Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 3015 

1FERC confirmed and approved Rate Order 

WAPA–134 on May 16, 2008, in Docket No. EF08– 

5181. See United States Department of Energy, 

Western Area Power Administration, Loveland Area 

Projects, 123 FERC ¶ 62,137 (May 16, 2008). 

Environment 

No additional evaluation of the 

environmental impact of the proposed 

rate schedule changes was conducted 

since no change has been made to the 

currently-approved System rates which 

were determined to fall within the class 

of actions that are categorically 

excluded from the requirements of 

preparing either an Environmental 

Impact Statement or an Environmental 

Assessment. 

Order 

In view of the foregoing and pursuant 

to the authority delegated to me by the 

Secretary of Energy, I hereby confirm, 

approve and place in effect on an 

interim basis, effective January 1, 2009, 

the Southwestern Integrated System 

Rate Schedules P–06A and NFTS–06A 

which shall remain in effect on an 

interim basis through September 30, 

2010, or until the FERC confirms and 

approves the rates on a final basis. 

Dated: January 8, 2009. 

Jeffrey F. Kupfer, 

Deputy Secretary. 

[FR Doc. E9–895 Filed 1–15–09; 8:45 am] 

BILLING CODE 6450–01–P 

DEPARTMENT OF ENERGY 

Western Area Power Administration 

Loveland Area Projects—Rate Order 

No. WAPA–142 

AGENCY: Western Area Power 

Administration, DOE. 

ACTION: Notice of order concerning firm 

electric rates. 

SUMMARY: The Acting Deputy Secretary 

of Energy has confirmed and approved 

Rate Order No. WAPA–142 and Rate 

Schedule L–F8, placing firm electric 

service rates from the Loveland Area 

Projects (LAP) of the Western Area 

Power Administration (Western) into 

effect on an interim basis. The 

Provisional Rates will be in effect until 

the Federal Energy Regulatory 

Commission (FERC) confirms, approves, 

and places them into effect on a final 

basis or until they are replaced by other 

rates. The Provisional Rates will provide 

sufficient revenue to pay all annual 

costs, including interest expense, and 

repayment of power investment and 

irrigation aid within the allowable 

periods. 

DATES: Rate Schedule L–F8 will be 

placed into effect on an interim basis on 

the first day of the first full billing 

period beginning on or after February 1, 

2009, and will remain in effect until 

FERC confirms, approves, and places 

the rate schedule in effect on a final 

basis ending December 31, 2013, or 

until the rate schedule is superseded. 

FOR FURTHER INFORMATION CONTACT: Mr. 

James D. Keselburg, Regional Manager, 

Rocky Mountain Customer Service 

Region, Western Area Power 

Administration, 5555 East Crossroads 

Boulevard, Loveland, CO 80538–8986, 

telephone (970) 461–7201, or Mrs. 

Sheila D. Cook, Rates Manager, Rocky 

Mountain Customer Service Region, 

Western Area Power Administration, 

5555 East Crossroads Boulevard, 

Loveland, CO 80538–8986, telephone 

(970) 461–7211, e-mail 

scook@wapa.gov. 

SUPPLEMENTARY INFORMATION: The 

Deputy Secretary of Energy approved 

existing Rate Schedule L-F7 for firm 

electric service on an interim basis on 

November 1, 2007 (72 FR. 64061, 

November 14, 2007), for a 5-year period 

beginning on January 1, 2008, and 

ending December 31, 2012.1

The LAP firm electric service rates 

must be increased due to the economic 

impacts of the ongoing drought. The 

drought is causing a decrease in hydropower generation, leading to an increase 

in purchase power expenses and a 

decrease in revenue from non-firm 

energy sales. 

Rate Schedule L–F7 is being 

superseded by Rate Schedule L–F8. 

Under Rate Schedule L–F7, the 

composite rate is 32.42 mills per 

kilowatthour (mills/kWh), the firm 

energy rate is 16.21 mills/kWh, and the 

firm capacity rate is $4.25 per 

kilowattmonth (kWmonth). Under Rate 

Schedule L–F8, the Provisional Rates for 

firm electric service will result in a 

combined composite rate of 37.24 mills/ 

kWh. The firm energy rate will be 18.62 

mills/kWh (a Base component of 12.23 

mills/kWh and a Drought Adder 

component of 6.39 mills/kWh) and the 

capacity rate will be $4.88/kWmonth (a 

Base component of $3.21/kWmonth and 

a Drought Adder component of $1.67/ 

kWmonth). This is a 14.9 percent 

increase when compared to the LAP 

firm electric rates under Rate Schedule 

L–F7. 

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 the Administrator 

of Western; (2) the authority to confirm, 

approve, and place such rates into effect 

on an interim basis to the Deputy 

Secretary of Energy; and (3) the 

authority to confirm, approve, and place 

into effect on a final basis, to remand, 

or to disapprove such rates to FERC. 

Existing Department of Energy 

procedures for public participation in 

power rate adjustments (10 CFR part 

903) were published on September 18, 

1985. 

Under Delegation Order Nos. 00– 

037.00 and 00–001.00C, 10 CFR part 

903, and 18 CFR part 300, I hereby 

confirm, approve, and place Rate Order 

No. WAPA–142, the proposed LAP firm 

electric service rates, into effect on an 

interim basis. 

The new Rate Schedule L–F8 will be 

promptly submitted to FERC for 

confirmation and approval on a final 

basis. 

Jeffrey F. Kupfer, 

Acting Deputy Secretary of Energy. 

Department of Energy Deputy Secretary 

In the matter of: Western Area Power 

Administration, Rate Adjustment for 

the, Loveland Area Projects; Rate Order 

No. WAPA–142; Order Confirming, 

Approving, and Placing the Loveland 

Area Projects Firm Electric Service 

Rates Into Effect on an Interim Basis 

These rates for the Loveland Area 

Projects were 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 (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 that specifically 

apply to the project involved. 

