Notice2022-25267
Pick-Sloan Missouri Basin Program-Eastern Division-Rate Order No. WAPA-203
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 21, 2022
Effective
January 1, 2023
Issuing agencies
Energy DepartmentWestern Area Power Administration
Abstract
The formula rates for the Upper Great Plains Region (UGP) Pick-Sloan Missouri Basin Program--Eastern Division (P-SMBP--ED) firm power service, firm peaking power service, and sale of surplus products have been confirmed, approved, and placed into effect on an interim basis (Provisional Formula Rates). These new formula rates replace the existing formula rates for these services under Rate Schedules P-SED- F13, P-SED-FP13, and P-SED-M1, which expire on December 31, 2022. The P-SMBP--ED firm power service composite rate is increasing 16.3 percent. There are no changes to the formula rate for sale of surplus products.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 223 (Monday, November 21, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 223 (Monday, November 21, 2022)]
[Notices]
[Pages 70808-70816]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25267]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division-Rate Order
No. WAPA-203
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of rate order concerning firm power service, firm
peaking power service, and sale of surplus products formula rates.
-----------------------------------------------------------------------
SUMMARY: The formula rates for the Upper Great Plains Region (UGP)
Pick-Sloan Missouri Basin Program--Eastern Division (P-SMBP--ED) firm
power service, firm peaking power service, and sale of surplus products
have been confirmed, approved, and placed into effect on an interim
basis (Provisional Formula Rates). These new formula rates replace the
existing formula rates for these services under Rate Schedules P-SED-
F13, P-SED-FP13, and P-SED-M1, which expire on December 31, 2022. The
P-SMBP--ED firm power service composite rate is increasing 16.3
percent. There are no changes to the formula rate for sale of surplus
products.
DATES: The Provisional Formula Rates under Rate Schedules P-SED-F14,
Firm Power Service; P-SED-FP14, Firm Peaking Power Service; and Rate
Schedule P-SED-M2, Sale of Surplus Products, are effective on the first
day of the first full billing period beginning on or after January 1,
2023, and will remain in effect through December 31, 2027, pending
confirmation and approval by the Federal Energy Regulatory Commission
(FERC) on a final basis or until superseded.
FOR FURTHER INFORMATION CONTACT: Lloyd Linke, Regional Manager, Upper
Great Plains Region, Western Area Power Administration, 2900 4th Avenue
North, 6th Floor, Billings, MT 59101-1266, or email:
<a href="/cdn-cgi/l/email-protection#ec998b9c8a859e819e8d9889ac9b8d9c8dc28b839a"><span class="__cf_email__" data-cfemail="24514354424d56495645504164534554450a434b52">[email protected]</span></a>, or Linda Cady-Hoffman, Rates Manager, Upper Great
Plains Region, Western Area Power Administration, (406) 255-2920, or
email: <a href="/cdn-cgi/l/email-protection#f79496938eb780968796d9909881"><span class="__cf_email__" data-cfemail="442725203d04332534256a232b32">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#88fdeff8eee1fae5fae9fcedc8ffe9f8e9a6efe7fe"><span class="__cf_email__" data-cfemail="22574552444b504f5043564762554352430c454d54">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: On April 16, 2018, FERC confirmed and
approved Formula Rate Schedules P-SED-F13, P-SED-FP13, and P-SED-M1,
under Rate Order No. WAPA-180, on a final basis through December 31,
2022.\1\ These schedules apply to P-SMBP--ED firm power service, firm
peaking power service, and sale of surplus products. Western Area Power
Administration (WAPA) published a Federal Register notice (Proposed
FRN) on May 25, 2022 (87 FR 31878), proposing increases to both the
base component and the drought adder component of the P-SMBP--ED firm
power service and firm peaking power service and to put new 5-year rate
schedules in place. The Proposed FRN also initiated a 90-day public
consultation and comment period and set forth the dates and locations
of the public information and public comment forums.
---------------------------------------------------------------------------
\1\ Order Confirming and Approving Rate Schedule on a Final
Basis, FERC Docket No. EF18-2-000, 163 FERC ] 62,039 (2018).
---------------------------------------------------------------------------
Legal Authority
By Delegation Order No. S1-DEL-RATES-2016, effective November 19,
2016, the Secretary of Energy delegated: (1) the authority to develop
power and transmission rates to the WAPA 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, or to
remand or disapprove such rates, to FERC. By Delegation Order No. S1-
DEL-S3-2022-2, effective June 13, 2022, the Secretary of Energy also
delegated the authority to confirm, approve, and place such rates into
effect on an interim basis to the Under Secretary for Infrastructure.
By Redelegation Order No. S3-DEL-WAPA1-2022, effective June 13, 2022,
the Under Secretary for Infrastructure further redelegated the
authority to confirm, approve, and place such rates into effect on an
interim basis to WAPA's Administrator. This rate action is issued under
Redelegation Order No. S3-DEL-WAPA1-2022 and
[[Page 70809]]
Department of Energy procedures for public participation in rate
adjustments set forth at 10 CFR part 903.\2\
---------------------------------------------------------------------------
\2\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
---------------------------------------------------------------------------
Following review of UGP's proposal, Rate Order No. WAPA-203, which
provides the formula rates for the P-SMBP--ED firm power service, firm
peaking power service, and sale of surplus products, is hereby
confirmed, approved, and placed into effect on an interim basis. WAPA
will submit Rate Order No. WAPA-203 to FERC for confirmation and
approval on a final basis.
