Amistad and Falcon Projects Rate Order No. WAPA-111

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of order concerning a power rate formula.

SUMMARY:

The Deputy Secretary of the Department of Energy (DOE) confirmed and approved Rate Order No. WAPA-111 placing a power rate formula for the Amistad and Falcon Projects of the Western Area Power Administration (Western) into effect on an interim basis. The provisional power rate formula will remain in effect on an interim basis until the Federal Energy Regulatory Commission (Commission) confirms, approves, and places it into effect on a final basis, or until the power rate formula is replaced by another power rate formula.

DATES:

The provisional rate formula extension will be placed into effect on an interim basis on June 8, 2004, and will be in effect until the Commission confirms, approves, and places the provisional rate formula extension into effect on a final basis for a 5-year period ending June 7, 2009, or until superseded.

FOR FURTHER INFORMATION CONTACT:

Mr. Bradley S. Warren, CRSP Manager, Colorado River Storage Project Management Center, Western Area Power Administration, P.O. Box 11606, Salt Lake City, UT 84147-0606, (801) 524-5493, e-mail warren@wapa.gov, or Ms. Carol Loftin, Rates Manager, Colorado River Storage Project Management Center, Western Area Power Administration, P.O. Box 11606, Salt Lake City, UT 84147-0606, telephone (801) 524-6380, e-mail loftinc@wapa.gov.

SUPPLEMENTARY INFORMATION:

The Amistad and Falcon Dams are features of international water storage projects located on the Rio Grande River between Texas and Mexico. Western markets the power from these dams under the terms of Contract No. 7-07-50-P0890 (Contract) dated August 9, 1977, and amended on April 10, 1986. The rate formula of that Contract was approved by the Federal Power Commission (FPC), predecessor to the Commission, for a 5-year period beginning with the date of initial operation of Amistad Power Plant, in Docket No. E-9566 on August 12, 1977. A 5-year rate extension approving this same rate formula through June 7, 1993, was ordered by the Commission on July 20, 1988, in 44 FERC 62,058. Subsequent 5-year renewals of the rate formula have been approved by the Commission. The most recent approval was on January 21, 2000, in Docket No. EF-99-5101-000, which approved the same power rate formula through June 7, 2004.

According to article 9(a) of the Contract, Western calculates the annual installment to be paid by the South Texas Electric Cooperative, Inc. (STEC), and the Medina Electric Cooperative, Inc. (MEC), for the power generated at the Amistad and Falcon power plants on or before August 31 of the year preceding the fiscal year to which it pertains. Each annual installment pays the annual amortized portion of the United States' investment in the Amistad and Falcon hydroelectric facilities with interest, and the associated operation, maintenance, and administrative costs. This repayment schedule is not dependent upon the power and energy made available for sale or the rate of generation each year. Western will continue to provide STEC/MEC with a revised Exhibit A by August 31 of each year using the same methodology.

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; and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove such rates to the Commission. Existing DOE procedures for public participation in power rate adjustments (10 CFR 903) were published on September 18, 1985 (50 FR 37835).

Pursuant to Delegation Order Nos. 00-037.00 and 00-001.00A, 10 CFR part 903, and 18 CFR part 300, I hereby confirm, approve, and place Rate Order No. WAPA-111 into effect on an interim basis. The extension of the rate formula will be promptly submitted to the Commission for confirmation and approval on a final basis.

Order Confirming, Approving, and Placing a Rate Formula Extension for Amistad and Falcon Projects Into Effect on an Interim Basis

The Western Area Power Administration (Western) developed this power rate formula under the Department of Energy Organization Act (42 U.S.C. 7152). This Act transferred the power marketing functions of the Secretary 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 enactments, particularly section 9(c) of the Reclamation Act of 1939, (43 U.S.C. 485h(c)), and other Acts specifically applicable to the Amistad Project and the Falcon Project, to the Secretary.

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; and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove such rates to the Commission. Existing DOE procedures for public participation in power rate adjustments (10 CFR 903) were published on September 18, 1985 (50 FR 37835).

Acronyms and Definitions

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

Commission: Federal Energy Regulatory Commission.

Contract: Contract No. 7-07-50-P0890 dated August 9, 1977, and amended on April 10, 1986, between Western, STEC, and MEC, for firm power.

Customers: STEC and MEC.

DOE: Department of Energy.

DOE Order RA 6120.2: An order dealing with power marketing administration financial reporting used in determining revenue requirements for rate development.

FPC: Federal Power Commission.

FY: Fiscal year; October 1 to September 30.

kWh: Kilowatthour.

MEC: Medina Electric Cooperative, Inc.

Mills/kWh: Mills per kilowatthour.

NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, et seq.).

O&M: Operation and maintenance.

PRS: Power repayment study.

Reclamation: Bureau of Reclamation, U.S. Department of the Interior.

Secretary: Secretary of Energy.

STEC: South Texas Electric Cooperative, Inc.

U.S. Section: U.S. Section of the International Boundary and Water Commission.

Western: Western Area Power Administration, U.S. Department of Energy.

Effective Date

This power rate formula will become effective on an interim basis on June 8, 2004, and will be in effect pending the Commission's approval of this or a substitute rate formula on a final basis for a 5-year period through June 7, 2009, or until superseded.

Public Notice and Comment

Paragraph 903.23(a) of 10 CFR 903 does not require either a consultation and comment period, or public information or comment forums for rate extensions. The Customers have expressed their desire to continue using the rate formula through correspondence and letters of concurrence dated December 9, 2003. In addition, on March 17, 2004, Western met with the Customers in San Antonio, Texas, where Western notified them of its intent to continue the power rate formula. Western also discussed the number of years covered in the annual installments, operation and maintenance funding, answered questions, and received comments and suggestions. The customers expressed support to continue the power rate formula.