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 the Administrator 

of Western; (2) the authority to confirm, 

approve, and place such rates into effect 

on an interim basis to the Deputy 

Secretary of Energy; and (3) the 

authority to confirm, approve, and place 

into effect on a final basis, to remand or 

to disapprove such rates to the Federal 

Energy Regulatory Commission. Existing 

DOE procedures for public participation 

in power rate adjustments (10 CFR part 

903) were published on September 18, 

1985. 

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3016 Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 

Acronyms and Definitions 

As used in this Rate Order, the 

following acronyms and definitions 

apply: 

Administrator: The Administrator of the 

Western Area Power Administration. 

Base: Revenue requirement component 

of the firm electric service rate 

including annual operation and 

maintenance expenses, investment 

repayment and associated interest, 

normal timing power purchases, and 

transmission costs. 

Capacity: The electric capability of a 

generator, transformer, transmission 

circuit, or other equipment. It is 

expressed in kilowatts. 

Capacity Rate: The rate which sets forth 

the charges for capacity. It is 

expressed in dollars per 

kilowattmonth. 

Composite Rate: The rate for 

commercial firm power which is the 

total annual revenue requirement for 

capacity and energy divided by the 

total annual energy sales. It is 

expressed in mills per kilowatthour 

and used for comparison purposes. 

Corps: United States Army Corps of 

Engineers. 

Criteria: The Post-1989 General Power 

Marketing and Allocation Criteria for 

the sale of energy with capacity from 

the Pick-Sloan Missouri Basin 

Program—Western Division and the 

Fryingpan-Arkansas Project. 

Customer: An entity with a contract that 

is receiving service from Western’s 

Rocky Mountain Region. 

Deficits: Deferred or unrecovered annual 

and/or interest expenses. 

DOE: United States Department of 

Energy. 

DOE Order RA 6120.2: An order 

outlining power marketing 

administration financial reporting and 

rate-making procedures. 

Drought Adder: Formula-based revenue 

requirement component including 

costs associated with the drought. 

Energy: Measured in terms of the work 

it is capable of doing over a period of 

time. It is expressed in kilowatthours. 

Energy Rate: The rate which sets forth 

the charges for energy. It is expressed 

in mills per kilowatthour and applied 

to each kilowatthour delivered to each 

customer. 

FERC: The Federal Energy Regulatory 

Commission. 

Firm: A type of product and/or service 

available at the time requested by the 

customer. 

FRN: Federal Register notice. 

Fry-Ark: Fryingpan-Arkansas Project. 

FY: Fiscal year; October 1 to September 

30. 

kW: Kilowatt—the electrical unit of 

capacity that equals 1,000 watts. 

kWh: Kilowatthour—the electrical unit 

of energy that equals 1,000 watts in 1 

hour. 

kWmonth: Kilowattmonth—the 

electrical unit of the monthly amount 

of capacity. 

LAP: Loveland Area Projects. 

L–F7: Loveland Area Projects existing 

firm electric service rate schedule 

(expires December 31, 2012, or until 

superseded). 

L–F8: Loveland Area Projects 

provisional firm electric service rate 

schedule to be effective February 1, 

2009 (to expire December 31, 2013, or 

when superseded). 

M&I: Municipal and industrial water 

development. 

mills/kWh: Mills per kilowatthour—the 

unit of charge for energy (equal to one 

tenth of a cent or one thousandth of 

a dollar). 

MW: Megawatt—the electrical unit of 

capacity that equals 1 million watts or 

1,000 kilowatts. 

MISO: Midwest Independent 

Transmission System Operator. 

NEPA: National Environmental Policy 

Act of 1969 (42 U.S.C. 4321, et seq.). 

Non-timing Power Purchases: Power 

purchases that are not related to 

operational constraints such as 

management of endangered species, 

species habitat, water quality, 

navigation, and control area purposes. 

O&M: Operation and Maintenance. 

P–SMBP: The Pick-Sloan Missouri Basin 

Program. 

P–SMBP—ED: Pick-Sloan Missouri 

Basin Program—Eastern Division. 

P–SMBP—WD: Pick-Sloan Missouri 

Basin Program—Western Division. 

Power: Capacity and energy. 

Power Factor: The ratio of real to 

apparent power at any given point 

and time in an electrical circuit. 

Generally it is expressed as a 

percentage ratio. 

Preference: The provisions of 

Reclamation Law which require 

Western to first make Federal power 

available to certain entities. For 

example, section 9(c) of the 

Reclamation Project Act of 1939 (43 

U.S.C. 485h(c)) states that preference 

in the sale of Federal power shall be 

given to municipalities and other 

public corporations or agencies and 

also to cooperatives and other 

nonprofit organizations financed in 

whole or in part by loans made under 

the Rural Electrification Act of 1936. 

Provisional Rate: A rate which has been 

confirmed, approved and placed into 

effect on an interim basis by the 

Acting Deputy Secretary. 

PRS: Power Repayment Study. 

Rate Brochure: An August 2008 

document explaining the rationale 

and background for the rate proposal 

contained in this Rate Order. 

Ratesetting PRS: The PRS used for the 

rate adjustment period. 

Reclamation: United States Department 

of the Interior, Bureau of Reclamation. 

Reclamation Law: A series of Federal 

laws. Viewed as a whole, these laws 

create the originating framework 

under which Western markets power. 

Regions: Western’s Rocky Mountain 

Region and Upper Great Plains 

Region. 

Revenue Requirement: The revenue 

required to recover annual expenses 

(such as O&M, purchase power, 

transmission service expenses, 

interest and deferred expenses) and 

repay Federal investments and other 

assigned costs. 

Rocky Mountain Region: The Rocky 

Mountain Customer Service Region of 

Western Area Power Administration. 

SPP: Southwest Power Pool. 

Timing Power Purchases: Power 

purchases that are due to operational 

constraints (e.g., management of 

endangered species, species habitat, 

water quality, navigation, control area 

purposes, etc.) not associated with the 

drought. 