Department of Energy Administrator, Western Area Power Administration
In the Matter of: Western Area Power Administration, Upper Great
Plains Region, Rate Adjustment for the Pick-Sloan Missouri Basin
Program--Eastern Division, Firm Power Service, Firm Peaking Power
Service, and Sale of Surplus Products Formula Rates
Rate Order No. WAPA-203
Order Confirming, Approving, and Placing the Formula Rates for the
Pick-Sloan Missouri Basin Program--Eastern Division Into Effect on an
Interim Basis
The formula rates in Rate Order No. WAPA-203 are established
following section 302 of the Department of Energy (DOE) Organization
Act (42 U.S.C. 7152).\3\
---------------------------------------------------------------------------
\3\ This Act transferred to, and vested in, the Secretary of
Energy the power marketing functions of the Secretary of the
Department 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 section 5 of the Flood Control Act of 1944 (16 U.S.C.
825s); and other acts that specifically apply to the projects
involved.
---------------------------------------------------------------------------
By Delegation Order No. S1-DEL-RATES-2016, effective November 19,
2016, the Secretary of Energy delegated: (1) the authority to develop
power and transmission rates to the Western Area Power Administration
(WAPA) 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, or to remand or disapprove such rates, to the
Federal Energy Regulatory Commission (FERC). By Delegation Order No.
S1-DEL-S3-2022-2, effective June 13, 2022, the Secretary of Energy also
delegated the authority to confirm, approve, and place such rates into
effect on an interim basis to the Under Secretary for Infrastructure.
By Redelegation Order No. S3-DEL-WAPA1-2022, effective June 13, 2022,
the Under Secretary for Infrastructure further redelegated the
authority to confirm, approve, and place such rates into effect on an
interim basis to WAPA's Administrator. This rate action is issued under
Redelegation Order No. S3-DEL-WAPA1-2022 and DOE procedures for public
participation in rate adjustments set forth at 10 CFR part 903.\4\
---------------------------------------------------------------------------
\4\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
---------------------------------------------------------------------------
Acronyms, Terms, and Definitions
As used in this Rate Order, the following acronyms, terms, and
definitions apply:
Base: A component of the firm power and firm peaking power rate
design that is a fixed revenue requirement that includes operation and
maintenance expenses (O&M), investments and replacements, interest on
investments and replacements, normal timing power purchases, and
transmission costs.
Capacity: The electric capability of a generator, transformer,
transmission circuit, or other equipment. It is expressed in kilowatts
(kW) or megawatts (MW).
Capacity Rate: The rate which sets forth the charges for capacity.
It is expressed in dollars per kilowatt-month (kWmonth) and applied to
each kW of the Contract Rate of Delivery or CROD.
Composite Rate: The Power Repayment Study (PRS) rate for commercial
firm power, which is the total annual revenue requirement for capacity
and energy divided by the total annual energy sales. It is expressed in
mills per kilowatt-hour (mills/kWh) and used only for comparison
purposes.
Corps of Engineers Annual Operating Plan (AOP): The Corps of
Engineers water management guidelines designed to meet the reservoir
regulation objectives.
Customer: An entity with a contract that is receiving Pick-Sloan
Missouri Basin Program--Eastern Division (P-SMBP--ED) firm power
service from WAPA.
Customer Rate Brochure: A document prepared for public distribution
explaining the rationale and background for the information contained
in the Proposed FRN and in this rate order.
Deficit(s): Deferred or unrecovered annual and/or interest
expenses.
Demand: The rate at which electric energy is delivered to or by a
system or part of a system, generally expressed in kilowatts (kW) or
megawatts (MW), at a given instant or averaged over any designated
interval of time.
Drought Adder: A component of the firm power and firm peaking power
rate design that is a formula-based revenue requirement that includes
future power purchases above normal timing power purchases, previous
purchase power drought-related Deficits, and interest on the purchase
power drought-related Deficits.
Energy: Measured in terms of the work it is capable of doing over a
period of time. Electric energy is expressed in kilowatt-hours (kWh).
Energy Charge: The charge under the rate schedule for energy. It is
expressed in mills/kWh and applied to each kWh delivered to each
Customer.
Firm: Power intended to be available at all times during the period
covered by a guaranteed commitment to deliver, even under adverse
conditions.
FRN: Federal Register Notice--a document published in the Federal
Register in order for WAPA to provide information of public interest.
FY: WAPA's fiscal year; October 1 to September 30.
kW: Kilowatt--the electrical unit of capacity that equals 1,000
watts.
kWh: Kilowatt-hour--the electrical unit of energy that equals 1,000
watts in 1 hour.
kWmonth: Kilowatt-month--the electrical unit of the monthly amount
of capacity.
mills/kWh: Mills per kilowatt-hour--the unit of charge for energy
(equal to one tenth of a cent or one thousandth of a dollar).
NEPA: National Environmental Policy Act of 1969, as amended.
Non-timing Power Purchases: Power purchases related to drought
conditions, not related to operational constraints.
Normal Timing Power Purchases: Power purchases related to
operational constraints (e.g., management of endangered species
habitat, water quality, navigation, balancing authority purposes,
market events, etc.), not associated with drought conditions.
O&M: Operation and maintenance expenses.
OM&R: Operation, maintenance, and replacement expenses.
