[Federal Register Volume 73, Number 25 (Wednesday, February 6, 2008)]
[Notices]
[Pages 6958-6960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2148]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Washoe Project--Rate Order No. WAPA-136

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Non-Firm Power Formula Rate.

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SUMMARY: The Western Area Power Administration (Western) is proposing a 
minor rate adjustment for non-firm energy from the Stampede Powerplant 
(Stampede), of the Washoe Project, located in Sierra County, 
California. The current rate expires September 30, 2010. The proposed 
formula rate will provide sufficient revenue to repay all annual costs, 
including interest expense, and repayment of required investment within 
the allowable period. Western will prepare a brochure that provides 
detailed information on the formula rate to all interested parties. The 
proposed formula rate, under Rate Schedule SNF-7, is scheduled to go 
into effect August 1, 2008, and will remain in effect through July 31, 
2013. Publication of this Federal Register notice begins the formal 
process for the proposed rate.

DATES: The consultation and comment period begins today and will end 
March 7, 2008. Western will accept written comments any time during the 
consultation and comment period.

ADDRESSES: Send written comments to Ms. Sonja A. Anderson, Power 
Marketing Manager, Sierra Nevada Customer Service Region, Western Area 
Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, e-
mail <a href="/cdn-cgi/l/email-protection#ff8c9e919b9a8d8c90bf889e8f9ed1989089"><span class="__cf_email__" data-cfemail="c6b5a7a8a2a3b4b5a986b1a7b6a7e8a1a9b0">[email protected]</span></a>. Western will post information about the rate 
process on its Web site at http://www.wapa.gov/sn/marketing/rates/. 
Western will post official comments received via letter, facsimile, and 
e-mail to its Web site after the close of the comment period. Western 
must receive written comments by the end of the consultation and 
comment period to ensure they are considered in Western's decision 
process.

FOR FURTHER INFORMATION CONTACT: Mr. Sean Sanderson, Rates Manager, 
Sierra Nevada Customer Service Region, Western Area Power 
Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, (916) 353-
4466, e-mail <a href="/cdn-cgi/l/email-protection#5b283a353f3e291b2c3a2b3a753c342d"><span class="__cf_email__" data-cfemail="493a28272d2c3b093e283928672e263f">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The proposed formula rate for Stampede's 
non-firm power is designed to recover an annual revenue requirement 
that includes investment repayment, interest, purchase power (if 
applicable), reimbursable operation and maintenance (O&M) expenses, and 
other expenses.
    The Deputy Secretary of Energy approved Rate Schedule SNF-6, a non-
firm power formula rate on August 16, 2005.\1\
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    \1\ Rate Order No. WAPA-119, 70 FR 51035, August 29, 2005, and 
the Commission confirmed and approved the rate schedule on May 4, 
2006, under FERC Docket EF05-5161-000 (115 FERC ] 62,137). Approval 
for Rate Schedule SNF-6 covered 5 years beginning October 1, 2005, 
and ending on September 30, 2010.
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    The proposed formula rate for Stampede power is:

    Stampede Annual Transferred PRR = Stampede Annual PRR--Stampede 
Revenue.

Where: Stampede Annual Transferred Power Revenue Requirement (PRR) = 
Stampede Annual PRR as identified as a cost transferred to the Central 
Valley Project (CVP).
Stampede Annual PRR = the total PRR for Stampede required to repay all 
annual costs, including interest, and the investment within the 
allowable period.
Stampede Revenue = Revenue from applying the Stampede Energy Exchange 
Account (SEEA) rate to project generation.

    To serve project use loads and effectively market the energy from 
Stampede, Western has contracted with a third party (Contractor) that 
provides for an SEEA. The SEEA is an annual energy exchange account for 
Stampede energy. Under this contract, the Contractor accepts delivery 
of all energy generated from Stampede and integrates this generation 
into its resource portfolio. The monthly calculation of revenue from 
Stampede energy received by the Contractor is credited into the SEEA at 
the SEEA rate. Western can use the SEEA to benefit project use 
facilities and market energy from Stampede to CVP preference entities.
    In the SEEA, the revenues from sales (generation revenues) made at 
the SEEA rate are reduced by the project use and station service power 
costs and SEEA administrative costs. Western applies the ratio of 
project use costs to the generation revenue recorded in the SEEA to 
determine a non-reimbursable percentage. One hundred percent minus this 
non-reimbursable percentage establishes a reimbursable percentage. This 
reimbursable percentage is then applied to the appropriate power-
related costs to determine the reimbursable costs for repayment. The 
reimbursable costs are then netted against generation revenues made at 
the SEEA rate. As stipulated under the 2004 CVP Power Marketing Plan, 
any remaining reimbursable costs, to include interest and annual 
capital costs, are then transferred to the CVP for incorporation into 
the CVP PRR.
    Since 1994, the Sierra Pacific Power Company (Sierra), through 
Contract 94-SAO-00010 (Contract 00010), has served as the Contractor 
for integrating Stampede generation into its resource portfolio and 
serving station service and project use loads in Sierra's service 
territory. The current rate schedule (SNF-6) links the current non-firm 
power formula rate to Contract 00010 and the management of the SEEA. In 
addition, the index that was used in Rate Schedule SNF-6 to set the 
``floor rate'' was contained in Contract 00010.

