82 FR 52294 - Boulder Canyon Project-Rate Order No. WAPA-178

DEPARTMENT OF ENERGY
Western Area Power Administration

Federal Register Volume 82, Issue 217 (November 13, 2017)

The Deputy Secretary of Energy confirmed and approved Rate Order No. WAPA-178 and Rate Schedule BCP-F10, placing formula rates for electric service from the Boulder Canyon Project (BCP) of the Western Area Power Administration (WAPA) into effect on an interim basis. The provisional formula rates will provide sufficient revenue to pay all annual costs, including interest expense, and repay required investment within the allowable periods. The Deputy Secretary has also confirmed and approved the fiscal year (FY) 2018 base charge and rates for BCP electric service.

[Federal Register Volume 82, Number 217 (Monday, November 13, 2017)]
[Notices]
[Pages 52294-52297]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-24496]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project-Rate Order No. WAPA-178

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of order concerning formula rates for electric service 
and calculation of the fiscal year 2018 base charge and rates for the 
Boulder Canyon Project.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-178 and Rate Schedule BCP-F10, placing formula rates for 
electric service from the Boulder Canyon Project (BCP) of the Western 
Area Power Administration (WAPA) into effect on an interim basis. The 
provisional formula rates will provide sufficient revenue to pay all 
annual costs, including interest expense, and repay required investment 
within the allowable periods. The Deputy Secretary has also confirmed 
and approved the fiscal year (FY) 2018 base charge and rates for BCP 
electric service.

DATES: Rate Schedule BCP-F10 is effective as of December 13, 2017, and 
will remain in effect through September 30, 2022, pending approval by 
the Federal Energy Regulatory Commission (FERC) on a final basis or 
until superseded. The FY 2018 base charge and rates for BCP are 
applicable December 13, 2017, and will remain in effect through 
September 30, 2018.

FOR FURTHER INFORMATION CONTACT: Mr. Ronald E. Moulton, Regional 
Manager, Desert Southwest Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 605-2453, email 
[email protected] or Mr. Jack Murray, Vice President of Power Marketing, 
Desert Southwest Region, Western Area Power Administration, P.O. Box 
6457, Phoenix, AZ 85005-6457, (602) 605-2555, email [email protected].

SUPPLEMENTARY INFORMATION: Rate Schedule BCP-F9 under Rate Order No. 
WAPA-171 \1\ was approved for a five-year period beginning on October 
1, 2015, and ending September 30, 2020. On June 19, 2017, WAPA proposed 
to update the formula rates under Rate Schedule BCP-F10 and calculate 
the FY 2018 base charge and rates in a notice published in the Federal 
Register on June 19, 2017 (82 FR 27813). The notice detailed the 
proposed formula rates, initiated a public consultation and comment 
period, and set forth the date and location of public information and 
comment forums.
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    \1\ Rate Order No. WAPA-171 was approved by FERC on a final 
basis on December 11, 2015, in Docket No. EF15-7-000 (153 FERC ] 
62,189).
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    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 the Administrator of WAPA; (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. Federal rules (10 CFR part 903) 
govern Department of Energy procedures for public participation in 
power and transmission rate adjustments.
    Under Delegation Order Nos. 00-037.00B and 00-001.00F and in 
compliance with 10 CFR part 903, 10 CFR part 904 and 18 CFR part 300, I 
hereby confirm, approve and place Rate Order No. WAPA-178, which places 
formula rates for BCP electric service into effect on an interim basis, 
and calculates the base charge and rates for FY 2018. Rate Schedule 
BCP-F10 will be submitted promptly to FERC for confirmation and 
approval on a final basis.

    Dated: November 3, 2017.
Dan Brouillette,
Deputy Secretary of Energy.

DEPARTMENT OF ENERGY

DEPUTY SECRETARY

In the matter of: Western Area Power Administration, Boulder Canyon 
Project Rate Adjustment for Electric Service

Rate Order No. WAPA-178

Order Confirming, Approving and Placing Formula Rates for Electric 
Service Into Effect on an Interim Basis and Calculation of Fiscal Year 
2018 Base Charge and Rates

    The formula rates set forth in this order are established 
pursuant to Section 302 of the Department of Energy (DOE) 
Organization Act (42 U.S.C. 7152). This act transferred to and 
vested in the Secretary of Energy the power marketing functions of 
the Secretary of the Interior and the Bureau of Reclamation 
(Reclamation) under 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. 00-037.00B, effective November 19, 2016, 
the Secretary of Energy delegated: (1) The authority to develop 
power and transmission rates to the Administrator of the Western 
Area Power Administration (WAPA); (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 
(FERC). Federal rules (10 CFR part 903) govern DOE procedures for 
public participation in power and transmission rate adjustments.