Order RA 6120.2: DOE Order outlining Power Marketing Administration
(PMA) financial reporting and rate-making procedures.
Power: Capacity and energy.
Power Factor: The ratio of real to apparent power at any given
point and time in an electrical circuit. Generally, it is expressed as
a percentage.
Power Repayment Study (PRS): Defined in Order RA 6120.2 as a study
portraying the annual repayment of power production and transmission
costs of a power system through the application of revenues over the
repayment period of the power system.
[[Page 70810]]
The study shows, among other items, estimated revenues and expenses,
year by year, over the remainder of the power system's repayment period
(based upon conditions prevailing over the cost evaluation period), the
estimated amount of Federal investment amortized during each year, and
the total estimated amount of Federal investment remaining to be
amortized.
Preference: The provisions of Reclamation Law that require WAPA to
first make Federal Power available to certain entities. For example,
section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c))
states that preference in the sale of Federal Power shall be given to
municipalities and other public corporations or agencies and also to
cooperatives and other nonprofit organizations financed in whole or in
part by loans made under the Rural Electrification Act of 1936.
Provisional Formula Rates: Formula rates confirmed, approved, and
placed into effect on an interim basis by the Secretary of Energy or
his/her designee.
Rate-setting PRS: The PRS used for the rate adjustment proposal.
Regions: WAPA's Upper Great Plains Region (UGP) and Rocky Mountain
Region (RMR).
Revenue Requirement: The revenue required by the PRS to recover
annual expenses (such as O&M, purchase power, transmission service,
interest, and deferred expenses) and repay Federal investments and
other assigned costs.
Webex: Webex is an online secure invite-only meeting platform used
by WAPA. The general website is <a href="https://doe.webex.com">https://doe.webex.com</a>.
Western Energy Imbalance Service Market (WEIS Market): The market
for imbalance energy administered by the Southwest Power Pool in the
Western Interconnection. The market footprint encompasses the loads and
resources that are located within a participating Balancing Authority
Area. The Western Area Colorado Missouri Balancing Authority or WACM
(operated by RMR) and the Western Area Upper Great Plains West
Balancing Authority or WAUW (operated by UGP) are both participating
Balancing Authority Areas.
Winter Storm Uri: A severe winter storm in February 2021 that had
widespread impacts across UGP and RMR regions.
Effective Date
The Provisional Formula Rate Schedules P-SED-F14, Firm Power
Service; P-SED-FP14, Firm Peaking Power Service; and P-SED-M2, Sale of
Surplus Products, will take effect on the first day of the first full
billing period beginning on or after January 1, 2023, and will remain
in effect through December 31, 2027, pending approval by FERC on a
final basis or until superseded.
Public Notice and Comment
UGP followed the Procedures for Public Participation in Power and
Transmission Rate Adjustments and Extensions, 10 CFR part 903, in
developing these formula rates. The steps UGP took to involve
interested parties in the rate process include:
1. On May 25, 2022, a Federal Register notice (87 FR 31878)
(Proposed FRN) announced the proposed formula rates and launched the
90-day public consultation and comment period.
2. On May 25, 2022, UGP notified Preference Customers and
interested parties of the proposed rates and provided a copy of the
published Proposed FRN.
3. On June 15, 2022, UGP held a public information forum via Webex.
UGP's representatives explained the proposed formula rates, answered
questions, and gave notice that more information was available in the
Customer Rate Brochure.
4. On June 29, 2022, UGP held a public comment forum via Webex to
provide an opportunity for customers and other interested parties to
comment for the record.
5. UGP provided a website that contains important dates, letters,
presentations, FRNs, Customer Rate Brochure, and other information
about this rate process. The website is located at <a href="http://www.wapa.gov/regions/UGP/rates/pages/2023-firm-rate-adjustment.aspx">www.wapa.gov/regions/UGP/rates/pages/2023-firm-rate-adjustment.aspx</a>.
6. During the 90-day consultation and comment period, which ended
on August 23, 2022, UGP received 2 oral comment submissions and 16
written comment letters. The comments and UGP's responses are addressed
in the ``Comments'' section. All comments have been considered in the
preparation of this Rate Order.
