[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5744-5748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02035]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Rocky Mountain Region Transmission, Ancillary Services, and Sale 
of Surplus Products--Rate Order No. WAPA-174

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Transmission, Ancillary Services, and Sale 
of Surplus Products Formula Rates.

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SUMMARY: The Western Area Power Administration (Western) Loveland Area 
Projects' (LAP) Transmission and Western Area Colorado Missouri 
Balancing Authority's (WACM) Ancillary Services formula rates under 
Rate Schedules L-NT1, L-FPT1, L-NFPT1, L-AS1, L-AS2, L-AS3, L-AS4, L-
AS5, L-AS6, L-AS7, L-AS9, and L-UU1 expire on September 30, 2016. 
Western is proposing modifications to the existing formula rate 
schedules and also is proposing to add a new rate schedule, referred to 
as ``LAP Marketing Sale of Surplus Products, L-M1.'' Western has 
prepared a brochure that provides detailed information on the proposed 
formula rates. If adopted, the proposed formula rates, under Rate 
Schedules L-NT1, L-FPT1, L-NFPT1, L-AS1, L-AS2, L-AS3, L-AS4, L-AS5, L-
AS6, L-AS7, L-AS9, L-UU1, and L-M1, will become effective October 1, 
2016, and will remain in effect through September 30, 2021, or until 
superseded. Publication of this Federal Register notice (FRN) begins 
the formal process for consideration of the proposed formula rates.

DATES: The consultation and comment period begins today and will end 
May 3, 2016. Western will present a detailed explanation of the 
proposed formula rates and other modifications addressed within this 
FRN at a public information forum that will be held on March 28, 2016, 
at noon MDT. Western will accept oral and written comments at a public 
comment forum that will be held on March 28, 2016, from 2:30 p.m. to no 
later than 4:00 p.m. MDT. Western will accept written comments any time 
during the consultation and comment period.

ADDRESSES: The location for both the public information forum and the 
public comment forum is the Western Area Power Administration, Rocky 
Mountain Region, 5555 East Crossroads Boulevard, Loveland, Colorado. 
Send written comments to Mr. Bradley S. Warren, Senior Vice President, 
Rocky Mountain Regional Manager, Western Area Power Administration, 
5555 East Crossroads Boulevard, Loveland, Colorado 80538-8986, or at 
email <a href="/cdn-cgi/l/email-protection#054944555177646b7644616f45726475642b626a73"><span class="__cf_email__" data-cfemail="97dbd6c7c3e5f6f9e4d6f3fdd7e0f6e7f6b9f0f8e1">[email protected]</span></a>. Western will post information about the 
rate process, as well as comments received via letter and email, on its 
Web site at: http://www.wapa.gov/regions/RM/rates/Pages/2017-rate-adjustment.aspx. Written comments must be received by the end of the 
consultation and comment period to be considered by Western in its 
decision process.
    As access to Western facilities is controlled, any United States 
(U.S.) citizen wishing to attend must present an official form of 
picture identification (ID), such as a U.S. driver's license, U.S. 
passport, U.S. Government ID, or U.S. Military ID prior to signing into 
Western. Foreign nationals should contact Western via Mrs. Sheila D. 
Cook, Rates Manager, at telephone number (970) 461-7211 or by email at 
<a href="/cdn-cgi/l/email-protection#2e5d4d4141456e594f5e4f00494158"><span class="__cf_email__" data-cfemail="3a49595555517a4d5b4a5b145d554c">[email protected]</span></a> 30 days in advance of the meeting to obtain the 
necessary form for admittance to Western's Rocky Mountain Regional 
Office.

FOR FURTHER INFORMATION CONTACT: Mrs. Sheila D. Cook, Rates Manager, 
Rocky Mountain Region, Western Area Power Administration, 5555 East 
Crossroads Boulevard, Loveland, Colorado 80538-8986, at telephone 
number (970) 461-7211, or by email at <a href="/cdn-cgi/l/email-protection#17647478787c576076677639707861"><span class="__cf_email__" data-cfemail="ee9d8d818185ae998f9e8fc0898198">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Under the existing formula rate schedules, 
approved under Rate Order No. WAPA-155,\1\charges are recalculated 
annually using updated financial and load information, as applicable. 
The proposed formula rates continue this approach. If adopted, these 
proposed formula rates will be in effect October 1, 2016, through 
September 30, 2021.

