[Federal Register Volume 60, Number 41 (Thursday, March 2, 1995)]
[Notices]
[Pages 11667-11670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4880]



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DEPARTMENT OF ENERGY
Western Area Power Administration


Provo River Project Notice of Rate Order No. WAPA-65

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order--Provo River Project.

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SUMMARY: Notice is given of the confirmation and approval by the Deputy 
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-65 
placing into effect a formula for determining annual, power-related 
payments for the Provo River Project (PRP) of the Western Area Power 
Administration (Western) on an interim basis. The formula will remain 
in effect on an interim basis until the Federal Energy Regulatory 
Commission (FERC) confirms, approves, and makes it effective on a final 
basis or until it is replaced by another method.

Statement of Revenue and Related Expenses

    The power-related revenue requirements for the Provo River Project 
(PRP) will be based upon projections contained in the annual power 
repayment study (PRS). Differences between estimated and actual costs 
will be adjusted when final financial data becomes available. The 
following table is based on the fiscal year (FY) 1994 preliminary PRS 
and provides a [[Page 11668]] summary of estimated revenue and cost 
data through the proposed 5-year approval period.

    Provo River Project--Total 5-Year Projections, Revenues and Costs   
                                [$1,000]                                
------------------------------------------------------------------------
                                                               Total FY 
                                                               1995-99  
                                                             projections
------------------------------------------------------------------------
      Total Revenues.......................................       1,341 
                                                            ------------
Costs:                                                                  
  O&M......................................................         959 
  Transmission.............................................         155 
  Interest.................................................         136 
  Investment Repayment.....................................          91 
                                                            ------------
      Total Costs..........................................       1,341 
------------------------------------------------------------------------

DATES: The formula will be effective on an interim basis beginning 
April 1, 1995, and remain in effect until FERC confirms, approves, and 
places it into effect on a final basis for a 5-year period, or until it 
is superseded.

FOR FURTHER INFORMATION CONTACT:

    Mr. Kenneth G. Maxey, Area Manager, Salt Lake City Area Office, 
Western Area Power Administration, P.O. Box 11606, Salt Lake City, UT 
84147-0606, (801) 524-5493 or
    Mr. Edmond Chang, Assistant Area Manager, for Power Marketing, Salt 
Lake City Area Office, Western Area Power Administration, P.O. Box 
11606, Salt Lake City, UT 84147-0606, (801) 524-5493 or
    Ms. Deborah M. Linke, Chief, Rates and Statistics Branch, Western 
Area Power Administration, P.O. Box 3402, Golden, CO 80401-0098, (303) 
275-1618 or
    Mr. Joel Bladow, Assistant Administrator for Washington Liaison, 
Western Area Power Administration, Room 8G-027, Forrestal Building, 
1000 Independence Avenue SW., Washington, DC 20585-0001, (202) 586-5581

SUPPLEMENTARY INFORMATION: By Amendment No. 3 to Delegation Order No. 
0204-108, published November 10, 1993 (58 FR 58716), the Secretary of 
Energy 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 confirm, approve, and place into effect on a final basis, 
to remand, or to disapprove such rates to FERC. Existing DOE procedures 
for public participation in power rate adjustments (10 CFR Part 903) 
became effective on September 18, 1985 (50 FR 37835).
    This action is established pursuant to Section 302(a) of the 
Department of Energy (DOE) Organization Act, 42 U.S.C. Sec. 7152(a), 
through which the power marketing functions of the Secretary of the 
Interior and the Bureau of Reclamation (Reclamation) were transferred 
to and vested in the Secretary of Energy (Secretary) under the 
Reclamation Act of 1902, 43 U.S.C. Sec. 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. Sec. 485h(c), and other acts 
specifically applicable to the project system involved.
    Rate Order No. WAPA-65, confirming, approving, and placing the 
proposed formula for determining annual, power-related payments for the 
Provo River Project into effect on an interim basis, is issued and will 
be submitted promptly to FERC for confirmation and approval on a final 
basis.