Upper Great Plains Region: The Upper 

Great Plains Customer Service Region 

of Western Area Power 

Administration. 

Western: United States Department of 

Energy, Western Area Power 

Administration. 

Effective Date 

The Provisional Rates will take effect 

on the first day of the first full billing 

period beginning on or after February 1, 

2009, and will remain in effect until 

December 31, 2013, pending approval 

by FERC on a final basis. 

Public Notice and Comment 

Western followed the Procedures for 

Public Participation in Power and 

Transmission Rate Adjustments and 

Extensions, 10 CFR part 903, in 

developing these rates. The steps 

Western took to involve interested 

parties in the rate process were: 

1. The proposed rate adjustment 

process began April 9, 2008, when 

Western’s Rocky Mountain Region 

mailed a notice announcing informal 

meetings to all LAP preference 

customers and interested parties. The 

informal meetings were held on April 

29, 2008, in Denver, Colorado, and on 

April 30, 2008, in Sioux Falls, South 

Dakota. At these informal meetings, 

Western explained the rationale for the 

rate adjustment, presented rate designs 

and methodologies, and answered 

questions. 

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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 3017 

2. A Federal Register was published 

on August 15, 2008 (73 FR 47942), 

which announced the proposed rates for 

LAP, began the public consultation and 

comment period, and announced the 

public information and public comment 

forums. 

3. On August 22, 2008, Western 

mailed letters to all LAP preference 

customers and interested parties 

transmitting the FRN published on 

August 15, 2008. 

4. On September 9, 2008, beginning at 

9 a.m. (MDT), Western held a public 

information forum at the Ramada Plaza 

Hotel in Northglenn, Colorado. Western 

provided updates to the proposed firm 

electric service rates for LAP and P– 

SMBP—ED. Western also answered 

questions and gave notice that more 

information was available in the Rate 

Brochure. 

5. On September 9, 2008, beginning at 

11:30 a.m. (MDT), following the public 

information forum, a public comment 

forum was held. The comment forum 

gave the public an opportunity to 

comment for the record. No oral or 

written comments were received at this 

forum. 

6. On September 10, 2008, beginning 

at 8 a.m. (CDT), Western held a public 

information forum at the Holiday Inn in 

Sioux Falls, South Dakota. Western 

provided updates to the proposed firm 

electric service rates for LAP and P– 

SMBP—ED. Western also answered 

questions and gave notice that more 

information was available in the rate 

brochure. 

7. On September 10, 2008, beginning 

at 10:30 a.m. (CDT), following the 

public information forum, a public 

comment forum was held. The comment 

forum gave the public an opportunity to 

comment for the record. One oral 

comment was received at this forum. 

8. Western provided a Web site with 

all of the letters, time frames, dates and 

locations of forums, documents 

discussed at the information meetings, 

FRN, Rate Brochure, and all other 

information about this rate process. The 

Web site is located at http:// 

www.wapa.gov/rm/ratesRM/2009/ 

default.htm. 

9. Western received 15 comment 

letters and one oral comment during the 

consultation and comment period, 

which ended November 13, 2008. All 

formally submitted comments have been 

considered in preparing this Rate Order. 

Comments 

Written comments were received from 

the following organizations: 

City of Bayard, Nebraska 

City of Benkelman, Nebraska 

City of Fort Morgan, Colorado 

City of Holyoke, Colorado 

City of Gering, Nebraska 

City of Imperial, Nebraska 

City of Kimball, Nebraska 

City of Mitchell, Nebraska 

City of Torrington, Colorado 

Midwest Electric Consumers 

Association 

Prairie Band Potawatomi Nation 

Town of Fleming, Colorado 

Town of Julesburg, Colorado 

Town of Lyons, Colorado 

Village of Morrill, Nebraska 

A representative of the following 

organization made an oral comment: 

Minnesota Municipal Utilities 

Project Descriptions 

Loveland Area Projects 

The Post-1989 General Power 

Marketing and Allocation Criteria, 

published in the Federal Register on 

January 31, 1986 (51 FR 4012), 

integrated the resources of the P– 

SMBP—WD and Fry-Ark. This 

operational and contractual integration, 

known as LAP, allowed an increase in 

marketable resource, simplified contract 

administration, and established a 

blended rate for LAP power sales. 

The P–SMBP—WD and Fry-Ark retain 

separate financial status. For this 

reason, separate PRSs are prepared 

annually for each project. These PRSs 

are used to determine the sufficiency of 

the firm electric service rate to generate 

adequate revenue to repay project 

investment and costs during each 

project’s prescribed repayment period. 

The revenue requirement of the Fry-Ark 

PRS is combined with the P–SMBP— 

WD revenue requirement, derived from 

the P–SMBP PRS, to develop one rate 

for LAP firm electric sales. 

Pick-Sloan Missouri Basin Program— 

Western Division 

The P–SMBP was authorized by 

Congress in section 9 of the Flood 

Control Act of December 22, 1944, 

commonly referred to as the Flood 

Control Act of 1944. This multipurpose 

program provides flood control, 

irrigation, navigation, recreation, 

preservation and enhancement of fish 

and wildlife, and power generation. 

Multipurpose projects have been 

developed on the Missouri River and its 

tributaries in Colorado, Montana, 

Nebraska, North Dakota, South Dakota 

and Wyoming. 

In addition to the multipurpose water 

projects authorized by section 9 of the 

Flood Control Act of 1944, certain other 

existing projects have been integrated 

with the P–SMBP for power marketing, 

operation and repayment purposes. The 

Colorado-Big Thompson, Kendrick, and 

Shoshone Projects were combined with 

the P–SMBP in 1954, followed by the 

North Platte Project in 1959. These 

projects are referred to as the 

‘‘Integrated Projects’’ of the P–SMBP. 