Acronyms and Definitions

    As used in this Rate Order, the following acronyms and definitions 
apply:
    Base Charge: The total charge paid by the contractors for their 
allocated contingent capacity and firm energy based on the annual 
revenue requirement. The base charge is composed of a capacity and an 
energy component.
    Boulder Canyon Project (BCP): All works and the real property 
associated with such works authorized by the Boulder Canyon Project 
Act, as amended, the Hoover Power Plant Act of 1984, as amended, and 
any future additions authorized by Congress, to be constructed and 
owned by the United States, but exclusive of the main canal and its 
related appurtenances authorized by the Boulder Canyon Project Act, 
known as the All-American Canal.

[[Page 52295]]

    Contractor: Any party that has a fully executed contract with WAPA 
for BCP electric service.
    DOE: Department of Energy.
    DSW: Desert Southwest Region.
    FERC: Federal Energy Regulatory Commission.
    Reclamation: Department of the Interior, Bureau of Reclamation.
    WAPA: Western Area Power Administration.
    Working Capital: Funds advanced by the contractors to meet BCP cash 
flow needs.

Effective Date

    Rate Schedule BCP-F10 is effective as of December 13, 2017, and 
will remain in effect through September 30, 2022, pending approval by 
FERC on a final basis or until superseded. The FY 2018 base charge and 
rates are applicable December 13, 2017, and will remain in effect 
through September 30, 2018.

Public Notice and Comment

    WAPA followed the Procedures for Public Participation in Power and 
Transmission Rate Adjustments and Extensions (10 CFR parts 903) and 
General Regulations for the Charges for the Sale of Power from the BCP 
(10 CFR 904), in developing these formula rates and schedule. WAPA took 
the following steps to involve the public in the rate adjustment 
process:
    1. WAPA published a Federal Register notice on June 19, 2017 (82 FR 
27813), announcing the proposed formula rates, initiating the 90-day 
public consultation and comment period, setting forth the date and 
location of public information and public comment forums, and outlining 
the procedures for public participation.
    2. On July 19, 2017, WAPA held a public information forum in 
Phoenix, Arizona. WAPA's representatives explained the need for the 
formula rate adjustment and proposed changes to the formula rates, 
answered questions, and provided presentation handouts.
    3. On August 18, 2017, WAPA held a public comment forum in Phoenix, 
Arizona, to provide contractors and interested parties an opportunity 
to comment for the record.
    4. WAPA posts information about this public process at: https://www.wapa.gov/regions/DSW/Rates/Pages/boulder-canyon-rates.aspx.

Comments

    WAPA received comments from the Irrigation & Electrical Districts 
Association of Arizona and the Colorado River Commission during the 
public consultation and comment period and responds to them in the 
paragraphs that follow. All comments received were considered in 
preparing this Rate Order. The comments have been paraphrased where 
appropriate without compromising their meaning.
    Comment: A commenter requested further explanation of how 
Reclamation's $15 million for working capital was derived and whether 
the increase in working capital over the prior marketing period was 
necessary. The commenter requested steps be taken to further moderate 
the impact of collecting the working capital amount in the FY 2018 base 
charge.
    Response: The greatest need for working capital is generally during 
the first quarter of a FY when receipts are not sufficient to cover 
obligations and expenditures. Because the working capital for the new 
marketing period will be incrementally funded over 12 billing cycles, 
the full amount will not be available until FY 2019. For FY 2018, the 
carryover balance from the marketing period ending September 30, 2017, 
will be available to cover funding shortfalls before the full $15 
million of working capital is collected. Because the carryover balance 
for the marketing period ending September 30, 2017, must be refunded by 
September 30, 2018, Reclamation must have the $15 million in working 
capital to maintain a positive cash balance at the end of FY 2018.
    Following the public comment forum, Reclamation reviewed their 
budgets and revenue projections for FY 2018. To moderate the base 
charge increase, Reclamation was able to further reduce its replacement 
budget by $800,000 and increased revenue projections for the Hoover Dam 
Visitor Center by $3 million. This resulted in a net decrease to the 
base charge of $3.8 million.
    Comment: A commenter requested Reclamation's working capital 
analysis and footnotes be updated with the latest budget figures 
reflected in the revised base charge.
    Response: The analysis was updated with the revised budget figures 
and posted to WAPA's Web site provided above. There was no change to 
Reclamation's working capital needs.
    Comment: A commenter thanked all parties involved for the efforts 
made to moderate the impact of Reclamation's working capital needs on 
the in FY 2018 base charge. The commenter encouraged further efforts as 
well.
    Response: Reclamation and WAPA were able to collectively moderate 
the impact of the working capital collection by reducing agency budgets 
by approximately $4.5 million. Reclamation and WAPA will continue to 
work collaboratively to ensure the stability of the base charge.
    Comment: A commenter thanked Reclamation and WAPA for their 
collaborative efforts to moderate the impact of the working capital 
collection in FY 2018 by billing over a 12-month period rather than a 
one-time collection. The commenter also requested that pre-2017 and 
post-2017 marketing period balances be accounted for separately, 
included the post retirement benefit (PRB) amounts.
    Response: Reclamation and WAPA are able to separately identify 
balances between pre-2017 and post-2017 marketing periods, including 
PRB balances.