[[Page 6959]]

    On May 10, 2007, the Truckee-Donner Public Utilities District 
(Truckee Donner) and the City of Fallon (Fallon), two preference 
customers located within Sierra's control area, entered into a contract 
with Western that replaces Contract 00010. This new contract with 
Truckee Donner and Fallon (TDF), Contract 07-SNR-01026 (Contract 
01026), uses a market index methodology as the basis for valuing 
Stampede generation. The effective date of Contract 01026 was August 1, 
2007. The change in contractors and the ``floor rate'' definition makes 
it necessary for Western to initiate a new rate case to revisit the 
formula rate. In this proposed rate design, Western is using a general 
term of ``Contractor'' in the development of the proposed formula rate 
and resulting rate schedule in order to provide flexibility in the 
event the contractor changes in the future.
    As indicated above, the non-reimbursable portion of the annual O&M 
costs are defined as the ratio of project use costs (i.e., costs to 
serve project use loads) divided by the generation revenue from the 
Stampede Powerplant (annual generation valuation). Beginning in August 
2007, due to the change in the SEEA rate, Western anticipates a 
reduction in the non-reimbursable percentage for the Washoe Project. 
This condition will subsequently increase reimbursable costs to the 
preference power customers. Western estimates that the reimbursable O&M 
costs could increase between $85,000 and $223,000 annually due to the 
change in generation revenues.
    The proposed formula rate will materially increase the Stampede 
Revenue for repayment of the Washoe Project. As a general comparison, 
the floor rate under the terminated Sierra Contract 00010 was $17.89 
per megawatt hour (MWh). Western estimates that the floor rate under 
the current TDF Contract would have ranged from $29.85 to $42.71 per 
MWh.\2\ The table below provides further comparison of fiscal year (FY) 
04-07 Stampede revenues between Sierra's terminated contract and the 
new TDF Contract. This information illustrates the significance of the 
change in the SEEA rate.
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    \2\ This estimated floor rate was calculated using historical 
hourly generation and market rate information.

                                     Table 1.--Comparison of Generation Revenues Between the Sierra and TDF Contract
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                                                                              Sierra               TDF Contract 01026 (current)
                                                                          Contract 00010 ------------------------------------------------   Difference
                                                                Total       (Terminated)                                                   between SEEA
                             FY                                Stampede  ----------------   Calculated      Calculated         Total      rate and floor
                                                              gen (MWh)     Calculated       SEEA rate       SEEA rate      calculated    rate  revenues
                                                                            floor rate     revenue  (on-  revenue  (off-     SEEA rate          \1\
                                                                              revenue          peak)           peak)          revenue
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2004.......................................................        9,586        $171,500        $234,171        $152,256        $386,427        $214,927
2005.......................................................        7,831         140,102         160,005         102,583         262,588         122,487
2006.......................................................       16,142         288,788         334,916         193,352         528,268         239,480
2007.......................................................       11,239         201,070         220,580         138,285         358,865        157,794
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\1\ For illustrative purposes, the Sierra contract calculations are presumed to exist for the entire year.

    Annual Stampede generation usually creates sufficient revenues in 
the SEEA to pay project use and station service costs. Due to the low 
floor rate used to credit the SEEA under the Sierra contract, low 
Stampede generation resulted in insufficient funds in the SEEA in some 
fall and winter months to cover the payment of project use and station 
service costs. In these cases, the U.S. Fish and Wildlife Service (FWS) 
was required to use its Federal appropriation to pay for its project 
use loads' electric service bills. Under the new contract, Western 
anticipates that generation valuation will be greater than in the past, 
which will reduce FWS's burden of payment and protect project use loads 
from incurring additional costs as a result of its monthly power costs 
exceeding SEEA balances.
    Estimates of revenues and expenses are listed in Table 2.

