Parker-Davis Project-Extension of the Rate Methodology for Firm Power Service and Firm and Nonfirm Transmission Service-Rate Order No. WAPA-98

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of Rate Order.

SUMMARY:

This action is to extend the existing Parker-Davis Project (Parker-Davis) rate methodology for determining the firm power service rate and the firm and nonfirm point-to-point transmission service rates, established under Rate Order No. WAPA-75, through September 30, 2004. The existing Parker-Davis rate methodology will expire September 30, 2002.

FOR FURTHER INFORMATION CONTACT:

Mr. Todd Statler, Financial Analyst, Desert Southwest Customer Service Region, Western Area Power Administration, PO Box 6457, Phoenix, AZ 85005-6457, (602) 352-2781, or e-mail statler@wapa.gov.

SUPPLEMENTARY INFORMATION:

By Delegation Order No. 00-037.00, effective December 6, 2001, the Secretary of Energy delegated (1) the authority to develop long-term power and transmission rates on a nonexclusive basis to the Administrator of Western Area Power Administration (Western), (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 Federal Energy Regulatory Commission (FERC).

Pursuant to applicable Delegation Orders and existing Department of Energy (DOE) procedures for public participation in power and transmission rate adjustments in 10 CFR part 903, Western's Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service was submitted to FERC for confirmation and approval on November 19, 1997. On March 10, 1998, in Docket No. EF98-5041-000, at 82 FERC ¶ 62,164, FERC issued an order confirming, approving, and placing in effect on a final basis the Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service. The rate methodology set forth in Rate Order No. WAPA-75 was approved for the period beginning November 1, 1997, and ending September 30, 2002.

On September 30, 2002, Western's Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service will expire. Western has proposed that the existing Parker-Davis rate methodology be extended pursuant to 10 CFR part 903.23.

The Secretary of Energy is extending the existing Parker-Davis rate methodology that is used each Fiscal Year (FY) to calculate the firm power service rates for capacity and energy (Rate Schedule PD-F6), the firm point-to-point transmission service rate (Rate Schedule PD-FT6), the firm point-to-point transmission service rate for delivery of Salt Lake City Area Integrated Projects Power (Rate Schedule PD-FCT6) and the nonfirm point-to-point transmission service rate (Rate Schedule PD-NFT6). The existing Parker-Davis rate methodology collects annual revenues sufficient to recover annual expenses (including interest) and capital requirements, thus ensuring repayment of the project within the cost-recovery criteria set forth in DOE Order RA 6120.2. Under the existing Parker-Davis rate methodology, the revenue requirements for generation and transmission are determined annually based on FY projections in the cost apportionment study. The cost apportionment study allocates all Parker-Davis expenses and other revenues between generation and transmission. The revenue requirement for generation determines the amount of funds to collect through firm power service rates for capacity and energy. Similarly, the revenue requirement for transmission determines the amount of funds to collect through firm point-to-point transmission service rates.

During this extension period of the existing Parker-Davis rate methodology, Western will initiate a rate adjustment process in accordance with procedures for public participation in power and transmission rate adjustments in 10 CFR part 903. Western anticipates this rate adjustment process to begin when audited financial data for FY 2001 and FY 2002 becomes available. In the meantime, Western will continue to conduct informal customer meetings to ensure involvement of interested parties in the rate process.

In accordance with 10 CFR part 903.23(a)(2), Western did not have a consultation and comment period and did not hold public information and comment forums. The notice of proposed extension of the Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service was published in the Federal Register (67 FR 34702) on May 15, 2002.

Following review of Western's proposal within the Department of Energy, I approve, in the absence of a Deputy Secretary, Rate Order No. WAPA-98, which extends the existing Parker-Davis rate methodology for determining the firm power service rate and the firm and nonfirm point-to-point transmission service rates through September 30, 2004.

Order Confirming and Approving an Extension of the Parker-Davis Project Rate Methodology for Firm Power Service and Firm and Nonfirm Transmission Service

This rate methodology was established pursuant to Section 302(a) of the Department of Energy Organization Act (42 U.S.C. 7152(a)), through which the power marketing functions of the Secretary of the Department 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 Project Act of 1939 (43 U.S.C. 485h(c)), were transferred to and vested in the Secretary of Energy (Secretary).

By Delegation Order No. 00-037.00, effective December 6, 2001, the Secretary delegated (1) the authority to develop long-term power and transmission rates on a nonexclusive basis to the Administrator of the Western Area Power Administration (Western), (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 Federal Energy Regulatory Commission (FERC). This extension of rate methodology is issued pursuant to the Delegation Order and the Department of Energy (DOE) rate extension procedures at 10 CFR part 903.

Background

In the order issued March 10, 1998, in Docket No. EF98-5041-000, at 82 FERC ¶ 62,164, FERC confirmed, approved, and placed in effect on a final basis Rate Order No. WAPA-75, the Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service. The rate methodology set forth in Rate Order No. WAPA-75 was approved for the period beginning November 1, 1997, and ending September 30, 2002. On September 30, 2002, the Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service will expire. This makes it necessary to extend the existing Parker-Davis rate methodology pursuant to 10 CFR part 903. With this approval, Rate Order No. WAPA-75 will be extended under Rate Order No. WAPA-98.

Discussion

Western proposes to extend the existing Parker-Davis rate methodology used each Fiscal Year (FY) to calculate the firm power service rates for capacity and energy (Rate Schedule PD-F6), the firm point-to-point transmission service rate (Rate Schedule PD-FT6), the firm point-to-point transmission service rate for delivery of Salt Lake City Area Integrated Projects Power (Rate Schedule PD-FCT6) and the nonfirm point-to-point transmission service rate (Rate Schedule PD-NFT6). The existing Parker-Davis rate methodology provides for collecting annual revenues sufficient to recover annual expenses (including interest) and capital requirements, thus ensuring repayment of the project within the cost-recovery criteria set forth in DOE Order RA 6120.2. Under the existing Parker-Davis rate methodology, the revenue requirements for generation and transmission are determined annually based on FY projections in the cost apportionment study. The cost apportionment study allocates all Parker-Davis expenses and other revenues between generation and transmission. The revenue requirement for generation determines the amount of funds to collect through firm power service rates for capacity and energy. Similarly, the revenue requirement for transmission determines the amount of funds to collect through firm point-to-point transmission service.

During this extension period of the existing Parker-Davis rate methodology, Western will initiate a rate adjustment process in accordance with procedures for public participation in power and transmission rate adjustments in 10 CFR part 903. Western anticipates this rate adjustment process to begin when audited financial data for FY 2001 and FY 2002 becomes available. In the meantime, Western will continue to conduct informal customer meetings to ensure involvement of interested parties in the rate process.

In accordance with 10 CFR 903.23(a)(2), Western did not have a consultation and comment period and did not hold public information and comment forums. The notice of proposed extension of the Parker-Davis rate methodology for firm power service and firm and nonfirm point-to-point transmission service was published in the Federal Register (67 FR 34702) on May 15, 2002.

Order

In view of the foregoing, I hereby extend for a period effective October 1, 2002, and ending September 30, 2004, the existing Parker-Davis rate methodology for determining the firm power service rate and the firm and nonfirm point-to-point transmission service rates.