[[Page 5745]]

This FRN describes proposed changes to the services referenced below.
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    \1\ WAPA-155 was approved by the Deputy Secretary of Energy on 
September 2, 2011 (76 FR 61184), and confirmed and approved by FERC 
on a final basis on December 2, 2011, in Docket No. EF11-10-000. See 
United States Department of Energy, Western Area Power 
Administration, 137 FERC ] 62,200.
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Transmission Services

Formula Rate for Annual Transmission Revenue Requirement

    Under this proposal, there will be no change to the existing 
formula rate for calculating the Annual Transmission Revenue 
Requirement (ATRR), which is applicable to both Network Integration and 
Point-to-Point transmission service. The ATRR is the annual cost of the 
LAP Transmission System, adjusted for Non-Firm Point-to-Point revenue 
credits, costs that increase the capacity available for transmission, 
other miscellaneous charges or credits, and the prior year true-up.

Proposed Change to Forward-Looking Transmission Rate Methodology

    Western is proposing to shorten the forward-looking transmission 
rate projection period for this ATRR calculation from sixteen months to 
four months. In the previous rate adjustment process, Western 
incorporated a forward-looking transmission rate methodology to 
calculate the ATRR to recover transmission expenses and investments on 
a current basis rather than a historical basis. Presently, Western 
projects transmission costs two years into the future relying on 
current year actual data for approximately the first eight months of 
the year and projecting for the remaining four months of the year plus 
twelve additional months. Western is proposing to remove the last 
twelve months of projections, thus only having to true-up the projected 
costs for the four-month period of the current year. This method would 
allow Western to more accurately match cost recovery with cost 
incurrence without introducing unnecessary, large true-ups caused by 
estimating the second year. This proposal would be a change to the 
inputs for the annual charge, rather than a change to the formula rate.
    When actual cost information for a year becomes available, Western 
will continue to calculate the actual revenue requirement. Revenue 
collected in excess of Western's actual revenue requirement will be 
included as a credit in the ATRR in the following year. Similarly, any 
under-collection of the revenue requirement will be recovered in the 
following year. This true-up procedure ensures Western recovers no more 
or no less than the actual transmission costs for the year. For 
example, as Fiscal Year (FY) 2016 actual financial data becomes 
available, the under- or over-collection of revenue for FY 2016 can be 
determined. When the FY 2018 charge is calculated, it would include an 
adjustment for revenue under- or over-collected in FY 2016.

Formula Rate for Network Integration Transmission Service (Rate 
Schedule L-NT1)

    Western proposes no changes to the Network Integration Transmission 
Service Formula Rate, but proposes to make minor edits to the rate 
schedule. Those edits would consist of rearranging the order of the 
sections and removing the section setting forth the annual ATRR. In the 
future, each year's ATRR will be identified in a separate tracking 
document posted on Western's Web site, as well as posted on Western's 
Transmission Services Open Access Same Time Information System (OASIS) 
Web site under Loveland Area Projects Transmission (LAPT).

Formula Rates for Firm and Non-Firm Point-to-Point Transmission Service 
(Rate Schedules L-FPT1 and L-NFPT1)

    Western proposes a change in the formula rate for Firm Point-to-
Point transmission service to clarify the denominator of the formula 
includes both Firm Point-to-Point transmission capacity reservations 
and Network Integration transmission service capacity. Western proposes 
the denominator read as ``Firm Transmission Capacity Reservations plus 
Network Integration Transmission Service Capacity'' rather than the 
current language ``LAP Transmission System Total Load.''
    The proposed formula rate for Point-to-Point transmission service 
would be:
[GRAPHIC] [TIFF OMITTED] TN03FE16.009

    In addition, Western also proposes to make minor editorial changes 
to the firm and non-firm rate schedules. Those edits would consist of 
rearranging the order of the sections and deleting the sections setting 
forth the annual charges under the formula rates. In the future, the 
annual charges will be identified in a separate tracking document 
posted on Western's Web site as well as posted on the LAPT OASIS Web 
site.

Transmission Losses Service (Rate Schedule L-AS7)

    Western proposes no changes to the Transmission Losses formula rate 
but proposes to make minor editorial changes to the rate schedule. 
Those edits would consist of rearranging the order of the sections, 
moving text within the sections, making minor edits to the language 
within the ``applicable'' section, and deleting the ``rate'' section.