    Issued in Washington, DC, February 16, 1995.
Bill White,
Deputy Secretary.
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DEPARTMENT OF ENERGY
Deputy Secretary

Order Confirming, Approving, and Placing into Effect on an Interim 
Basis, a Formula for Determining Annual, Power-Related Payments for 
the Provo River Project

February 16, 1995.
    In the matter of: Western Area Power Administration Provo River 
Project Power Rate, Rate Order No. WAPA-65.

    The formula is established pursuant to Section 302(a) of the 
Department of Energy (DOE) Organization Act, 42 U.S.C. Sec. 7152(a), 
through which the power marketing functions of the Secretary of the 
Interior and the Bureau of Reclamation (Reclamation) were transferred 
to and vested in the Secretary of Energy (Secretary) under the 
Reclamation Act of 1902, 43 U.S.C. Sec. 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. Sec. 485h(c), and other acts 
specifically applicable to the project system involved.
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary delegated (1) the 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of the Western Area Power 
Administration (Western); (2) the authority to confirm, approve, and 
place such rates into effect on an interim basis to the Deputy 
Secretary of DOE; 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) became 
effective on September 18, 1985 (50 FR 37835).

Acronyms and Definitions

    As used in this rate order, the following acronyms an definitions 
apply:

Contractors: ICPA and UMPA.
CRSP: Colorado River Storage Project.
DCP: Deer Creek Powerplant.
DOE: Department of Energy.
DOE Order RA 6120.2: A Department of Energy order dealing with power 
marketing administration financial reporting.
FERC: Federal Energy Regulatory Commission.
FRN: Federal Register notice.
FY: Fiscal year, beginning October 1.
ICPA: Intermountain Consumer Power Association.
Interior: U.S. Department of the Interior.
kW: Kilowatt.
kW/month: The greater of (1) the highest 30-minute demand measured 
during the month, not to exceed the contract obligation, or (2) the 
contract rate of delivery.
kWh: Kilowatthour.
M&I: Municipal and industrial.
mills/kWh: Mills per kilowatthour.
MWh: Megawatthour.
NEPA: National Environmental Policy Act of 1969.
OM&R: Operation, maintenance, and replacement.
PMA: Power marketing administration.
PRP: Provo River Project.
PRP-MP: Provo River Project--Marketing Plan.
PRS: Power repayment study.
PRWUA: Provo River Water Users Association.
Reclamation: Bureau of Reclamation, U.S. Department of the Interior.
SLCA: Salt Lake City Area.
SLCAO: Salt Lake City Area Office.
Treasury: U.S. Department of the Treasury.
UMPA: Utah Municipal Power Agency.
UP&L: Utah Power & Light Company.
Western: Western Area Power Administration, U.S. Department of Energy.

Effective Date

    The revenue recovery formula will become effective on an interim 
basis [[Page 11669]] beginning April 1, 1995, and remain in effect 
pending FERC's approval on a final basis for a 5-year period, or until 
superseded.

Public Notice and Comment

    The Procedures for Public Participation in Power and Transmission 
Rate Adjustments and Extensions, 10 CFR Part 903, have been followed by 
Western in developing the method of determining annual power-related 
payments.
    The following summarizes the steps Western took to ensure 
involvement of interested parties in determining annual power-related 
payments:
    1. A Federal Register notice was published on July 12, 1994 (59 FR 
35513), officially announcing the proposed formula, initiating the 
public consultation and comment period, and presenting procedures for 
public participation.
    2. On July 15, 1994, a letter was mailed from Western's SLCAO to 
customers and other interested parties announcing the publication of 
the Federal Register notice of July 12, 1994.
    3. The consultation and comment period ended August 11, 1994.

