[Federal Register Volume 82, Number 126 (Monday, July 3, 2017)]
[Notices]
[Pages 30858-30861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13981]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division-Rate Order
No. WAPA-180
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of Proposed Firm Power Service and Sale of Surplus
Products Rates.
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SUMMARY: Western Area Power Administration (WAPA) is proposing revised
rates for Pick-Sloan Missouri Basin Program--Eastern Division (P-SMBP--
ED) firm power and firm peaking power service, and a new formula rate
for sales of surplus products. Current firm power and firm peaking
power service rates, under Rate Schedules P-SED-F12 and P-SED-FP12, are
in effect through December 31, 2019.
WAPA is proposing to lower the overall charges for firm power and
firm peaking power service by 19 percent, as a result of rebalancing
the charge components in formula-based Rate Schedules P-SED-F12 and P-
SED-FP12 by reducing the drought adder component, increasing the base
component, and removing the voltage discount. The proposed rates will
provide sufficient revenue to pay all annual costs, including interest
expense, and repay investments within the allowable periods. In
addition, WAPA is proposing a new formula rate for the sale of surplus
products under Rate Schedule P-SED-M1. This new
[[Page 30859]]
rate schedule will allow for the sale of generation and generation-
related products in excess of WAPA's P-SMBP--ED firm power obligations
at market rates. WAPA will prepare a brochure providing detailed
information on these proposed rates prior to the public information
forums listed below. This brochure will be posted to WAPA's Web site at
https://www.wapa.gov/regions/UGP/rates/Pages/2018-firm-rate-adjustment.aspx. If approved, the proposed rates, under Rate Schedules
P-SED-F13, P-SED-FP13, and P-SED-M1 would become effective on January
1, 2018, and would remain in effect through December 31, 2022, or until
superseded. Publication of this Federal Register notice begins the
formal process for the proposed rate adjustment and new sale of surplus
products formula rate.
DATES: The consultation and comment period will begin July 3, 2017 and
end October 2, 2017. WAPA will present a detailed explanation of the
proposed rates and other modifications at public information forums
being held on the following dates and times:
1. August 22, 2017, 9:00 a.m. to 10:30 a.m. MDT, Denver, Colorado.
2. August 23, 2017, 9:00 a.m. to 10:30 a.m. CDT, Sioux Falls, South
Dakota.
WAPA will accept oral and written comments at public comment forums
on the following dates and times:
1. August 22, 2017, 11:00 a.m. to no later than 12 noon MDT,
Denver, Colorado.
2. August 23, 2017, 11:00 a.m. to no later than 12 noon CDT, Sioux
Falls, South Dakota.
WAPA will accept written comments anytime during the consultation
and comment period.
ADDRESSES: Written comments and/or requests to be informed of Federal
Energy Regulatory Commission (FERC) actions concerning the proposed
rates submitted by WAPA to FERC for approval should be sent to: Mr.
Robert J. Harris, Regional Manager, Upper Great Plains Region, Western
Area Power Administration, 2900 4th Avenue North, 6th Floor, Billings,
MT 59101-1266, or email [email protected]. Information about this
rate process is posted on WAPA's Web site at https://www.wapa.gov/regions/UGP/rates/Pages/2018-firm-rate-adjustment.aspx. WAPA will post
official comments received via letter and email to its Web site after
the close of the comment period. WAPA must receive written comments by
the end of the consultation and comment period to ensure they are
considered in WAPA's decision process.
Public information and comment forum locations are:
1. Denver--Embassy Suites, 7001 Yampa Street, Denver, Colorado.
2. Sioux Falls--Holiday Inn, 100 West 8th Street, Sioux Falls,
South Dakota.
FOR FURTHER INFORMATION CONTACT: Mrs. Linda Cady-Hoffman, Rates
Manager, Upper Great Plains Region, Western Area Power Administration,
2900 4th Avenue North, 6th Floor, Billings, MT 59101-1266, telephone:
(406) 255-2920, email: [email protected]@wapa.gov.
SUPPLEMENTARY INFORMATION:
Firm Electric Service
On December 2, 2014, the Deputy Secretary of Energy approved, on an
interim basis, Rate Order No. WAPA-166 and Rate Schedules P-SED-F12 and
P-SED-FP12 for the period beginning January 1, 2015, and ending
December 31, 2019 (79 FR 72670-72677 (Dec. 8, 2014)).\1\ These Rate
Schedules are formula-based, providing for downward adjustments to the
drought adder component.\2\ On January 1, 2017, the drought adder
component of the P-SMBP--ED effective Rate Schedules was adjusted
downward, recognizing repayment of drought costs included in the
drought adder component of the approved formula rates. The formula-
based drought adder component needs to be adjusted down to zero in 2018
and such adjustment can be made using the approved annual drought adder
adjustment process. However, since any adjustment to the base component
must be done through a public rate process, WAPA now proposes to adjust
both the base and drought adder components through a rate adjustment
process. WAPA proposes to adjust the formula-based drought adder
component of firm power rate schedules down to zero in 2018, while the
base component will be adjusted upward to address present costs. The P-
SMBP Fiscal Year 2016 Power Repayment Study (PRS) revenue requirement
and current water conditions in the P-SMBP are the determining factors
for this proposed rate adjustment.