The Flood Control Act of 1944 also 

authorized the inclusion of the Fort 

Peck Project with the P–SMBP for 

operation and repayment purposes. The 

Riverton Project was integrated with the 

P–SMBP in 1954, and in 1970 was 

reauthorized as a unit of P–SMBP. 

The P–SMBP is administered by two 

regions. The Rocky Mountain Region 

with a regional office in Loveland, 

Colorado, markets the Western Division 

power of P–SMBP and the Upper Great 

Plains Region with a regional office in 

Billings, Montana, markets power from 

the Eastern Division of P–SMBP. The 

Rocky Mountain Region markets LAP 

power (a combination of P–SMBP—WD 

and Fry-Ark power) in northeastern 

Colorado, east of the Continental Divide 

in Wyoming, west of the 101st meridian 

in Nebraska, and most of Kansas. The 

Upper Great Plains Region markets 

power in western Iowa, western 

Minnesota, Montana east of the 

Continental Divide, North Dakota, South 

Dakota, and the eastern two-thirds of 

Nebraska. P–SMB power is marketed to 

approximately 60 firm power Customers 

by the Rocky Mountain Region and 

approximately 300 firm power 

Customers by the Upper Great Plains 

Region. 

Fryingpan-Arkansas Project 

Fry-Ark is a trans-mountain diversion 

development in southeastern Colorado 

authorized by the Act of Congress on 

August 16, 1962 (Pub. L. 87–590, 76 

Stat. 389, as amended by Title XI of the 

Act of Congress on October 27, 1974 

(Pub. L. 93–493, 88 Stat. 1486, 1497)). 

The Fry-Ark diverts water from the 

Fryingpan River and other tributaries of 

the Roaring Fork River in the Colorado 

River Basin on the West Slope of the 

Rocky Mountains to the Arkansas River 

on the East Slope. The water diverted 

from the West Slope, together with 

regulated Arkansas River water, 

provides supplemental irrigation, M&I 

water supplies, and produces 

hydroelectric power. Flood control, fish 

and wildlife enhancement, and 

recreation are other important purposes 

of Fry-Ark. The only generating facility 

in Fry-Ark is the Mt. Elbert PumpedStorage powerplant on the East Slope. 

Power Repayment Studies—Firm 

Electric Service Rate 

Western prepares PRSs each FY to 

determine if revenues will be sufficient 

to repay, within the required time, all 

costs assigned to the LAP. Repayment 

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3018 Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 

criteria are based on law, policies 

including DOE Order RA 6120.2, and 

authorizing legislation. To meet Cost 

Recovery Criteria outlined in DOE Order 

RA 6120.2, revised studies and rate 

adjustments have been developed to 

demonstrate that sufficient revenues 

will be collected under the proposed 

rates to meet future obligations. 

Existing and Provisional Rates 

A comparison of the existing and 

Provisional Rates for LAP firm electric 

service follows: 

TABLE 1—COMPARISON OF EXISTING AND PROVISIONAL RATES LAP FIRM ELECTRIC SERVICE

Firm electric service 

Existing rate 

(January 1, 2008) 

L–F7 

Provisional rate 

L–F8 

Percent change 

(%) 

LAP Revenue Requirement (million) ..................................................................... $66.1 $75.9 14.9 

LAP Composite Rate (mills/kWh) .......................................................................... 32.42 37.24 14.9 

Firm Energy Rate (mills/kWh) ............................................................................... 16.21 18.62 14.9 

Firm Capacity Rate ($/kWmonth) .......................................................................... $4.25 $4.88 14.9 

Certification of Rates 

Western’s Administrator certified that 

the Provisional Rates for LAP firm 

electric service under Rate Schedule L– 

F8 are the lowest possible rates 

consistent with sound business 

principles. The Provisional Rates were 

developed following administrative 

policies and applicable laws. 

LAP Firm Electric Service Rate 

Discussion 

According to Reclamation Law, 

Western must establish power rates 

sufficient to recover operation, 

maintenance, purchased power and 

interest expenses, and repay power 

investment and irrigation aid. 

The Criteria, published in the Federal 

Register on January 31, 1986 (51 FR 

4012), operationally and contractually 

integrated the resources of the P– 

SMBP—WD and Fry-Ark (thereafter 

referred to as LAP). A blended rate was 

established for the sale of LAP firm 

electric service. The P–SMBP—WD 

portion of the revenue requirement for 

LAP firm electric service rates was 

developed from the revenue 

requirement calculated in the P–SMBP 

Ratesetting PRS. The P–SMBP—WD 

revenue requirement increased 

approximately 18.6 percent from the 

previous revenue requirement due to 

the economic impact of the drought, 

increased annual expenses, increased 

investments, and increased interest 

expenses associated with deficits. The 

revenue requirements for P–SMBP—WD 

are as follows: 

TABLE 2—SUMMARY OF P–SMBP–WD REVENUE REQUIREMENTS ($000) 

Current Revenue Requirement (Jan 08) (26.04 mills/kWh × 1,988,000,000 kWh) ............................................................................ $51,767 

Provisional Increase (4.85 mills/kWh × 1,988,000,000 kWh) ............................................................................................................. 9,642 

Provisional Revenue Requirement (26.04 + 4.85 = 30.89 mills/kWh × 1,988,000,000 kWh) ............................................................ 61,409 

The adjustment to the P–SMBP 

revenue requirement is a separate 

formal rate process which is 

documented in Rate Order No. WAPA– 

140. 