Background and Provisional Base Charge and Rates

    The Hoover Dam, authorized by the Boulder Canyon Project Act (45 
Stat. 1057, December 21, 1928), sits on the Colorado River along the 
Arizona-Nevada border. The Hoover Dam's power plant has 19 generating 
units (two for plant use) and an installed capacity of 2,078.8 
megawatts (4,800 kilowatts for plant use). High-voltage transmission 
lines and substations deliver this power to southern Nevada, Arizona, 
and southern California.
    The rate-setting process for BCP is different from most WAPA power 
systems. The Boulder Canyon Project Amended and Restated Implementation 
Agreement (BCPIA), executed in 2016 between WAPA, Reclamation, and 
contractors, carried forward the rate methodology used for the 
marketing period ending September 30, 2017. This rate methodology 
requires contractors to pay a base charge rather than a unit rate for 
power. The base charge is designed to collect sufficient revenue to 
cover all annual costs and to repay investment obligations within 
allowable time periods. Each contractor is billed a base charge in 
proportion to their allocation of power from the Hoover Dam. A unit 
rate is calculated for comparative purposes but is not used to 
determine charges for electric service.
    Since a new 50-year marketing period commences on October 1, 2017, 
WAPA is updating the formula rates for a five-year period and 
calculating the base charge and rates for FY 2018.
    The revision to Rate Schedule BCP-F10 is:
    Capacity: Shall be equal to the annual capacity dollars divided by 
2,074 megawatt hours. This rate is applied to unauthorized overruns.
    The existing formula used to calculate the forecast capacity rate 
was revised from 1,951 to 2,074 megawatts to reflect the current 
generating (nameplate) capacity for the BCP, as required by the Hoover 
Power Allocation Act of 2011.

[[Page 52296]]

No other changes to the formula rates in the rate schedule were 
proposed.
    The update to the FY 2018 formula driven base charge and rates are:

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                                                                   FY 2017 base    FY 2018 base
                                                                      charge          charge      Percent change
----------------------------------------------------------------------------------------------------------------
Base Charge.....................................................     $69,662,289     $76,910,193            10.4
Composite Rates (mills/kWh).....................................           19.63           19.98            1.75
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    The FY 2018 base charge increased from $69.6 million in FY 2017 to 
$76.9 million in FY 2018, a 10.4 percent increase. The composite rate 
increased to 19.98 mills per kilowatt month, a 1.75 percent increase. 
Although the overall BCP budget decreased in FY 2018, the establishment 
of a working capital fund for the new 50-year marketing period caused 
the FY 2018 base charge to increase. As part of the BCPIA, Reclamation 
is establishing a $15 million working capital fund to cover short-term 
liabilities until sufficient revenues are received. This fund is 
particularly important at the beginning of a fiscal year when project-
related expenses tend to be greater than the revenue collected. This 
working capital fund balance will be reviewed annually in accordance 
with the BCPIA.

