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Notice2024-26162

Final 2028 Parker-Davis Project Power Marketing Plan and Call for Resource Pool Applications

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Published

November 12, 2024

Effective

December 12, 2024

Issuing agencies

Energy DepartmentWestern Area Power Administration

Abstract

The Department of Energy (DOE), Western Area Power Administration (WAPA), Desert Southwest Region (DSW), announces its Final 2028 Parker-Davis Project (P-DP) Power Marketing Plan (Final 2028 Plan) and issues a Call for Resource Pool Applications. This notice responds to comments received on the Proposed 2028 P-DP Power Marketing Plan (Proposed 2028 Plan). The Final 2028 Plan specifies the terms and conditions under which WAPA will market power from P-DP from October 1, 2028, through September 30, 2048. WAPA will offer new contracts for the sale of power to existing contractors and create a resource pool for potential new applicants. Entities who wish to apply for a new allocation of power from WAPA, and who meet the criteria defined in the Final 2028 Plan, must submit a formal application using the Applicant Profile Data (APD) form and must meet the Eligibility Criteria and Allocation Criteria described herein. The General Criteria and Contract Principles set forth in the Final 2028 Plan will apply to new allottees and existing contractors. This Final 2028 Plan supersedes all previous marketing plans for P-DP.

Full Text

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<title>Federal Register, Volume 89 Issue 218 (Tuesday, November 12, 2024)</title>
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[Federal Register Volume 89, Number 218 (Tuesday, November 12, 2024)]
[Notices]
[Pages 88999-89011]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26162]

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DEPARTMENT OF ENERGY

Western Area Power Administration

Final 2028 Parker-Davis Project Power Marketing Plan and Call for
Resource Pool Applications

AGENCY: Western Area Power Administration, Department of Energy (DOE).

ACTION: Notice of final plan and call for resource pool applications.

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SUMMARY: The Department of Energy (DOE), Western Area Power
Administration (WAPA), Desert Southwest Region (DSW), announces its
Final 2028 Parker-Davis Project (P-DP) Power Marketing Plan (Final 2028
Plan) and issues a Call for Resource Pool Applications. This notice
responds to comments received on the Proposed 2028 P-DP Power Marketing
Plan (Proposed 2028 Plan). The Final 2028 Plan specifies the terms and
conditions under which WAPA will market power from P-DP from October 1,
2028, through September 30, 2048. WAPA will offer new contracts for the
sale of power to existing contractors and create a resource pool for
potential new applicants. Entities who wish to apply for a new
allocation of power from WAPA, and who meet the criteria defined in the
Final 2028 Plan, must submit a formal application using the Applicant
Profile Data (APD) form and must meet the Eligibility Criteria and
Allocation Criteria described herein. The General Criteria and Contract
Principles set forth in the Final 2028 Plan will apply to new allottees
and existing contractors. This Final 2028 Plan supersedes all previous
marketing plans for P-DP.

DATES: The Final 2028 Plan will become effective December 12, 2024 to
make power allocations and complete the other processes necessary to
begin providing service on October 1, 2028. Resource pool applications
must be received on or before 5:00 p.m., Mountain Standard Time (MST),
on January 31, 2025. WAPA will accept applications using the APD form
by email or by certified mail (or its equivalent). Applications sent by
regular mail will be accepted if postmarked before January 31, 2025,
and received no later than February 5, 2025. WAPA will not consider
applications unless they are received by the prescribed dates.

ADDRESSES: Preference entities interested in applying for an allocation
of WAPA power may complete the APD form available at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a> and mail the signed
and dated APD form to Ms. Jennifer Henn, Power Marketing Advisor,
Desert Southwest Region, Western Area Power Administration, P.O. Box
6457, Phoenix, AZ 85005-6457. APD application forms with an electronic
signature (e-signature) may be emailed to <a href="/cdn-cgi/l/email-protection#08786c78257a6d65697a636d7c61666f487f697869266f677e"><span class="__cf_email__" data-cfemail="106074603d62757d71627b7564797e7750677160713e777f66">[email&#160;protected]</span></a>. If
an electronic signature is not available, the signed APD form may be
scanned and emailed to the address above, faxed to (602) 605-4663, or
mailed it to the address above. All APD forms must be received by WAPA
within the time required in the DATES section, herein. WAPA will
publish a notice of Proposed 2028 Allocations in the Federal Register
after evaluating all applications.