Project History

    The PRP is located on the Provo River in central Utah. Deer Creek 
Reservoir is backed-up behind Deer Creek Dam. Construction of the PRP 
began in May 1938, with the powerplant completed in 1958. It has a 
present generating capacity of 5 megawatts. The PRP initially was 
designed to supply M&I and irrigation water to users in the Salt Lake 
and Utah valleys. It does this by capturing the flow of the Provo River 
and also by storing water diverted from the Duschesne and Weber Rivers. 
UP&L has a powerplant on the Weber which has its production reduced 
with the diversion of water to the Deer Creek Reservoir. As 
compensation, the PRP furnishes UP&L energy to replace that which it is 
estimated it would have generated absent the construction of the PRP. 
This arrangement was formalized in contract No. Ilr-1082, dated 
December 20, 1938.
    The irrigation water consumers for the PRP are organized into the 
PRWUA, a corporation of stockholders owning prorated Provo River water 
entitlements. They executed contract No. Ilr-874 in 1936 with the 
Federal Government to construct and repay irrigation-related project 
facilities.
    Only Deer Creek energy in excess of that obligated to UP&L has been 
available for Federal marketing. Since 1963, CRSP has purchased the 
available PRP energy at rates designed to recover the PRP's power-
related OM&R and investment costs. Since 1986, the PRP rate has also 
included a commitment to supply $1.623 million toward the PRWUA's 
repayment obligation for costs allocated to irrigation. The PRP's 
original power-related investment was repaid in FY 1986.

Power Repayment Studies

    PRSs are typically prepared each FY to determine if power revenues 
will be sufficient to pay, within the prescribed time periods, all 
costs assigned to be repaid by the power function. Repayment criteria 
are based on law, policies, and authorizing legislation. DOE Order RA 
6120.2, section 12b, requires that:

    In addition to the recovery of the above costs (operation and 
maintenance and interest expenses) on a year-by-year basis, the 
expected revenues are at least sufficient to recover (1) each dollar 
of power investment at Federal hydroelectric generating plants 
within 50 years after they become revenue producing, except as 
otherwise provided by law; plus, (2) the cost of each replacement of 
a unit of property of a Federal power system within its expected 
service life up to a maximum of 50 years; plus, (3) each dollar of 
assisted irrigation investment within the period established for the 
irrigation water users to repay their share of construction costs.

    The PRP PRSs have been used to determine the annual PRP rate, which 
includes OM&R, wheeling and interest expenses. The contractors' annual 
irrigation assistance payments to the PRWUA will not be included in the 
PRS but will instead be paid under a separate agreement among 
Reclamation, Western, PRWUA, and the contractors.

Certification of Rate

    Western's Administrator has certified that the PRP formula for 
determining annual, power-related payments placed into effect on an 
interim basis herein will result in the lowest possible cost to 
consumers, consistent with sound business principles. The formula has 
been developed in accordance with administrative policies and 
applicable laws.

Discussion

    Each year, the contractors will pay the PRP's total estimated 
annual power-related costs in return for the total marketable energy 
produced at the PRP. The energy produced at the PRP has been allocated 
to the contractors proportional to their PRP entitlement. Western will 
prepare an annual PRS which will identify the anticipated power-related 
costs for the next FY. Budgeted minor replacements and additions will 
be included in the annual expenses. If replacements or additions 
exceeding $5,000.00, but no greater than $25,000.00 are needed, the 
contractors will be given the option of financing their share of the 
cost, proportional to their PRP entitlement, in advance, or of having 
the cost capitalized at DOE's current interest rate (the year in which 
funds are first expended) and amortized over the estimated, average 
life of the replacement, or 50 years, whichever is less. Additions will 
be amortized over 50 years. Each contractor will pay its share of the 
annual costs identified in the PRS in 12 equal monthly installments.
    This method of determining annual power-related revenue 
requirements will satisfy the cost-recovery criteria set forth in DOE 
Order RA 6120.2.

Statement of Revenue and Related Expenses

    The revenue requirements for the PRP are based upon PRS estimates 
of future annual costs. Each FY's annual estimated costs will be 
adjusted when historical financial data becomes available. The 
following table provides a summary of estimated revenue and cost data 
through the proposed 5-year approval period.