Penalty Rate for Unreserved Use of Transmission Service (Rate Schedule 
L-UU1)

    Western proposes no changes to the Unreserved Use penalty formula 
rate but plans to make minor editorial changes to the rate schedule. 
Those edits would consist of rearranging the order of the sections, 
moving text within the sections, and deleting the ``rate'' section.

Ancillary Services

Scheduling, System Control, and Dispatch Service (Rate Schedule L-AS1)

    Western proposes no changes to the Scheduling, System Control, and 
Dispatch formula rate, but plans to make minor editorial changes to the 
rate schedule. Those edits would consist of adding LAPT and Colorado 
River Storage Project Transmission (CRCM) to the title, rearranging the 
order of the sections, and deleting the section setting forth the 
annual charge under the formula rate. In the future, the annual charge 
will be identified in a separate tracking document posted on Western's 
Web site as well as posted on the LAPT and CRCM OASIS Web sites.

Reactive Supply and Voltage Control From Generation or Other Sources 
Service (Rate Schedule L-AS2)

    Western proposes to eliminate Reactive Supply and Voltage Control 
from Generation or Other Sources (VAR Support Service) exemptions and 
begin assessing VAR Support Service charges for all transmission 
transactions on the

[[Page 5746]]

LAPT and CRCM transmission systems, as contract provisions allow. In 
order to maintain transmission voltages on the transmission system 
within acceptable limits, generating facilities under the control of 
the Control Area operator, WACM, are operated to produce or absorb 
reactive power. Thus, VAR Support Service must be provided for each 
transaction on the transmission systems within the Control Area either 
directly by the Transmission Service Provider (TSP) or indirectly by 
the TSP making arrangements with the Control Area operator. 
Furthermore, the Transmission Customers are required to purchase this 
service from the TSP. If the TSP acquires the service from the Control 
Area, the charges are to reflect only a pass-through of the costs 
charged to the TSP by the Control Area operator, as stated in the 
Federal Energy Regulatory Commission's (FERC) pro forma open access 
transmission tariff language.\2\ WACM has both Federal TSPs (LAPT and 
CRCM) and non-Federal TSPs.
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    \2\ 75 FERC ] 61,080 (FERC Order 888), Appendix D, ``Pro Forma 
Open Access Transmission Tariff'', Schedule 2, ``Reactive Supply and 
Voltage Control from Generation Sources Service'' (April 24, 1996).
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    Historically, based on the assumption some LAPT and CRCM 
transmission customers have non-Federal generation resources inside 
WACM, and they have agreed to make their non-Federal generation 
resources inside WACM available to the WACM operator for VAR Support 
Service, Western has allowed some of these LAPT and CRCM transmission 
customers to receive an exemption from LAPT and CRCM VAR Support 
Service charges. As a result of these exemptions, the cost for LAPT and 
CRCM to provide VAR Support Service on their transmission systems has 
been shifted to the remaining (non-exempted) transmission customers. 
WACM, the Control Area operator, has always taken the position the non-
Federal TSPs have adequate non-Federal generation resources to provide 
VAR Support Service on their transmission systems and therefore WACM 
has never charged any non-Federal TSPs for VAR Support Service. In the 
future, WACM plans to pursue efforts to verify that this presumption 
continues to be warranted for all of the non-Federal TSPs.
    Western is now proposing to take the same position with the Federal 
TSPs, i.e., that the Federal generation resources connected to the LAPT 
and CRCM transmission systems provide adequate VAR Support Service on 
the LAPT and CRCM transmission systems, without the addition of the 
non-Federal generation resources. It will be inappropriate, therefore, 
for LAPT and CRCM TSPs to continue to provide VAR Support Service 
charge exemptions to its transmission customers. The elimination of the 
LAPT and CRCM VAR Support Service exemptions will lead to the recovery 
of the LAPT and CRCM VAR Support Service costs from all LAPT and CRCM 
transmission customers instead of only a portion of them.
    Western is also proposing changes to both the numerator and the 
denominator of the formula rate for VAR Support Service. The numerator 
will be changed to include the annual cost of other resources used to 
provide VAR Support Service in addition to the revenue requirement for 
Federal generation. The denominator will be changed to state 
``Transmission Transactions in WACM Requiring VAR Support Service'' 
rather than ``Load in WACM requiring VAR Support Service.''
    The proposed formula rate for VAR Support Service is as follows:
    [GRAPHIC] [TIFF OMITTED] TN03FE16.007
    