FOR FURTHER INFORMATION CONTACT: Jennifer Henn, Power Marketing
Advisor, Desert Southwest Region, Western Area Power Administration,
(602) 605-2572 or email: <a href="/cdn-cgi/l/email-protection#94e4f0e4b9e6f1f9f5e6fff1e0fdfaf3d4e3f5e4f5baf3fbe2"><span class="__cf_email__" data-cfemail="ccbca8bce1bea9a1adbea7a9b8a5a2ab8cbbadbcade2aba3ba">[email&#160;protected]</span></a>. Information on
development of the Final 2028 Plan can be found at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a>.

SUPPLEMENTARY INFORMATION:

Development of the Final 2028 Plan

P-DP power facilities include Davis Dam, with its current total
operating capacity of 255,000 kilowatts (kW) for P-DP and expected
increase of approximately 3,750 kW from the rewind of Unit 3, and
Parker Dam, with 60,000 kW of operating capacity allotted to P-DP and
60,000 kW allotted to Metropolitan Water District of Southern
California. Both dams are owned and operated by the Bureau of
Reclamation (Reclamation). WAPA owns and operates approximately 1,500
miles of high voltage transmission lines and 45 substations throughout
Arizona, California, and Nevada to facilitate delivery of P-DP power in
those three states.
On September 30, 2028, WAPA's existing long-term sales contracts
for P-DP power will expire. WAPA began developing the Final 2028 Plan
with a series of informal public information meetings for existing and
new potential contractors. These meetings helped

[[Page 89000]]

WAPA identify pertinent issues to address in the Proposed 2028 Plan.
WAPA subsequently published its Proposed 2028 Plan (1) to define the
products and services WAPA will offer, and (2) to determine the
criteria for marketing and allocating power from October 1, 2028,
through September 30, 2048 (89 FR 43841). WAPA held a public
information forum on June 20, 2024, to present the Proposed 2028 Plan
and answer questions. On July 19, 2024, WAPA held a public comment
forum to receive verbal comments. WAPA accepted written comments from
the public through the end of the consultation and comment period on
August 19, 2024. This notice sets forth WAPA's Final 2028 Plan and
responds to comments received on the Proposed 2028 Plan.
Based on comments received, WAPA will: (1) apply the Energy
Planning and Management Program (EPAMP) Power Marketing Initiative
(PMI) regulations, set forth at 10 CFR 905.30 through 10 CFR 905.37, to
the P-DP remarketing effort; (2) extend 98 percent of marketable
capacity to existing contractors for a term of 20 years; and (3) use
the remaining two percent of marketable capacity for the creation of a
resource pool. WAPA will make allocations from the resource pool to
eligible preference contractors using the Eligibility Criteria and
Allocation Criteria for Resource Pool Allocations described in this
notice and under the Final 2028 Plan. The Final 2028 Plan also sets
forth General Criteria and Contract Principles that will apply to new
allottees and existing contractors. This Final 2028 Plan supersedes all
previous marketing plans for this project.

Responses to Comments Received on the Notice of Proposed Plan

During the public consultation and comment period, WAPA received
nine letters commenting on the Proposed 2028 Plan. The letters are
available on WAPA's website at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a>. Six contractors and interested stakeholder
representatives commented during the July 19, 2024, public comment
forum. Transcripts from the public meetings are also available on
WAPA's website. In addition, multiple parties requested clarification
on the Proposed 2028 Plan during the 90-day public consultation and
comment period. WAPA provided clarifying responses to these questions
during the consultation and comment period. These responses remain
available on WAPA's website at the address above and are not included
below.
The following is a summary of the comments received during the
consultation and comment period, and WAPA's responses to those
comments. Comments are grouped by subject and paraphrased for brevity.

I. Marketing Plan Term

Comment: Two commenters supported the 20-year contract term for the
forthcoming marketing period. WAPA received no comments objecting to
the 20-year term.
Response: WAPA appreciates the support. The Final 2028 Plan
provides for the marketing of P-DP power from October 1, 2028, through
September 30, 2048.