    Provo River Project Total--5-Year Projections Revenues and Costs    
                                [$1,000]                                
------------------------------------------------------------------------
                                                               Total FY 
                                                               1995-99  
                                                             projections
------------------------------------------------------------------------
      Total Revenues.......................................       1,341 
                                                            ------------
Costs:                                                                  
  O&M......................................................         959 
  Transmission.............................................         155 
  Interest.................................................         136 
  Investment Repayment.....................................          91 
                                                            ------------
      Total Costs..........................................       1,341 
------------------------------------------------------------------------

Basis for Rate Methodology--Provo River Project

    The contractors will be billed each FY, payable in 12 equal monthly 
payments. The monthly payments will be due and payable regardless of 
the amount of power the contractors receive from the PRP. During the 
first year this procedure is in effect, the annual sum due for FY 1995 
will be divided by the months remaining in FY 1995. The contractors 
will be billed in equal monthly installments for the remaining months 
in FY 1995. Beginning in FY 1996, the proposed 12 equal monthly 
installments will take effect. Each FY, Western will project PRP 
expenses by [[Page 11670]] preparing a PRS which will include budgeted 
OM&R and repayment costs for the PRP. The revenue requirement shown in 
this PRS will not be dependent upon the power and energy made available 
for sale, or the rate of generation each year. The amount of each 
monthly payment for the following FY shall be established in advance by 
Western and submitted to each contractor on or before August 31 of the 
year preceding the appropriate FY.
    The preparation of each FYs PRS shall include adjustment to the 
figures used in the previous year's PRS to incorporate final financial 
and operational data for the prior FY. Any adjustments required, 
whether resulting in an increase or decrease of the annual sum due, 
will be added to the FY then being calculated, and divided over 12 
equal monthly installments.
    Minor replacements and additions will be included in annual OM&R 
expenses. If replacements and/or additions exceeding $5,000.00, but no 
greater than $25,000.00, in cost are needed, the contractors will be 
given the option of financing the cost through their own non-Federal 
sources or having the cost financed by the Federal Government and 
amortized and paid over the lesser of the average life of the 
replacement or 50 years, whichever is less. Additions will be amortized 
over 50 years. If financed with Federal funds, the cost will be 
capitalized at the then-current interest rate prescribed by DOE, 
pursuant to RA 6120.2 11B, ``Basic Policy for Rate Adjustments; 
Interest Rate Formula,'' in the FY in which funds are first expended 
for the replacement or addition.
    If replacements over $25,000.00 are needed, the contractors will 
consult with Reclamation, the PRWUA, and Western about financing the 
replacement.
    The proposed formula constitutes a minor rate adjustment as defined 
by the procedures for public participation in general rate adjustments 
covered in 10 CFR 903.2(f). The PRP's annual sales are less than 100 
million kWh and installed capacity is less than 20,000 kW.

Comments

    During the 30-day comment period, Western received no written 
comments either requesting information or commenting on the formula. 
Comments were received in response to the revised, PRP-MP Federal 
Register notice dated July 11, 1994 (59 FR 35334). Comments were 
accepted on Western's revised PRP-MP proposal until August 10, 1994. 
These comments were addressed in the PRP-MP Federal Register notice 
dated November 21, 1994 (59 FR 60007).

Environmental Evaluation

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

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 the Office of Management and Budget is required.

Availability of Information

    Information regarding this rate order, including PRSs, comments, 
letters, memorandums, and other supporting material made or kept by 
Western for the purpose of developing the revenue-recovery methodology, 
is available for public review at the following offices:

Western Area Power Administration, Salt Lake City Area Office, Office 
of the Assistant Area Manager for Power Marketing, 257 East 200 South, 
Suite 475, Salt Lake City, UT 84111
Western Area Power Administration, Division of Marketing and Rates, 
1627 Cole Boulevard, Golden, CO 80401
Western Area Power Administration, Office of the Assistant 
Administrator for Washington Liaison, Room 8G-027, Forrestal Building, 
1000 Independence Avenue SW., Washington, DC 20585

Submission to Federal Energy Regulatory Commission

    The formula for determining annual, power-related payments herein 
confirmed, approved, and placed into effect on an interim basis, 
together with supporting documents, will be submitted to FERC for 
confirmation and approval on a final basis.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I confirm and approve on an interim 
basis, effective April 1, 1995, the method of cost recovery for the 
Provo River Project. The procedure shall remain in effect on an interim 
basis, pending Federal Energy Regulatory Commission confirmation and 
approval of it or a substitute process on a final basis, through March 
31, 2000.

    Issued in Washington, DC, February 16, 1995.
Bill White,
Deputy Secretary.
[FR Doc. 95-4880 Filed 3-1-95; 8:45 am]
BILLING CODE 6450-01-P