Fry-Ark 

The Fry-Ark portion of the revenue 

requirement for LAP firm electric 

service rates was developed from the 

revenue requirement calculated in the 

Fry-Ark Ratesetting PRS. The Fry-Ark 

revenue requirement increased 

approximately 1.25 percent due to 

increased O&M expenses and the 

economic impact of the drought. The 

revenue requirements for Fry-Ark are as 

follows: 

TABLE 3—SUMMARY OF FRY-ARK

REVENUE REQUIREMENTS ($000) 

Current Revenue Requirement 

(Jan 08) ....................................... $14,365 

Provisional Increase ....................... 180 

Provisional Revenue Requirement 14,545 

The following table compares LAP 

existing revenue requirements to the 

proposed revenue requirements: 

TABLE 4—SUMMARY OF LAP REVENUE

REQUIREMENTS ($000) 

Existing 

(January 

2008) 

Provisional 

P–SMBP—WD .. $51,767 $61,409 

Fry-Ark .............. 14,365 14,545 

Total LAP .......... 66,132 75,954 

Western will continue to identify its 

firm electric service revenue 

requirement using Base and Drought 

Adder components. The Base 

component is a fixed revenue 

requirement for each project that 

includes annual O&M expenses, 

investment repayment and associated 

interest, normal timing power 

purchases, and transmission costs. 

Normal timing power purchases are 

purchases due to operational constraints 

(e.g., management of endangered species 

habitat, water quality, navigation, 

control area purposes, etc.) not 

associated with the current drought in 

the Regions. The Base component can 

not be adjusted by Western without a 

public process. 

The Drought Adder component for 

each project is a formula-based revenue 

requirement that includes costs 

attributable to the present drought 

conditions in the Regions. The Drought 

Adder component includes costs 

associated with future non-timing 

power purchases to meet firm electric 

service contractual obligations not 

covered with available system 

generation due to the drought, 

previously incurred deficits due to 

purchased power debt that resulted 

from non-timing power purchases made 

during this drought, and the interest 

associated with the previously incurred 

and future drought debt. The Drought 

Adder component is designed to repay 

the drought debt within 10 years from 

the time the debt was incurred using 

balloon-payment methodology. For 

example, the drought debt incurred by 

Western in 2007 will be repaid by 2017. 

Adjustments to the Drought Adder rate 

component of less than or equal to 2 

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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 3019 

mills/kWh to the LAP composite rate 

will be made by Customer notification 

of a revised rate schedule with a January 

implementation date. 

The annual revenue requirement 

calculation formula is: Annual Revenue 

Requirement = Base Revenue 

Requirement + Drought Adder Revenue 

Requirement. Under this Provisional 

Rate, the LAP annual revenue 

requirement is $75.9 million (Base 

revenue requirement of $49.9 million 

plus a Drought Adder revenue 

requirement of $26 million). 

A comparison of the current and 

proposed rate components is listed in 

the following table: 

TABLE 5—SUMMARY OF LAP COMPONENTS

Existing rates 

L–F7 

Provisional rates 

L–F8 

Base Drought 

adder Total Base Drought adder Total 

Firm Capacity ($/kW-month) .................................................................... $3.13 $1.12 $4.25 $3.21 $1.67 $4.88 

Firm Energy (mills/kWh) .......................................................................... 11.92 4.29 16.21 12.23 6.39 18.62 

Continuing to identify the firm 

electric service revenue requirement 

using Base and Drought Adder rate 

components will assist Western in 

presenting the effects of the drought 

within the Regions, demonstrating 

repayment of the drought related costs, 

and being more responsive to changes in 

drought related expenses. Western will 

continue to charge and bill Customers 

firm electric service rates for energy and 

capacity, which are the sum of the Base 

and Drought Adder rate components. 

Western reviews its firm electric 

service rates annually. Western will 

review the Base rate component after 

the annual PRSs are complete, generally 

in the first quarter of the calendar year. 

If an adjustment to the Base rate 

component is necessary, Western will 

initiate a public process pursuant to 10 

CFR part 903 prior to making an 

adjustment. 

In accordance with the original 

implementation of the Drought Adder 

rate component, Western will review 

the Drought Adder rate component each 

September to determine if drought costs 

differ from those projected in the PRSs. 

If drought costs differ, Western will 

determine whether an adjustment to the 

Drought Adder rate component is 

necessary. Western will use recent 

Corps and Reclamation hydrological 

estimates and historical data to 

determine the estimated amounts for 

future purchase power costs. For any 

drought-related adjustments of less than 

or equal to 2 mills/kWh to the LAP 

Composite Rate, Western will notify 

Customers by letter in October and 

implement the adjustment in the 

following January billing cycle. For the 

portion of any planned incremental 

adjustment greater than 2 mills/kWh to 

the LAP composite rate, Western will 

engage in a public process pursuant to 

10 CFR part 903 prior to implementing 

that portion of the adjustment. Although 

decremental adjustments to the Drought 

Adder will occur, the adjustment cannot 

result in the Drought Adder being a 

negative number. Western will conduct 

a preliminary review of the Drought 

Adder in early summer and advise 

Customers by letter of any estimated 

change to the Drought Adder for the 

following January, with the final 

Drought Adder rate component 

adjustment verified by notification in 

the October letter to the Customers. 

Implementing the Drought Adder rate 

component adjustment on January 1 of 

each year will help keep the drought 

deficits from escalating, lower the 

interest expense due to drought deficits, 

demonstrate responsible deficit 

management, and provide prompt 

drought deficit repayments. 

Western’s current and Provisional 

Rate schedules permit a formula-based 

adjustment of the Drought Adder rate 

component of up to 2 mills/kWh. The 2 

mills/kWh cap is intended to place a 

limit on the amount the Drought Adder 

formula can be adjusted relative to 

associated drought costs without 

initiating a public process to recover 

costs attributable to the Drought Adder 

formula rate for any one-year cycle. 