II. Products and Services--Quarterly Energy

Background: WAPA proposed to offer energy amounts for three-month
periods (``Quarterly Energy'') based on Reclamation's 24-month
generation projection studies (``24-Month Study''), which are released
every month.
Comment: Three commenters generally supported WAPA's proposed
operational changes in response to challenging hydrology and WAPA's
efforts to reduce purchase power activities, as such activities had led
to accumulated deficits.
Response: WAPA appreciates the support to change the energy
delivery methodology. The Final 2028 Plan will align energy deliveries
with actual hydropower generation, thereby decreasing the amount of
energy WAPA will have to purchase, reducing financial burdens on
contractors, and promoting rate stability.
Comment: Two commenters recommended WAPA consider leaving the
majority of the details concerning the implementation of the new
operational strategy, such as the final process and operational changes
related to estimating, committing, and scheduling the hydropower
resource, in the contract and Metering and Scheduling Instructions
(MSI), rather than including these details in the Final 2028 Plan to
allow the most flexibility to amend agreements as conditions change.
Response: WAPA agrees more detailed terms and conditions regarding
Quarterly Energy, Optional Energy, Excess Energy, changes to generation
forecasts, minimum scheduling requirements, and other products or
services will be addressed, as appropriate, in electric service
contracts or MSI, which will be incorporated into such contracts as an
attachment. WAPA has added additional language to the Final 2028 Plan
to align with this recommendation.
Comment: One commenter expressed concern that WAPA is adopting a
Quarterly Energy methodology while simultaneously creating a new
resource pool. The commenter further stated that creating a Quarterly
Energy methodology admits that the P-DP resource cannot sustain the
energy deliveries associated with the allocated capacity.
Response: P-DP's fixed contractual obligation methodology for
energy delivery imposed financial burdens on contractors in the
existing marketing period. As a result, existing contractors have
experienced increased P-DP power rates and incurred deficits for
purchase power and wheeling (PPW) expenses. WAPA developed the Final
2028 Plan to provide energy deliveries based on actual generation and
to reduce such deficits. WAPA believes the Final 2028 Plan constitutes
a balanced approach between maximizing the ongoing value of the P-DP
resource to existing contractors and encouraging widespread use with a
two-percent resource pool.
Comment: One commenter noted that aligning P-DP energy deliveries
with the July 2024, 24-Month Study would have resulted in a 17 percent
megawatt hour (MWh) average potential reduction over a 12-month period,
with the largest reductions occurring during the highest demand and
highest price summer peaking months. This commenter requested that WAPA
develop a policy to support full availability of P-DP generation
capacity during summer from 3-10 p.m. MST when demand is at its highest
and solar resources are waning. The commenter also requested
operational measures to make generation available during system
emergencies or forecasted peak days so that WAPA may have substantial
operational flexibility to support regional reliability.
Response: Thank you for this recommendation. WAPA and Reclamation
already collaborate to optimize P-DP generation. WAPA will continue
those efforts and will approach Reclamation about options to further
optimize the resource.
Additionally, the Final 2028 Plan provides for Optional Energy in
which a contractor may elect for WAPA to purchase energy on behalf of
the contractor to supplement available P-DP energy, up to the
contractor's Contract Rate of Delivery (CROD). This product may help
contractors meet their energy requirements during high demand hours.

[[Page 89001]]

Comment: One commenter expressed concern that Quarterly Energy will
affect existing metering and scheduling instructions with its
scheduling agent. This entity requested WAPA coordinate with its
scheduling agent to ensure any energy delivery changes meet with the
agent's approval.
Response: A contractor's entitlement to Quarterly Energy will not
be contingent upon approval of a scheduling agent. WAPA is willing to
work with the scheduling agent for this contractor, and other
contractors as requested, to coordinate Quarterly Energy deliveries.
Comment: Comments expressed support for structuring the P-DP
contract more like WAPA's Colorado River Storage Project (CRSP)
contracts, with a small replacement power budget to help control future
rates. The commenters strongly supported these changes, as they will
help mitigate the rate impacts contractors are seeing with the
reduction of generation at the dams.
Response: WAPA appreciates the support. Aligning energy deliveries
with forecasted generation will mitigate rate impacts and significantly
reduce the P-DP purchase power costs.

III. Products and Services--Optional Energy

Comment: One commenter supported the concept of Optional Energy and
requested that WAPA develop a plan to meet the commenter's requirements
using Optional Energy while minimizing energy purchase costs.
Response: WAPA appreciates the support. WAPA will work with the
contractor to provide assistance as requested.