Oral comments were received from the following organizations:
Missouri River Energy Services (MRES), South Dakota
Mid-West Electric Consumers Association, Colorado
Written comments were received from the following organizations:
Missouri River Energy Services (MRES), South Dakota
Worthington Public Utilities, Minnesota
Valley City Public Works, North Dakota
Lakota Municipal Utilities, North Dakota
Elbow Lake Municipal Power, Minnesota
Hartley Municipal Utilities, Iowa
Hawarden Municipal Utilities, Iowa
City of Wadena, Minnesota
City of Vermillion Light & Power, South Dakota
Jackson, Minnesota
Willmar Municipal Utilities, Minnesota
Denison Municipal Utilities Denison, Iowa
Orange City, Iowa
City of Melrose Public Utility, Minnesota
East River Electric Power Cooperative, Inc., South Dakota
Mid-West Electric Consumers Association, Colorado
Power Repayment Study--Firm Power Service Rate Discussion
A PRS is prepared each FY to determine if revenues will be
sufficient to repay, within the required time, all costs assigned to
the Pick-Sloan Missouri Basin Program (P-SMBP). Repayment criteria are
based on applicable laws and legislation as well as policies including
Order RA 6120.2. To meet the Cost Recovery Criteria outlined in Order
RA 6120.2, UGP developed a rate adjustment to demonstrate sufficient
revenues will be collected under the Provisional Formula Rates to meet
future obligations. The revenue requirement for P-SMBP is recovered by
both the UGP in the P-SMB--ED rates and by RMR in the Loveland Area
Projects (LAP) rate. The revenue requirement and composite rate for P-
SMBP--ED firm power service are being increased, as indicated in Table
1:
[[Page 70811]]
Table 1--Comparison of Existing and Provisional Revenue Requirements and Composite Rates
----------------------------------------------------------------------------------------------------------------
Existing Provisional
requirements requirements
Firm power service under P-SED- under P-SED- Percent change
F13 as of F14 as of
January 1, January 1,
-----------------------------------------------------------------------2018------------2023---------------------
P-SMBP--ED Revenue 1/ Requirement (million $)................... $230.1 $268.4 16.6
P-SMBP--ED Composite Rate (mills/kWh)........................... 24.00 27.91 16.3
----------------------------------------------------------------------------------------------------------------
1/ The Pick-Sloan--WD revenue requirement is recovered under the LAP rate schedule, which can be found under
Rate Order No. WAPA-202 and on RMR's website at www.wapa.gov/regions/RM/rates/Pages/2023-Rate-Adjustment_-
Firm-Power.aspx.
Firm Power Service--Existing and Provisional Formula Rates
Under the current rate methodology, rates for P-SMBP--ED firm power
and firm peaking power services are designed to recover an annual
revenue requirement that includes investment repayment (including aid
to irrigation), interest, purchase power, OM&R, and other expenses
within the allowable period. The annual revenue requirement continues
to be allocated equally between demand and energy.
The Base component costs for the P-SMBP PRS have increased
primarily due to: (1) increased OM&R from WAPA and the generating
agencies; (2) increased purchase power, including during the Winter
Storm Uri; (3) pricing volatility; (4) reduced surplus energy sales;
and (5) the loss of certain balancing authority revenues for services
that are no longer provided after RMR joined the WEIS Market. Winter
Storm Uri was not a water or generation issue; therefore, its costs
only impact the Base component.
The driver behind the P-SMBP PRS Drought Adder component increase
is the AOP projecting less than average generation for the next several
years in the P-SMBP mainstem dams. Uncertainties with water inflows,
hydro generation, and replacement energy prices continue to pose
potential risks for meeting firm power contractual commitments.
The net effect of these changes to the PRS Base and Drought Adder
components results in an overall increase to the P-SMBP--ED rate. A
comparison of the existing and Provisional Formula Rates for firm power
and firm peaking power service is shown in Table 2:
Table 2--Comparison of Existing and Provisional Formula Rates
----------------------------------------------------------------------------------------------------------------
Existing Provisional
charges under charges under
rate schedule rate schedule
Firm power & firm peaking power service P-SED-F13 & P- P-SED-F14 & P- Percent change
SED-FP13 as of SED-FP14 as of
January 1, January 1,
2018 2023
----------------------------------------------------------------------------------------------------------------
Firm Demand ($/kWmonth)......................................... $5.25 $6.20 18.1
Firm Energy (mills/kWh)......................................... 13.27 15.27 15.1
Firm Peaking Demand ($/kWmonth)................................. 4.75 5.70 20.0
Firm Peaking Energy 1/ (mills/kWh).............................. 13.27 15.27 15.1
----------------------------------------------------------------------------------------------------------------
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 existing and provisional rate schedules, UGP
provides for a formula-based adjustment of the Drought Adder component,
with an annual increase of up to 2 mills/kWh each year. The 2 mills/kWh
cap places a limit on the amount the Drought Adder component can be
adjusted upward relative to associated drought costs included in the
Drought Adder formula rate for any 1-year cycle. The Drought Adder
component may be adjusted downward by any amount. Continuing to
identify the firm power service revenue requirement using Base and
Drought Adder components will assist the Regions in presenting the
future impacts of droughts, demonstrate repayment of drought-related
costs in the PRS, and allow the Regions to be more responsive to
changes caused by drought-related expenses. UGP will continue to charge
and bill its customers firm power and firm peaking power service rates
for energy and demand, which are the sum of the Base and Drought Adder
components.
Under Rate Schedule P-SED-F14, UGP will continue to identify its P-
SMBP--ED firm power service revenue requirement using Base and Drought
Adder components. The Base component is a fixed revenue requirement
that includes annual O&M, investment repayment and associated interest,
Normal Timing Power Purchases, and transmission costs. UGP cannot
adjust the Base component without a public process. The Drought Adder
component is a formula-based revenue requirement that includes costs
attributable to drought conditions in the Regions. The Drought Adder
component includes costs associated with future Non-timing Power
Purchases to meet firm power service contractual obligations not
covered with available system generation due to a drought, previously
incurred Deficits due to purchased power debt that resulted from Non-
timing Power Purchases made during a drought, and the interest
associated with drought-related Deficits. The Drought Adder component
is designed to repay drought-related Deficits within 10 years from the
time the Deficit was incurred, using balloon-payment methodology. For
example, a drought-related Deficit incurred in FY 2022 will be repaid
by FY 2032.
The annual revenue requirement calculation will continue to be
summarized by the following formula: Annual Revenue Requirement = Base
Revenue Requirement + Drought Adder Revenue Requirement.