Statement of Revenue and Related 

Expenses 

The following table provides a 

summary of projected revenue and 

expense data for the Fry-Ark firm 

electric service revenue requirement 

through the 5-year Provisional Rate 

approval period: 

TABLE 6—FRY-ARK COMPARISON OF 5-YEAR RATE APPROVAL PERIOD (FY 2009–2013) 

[Total revenue and expense ($000)] 

Existing rate Provisional rate Difference 

Total Revenues ................................................................................................................ $76,744 $78,983 $2,239 

Revenue Distribution: 

Expenses: 

O&M .......................................................................................................................... 25,336 28,868 3,532 

Purchase Power ....................................................................................................... 82 1,398 1,316 

Transmission ............................................................................................................ 19,889 20,027 138 

Interest 1 .................................................................................................................... 22,676 21,383 ¥1,293 

Total Expenses .................................................................................................. 67,983 71,676 3,693 

Principal Payments: 

Capitalized Expenses (deficits) ................................................................................ 0 0 0 

Original Project and Additions .................................................................................. 315 1,762 1,447

Replacements 2 ......................................................................................................... 8,446 5,545 ¥2,901 

Total Principal Payments .................................................................................. 8,761 7,307 ¥1,454 

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3020 Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 

2Western’s Continuing Fund (Emergency Fund) 

Policy can be found at http://www.wapa.gov/ 

powerm/pdf/repaypolicy.pdf. 

TABLE 6—FRY-ARK COMPARISON OF 5-YEAR RATE APPROVAL PERIOD (FY 2009–2013)—Continued 

[Total revenue and expense ($000)] 

Existing rate Provisional rate Difference 

Total Revenue Distribution ................................................................................ 76,744 78,983 2,239 

1The decrease in interest expense is primarily due to a decrease in projected replacements. 

2The decrease in replacement payments is primarily due to a reduction of planned capital replacements at Mt. Elbert by Reclamation. 

The summary of P–SMBP—WD 

revenues and expenses for the 5-year 

Provisional Rate approval period is 

included in the P–SMBP Statement of 

Revenue and Related Expenses that is 

part of Rate Order No. WAPA–140. 

Basis for Rate Development 

The existing rates for LAP firm 

electric service in Rate Schedule L–F7, 

which expire December 31, 2012, no 

longer provide sufficient revenues to 

pay all annual costs, including interest 

expense, and repay investment and 

irrigation aid within the allowable 

period. The adjusted rates reflect 

increases due to the economic impact of 

the drought, annual expenses, 

investments, and interest expense 

associated with drought deficits. The 

Provisional Rates will provide sufficient 

revenue to pay all annual costs, 

including interest expense, and repay 

power investment and irrigation aid 

within the allowable periods. The 

Provisional Rates will take effect on the 

first day of the first full billing period 

beginning on or after February 1, 2009, 

and will remain in effect on an interim 

basis, pending FERC’s confirmation and 

approval of them or substitute rates on 

a final basis, through December 31, 

2013. 

Emergency Fund Discussion 

Due to continuing below normal 

hydropower generation, Western may 

need to use the Continuing Fund 

(Emergency Fund) to pay for 

unanticipated purchase power and 

wheeling expenses necessary to meet its 

contractual obligations for the sale and 

delivery of power to its Customers. 

Should Western use this funding 

mechanism, Western will replenish the 

Continuing Fund (Emergency Fund) in 

accordance with law and Western’s 

current repayment policy.2

Comments 

The comments and responses below 

regarding the firm electric service rates 

are paraphrased for brevity when not 

affecting the meaning of the 

statement(s). Direct quotes from 

comment letters are used for 

clarification when necessary. 

The issues discussed are (1) Firm 

Electric Service Rate and (2) MISO 

Markets. 

1. Firm Electric Service Rate 

Comment: Western received 

numerous comments from Customers 

stating that they understand the need for 

the rate increases and support the 

concept of the Drought Adder, which 

establishes a window during which 

drought-related expenses are repaid. 

Response: Western appreciates the 

Customer support received for the rate 

adjustment proposal. Western continues 

separation of the annual revenue 

requirement into the Base and Drought 

Adder rate components. 

Comment: Many comments were 

received from Customers expressing 

appreciation for Western’s commitment 

to keep them informed and involved 

throughout this rate process. Customers 

were grateful for past cost-cutting 

measures and encouraged Western’s 

continued vigilance in keeping 

controllable costs as low as possible. 

Response: Western is pleased with the 

level of Customer interest and 

participation in the public meetings. 

Under the Flood Control Act of 1944, 

power is to be sold at the lowest 

possible rates consistent with sound 

business principles. Western is 

committed to keeping controllable costs 

as low as possible while continuing to 

meet our firm electric service 

commitments. 

Comment: Customers state that they 

are looking forward to working with 

Western’s staff on the projected Base 

rate adjustments as they pertain to 

Western’s draft Strategic Plan and 

Western’s potential involvement in 

changes associated with MISO and SPP. 

Response: Western’s goal is to work 

closely with our Customers throughout 

this and future rate adjustments. 

Changes to the Base rate are made 

through a public process and allow for 

Customer input. 

Comment: One Customer recognized 

the impacts that the extended drought 

has had on the current financial status 

of the P–SMBP and expressed support 

for the proposed firm power rate 

increases. The Customer also stated that 

the repayment of Federal investment 

through Federal power rates is taken 

very seriously. In the future, the 

Drought Adder will help to avoid a 

repetition of the financial impacts that 

are seen today. 

Response: Western acknowledges the 

financial impact of the extended 

drought, and the need for a firm power 

rate increase as well. The Drought 

Adder will allow Western to be more 

responsive to the changing hydrological 

conditions. 

Comment: A Customer representative 

acknowledged the financial challenges 

of this drought and made note of the 

difficulties Federal power customers are 

confronted with in fulfilling their 

financial responsibilities to the Federal 

government. They noted the good water 

years in the 1990’s generated significant 

revenue surplus to P–SMBP’s financial 

requirements. Also noted was Western’s 

administration of repayment according 

to repayment policies and the 

repayment of a significant amount of 

capital investment ahead of schedule. 

This early repayment benefitted both P– 

SMBP Customers and the Federal 

government, but left no financial 

resources to deal with the drought. 