    Numerator is: Annual Revenue Requirement for VAR Support Service = 
(Revenue Requirement for Generation x % of Resource Capacity Used for 
VAR Support Service (1 Minus Power Factor)) + Other Resources, e.g., 
energy and transmission costs for condensing Federal generating units.
    Denominator is: Transmission Transactions in WACM Requiring VAR 
Support Service = Transmission Capacity usage on Federal Transmission 
Systems (Point-to-Point Transmission Service as well as Network 
Integration Transmission Service on LAPT and CRCM Transmission Systems) 
+ Transmission Capacity usage by other TSPs inside WACM.
    In addition, Western also proposes to make edits to the VAR Support 
Service rate schedule. Those edits would consist of adding LAPT and 
CRCM to the title, rearranging the order of the sections, removing 
language regarding exemptions, clarifying the rate is applicable to 
Federal transmission customers serving load inside WACM and to non-
Federal TSPs/owners/operators who request the service from WACM or who 
do not adequately supply VAR Support Service on their systems, and 
deleting the section setting forth the annual charge under the formula 
rate. In the future, the annual charge will be identified in a separate 
tracking document posted on Western's Web site as well as posted on the 
LAPT and CRCM OASIS Web sites.

Regulation and Frequency Response Service (Rate Schedule L-AS3)

    In order to more accurately allocate costs based on cost causation 
principles, Western is proposing a change to the current load-based 
assessment of the Regulation and Frequency Response Service (Regulation 
Service) formula rate. The current load-based assessment is applicable 
to (1) all load inside WACM and (2) installed nameplate capacity of all 
intermittent resources serving load inside WACM.
    Western is not proposing any changes to the application of the 
load-based assessment for the load inside WACM. The charge will 
continue to be one-for-one for each megawatt (MW) of load inside WACM. 
Western is, however, proposing to modify the one-for-one MW load-based 
assessment for the installed nameplate of intermittent resources 
serving load inside WACM. It would instead include a ``variable 
capacity multiplier'' to be applied to the installed capacity for 
Variable Energy Resources (VER) serving load inside WACM.
    The proposed formula rate for Regulation Service is as follows:

[[Page 5747]]

[GRAPHIC] [TIFF OMITTED] TN03FE16.008

    Regulation Service is necessary to provide for the continuous 
balancing of resources with obligations and for maintaining scheduled 
interconnection frequency at sixty cycles per second (60 Hz). 
Regulation Service is accomplished by committing on-line generation 
whose output is raised or lowered as necessary, predominantly through 
the use of automatic generation control (AGC) equipment, to follow the 
moment-by-moment changes in load. The obligation to maintain this 
balance between resources and load lies with the TSP (or the Control 
Area Operator who performs this function for the TSP). The TSP must 
offer this service when the transmission service is used to serve load 
within its Control Area.
    Western markets the maximum amount of power from its Federal 
projects, leaving little flexibility for additional regulation needs 
within WACM. More VER connecting to the system results in a significant 
increase in regulation needs and costs and presents operational 
constraints in managing the significant fluctuations normally 
associated with VER. These costs are allocated to all customers taking 
Regulation Service regardless of their ability or inability to 
influence the condition.
    The Annual Revenue Requirement for Regulation Service will not be 
affected by the inclusion of the multipliers. The proposed change will 
result in the denominator increasing, because more units of capacity 
will be charged, which in turn will cause the overall Regulation 
Service charge to be lower. The lower charge will then be allocated to 
each unit of capacity, thereby lowering the costs incurred by the load 
and assigning more of the costs for regulating capacity to those 
customers predominantly contributing to the need for Regulation 
Service.
    In order to determine the ``variable capacity multipliers,'' 
Western has developed a ``Regulation Analysis'' tool that allows 
Western to determine the hourly impacts of both load and variable 
energy generation on WACM. The Regulation Analysis tool focuses on 95 
percent (%) of the events where the Control Area's Area Control Error 
(ACE) limit was exceeded within the 10 minute duration range. Recent 
analysis using the Regulation Analysis tool has shown wind resources 
consume a disproportionate amount of regulating capacity. As an 
example, the results for the July 2014 to June 2015 average indicate a 
2.25 or 225% wind capacity multiplier.
    WACM does not have a significant amount of solar generation 
impacting its balancing authority area and, therefore, does not have 
sufficient solar generation data available to perform a thorough 
analysis at this time. Therefore, Western proposes to identify a solar 
capacity multiplier of 1.00 or 100%. This multiplier does not change 
the current denominator, but allows the denominator to change if and 
when solar generation becomes more prevalent in the WACM footprint.
    The Regulation Analysis will be completed on a monthly basis with 
an annual average, based on most current data available, typically July 
to June, used for the annual formula rate updates that go into effect 
each October 1 of the effective rate period.
    In addition, Western proposes to make edits to the Regulation 
Service rate schedule. Those edits will consist of adding LAPT and CRCM 
to the title, rearranging the order of the sections, clarifying the 
rate is applicable to Federal transmission customers and non-Federal 
TSPs requesting the service that serve load within WACM, and removing 
the section setting forth the annual charge under the formula rate. In 
the future, the annual charge will be identified in a separate tracking 
document posted on Western's Web site as well as posted on the LAPT and 
CRCM OASIS Web sites.