The Provisional charge components update the Base component with
present costs from a revenue
[[Page 70812]]
requirement of $230.1 million to $235.4 million and increases the
Drought Adder component revenue requirement. For rate year 2023, the
Drought Adder revenue requirement increases from zero to $33 million. A
comparison of the existing and provisional components is shown in Table
3:
Table 3--Summary of P-SMBP--ED Existing and Provisional Charge Components
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing charges under rate schedules P-SED- Provisional charges under rate schedules P-SED-
F13 & P-SED-FP13 as of January 1, 2018 F14 & P-SED-FP14 as of January 1, 2023
Firm power & firm peaking power service ------------------------------------------------------------------------------------------------ Percent change
Base Drought adder Base Drought adder
component component Total charge component component Total charge
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Demand (/kWmonth).................. $5.25 $0.00 $5.25 $5.45 $0.75 $6.20 18.1
Firm Energy (mills/kWh)................. 13.27 0.00 13.27 13.36 1.91 15.27 15.1
Firm Peaking Demand ($/kWmonth)......... 4.75 0.00 4.75 5.00 0.70 5.70 20
Firm Peaking Energy 1/ (mills/kWh)...... 13.27 0.00 13.27 13.36 1.91 15.27 15.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/ Firm peaking energy is normally returned. This charge will be assessed in the event firm peaking energy is not returned.
The Regions review the inputs for the P-SMBP Base and Drought Adder
components after the annual PRS is complete, generally in the first
quarter of the calendar year. If an adjustment to the P-SMBP Base
component is necessary, or if an incremental upward adjustment to the
P-SMBP PRS Drought Adder component greater than the equivalent of 2
mills/kWh to the P-SMBP Composite Rate is necessary, the Regions will
initiate a public process pursuant to 10 CFR part 903 prior to making
adjustments.
In accordance with the approved annual Drought Adder adjustment
process, the Drought Adder component is reviewed annually in early
summer to determine if drought costs differ from those projected in the
PRS. In October, the Regions will determine if a change to the Drought
Adder component is necessary, either incremental or decremental. Any
incremental adjustment to the Drought Adder component, up to 2 mills/
kWh, or any decremental adjustment will be implemented by the Regions
in the following January billing cycle. Although decremental
adjustments to the Drought Adder component will occur as drought costs
are repaid, the adjustments cannot result in a negative Drought Adder
component. Implementing the Drought Adder component adjustment on
January 1 of each year will help keep the drought-related Deficits from
escalating as quickly, will lower the interest expense due to drought-
related Deficits, will demonstrate responsible Deficit management, and
will provide prompt drought-related Deficit repayments.
Statement of Revenue and Related Expenses
The following Table 4 provides a summary of the projected revenue
and expense data for the P-SMBP revenue requirement during the 5-year
rate-setting periods:
Table 4--P-SMBP Comparison of 5-Year Rate Periods Total Revenues and Expenses
----------------------------------------------------------------------------------------------------------------
Provisional
Existing rate rate FY2023- Difference
FY2018-FY2022 FY2027 ($000) ($000)
($000)
----------------------------------------------------------------------------------------------------------------
Total Revenues...................................... $2,720.2 $3,185.8 $465.6
Revenue Distribution............................................
Expenses
O&M......................................................... 1,158.9 1,376.5 217.6
Purchase Power.............................................. 124.8 288.0 163.2
Transmission................................................ 461.0 845.2 384.2
Interest.................................................... 556.3 516.5 (39.8)
-----------------------------------------------
Total Expenses.......................................... 2,301.0 3,026.2 725.2
Principal Payments:
Capitalized Expenses (Deficits)............................. 113.4 111.2 (2.2)
Original Project and Additions.............................. 187.2 38.2 (149.0)
Irrigation Aid.............................................. 45.7 0.0 (45.7)
Replacements................................................ 72.9 10.2 (62.7)
-----------------------------------------------
Total Principal Payments................................ 419.2 159.6 (259.6)
-----------------------------------------------
Total Revenue Distribution.............................. 2,720.2 3,185.8 465.6
----------------------------------------------------------------------------------------------------------------
Sale of Surplus Products Rate Discussion
The sale of surplus products rate schedule is formula-based,
providing for P-SMBP--ED Marketing Office to sell P-SMBP--ED surplus
energy and demand products. If P-SMBP--ED surplus products are
available, as specified in the rate schedule, the charge will be 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. Rate
[[Page 70813]]
Schedule P-SED-M1 is being superseded by the Provisional Rate Schedule
P-SED-M2 and continues to allow for the sale of energy, frequency
response, regulation, and reserves.
Comments
UGP received 2 oral and 16 written submissions during the public
consultation and comment period. Comments expressed have been
paraphrased and/or combined, where appropriate, without compromising
the meaning of the comments:
A. Comment: The customer association, member utility, and the
action agency commented that they understand a rate increase is
warranted due to several factors: (1) persistent low water conditions
in the P-SMBP--ED, (2) increasing market power pricing, (3) costs
incurred during the Winter Storm Uri, and (4) inflation on O&M and
capital investments for the system. They encourage WAPA to continue
focus on identifying and reducing controllable costs within the Regions
and at WAPA's Headquarters. The action agency understands the full rate
increase of 16.3 percent is necessary in 2023.
Response: The Regions appreciate the commentors' recognition of the
specific costs and repayment obligations of the PRS and the need for
the rate adjustments. The Regions are committed to developing rates
that are the lowest possible, consistent with sound business
principles.