Certification of Rates

    WAPA's Administrator certified that the provisional formula rates 
for BCP electric service under Rate Schedule BCP-F10 result in the 
lowest possible rates consistent with sound business principles. The 
provisional formula rates were developed following administrative 
policies and applicable laws.

Availability of Information

    All brochures, studies, comments, letters, memorandums and other 
documents used by WAPA to develop the provisional formula rates are 
available for inspection and copying at the Desert Southwest Regional 
Office, Western Area Power Administration, 615 South 43rd Avenue, 
Phoenix, Arizona. Many of these documents are also available on WAPA's 
Web site: https://www.wapa.gov/regions/DSW/Rates/Pages/boulder-canyon-rates.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 
has determined that this action is categorically excluded from 
preparing an environmental assessment or an environmental impact 
statement.

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.

Submission to FERC

    The formula rates herein confirmed, approved, and placed into 
effect on an interim basis, together with supporting documents, will be 
submitted to FERC for confirmation and final approval.

Order

    In view of the foregoing and under the authority delegated to me, I 
confirm and approve, on an interim basis, the formula rates under Rate 
Schedule BCP-F10. Rate Schedule BCP-F10 is applicable the first full 
billing period on or after November 13, 2017, and will remain in effect 
through September 30, 2022, pending FERC's confirmation and approval of 
the rate schedule or substitute formula rates on a final basis.

    Dated: November 3, 2017.

Dan Brouillette,

Deputy Secretary of Energy.

Rate Schedule BCP-F10

(Supersedes Rate Schedule BCP-F9)

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION

DESERT SOUTHWEST REGION

Boulder Canyon Project

SCHEDULE OF RATES FOR ELECTRIC SERVICE

Effective

    The first day of the first full billing period beginning on or 
after December 13, 2017, and extending through September 30, 2022, or 
until superseded by another rate schedule, whichever occurs earlier.

Available

    In the marketing area serviced by the Boulder Canyon Project.

Applicable

    To power supplied by the Boulder Canyon Project through one meter, 
at one point of delivery, unless otherwise provided by contract.

Character and Conditions of Service

    Alternating current at 60 hertz, three-phase, delivered and metered 
at the voltages and points established by contract.

Base Charge

    The charge paid by each contractor for their allocated capacity and 
firm energy based on the annual revenue requirement. The base charge 
shall be composed of a capacity component and an energy component:
    Capacity Charge: Each month WAPA shall bill each contractor for a 
capacity charge equal to one-twelfth (1/12) of the capacity dollars 
multiplied by each contractor's contingent capacity percentage as 
provided by contract.
    Energy Charge: Each month WAPA shall bill each contractor for an 
energy charge equal to that period's monthly energy ratio, multiplied 
by the contractor's energy dollars as provided by contract.

Forecast Rates

    Energy: Shall be equal to the annual energy dollars divided by the 
lesser of the total master schedule energy or 4,501 megawatt hours. 
This rate is applied to excess energy, unauthorized overruns, and water 
pump energy.
    Capacity: Shall be equal to the annual capacity dollars divided by 
2,074 megawatt hours. This rate is applied to unauthorized overruns.

Calculated Energy Rate

    Within ninety (90) days after the end of the fiscal year, a 
calculated energy rate shall be calculated. For any rate year in which 
energy deemed delivered is greater than 4,501 megawatt hours, WAPA 
shall apply the calculated energy rate to each contractor's energy 
deemed delivered to determine the contractor's actual energy charge. A 
credit or debit shall be established for each contractor based on the 
difference between the contractor's energy dollars and the contractor's 
actual energy charge, to be applied in the month following the

[[Page 52297]]

calculation or as soon as possible thereafter.

Lower Colorado River Basin Development Fund (Contribution Charge)

    The Contribution Charge is 4.5 mills for each kilowatt hour 
measured or scheduled to an Arizona purchaser and 2.5 mills for each 
kilowatt hour measured or scheduled to a California or Nevada 
purchaser, except for purchased power.

Billing for Unauthorized Overruns

    For each billing period in which there is a contract violation 
involving an unauthorized overrun of contractual power obligations, 
such overrun shall be billed at ten (10) times the forecast energy rate 
and forecast capacity rate. The Contribution Charge shall also be 
applied to each kilowatt hour of overrun.

Adjustments

    None.

[FR Doc. 2017-24496 Filed 11-9-17; 8:45 am]
 BILLING CODE 6450-01-P