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\1\ FERC confirmed and approved Rate Order WAPA-166 on a final
basis on March 18, 2015, in Docket No. EF15-3-000. See United States
Department of Energy, Western Area Power Administration (Pick-Sloan
Missouri Basin Program--Eastern Division), 150 FERC ] 62,170.
\2\ The drought adder component is a formula-based revenue
requirement that includes future purchase power above timing
purchases, previous purchase power drought deficits, and interest on
the purchase power drought deficits. See 72 FR 64067 (November 14,
2007). The drought adder was added as a component to the energy and
capacity rates in Rate Order No. WAPA-135, which was approved by the
Deputy Secretary on an interim basis on November 14, 2007 (72 FR
64067). FERC confirmed and approved Rate Order WAPA-135 on a final
basis on April 14, 2008, in Docket No. EF08-5031. See United States
Department of Energy, Western Area Power Administration (Pick-Sloan
Missouri Basin Program-Eastern Division), 123 FERC ] 62,048. Western
reviews the drought adder each September to determine if drought
costs differ from those projected in the Power Repayment Study and
whether an adjustment to the drought adder is necessary. See 72 FR
at 64071. The drought adder may be adjusted downward using the
approved annual drought adder adjustment process, whereas an
incremental upward adjustment to the drought adder component greater
than the equivalent of 2 mills/kWh requires a public rate process.
See 72 FR at 64071.
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WAPA's Upper Great Plains Region (UGP) is also proposing the
removal of the 5 percent voltage discount currently in the existing P-
SMBP--ED firm power rate schedule P-SED-F12 and removing it from the
firm power revenue requirement determined in the FY 2016 PRS. The
voltage discount was originally created by the Bureau of Reclamation
(BOR) in its firm power rate schedules prior to the creation of WAPA.
This discount was to compensate certain preference customers for
providing ``transmission'' facilities otherwise provided by the BOR and
later WAPA. The effect of providing this discount to certain customers
is to raise the firm power rates to all customers to recover the
dollars lost by providing the discount. By removing the voltage
discount, the overall P-SMBP--ED firm power rate will be lower and all
firm power customers will pay firm power rates on an equivalent basis.
The original intent of the voltage discount has been met in its nearly
70 years of application. The voltage discount has been difficult to
administer equitably among customers. It takes considerable staff time
to administer, impedes simplifying power and energy billing, and adds
complexity to solely Upper Great Plains (UGP) power billing. Removing
the voltage discount is revenue neutral for WAPA.
With the removal of the voltage discount taken into account, the
proposed total annual revenue requirement for P-SMBP--ED is $230.1
million for firm power and firm peaking power service. The existing P-
SMBP--ED charges in the current rate schedules for firm power and firm
peaking power are being reduced, as indicated in Table 1:
[[Page 30860]]
Table 1--Summary of Current and Proposed Revenue Requirement and Rates
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Current under P-
SED-F12/ P-SED- Proposed under P-
FP12 with SED-F13/ P-SED-
Firm power service modified drought FP13 as of Percent change
adder reduction January 1, 2018
as of January 1,
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P-SMBP--ED Revenue Requirement (millions $)............... $282.7 $230.1 -19
P-SMBP--ED Composite Rate (mills/kWh)..................... 28.25 24.00 -15
Firm Capacity ($/kW-month)................................ $6.50 $5.25 -19
Firm Energy (mills/kWh)................................... 16.18 13.27 -18
Firm Peaking Capacity ($/kW-month)........................ $5.85 $4.75 -19
Firm Peaking Energy (mills/kWh) 1......................... 16.18 13.27 -18
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1 Firm Peaking Energy is normally returned. This charge will be assessed in the event Firm Peaking Energy is not
returned.
Under the current rate methodology, rates for P-SMBP--ED firm power
and firm peaking power service are designed to recover an annual
revenue requirement that includes investment repayment, interest,
purchase power, operation and maintenance, and other expenses within
the allowable period. The annual revenue requirement continues to be
allocated equally between capacity and energy.
WAPA is proposing to place Rate Schedules P-SED-F13 and P-SED-FP13
into effect for the 5-year period beginning January 1, 2018, through
December 31, 2022. The proposed adjustment updates the base component
with present costs and reduces the drought adder component to zero, as
the drought-related debts are projected to be fully repaid in 2018. The
net effect of these adjustments results in an overall decrease to the
P-SMBP--ED rates.
