Parker-Davis Project, Pacific Northwest-Pacific Southwest Intertie Project, and the Central Arizona Project

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of proposed rates.

SUMMARY:

The Western Area Power Administration (Western) is initiating a rate adjustment process for a firm transmission rate for Projects in the Desert Southwest Customer Service Region. The multi-system transmission rate (MSTR) will apply to three transmission systems: the Parker-Davis Project (P-DP), the Pacific Northwest-Pacific Southwest Intertie Project (Intertie), and the Central Arizona Project (CAP) for rate purposes. The proposed MSTR will provide sufficient revenue to pay all annual costs, including interest expense and repayment of required investment, within the allowable period for the three transmission systems. A detailed rate brochure that identifies the reasons for proposing a multi-system transmission rate is available on Western's Web site ( http://www.wapa.gov/dsw/pwrmkt/MSTRP/MSTRP.htm ). The proposed MSTR is scheduled to become effective on January 1, 2005, and will remain in effect through December 31, 2009. Publication of this Federal Register notice initiates the formal process for the proposed rate adjustment.

DATES:

The consultation and comment period will begin today and will end September 20, 2004. Western representatives will explain the proposed MSTR at a public information forum on July 14, 2004, beginning at 10 a.m. MST, in Phoenix, AZ. Western will receive oral and written comments at a public comment forum on August 11, 2004, beginning at 10 a.m. MST, in Phoenix, AZ.

ADDRESSES:

Written comments should be sent to: Mr. J. Tyler Carlson, Regional Manager, Desert Southwest Customer Service Region, Western Area Power Administration, PO Box 6457, Phoenix, AZ 85005-6457, e-mail carlson@wapa.gov. Western must receive written comments by the end of the consultation and comment period to ensure they are considered in Western's decision process. The public information forum and public comment forum will be held at: Desert Southwest Customer Service Regional Office, located at 615 South 43rd Avenue, Phoenix, Arizona.

FOR FURTHER INFORMATION CONTACT:

Mr. Jack Murray, Rates Team Lead, Desert Southwest Customer Service Region, Western Area Power Administration, PO Box 6457, Phoenix, AZ 85005-6457, telephone (602) 352-2442, e-mail: jmurray@wapa.gov.

SUPPLEMENTARY INFORMATION:

Proposed Multi-System Transmission Rate

The proposed MSTR is designed to recover an annual revenue requirement that includes the annual transmission costs for P-DP, Intertie, and CAP, including investment repayment. The MSTR will be determined by the total transmission Revenue Requirements from each of the three projects divided by the total system reservations and estimates of network sales for the three projects. A stepped rate will be applied during the first 5 years to mitigate the cost shift to those customers who do not have concurrent service over two or more Projects (termed pancaked service). This stepped rate will be determined as follows: DSW will calculate a target rate to be achieved in the fifth year following the effective date of the MSTR. The single system transmission rate (SSTR) for each Project in the first 4 years will be the prior year rate increased/decreased each year by an amount equal to 25 percent of the difference between the target rate and the rate in effect in the year prior to the MSTR effective date. In the fifth year, all projects will pay the target rate. The stepped rate is illustrated in Table 1. The total revenue collected during the 5 years will be adequate to meet all expenses of each Project during the 5-year period.

The rate will be effective on January 1, 2005, and will remain in effect through December 31, 2009. Schedules will be updated every fiscal year on October 1, to reflect current financial and load data. The target rate may be changed as a result of the yearly update to ensure revenues collected over the 5 year period will be adequate to meet all expenses for each project. The MSTR will supersede each Project's SSTR. Revenue derived from the MSTR will be allocated to the Projects based on each individual Project's percentage of the MSTR revenue requirement.

Firm Electric Service (FES) and Priority Use Power (PUP) customers who take service under existing marketing plans will continue to receive a bundled product which includes an appropriate transmission component charge. The FES or PUP customers that choose to take advantage of the broader MSTR transmission service will pay the MSTR. In the near term and in accordance with the existing contractual commitments, FES and PUP customers that continue to take limited service delivery solely on the P-DP system will receive a credit for the difference between the MSTR and the transmission component of the P-DP bundled Power rate.

Procedural Requirements

Western will hold both a public information forum and a public comment forum. After a review of public comments, possible amendments or adjustments, Western will recommend the Deputy Secretary of Energy approve the proposed MSTR on an interim basis. The proposed MSTR is being established pursuant to the DOE 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 P-DP, Intertie, and CAP transmission projects.

By Delegation Order No. 00'037.00 approved December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates on a nonexclusive basis 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 DOE procedures for public participation in power rate adjustments (10 CFR 903) were published on September 18, 1985 (50 FR 37835).

Availability of Information

All brochures, studies, comments, letters, memorandums, or other documents that Western initiates or uses to develop the proposed MSTR, are available for inspection and copying at the Desert Southwest Customer Service Regional Office, located at 615 South 43rd Avenue, Phoenix, Arizona. Many of these documents and supporting information are also available on the DSW Web site at: http://www.wapa.gov/dsw/pwrmkt/MSTRP/MSTRP.htm.

Regulatory Procedure Requirements

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. 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.

Environmental Compliance

In compliance with the National Environmental Policy Act of 1969 (NEPA) (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 preparing an environmental assessment or an environmental impact statement.

Determination Under Executive Order 12866

Western has an exemption from centralized regulatory review under Executive Order 12866; accordingly, no clearance by the Office of Management and Budget is required.

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.