Project Description

The Amistad and Falcon Dams are features of international water storage projects located on the Rio Grande River between Texas and Mexico. Western markets the power from these dams under the terms of the Contract.

On August 12, 1977, in Docket No. E-9566, the FPC approved for a 5-year period the rate formula contained in the Contract between Reclamation and the two electric cooperatives, to become effective on the date of initial operation of Amistad Power Plant (June 8, 1983). The Customers agreed to purchase the output of the Amistad and Falcon Power Plants for a 50-year period, beginning when initial electric service became available from Amistad. The cooperatives agreed to take all Amistad and Falcon power and to pay the United States an annual installment as discussed in the Contract.

The power marketing functions of Reclamation were transferred to Western on October 1, 1977, and Western became responsible for the administration of the above Contract.

Western and the Customers executed Supplement No. 1 to the Contract on April 10, 1986, to clarify the method for determining the annual installment consistent with DOE Order No. RA 6120.2. Those clarifications address repayment of Falcon hydroelectric facilities within the remaining period, establish interest during construction at 7 percent, capitalize major replacements and additions at current interest rates, and specify the actual date of initial service as June 8, 1983.

Supplement No. 1 requires the amount of each annual installment be established in advance by the contracting officer in consultation with the U.S. Section and submitted to the cooperatives as Exhibit A on or before August 31 of the year preceding the appropriate fiscal year in accordance with the following:

The amount of each annual installment shall be the sum of:

(1) An annual repayment installment including interest, to amortize within the remaining period, the unpaid United States investment in the Falcon hydroelectric facilities and in the penstocks at Amistad Dam; plus

(2) An annual installment to amortize over a 50-year period, the United States actual total investment costs with interest, for hydroelectric power facilities, not including penstocks, at Amistad Dam to be under the jurisdiction of the U.S. Section, including the costs of engineering plans, supervision, administration of construction, and interest during construction * * * and

(3) The annual operation, maintenance, replacement, and administration costs of the U.S. Section and the administration costs of Western related directly or indirectly to the United States power facilities at Amistad Dam and at Falcon Dam, provided that such costs shall be based on prudent and businesslike management practices and in accordance with established electric industry operation and maintenance practices * * *.

The billing procedures contained in Supplement No. 1 require Western to submit bills to the cooperatives for each monthly payment on the annual installment on or before the tenth day of the month for which such payment is due. Payments are due and payable by the cooperatives on the first day of the following month. Western divides the calculated annual installment by 12 and bills the customer monthly for this amount.

The rate formula of that Contract was approved by the FPC, for a 5-year period beginning with the date of initial operations of Amistad Power Plant, and subsequent 5-year renewals of the rate formula have been approved by the Commission through June 2004.

Consequently, Commission approval is now sought for an additional 5-year period. The effective date is scheduled to be June 8, 2004, through June 7, 2009.

Power Repayment Studies

The Contract requires that Western calculate the annual installment to be paid by the customers for the power generated at the Amistad and Falcon Power Plants, in consultation with the U.S. Section, and submit it to STEC and MEC in the form of a contract exhibit on or before August 31 of the year preceding the FY to which it pertains.

Western calculates the annual installment based on 2 years of data. The calculation includes the projected costs of the rate installment year (future fiscal year) and an adjustment from the last historic fiscal year. The adjustment is the surplus or deficit that occurs in the last historic year when actual costs and repayment obligations are subtracted from actual revenues. This surplus or deficit is combined with the projected rate installment year costs to arrive at the rate installment.

Statement of Revenue and Related Expenses

The following table provides a summary of revenues and expenses for the current 6-year rate formula and the actual revenues and expenses for the same period.

The following table provides a summary of the projected revenues and expenses during the provisional rate formula period.

Environmental Compliance

In compliance with the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321, et seq.); Council on Environmental Quality Regulations (40 CFR 1500-1508); and DOE NEPA Regulations (10 CFR 1021), Western has determined that 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.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) requires Federal agencies to perform a regulatory flexibility analysis if a final rule is likely to have a significant economic impact on a substantial number of small entities and there is a legal requirement to issue a general notice of proposed rulemaking. Western has determined that this action does not require a regulatory flexibility analysis since it is a rulemaking of particular applicability involving rates or services applicable to public property.

Small Business Regulatory Enforcement Fairness Act

Western has determined that this rule is exempt from congressional notification requirements under 5 U.S.C. 801 because the action is a rulemaking of particular applicability relating to rates or services and involves matters of procedure.

Availability of Information

Information regarding this rate formula extension is available for public review in the Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111. Some of these documents are also available at http://www.wapa.gov/crsp/rateanal.htm under CRSP Rate Adjustment documents for the Amistad and Falcon Projects section.

Submission to Federal Energy Regulatory Commission

The rate formula extension herein confirmed, approved, and placed into effect on an interim basis, together with supporting documents, will be submitted to the Commission for confirmation and approval on a final basis.

Order

In view of the foregoing and pursuant to the authority delegated to me, I confirm and approve and place into effect on an interim basis a renewal of the rate formula provisions contained in the Contract and supplemented. The rate formula has been in effect since June 8, 1999. The rate formula provisions shall remain in effect on an interim basis, pending the Commission's confirmation and approval of this or a substitute rate formula on a final basis through June 7, 2009.