the 
SLCA-IP firm power capacity rate in effect at the time of the sale. The 
current LAP firm power capacity rate is $2.85/kW-Month. The proposed 
SLCA-IP firm power capacity rate is $3.48/kW-Month.
    If Spinning or Supplemental Reserves are unavailable from WACM 
resources, Western may obtain the reserves on the open market for the 
customer and pass through the cost of those reserves, plus a cost for 
administration.
    When reserves are called on for Emergency Use, Western will assess 
a charge for energy used, at the greater of 30 mills/kWh or the 
prevailing market energy rate in the Region.
    The Transmission Customer will be responsible for the transmission 
service to get these reserves to their destination.

III. Table 1--Summary of LAP Proposed Service Rates

----------------------------------------------------------------------------------------------------------------
              Service                           Rate calculation or basis                    Proposed rate      
----------------------------------------------------------------------------------------------------------------
Network Transmission...............  Customer's Load Ratio Share *\1/12\* Annual      Based upon customer load  
                                      Transmission Revenue Requirement ($43,554,579).  share.                   
Firm Point-to-Point Transmission...  Total Annual Revenue Requirement/12 CP/12        $3.25/kW-month.           
                                      months ($43,554,579/1,118,245 kW/12).                                     
Non Firm Point-to-Point              Firm point-to-point rate/730 hours per month     Maximum of 4.45 mills/kWh.
 Transmission.                        ($3.25/kW-Month/730).                                                     
Scheduling, System Control, and      Annual cost of personnel and related costs/                                
 Dispatch.                            number of schedules per year.                                             
                                     Before consolidation into WACM: $1,098,873/      Before: $32.51/schedule/  
                                      33,800 schedules.                                day.                     
                                     After consolidation into WACM: $1,223,140/       After: $25.71/schedule/   
                                      47,580 schedules.                                day.                     
Reactive Supply and Voltage Control  Total Annual Revenue Requirement for Generation                            
 from Generation Sources.             *Percentage of Resource Capacity Used for                                 
                                      Reactive Power = Annual Revenue Requirement                               
                                      for Reactive Power/Load in Control Area                                   
                                      Requiring Reactive Power/12 months.                                       
                                     Before consolidation into WACM: $51,456,799      Before: $0.09/kW-Month.   
                                      *2.82%=$1,448,509; then, $1,448,509/1,383,432                             
                                      kW/12.                                                                    
                                     After consolidation into WACM: $73,299,264       After: $0.12/kW-Month.    
                                      *2.82%=$2,063,374; then $2,063,374/1,407,918                              
                                      kW/12.                                                                    
Regulation and Frequency Response..  Total Annual Revenue Requirement for Regulation/                           
                                      Load in Control Area Requiring Regulation/12/                             
                                      Months.                                                                   
                                     Before consolidation into WACM: $1,746,658/      Before: $0.11/kW-Month.   
                                      1,353,712 kW/12.                                                          
                                     After consolidation into WACM: $2,531,065/       After: $0.15/kW-Month.    
                                      1,407,918 kW/12.                                                          
Energy Imbalance...................  Charge for Energy Imbalance will be applied to   As described.             
                                      deviations outside a 3 percent bandwidth.                                 
                                     Negative deviations above 1.5 percent,                                     
                                      occurring more than five times per month, will                            
                                      be assessed 100 mills/kWh, with a 2 MW minimum                            
                                      deviation.                                                                
                                     Any Positive deviations above 1.5 percent will                             
                                      be credited to customer at 50 percent of                                  
                                      average monthly non-firm market price in WACM                             
                                      control area.                                                             
Spinning/Supplemental/Emergency Use  Anticipate no long-term surplus reserves         Spinning/Supplemental     
 Reserves.                            available for sale.                              Reserves will be charged 
                                                                                       the Current Firm Power   
                                                                                       Capacity Rates:          
                                     If available from a WACM resource on short-term  LAP: $2.85kW Month.       
                                      basis, Spinning/Supplemental reserves would be                            
                                      assessed the LAP or SLCA-IP firm power                                    
                                      capacity rate in effect at the time the                                   
                                      request is made.                                                          
                                     Spinning/Supplemental reserves are unavailable   SLCA-IP: $3.48/kW-Month   
                                      from a WACM resource, Western would offer to     (Proposed).              
                                      purchase and pass-through cost of the                                     
                                      reserves, plus a cost for administration.                                 
                                     Emergency Use reserves will be charged the       Emergency Use will be     
                                      greater of 30 mills/kWh or the prevailing        charged > of 30 mills/kWh
                                      market energy rate in the Region.                or prevailing market.    
----------------------------------------------------------------------------------------------------------------

IV. Authorities

    Transmission and ancillary services rates for the LAP are being 
established pursuant to the Department of Energy (DOE) Organization Act 
(42 U.S.C. 7101 et seq.) and the Reclamation Act of 1902 (43 U.S.C. 371 
et seq.), as amended and supplemented by subsequent enactments, 
particularly section 9(c) of the Reclamation Project Act of 1939 (43 
U.S.C. 485h(c)) and section 5 of the Flood Control Act of 1944 (16 
U.S.C. 825s) and other acts specifically applicable to the projects 
involved.
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary of DOE delegated: (1) 
The authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of Western; (2) the authority 
to confirm, approve, and place such rates into effect on an interim 
basis to the Deputy Secretary; and (3) the authority to

[[Page 49221]]

confirm, approve, and place into effect on a final basis, to remand, or 
to disapprove such rates to the FERC. Existing DOE procedures for 
public participation in power rate adjustments are found at 10 CFR part 
903.

Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601, 
et seq.), each agency, when required 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 initiation of the 
LAP transmission rate and ancillary service rate adjustments are 
related to non-regulatory services provided by Western at particular 
rates. Under 5 U.S.C. 601(2), rules of particular applicability 
relating to rates or services are not considered rules within the 
meaning of the act. Since the LAP transmission rates and ancillary 
services are of limited applicability, no flexibility analysis is 
required.

Environmental Compliance

    Western will conduct an environmental evaluation of the proposed 
rates and develop the appropriate level of environmental documentation 
pursuant to the National Environmental Policy Act (NEPA) of 1969 (42 
U.S.C. 4321 et seq.); the Council on Environmental Quality Regulations 
for implementing NEPA (40 CFR parts 1500 through 1508); and the DOE 
NEPA Implementing Procedures and Guidelines (10 CFR part 1021).

Determination Under Executive Order 12866

    DOE has determined that this is not a significant regulatory action 
because it does not meet the criteria of Executive Order 12866, 58 FR 
51735. Western has an exemption from centralized regulatory review 
under Executive Order 12866; accordingly, no clearance of this notice 
by Office of Management and Budget is required.

Availability of Information

    All brochures, studies, comments, letters, memoranda, or other 
documents made or kept by Western for developing the proposed rates, 
will be made available for inspection and copying at the RMR Office, 
located at 5555 East Crossroads Boulevard, Loveland, Colorado, 80537, 
during normal business hours.

    Dated: Sepember 11, 1997.
Michael S. Hacskaylo,
Acting Administrator.
[FR Doc. 97-24950 Filed 9-18-97; 8:45 am]
BILLING CODE 6450-01-P


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