Energy and Generator Imbalance Services (Rate Schedules L-AS4 and L-
AS9)

    Western proposes no changes to the Energy Imbalance Service or 
Generator Imbalance Service formula rates, but plans to make minor 
editorial changes to the rate schedules. Those edits would consist of 
adding LAPT to the title, rearranging the order of the sections, and 
deleting the ``rate'' section.

Rate Schedules for Operating Reserves Service--Spinning and 
Supplemental (Rate Schedules L-AS5 and L-AS6)

    Western proposes no changes to the Spinning and Supplemental 
Reserves Service formula rates, but proposes to make editorial changes 
to the rate schedules. Those edits would consist of adding LAPT to the 
schedule, clarifying the ``applicable'' language, and rearranging the 
order of the sections.

LAP Marketing Services

LAP Marketing Sale of Surplus Products (L-M1)

    Western is proposing to implement a new LAP Marketing rate schedule 
that would be applicable to the sale of LAP surplus energy and capacity 
products. At this time, Western proposes to include reserves, 
regulation, and frequency response. If LAP resources are available, the 
charge will be determined based on market rates plus administrative 
costs. In the future, if Western considers offering additional products 
for sale, a revised or new rate schedule will be proposed via a public 
rate adjustment process.

 Legal Authority

    Western will hold both a public information forum and a public 
comment forum. After review of public comments, Western will take 
further action on the proposed formula rates and other modifications 
addressed in this FRN, and follow procedures for public participation 
consistent with 10 CFR part 903.
    Western is establishing formula rates for LAP Transmission, WACM, 
LAPT, and CRCM Ancillary Services, and LAP Marketing Sales of Surplus 
Products under the Department of Energy (DOE) Organization Act (42 
U.S.C. 7152); the Reclamation Act of 1902 (ch. 1093, 32

[[Page 5748]]

Stat. 388), 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 Delegation Order No. 00-037.00A, effective October 25, 2013, 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 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.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents Western initiates or uses to develop the proposed formula 
rates are available for inspection and copying at the Rocky Mountain 
Regional Office, located at 5555 East Crossroads Boulevard, Loveland 
Colorado 80538-8986. Many of these documents and supporting information 
are also available on Western's RMR Web site under the 2017 Rate 
Adjustment--Transmission and Ancillary Services section located at 
http://www.wapa.gov/regions/RM/rates/Pages/rates.aspx.

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969, 42 U.S.C. 4321-4347; the Council on Environmental Quality 
Regulations for implementing NEPA (40 CFR parts 1500-1508); and DOE 
NEPA Implementing Procedures and Guidelines (10 CFR part 1021), Western 
is in the process of determining whether an environmental assessment or 
an environmental impact statement should be prepared or if this action 
can be categorically excluded from those requirements.

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.

    Dated: January 20, 2016.
Mark A. Gabriel,
Administrator.
[FR Doc. 2016-02035 Filed 2-2-16; 8:45 am]
 BILLING CODE 6450-01-P


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