B. Comment: The action agency commented that they understand the
need to cover expenses necessary to provide firm, reliable service that
is sustainable, and wants to ensure that proper planning is in place in
order to guarantee the solvency of the system and not get into the
situation the P-SMBP--ED experienced during the last drought.
Response: UGP appreciates the commentor's understanding of the
impacts of drought conditions in the P-SMBP--ED. UGP intends to
continue transparency and data sharing to encourage a strong working
relationship with our Customers as we continue to provide products that
are reliable and sustainable and meet repayment obligations of the
power system.
C. Comment: Several Customers commented that this rate adjustment
is substantial for the communities they serve, and they would have
preferred for this increase to be implemented in multiple stages rather
than one large increase beginning in 2023. They stated perhaps this
could have been achieved by starting a few years earlier in planning
for rate adjustments.
Response: The 10-month timeline associated with a public process is
a major factor when initiating rate adjustments. Given the required
timeline, in addition to the timing of the data to effectively evaluate
impacts to the rate, UGP was as timely as could be when initiating this
rate adjustment. UGP did notify Customers in both the spring 2021 and
fall 2021 Drought Adder review letters that the rate schedules were
expiring December 31, 2022, and that we would be in a formal rate
process in 2022 to put new rates in place.
D. Comment: The action agency and customer association commented
that they recommend the Rate's staff and Regional leadership continue
to meet regularly with the Mid-West Electric Consumers Association's
(Mid-West) Water and Power Committee on a quarterly basis to update and
advise the members on the latest information on hydrology outlook,
power supply costs, system storage, and potential need for future
adjustments as this will allow more advance notice for dealing with
future issues.
Response: Customer meeting attendance is outside the scope of this
rate process; however, the Regions do intend to continue communication
with our Customers and customer groups, as appropriate.
E. Comment: The action agency commented they prefer WAPA return to
meeting with Customers/customer groups in person, as many in the
industry have been meeting face-to-face for several months (post-
COVID), and that it is important to have those in-person meetings to
deal with issues more fully as this is the means to further
understanding and to more efficiently resolve issues.
Response: Customer meeting attendance is outside the scope of this
rate process; however, the Regions appreciate the comments and strive
to communicate as broadly as possible with our Customers. It is the
Regions' observation that the virtual meetings held for this rate
process had greater attendance than when in person meetings were held
prior to March 2020.
F. Comment: The action agency commented that the Regions should
provide for more comprehensive and rigorous scenario analysis as part
of the PRS and show details related to the assumptions and the results
to Customers/customer groups. It also was noted that the new PRS system
utilized by WAPA does not have the transparency promised and has not
been as successful or open to customer access through the PRS customer
portal.
Response: UGP intends to continue transparency and data sharing to
encourage a strong working relationship with our Customers/customer
groups. The PRS software tool is outside the scope of this rate
process; however, WAPA's Information Technology (IT) and Rates staff
have been evaluating the concerns with the PRS software. IT has
contacted the vendor to address the issues and developed a plan to
hopefully address the interface issue for external entity interfacing.
G. Comment: The action agency, customer association, and member
utility request WAPA staff continue transparent engagements with the
Customers and customer groups to better understand WAPA's efforts to
control and mitigate costs, rate impacts, impacts of drought
conditions, importance of rate stability, and need for risk mitigation
through regular meetings with the Mid-West Water and Power Committee
and impacted customer groups. The strong collaboration between
customers and WAPA benefits everyone and improves the value we all
provide to the consumer-owners at the end of the line.
Response: The Regions appreciate the support of our Customers and
customer groups and agree that collaboration is vital when faced with
uncertain drought conditions and other impacts to the firm power rates.
The Regions intend to continue communication with our Customers and
customer groups as appropriate.
H. Comment: The customer association and member utility commented
that they appreciated the efforts of the UGP and RMR Rates staff for
understanding Customer concerns regarding the rate.
Response: The Regions thank the commentors for recognizing the UGP
and RMR Rates staff and their efforts to ensure Customer concerns are
addressed.
I. Comment: A customer association and a member utility commented
their customers are already feeling the impacts of the current drought
in the P-SMBP--ED and understand the need for the Drought Adder and the
process for the Drought Adder evaluation. They requested debt strategy
and rate design options be discussed with customers before any final
decisions are made as a part of the annual Drought Adder review
process.
Response: The Regions agree with the need for continued
transparency regarding debt strategy and rate options related to the
annual Drought Adder adjustment process. The proposed rates did not
reflect any change to the Regions' existing rate designs or annual
[[Page 70814]]
Drought Adder adjustment process. Changes to the rate designs or
adjustment process would require a separate rate process where
Customers and interested parties would have the opportunity to
participate in the process. The 2007 rate orders implementing the
Drought Adder component provided the framework for the annual Drought
Adder adjustment process, which has not been modified in subsequent
rate orders.
J. Comment: The member utility encourages WAPA to focus on its core
function of marketing and delivering Preference Power to Preference
Customers.
Response: The Regions appreciate the comment and intend to continue
to fulfill our mission of marketing to Preference Power Customers
consistent with current marketing plans.
K. Comment: The customer association commented that they support
the comments of their member utilities and fellow customer groups.