Base component costs for the P-SMBP--ED have increased primarily
due to inflationary annual and capital cost increases associated with
incorporating three new out-year projections into the 5-year cost
evaluation period of the current rate-setting PRS. Concurrently, WAPA
will be reducing the P SMBP--ED drought adder components of the firm
power rates to zero recognizing the full repayment of drought costs in
2018. The anticipated net effect of these planned rate actions is the
firm power rate charges for the P-SMBP--ED will be decreasing overall
from the current rate charges. A comparison of the current and proposed
components is listed in Table 2.
Table 2--Summary of P-SMBP--ED Charge Components
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Current charges under rate schedules P- Proposed charges under rate schedules P-
SED-F12 and P-SED-FP12 with modified SED-F13 and P-SED-FP13 as of January 1,
drought adder reduction as of January 1, 2018
2017 ------------------------------------------ Change
------------------------------------------ (percent)
Base Drought adder Total Base Drought adder Total
component component charge component component charge
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Firm Capacity ($/kWmonth).............................. $4.90 $1.60 $6.50 $5.25 $0.00 $5.25 -19
Firm Energy (mills/kWh)................................ 12.33 3.85 16.18 13.27 0.00 13.27 -18
Firm Peaking Capacity ($/kWmonth)...................... $4.45 $1.40 $5.85 $4.75 $0.00 $4.75 -19
Firm Peaking Energy (mills/kWh) 1...................... 12.33 3.85 16.18 13.27 0.00 13.27 -18
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1 Firm peaking energy is normally returned. This charge will be assessed in the event firm peaking energy is not returned.
As a part of the current and proposed rate schedules, WAPA provides
for a formula-based adjustment of the drought adder component of up to
2 mills/kWh. The 2 mills/kWh cap is intended to place a limit on the
amount the drought adder component can be adjusted relative to
associated drought costs to recover costs attributable to the drought
adder formula rate for any one-year cycle. Continuing to identify the
firm power service revenue requirement using base and drought adder
components will assist WAPA in the presentation of future impacts of
droughts, demonstrate repayment of drought-related costs in the PRS,
and allow WAPA to be more responsive to changes caused by drought-
related expenses. WAPA will continue to charge and bill its customers
firm power and firm peaking power service rates for energy and
capacity, which are the sum of the base and drought adder components.
Sale of Surplus Products
In addition to the firm power and firm peaking power rate
schedules, WAPA is proposing a new formula-based rate schedule, P-SED-
M1, applicable to the sale of surplus energy and capacity products. The
schedule includes reserves, regulation, frequency response, and energy.
If WAPA UGP surplus products are available, the charge will be
determined based on market rates, plus administrative costs. The
customer will be responsible for acquiring transmission service
necessary to deliver the product(s) for which a separate charge may be
incurred. WAPA is proposing to place Rate Schedule P-SED-M1 into effect
for the 5-year period beginning January 1, 2018, through December 31,
2022.
Legal Authority
The proposed rates constitute a major rate adjustment, as defined
by 10 CFR 903.2(e); therefore, WAPA will hold the public information
and public comment forums for this rate adjustment, pursuant to 10 CFR
903.15 and 903.16. WAPA will review all timely public comments and make
amendments or adjustments to the proposals as appropriate. Proposed
rates will be forwarded to the Deputy Secretary of Energy for approval
on an interim basis.
WAPA is establishing firm power service rates, firm peaking power
service rates, and sale of surplus
[[Page 30861]]
product formula rates for P-SMBP-ED under the Department of Energy
(DOE) Organization Act (42 U.S.C. 7152); the Reclamation Act of 1902
(ch. 1093, 32 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. 00-037.00B, effective November 19, 2016,
the Secretary of Energy delegated: (1) The authority to develop power
and transmission rates to WAPA'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. Existing DOE procedures for public
participation in power rate adjustments (10 CFR part 903) were
published on September 18, 1985 (50 FR 37835).
Availability of Information
All brochures, studies, comments, letters, memorandums, or other
documents WAPA initiates or uses to develop the proposed rates will be
available for inspection and copying at the Upper Great Plains Regional
Office, located at 2900 4th Avenue North, 6th Floor, Billings, Montana.
These documents and supporting information will be posted on WAPA's Web
site as they become available under the ``2018 Firm Rate Adjustment''
section located at https://www.wapa.gov/regions/UGP/rates/Pages/2018-firm-rate-adjustment.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), WAPA 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
WAPA 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: June 27, 2017.
Mark A. Gabriel,
Administrator.
[FR Doc. 2017-13981 Filed 6-30-17; 8:45 am]
BILLING CODE 6450-01-P