Thus, the current repayment practices 

and policies exacerbate the impacts of 

the natural swings in hydrology. When 

the drought deficit is repaid, there will 

still be a substantial amount of paid 

ahead investments for the P–SMBP. The 

Customer would like to work with 

Western to address this issue. 

Response: Western acknowledges the 

financial impacts of the current drought 

and believes the ratemaking policy of 

identifying the Base and Drought Adder 

components will make the rates more 

responsive to hydrological changes 

caused by both drought and flush water 

years. The Drought Adder component 

may be adjusted annually up to 2 mills/ 

kWh without a public process to quickly 

address drought impacts, and the Base 

Rate component can only be adjusted 

through a public process. This practice 

will lower interest expense due to 

drought deficits and demonstrate 

responsible deficit management. 

Western acknowledges the statements 

regarding Western’s adherence to 

repayment policies and the associated 

repayment of a significant amount of 

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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 3021 

capital investment ahead of schedule in 

the 1990s. Prepayment is an integral 

part of the long-term plan for the project 

and has provided rate stability for 

Consumers while meeting Federal 

repayment obligations. The ability to 

reduce the Drought Adder rate 

component when normal hydrological 

conditions return to P–SMBP will allow 

appropriate recognition of repayment 

obligations. Western appreciates the 

Customer’s support and willingness to 

work with Western and will continue to 

discuss issues, impacts, and possible 

solutions with the Customers. 

2. MISO Markets 

Comment: Western has received 

numerous comments concerning the 

issue of whether the Upper Great Plains 

Region should join MISO and its Day 

Two Markets. The comments support a 

thorough review of costs and benefits to 

all of Western’s Customers, before a 

change is made. Comments suggest that 

administrative costs associated with the 

Day Two markets may impose a 

significant burden, especially on smaller 

Customers. There were concerns that if 

Western joins MISO and other area 

transmission owners that serve the 

Customers join the SPP, there could be 

significant cost issues associated with 

the delivery of Western’s allocation to 

preferred customer loads. Comments 

stated that if there are benefits to 

participating in the Day Two market, 

those benefits should flow to all of 

Western’s Customers, not just those that 

participate in joint dispatching 

arrangements inside the Integrated 

System. Concerns are that costs 

associated to deliver Western’s 

allocations to the edge of the system 

should be recovered as part of the total 

system transmission rate recovery, as it 

has been done in the past. 

Response: This comment is not 

directly related to the proposed rate 

adjustment and it is outside the scope 

of this rate process. However, Western 

is actively addressing these issues as 

well as other options and evaluating 

them based on cost and benefit to 

Western’s Customers. 

Comment: A commenter noted that 

MISO intends to start an ancillary 

service market. When that occurs, 

Western has preference power 

customers that are served in the MISO 

footprint. The question asked was, does 

Western have avoided cost due to the 

MISO market providing those ancillary 

services? Specifically, are there avoided 

cost in Schedule 3, Regulation and 

Frequency Response, Schedule 5, 

Operating Reserves Spinning, and 

Schedule 6, Operating Reserves 

Supplemental? 

Response: This comment is not 

directly related to the proposed rate 

action and is outside the scope of this 

rate process. However, Western is 

actively evaluating the MISO Module F, 

as well as other options. Changes in the 

electric utility market are still evolving. 

As Western moves forward in evaluating 

the impacts on market participation and 

changes for our Customers, we will 

continue to keep our Customers 

informed of our decisions regarding 

these matters. 

Availability of Information 

Information about this rate 

adjustment, including the PRSs, 

comments, letters, memorandums, and 

other supporting materials that were 

used to develop the Provisional Rates 

are available for public review in the 

Rocky Mountain Regional Office, 

Western Area Power Administration, 

5555 E. Crossroads Boulevard, 

Loveland, Colorado. 

Ratemaking Procedure Requirements 

Environmental Compliance 

In compliance with the National 

Environmental Policy Act (NEPA) of 

1969 (42 U.S.C. 4321–4347); 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 preparing 

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 the Federal Energy 

Regulatory Commission 

The Provisional Rates herein 

confirmed, approved, and placed into 

effect, together with supporting 

documents, will be submitted to FERC 

for confirmation and final approval. 

Order 

In view of the foregoing and under the 

authority delegated to me, I confirm and 

approve on an interim basis, effective on 

the first full billing period on or after 

February 1, 2009, Rate Schedule L-F8 

for the Loveland Area Projects of the 

Western Area Power Administration. 

The rate schedule shall remain in effect 

on an interim basis, pending FERC’s 

confirmation and approval of them or 

substitute rates on a final basis through 

December 31, 2013. 

Dated: January 8, 2009. 

Jeffrey F. Kupfer, 

Acting Deputy Secretary of Energy. 

Rate Schedule L–F8 

(Supersedes Rate Schedule L–F7) 

Effective February 1, 2009 

United States Department of Energy 

Western Area Power Administration 

Loveland Area Projects; Colorado, 

Kansas, Nebraska, Wyoming 

Schedule of Rates for Firm Electric 

Service 

(Approved Under Rate Order No. 

WAPA–142) 

Effective: The first day of the first full 

billing period beginning on or after 

February 1, 2009, through December 31, 

2013. 

Available: Within the marketing area 

served by the Loveland Area Projects. 

Applicable: To the wholesale power 

customers for firm electric service 

supplied through one meter at one point 

of delivery, or as otherwise established 

by contract. 

Character: Alternating current, 60 

hertz, three phase, delivered and 

metered at the voltages and points 

established by contract. 

Monthly Rates: 

Capacity Charge: $4.88 per kilowatt of 

billing capacity. 

Energy Charge: 18.62 mills per 

kilowatthour (kWh) of monthly 

entitlement. 

Billing Capacity: Unless otherwise 

specified by contract, the billing 

capacity will be the seasonal contract 

rate of delivery. 

Charge Components: 

Base: A fixed revenue requirement 

that includes operation and 

maintenance expense, investment 

repayment and associated interest, 

normal timing power purchases 

(purchases due to operational 

constraints, not associated with 

drought), and transmission costs. The 

Base revenue requirement is $49.9 

million. 