Response: The Regions appreciate the commentor's feedback. The
Regions conducted a combined public process for the rate adjustments
under Rate Order Nos. WAPA-202 and WAPA-203 and have coordinated all
responses. Comments received specifically by RMR for the LAP rate
process are recognized as being addressed in RMR's Rate Order No. WAPA-
202.
L. Comment: The customer association and member utility appreciated
the opportunity to comment on the rate process, stating that any rate
increase has a direct impact on the energy affordability of the members
it serves.
Response: The Regions recognize the impact of the rate increases on
Customers and strive to find ways to mitigate impacts of the drought
and operational costs to keep rates as low as possible.
Certification of Rates
I have certified that the Provisional Formula Rates for P-SMBP--ED
firm power service under Rate Schedule P-SED-F14, P-SMBP--ED firm
peaking power service under Rate Schedule P-SED-FP14, and P-SMBP--ED
sale of surplus products under Rate Schedule P-SED-M2 are the lowest
possible rates, consistent with sound business principles. The
Provisional Formula Rates were developed following administrative
policies and applicable laws.
Availability of Information
Information about this rate adjustment, including the Customer Rate
Brochure, PRSs, comments, letters, memorandums, and other supporting
materials that were used to develop the Provisional Formula Rates, is
available for inspection and copying at the Upper Great Plains Regional
Office located at 2900 4th Avenue North, 6th Floor, Billings, Montana.
Many of these documents are also available on UGP's website at
www.wapa.gov/regions/UGP/rates/Pages/2023-firm-rate-adjustment.aspx
Ratemaking Procedure Requirements
Environmental Compliance
WAPA has determined that this action fits within the following
categorical exclusions listed in appendix B to subpart D of 10 CFR part
1021.410: B4.3 (Electric power marketing rate changes). Categorically
excluded projects and activities do not require preparation of either
an environmental impact statement or an environmental assessment.\5\ A
copy of the categorical exclusion determination is available on WAPA's
website at <a href="http://www.wapa.gov/regions/UGP/Environment/Pages/CX2022.aspx">www.wapa.gov/regions/UGP/Environment/Pages/CX2022.aspx</a>.
---------------------------------------------------------------------------
\5\ The determination was done in compliance with NEPA (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).
---------------------------------------------------------------------------
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 the Federal Energy Regulatory Commission
The Provisional 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 above and under the authority delegated to me, I
hereby confirm, approve, and place into effect, on an interim basis,
Rate Order No. WAPA-203. The rates will remain in effect on an interim
basis until: (1) FERC confirms and approves them on a final basis; (2)
subsequent rates are confirmed and approved; or (3) such rates are
superseded.
Signing Authority
This document of the Department of Energy was signed on November 9,
2022, by Tracey A. LeBeau, Administrator, Western Area Power
Administration, pursuant to delegated authority from the Secretary of
Energy. That document, with the original signature and date, is
maintained by DOE. For administrative purposes only, and in compliance
with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on November 16, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
Rate Schedule P-SED-F14 (Supersedes Rate Schedule P-SED-F13): Effective
January 1, 2023
United States Department of Energy, Western Area Power Administration
Upper Great Plains Region Pick-Sloan Missouri Basin Program--Eastern
Division
Firm Power Service (Approved Under Rate Order No. WAPA-203)
Effective
The first day of the first full billing period beginning on or
after January 1, 2023, through December 31, 2027, or until superseded
by another rate schedule, whichever occurs earlier.
Available
Within the marketing area served by the Eastern Division of the
Pick-Sloan Missouri Basin Program, within Montana, North Dakota, South
Dakota, Minnesota, Iowa, and Nebraska.
Applicable
To the power and energy delivered to customers as firm power
service, as established in the contract for service.
Character
Alternating current, 60 hertz, three phase, delivered and metered
at the voltages and points established by contract.
Formula Rate and Charge Components
Rate = Base component + Drought Adder component
Monthly Charge as of January 1, 2023, under the Rate:
CAPACITY CHARGE: $6.20 for each kilowatt per month (kWmonth) of
billing capacity.
[[Page 70815]]
ENERGY CHARGE: 15.27 mills for each kilowatt-hour (kWh) for all
energy delivered as firm power service.
BILLING CAPACITY: The billing capacity will be as defined by the
power sales contract.
Charge Components
Base Component: A fixed-revenue requirement that includes operation
and maintenance expense, investments and replacements, interest on
investments and replacements, normal timing power purchases (purchases
due to operational constraints, not associated with drought), and
transmission costs. Any proposed change to the Base component will
require a public process. As of January 1, 2023, the Base component
revenue requirement is $213.8 million and the charges under the
formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.018
Drought Adder Component: A formula-based revenue requirement that
includes future power purchases above normal timing power purchases,
previous purchase power drought-related deficits, and interest on the
purchase power drought-related deficits. As of January 1, 2023, the
Drought Adder component revenue requirement is $30.0 million and the
charges under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.019
Annual Drought Adder Adjustment Process
The Drought Adder component may be adjusted annually using the
above formulas for any costs attributed to drought of less than or
equal to the equivalent of 2 mills/kWh to the Pick-Sloan Missouri Basin
Program Power Repayment Study (PRS) composite rate. Any planned
incremental upward adjustment to the Drought Adder component greater
than the equivalent of 2 mills/kWh to the PRS composite rate will
require a public process.