              Table 2.--Comparison of Existing and Proposed Non-Firm Power Formula Rate Components
                               ([Based on a 5-year average for FY 2008-2012]) \1\
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                                                                                    Proposed SEEA
                                                                 Existing floor      rate \2\ ($)      Percent
                        Component \2\                               rate ($)      (effective August     change
                                                                                       1, 2008)
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Stampede Revenue.............................................            214,680            560,064          161
Expenses:
    O&M (reimbursable only)..................................                  0            233,207         2332
    Project Use..............................................            239,723            239,723            0
    Interest.................................................            213,993            211,626           -1
    Capital Repayment........................................            584,164            584,508            0
                                                              ==================================================
        Total Expenses.......................................          1,037,880          1,269,064           22
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Stampede Annual Transferred PRR (Stampede Revenue--Total               (832,200)          (709,000)         -14
 Expenses)...................................................
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\1\ Existing and proposed rates are based on a historical generation average. The difference between the two
  rates is (1) different generation valuation rates and (2) different reimbursable percentages as a result of
  the generation value.
\2\ Amounts represent the 5-year averages of each component.


[[Page 6960]]

    Western will review the PRR for the Stampede Powerplant 
semiannually in or around March and September each year. According to 
the existing rate procedures for the CVP, Western will review the CVP 
PRR in March and September of each year (71 FR 45821). The CVP rate 
procedures stipulate that Western will analyze the CVP financial data 
from October through February, to the extent information is available, 
as well as forecasted data for March through September. In the case of 
Stampede, Western will use the most current Power Repayment Study (PRS) 
and the disposition of the SEEA account up through February and 
estimate March through September and other financial data, to the 
extent information is available, to determine the amount of costs to be 
included in the CVP PRR. In September, when the next review occurs, 
Western will use the same methodology to include costs in the CVP PRR 
for the following year. At the time Western makes a final decision 
regarding this proposed formula rate, to the extent that updated 
financial data is made available, Western will update the PRS 
supporting the proposed rate. Based on estimated expenses and projected 
Stampede revenues, the Stampede Annual Transferred PRR for October 2008 
through September 2009 (FY 2009), the first full year of the proposed 
rate, is estimated to be $480,000.
    A comparison of existing and proposed rates and revenue requirement 
follows:

 Table 3.--Comparison of Existing and Proposed Rates and Revenue Requirement Washoe Project, Stampede Powerplant
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                                                                Proposed rates
   Non-firm energy rates and PRR         Existing rates       (effective 8/1/08)           Percent change
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Floor Rate (Mills/kWh).............  0.01789 $/kWh........  N/A..................  N/A.
SEEA Rate--Average.................  N/A..................  0.04667 $/kWh........  N/A.
Stampede Annual Transferred PRR (5-  $823,200.............  $709,000.............  -14
 year average).
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Legal Authority

    Stampede Powerplant is a feature of the Washoe Project authorized 
by Congress in 1956 and is located on the Little Truckee River in 
Sierra County, California (70 Stat.775 (1956)). The powerplant has a 
maximum operating capability of 3,650 kilowatts (kW) with an estimated 
annual generation over the past 12 years of 12-million KWh. Since 
Stampede Powerplant has an installed capacity of less than 20,000 kW 
and generates less than 100 million kWh annually for sale, the proposed 
rate constitutes a minor rate adjustment. Western has determined that 
it is not necessary to hold a public information or comment forum for 
this proposed minor rate adjustment as defined by 10 CFR part 
903.23(a). After review of public comments, and possible amendments or 
adjustments, Western will recommend the Deputy Secretary of Energy 
approve the proposed rate on an interim basis.
    Western is establishing the proposed non-firm power formula rate 
for non-firm energy for the Stampede Powerplant under the Department of 
Energy Organization Act (42 U.S.C. 7152); the Reclamation Act of 1902 
(ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent 
laws, particularly section 9(c) of the Reclamation Project Act of 1939 
(43 U.S.C. 485h(c)); and other acts that specifically apply to the 
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 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 the Federal Energy Regulatory Commission. 
Existing Department of Energy (DOE) procedures for public participation 
in power rate adjustments are published in Title 10 of the Code of 
Federal Regulations in Part 903.
    Pursuant to paragraph 1.5 of Delegation Order No. 00-037.00, 
Western's Administrator approved the power formula rate for the sale of 
short-term, non-firm power to Truckee Donner and Fallon effective 
August 1, 2007. The Administrator's approval provided interim rate 
authority between the effective date of the new contract (August 1, 
2007) and the effective date of the proposed rate (August 1, 2008). The 
Administrator's approval will expire on July 31, 2008, or upon approval 
of this proposed rate that supersedes Rate Order No. WAPA-119, 
whichever occurs earlier.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that Western initiates or uses to develop the proposed rates 
are available for inspection and copying at the Sierra Nevada Regional 
Office, located at 114 Parkshore Drive, Folsom, California. Many of 
these documents and supporting information are also available on the 
Web site under the ``Current Rates'' section located at http://www.wapa.gov/sn/marketing/rates/.

Regulatory Procedure Requirements

Environmental Compliance

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

    Dated: January 17, 2008.
Timothy J. Meeks,
Administrator.
 [FR Doc. E8-2148 Filed 2-5-08; 8:45 am]
BILLING CODE 6450-01-P


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