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3022 Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices 

1FERC confirmed and approved Rate Order No. 

WAPA–135 on April 14, 2008, in Docket No. EF08– 

5031–000. See United States Department of Energy, 

Western Area Power Administration, Pick-Sloan 

Missouri Basin Program, 123 FERC ¶ 62048 (April 

14, 2008). 

Base Capacity Base Revenue Requirement

Firm Billing Cap = 50%×

acity

Base Energy Base Revenue Requireme

=

= ×

$. /

%

3 21

50

kW month

nt

Annual Energy = 12 23 . mills/kWh

Drought Adder: A formula-based 

revenue requirement that includes 

future purchase power expense 

excluding timing power purchases, 

previous purchase power drought 

deficits, and interest on the purchase 

power drought deficits. For the period 

beginning on or after the first day of the 

first full billing period beginning on or 

after February 1, 2009, the Drought 

Adder revenue requirement is $26 

million. 

Drought Adder Capacity Drought Adder Revenue Requireme = 50%× nt

Firm Billing Capacity

Drought Adder Energy

= $. / 1 67 kW month

= × = 50 6 39 % $ . Drought Adder Revenue Requirement

Annual Energy

mills/kWh

Process: Any proposed change to the 

Base component will require a public 

process. The Drought Adder may be 

adjusted annually using the above 

formula for any costs attributed to 

drought of less than or equal to the 

equivalent of 2 mills/kWh to the LAP 

composite rate. Any planned 

incremental adjustment to the Drought 

Adder component greater than the 

equivalent of 2 mills/kWh to the LAP 

composite rate will require a public 

process. 

Adjustments: 

For Drought Adder: Adjustments 

pursuant to the Drought Adder 

component will be documented in a 

revision to this rate schedule. 

For Transformer Losses: If delivery is 

made at transmission voltage but 

metered on the low-voltage side of the 

substation, the meter readings will be 

increased to compensate for transformer 

losses as provided for in the contract. 

For Power Factor: None. The customer 

will be required to maintain a power 

factor at all points of measurement 

between 95-percent lagging and 95- 

percent leading. 

[FR Doc. E9–897 Filed 1–15–09; 8:45 am] 

BILLING CODE 6450–01–P 

DEPARTMENT OF ENERGY 

Western Area Power Administration 

Pick-Sloan Missouri Basin Program— 

Eastern Division-Rate Order No. 

WAPA–140 

AGENCY: Western Area Power 

Administration, DOE. 

ACTION: Notice of Order Concerning 

Firm Power Rates. 

SUMMARY: The Acting Deputy Secretary 

of Energy confirmed and approved Rate 

Order No. WAPA–140 and Rate 

Schedules P–SED–F10 and P–SED– 

FP10, placing firm power and firm 

peaking power rates from the Pick-Sloan 

Missouri Basin Program—Eastern 

Division (P–SMBP—ED) of the Western 

Area Power Administration (Western) 

into effect on an interim basis. The 

provisional rates will be in effect until 

the Federal Energy Regulatory 

Commission (FERC) confirms, approves, 

and places them into effect on a final 

basis or until they are replaced by other 

rates. The provisional rates will provide 

sufficient revenue to pay all annual 

costs, including interest expense, and 

repayment of power investment and 

irrigation aid within the allowable 

periods. 

DATES: Rate Schedules P–SED–F10 and 

P–SED–FP10 will be placed into effect 

on an interim basis on the first day of 

the first full billing period beginning on 

or after February 1, 2009, and will 

remain in effect until FERC confirms, 

approves, and places the rate schedules 

in effect on a final basis ending 

December 31, 2013, or until the rate 

schedules are superseded. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Robert J. Harris, Regional Manager, 

Upper Great Plains Region, Western 

Area Power Administration, 2900 4th 

Avenue North, Billings, MT 59101– 

1266, telephone (406) 247–7405, e-mail 

rharris@wapa.gov, or Ms. Linda CadyHoffman, Rates Manager, Upper Great 

Plains Region, Western Area Power 

Administration, 2900 4th Avenue North, 

Billings, MT 59101–1266, (406) 247– 

7439, e-mail cady@wapa.gov. 

SUPPLEMENTARY INFORMATION: The 

Deputy Secretary of Energy approved 

existing Rate Schedules P–SED–F9 and 

P–SED–FP9 for P–SMBP—ED firm and 

firm peaking electric service, 

respectively, on an interim basis on 

November 1, 2007 (72 FR 68,64,067 

November 14, 2007), for a 5-year period 

beginning on January 1, 2008, and 

ending December 31, 2012.1

Under Rate Schedule P–SED–F9, the 

composite rate is 24.49 mills per 

kilowatthour (mills/kWh), the firm 

energy rate is 13.99 mills/kWh, and the 

firm capacity rate is $5.65 per 

kilowattmonth (kWmonth). Under Rate 

Schedule P–SED–FP9, the firm peaking 

capacity rate is $5.10/kWmonth. These 

Rate Schedules are formula based with 

Base and Drought Adder components 

and provide for an up to 2 mills/kWh 

increase in the Drought Adder rate 

component. 

The current rate adjustment reflects a 

rate increase based on the P–SMBP 

Final Fiscal Year 2007 Power 

Repayment Study (PRS). The PRS sets 

the total annual P–SMBP—ED revenue 

requirement for 2009 for firm and firm 

peaking electric service at $283.0 

million, or a 19.9 percent increase. The 

current rates, including the 2 mills/kWh 

increase provided for under the Drought 

Adder formula rate component, are not 

sufficient to meet the P–SMBP—ED 

revenue requirements. 

The P–SMBP—ED revenue 

requirement increase is mainly 

attributed to the economic impacts of 

the drought. A decrease in hydro-power 

generation has caused purchase power 

expense to increase and revenue from 


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