The annual review process is initiated in early summer when the
Upper Great Plains Region (UGP) reviews the Drought Adder component and
provides notice of any estimated change to the Drought Adder component
charge under the formula. In October, UGP will make a final
determination of any change to the Drought Adder component charge,
either incremental or decremental. If a Drought Adder component change
is required, a modified Drought Adder revenue requirement and the
associated charges will become effective the following January 1 and
will be identified in a Drought Adder modification update. UGP will
inform customers of updates by letter and post updates to UGP's
external website.
Adjustments
For Billing of Unauthorized Overruns: For each billing period in
which there is a contract violation involving an unauthorized overrun
of the contractual firm power and/or energy obligations, such overrun
shall be billed at 10 times the formula rate.
For Power Factor: None. Customers will be required to maintain a
power factor within the range of 95-percent leading and 95-percent
lagging, measured at the point of interconnection.
Rate Schedule P-SED-FP14 (Supersedes Rate Schedule P-SED-FP13):
Effective January 1, 2023
United States Department of Energy, Western Area Power Administration
Upper Great Plains Region Pick-Sloan Missouri Basin Program--Eastern
Division
Firm Peaking Power Service (Under Rate Order No. WAPA-203)
Effective
The first day of the first full billing period beginning on or
after January 1, 2023, through December 31, 2027, or until superseded
by another rate schedule, whichever occurs earlier.
Available
Within the marketing area served by the Eastern Division of the
Pick-Sloan Missouri Basin Program, within Montana, North Dakota, South
Dakota, Minnesota, Iowa, and Nebraska.
Applicable
To the power sold to customers as firm peaking power service, as
established in the contract for service.
Character
Alternating current, 60 hertz, three phase, delivered and metered
at the voltages and points established by contract.
Formula Rate and Charge Components
Rate = Base component + Drought Adder component
Monthly Charge as of January 1, 2023, under the Rate:
CAPACITY CHARGE: $5.70 for each kilowatt per month (kWmonth) of the
effective contract rate of delivery for peaking power or the maximum
amount scheduled, whichever is greater.
ENERGY CHARGE: 15.27 mills for each kilowatt-hour (kWh) for all
energy scheduled for delivery without return.
Charge Components
Base Component: A fixed revenue requirement that includes operation
and maintenance expense, investments and replacements, interest on
investments and replacements, normal timing power purchases (purchases
due to operational constraints, not associated with
[[Page 70816]]
drought), and transmission costs. Any proposed change to the Base
component will require a public process. As of January 1, 2023, the
Base component revenue requirement is $21.6 million and the charges
under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.020
Drought Adder Component: A formula-based revenue requirement that
includes future power purchases above normal timing power purchases,
previous purchase power drought-related deficits, and interest on the
purchase power drought-related deficits. As of January 1, 2023, the
Drought Adder component revenue requirement is $3.0 million and the
charges under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.021
Annual Drought Adder Adjustment Process
The Drought Adder may be adjusted annually using the above formulas
for any costs attributed to drought of less than or equal to the
equivalent of 2 mills/kWh to the Pick-Sloan Missouri Basin Program
Power Repayment Study (PRS) composite rate. Any planned incremental
upward adjustment to the Drought Adder greater than the equivalent of 2
mills/kWh to the PRS composite rate will require a public process.
The annual review process is initiated in early summer when the
Upper Great Plains Region (UGP) reviews the Drought Adder component and
provides notice of any estimated change to the Drought Adder component
charge under the formula. In October, UGP will make a final
determination of any change to the Drought Adder component charge,
either incremental or decremental. If a Drought Adder component change
is required, a modified Drought Adder revenue requirement and the
associated charges will become effective the following January 1 and
will be identified in a Drought Adder modification update. UGP will
inform customers of updates by letter and post updates to UGP's
external website.
BILLING CAPACITY: The billing capacity will be the greater of (1)
the highest 30-minute integrated capacity measured during the month up
to, but not in excess of, the delivery obligation under the power sales
contract, or (2) the contract rate of delivery.
Adjustments
Billing for Unauthorized Overruns: For each billing period in which
there is a contract violation involving an unauthorized overrun of the
contractual obligation for peaking capacity and/or energy, such overrun
shall be billed at 10 times the above rate.
Rate Schedule P-SED-M2 (Supersedes Rate Schedule P-SED-M1): Effective
January 1, 2023
United States Department of Energy, Western Area Power Administration
Upper Great Plains Region Pick-Sloan Missouri Basin Program--Eastern
Division
Sale of Surplus Products (Under Rate Order No. WAPA-203)
Effective
The first day of the first full billing period beginning on or
after January 1, 2023, through December 31, 2027, or until superseded
by another rate schedule, whichever occurs earlier.
Applicable
This rate schedule applies to Pick-Sloan Missouri Basin Program--
Eastern Division (P-SMBP--ED) Marketing and is applicable to the sale
of the following P-SMBP--ED surplus energy and capacity products:
energy, frequency response, regulation, and reserves. If any P-SMBP--ED
surplus energy and capacity products are available, the Upper Great
Plains Region (UGP) can make the product(s) available for sale,
providing entities enter into a separate agreement(s) with the UGP
Marketing Office which will specify the terms of sale(s).
Formula Rate
The charge for each product will be determined at the time of the
sale based on market rates, plus administrative costs. The customer
will be responsible for acquiring transmission services necessary to
deliver the product(s), for which a separate charge may be incurred.
[FR Doc. 2022-25267 Filed 11-18-22; 8:45 am]
BILLING CODE 6450-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on November 21, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.