IV. Products and Services--Contractor Use of Transmission

Background: WAPA will allow contractors to use transmission
capacity, reserved for delivery of their P-DP firm electric service
(FES) allocation, for contractor-owned or contractor-purchased
resources. Transmission capacity used for such energy must not exceed a
contractor's CROD. As clarified during the public information forum,
usage of transmission capacity will be comparable to service under
WAPA's Open Access Transmission Tariff (OATT).
Comment: Three commenters supported WAPA's transmission proposal,
with one commenter stating that the use of transmission up to CROD is
consistent with the use of transmission facilities in other marketing
areas.
Response: WAPA appreciates the support.
Comment: One commenter noted that reference to WAPA's OATT suggests
divergency from WAPA's traditional practice of pairing an allocation of
power with firm transmission rights over WAPA transmission facilities
for the delivery of power. WAPA was asked to clarify that such
transmission rights remain tied to the allocation and are not
severable. Furthermore, the commenter stated the allusion to WAPA's
OATT should be clarified to state that firm power customers are not
required to separately reserve transmission pursuant to WAPA's OATT.
The commenter stated that while WAPA may market transmission capacity
excess for the mission of delivering preference power pursuant to the
terms and conditions set forth in its safe harbor OATT, the use of
transmission capacity associated with the P-DP allocation should remain
within WAPA's organic authorities and outside the purview of the
Federal Energy Regulatory Commission.
Response: WAPA will continue to utilize existing transmission
capacity to deliver energy associated with a contractor's P-DP
allocation. Under the Final 2028 Plan, transmission capacity not used
by WAPA to deliver a contractor's P-DP allocation will be made
available for contractors to deliver contractor-owned or contractor-
purchased resources. Contractors will not be required to separately
reserve transmission to deliver P-DP energy. When a contractor requests
transmission service for contractor-owned or contractor-purchased
resources on a transmission path other than that reserved for delivery
of P-DP energy, WAPA will study the transmission system to determine
availability, comparable to the OATT process for redirecting point-to-
point transmission rights.
Comment: A commenter stated that WAPA's decision to create a new
resource pool should be delayed until contractors fully understand the
impact of how the transmission rights up to CROD are delineated and
understood by the contractors.
Response: Transmission capacity used for delivery of contractor-
owned or contractor-purchased resources must not exceed a contractor's
CROD, regardless of the creation of a resource pool.

V. Application of PMI and Creation of Resource Pool

Background: WAPA proposed to apply the principles of the PMI (10
CFR 905.30-905.37) to P-DP for the forthcoming marketing period. This
included a proposal to extend 98 percent of P-DP marketable capacity to
existing contractors' CROD and creation of a single, one-time, two-
percent resource pool of marketable capacity for new allottees.
Comment: Eight entities provided comments on this proposal. One
entity supported the proposal to encourage widespread use. One entity
requested a larger resource pool. Two entities opposed creating a
resource pool at this time. Four entities preferred no resource pool
but supported the small two-percent resource pool to accommodate
widespread use. Two of these entities specifically supported WAPA's
application of the PMI principles to ensure current contractors
continue to receive a substantial amount of their resource. One entity
noted its preference that WAPA not create a resource pool, but stated
WAPA's proposal of a small, one-time, resource pool appears to be a
reasonable compromise to ensure that existing contractors continue to
receive most of their existing resources.
Response: WAPA appreciates the feedback.
Comment: One entity opposed using PMI principles because of the
significant reduction WAPA is proposing for energy deliveries, along
with the impact the capacity reduction may have on this entity's
current crediting arrangement.
Response: Application of PMI provides WAPA with a framework for
extending a significant portion of existing marketable capacity to
existing contractors while also encouraging widespread use. Entities
without a Federal hydropower allocation may exist within the P-DP
marketing area, and WAPA intends to provide those entities with an
opportunity to apply.
The two-percent resource pool will be largely offset by the
anticipated addition of capacity from the Davis Dam Unit 3 rewind.
Creating a resource pool during drought conditions further reduces
energy deliveries to existing contractors. For that reason, WAPA
determined to establish a modest resource pool.
WAPA has decided to apply the PMI formula to extend existing
contractors' allocation for the Final 2028 Plan consistent with the
Proposed 2028 Plan. WAPA recognizes the impact of reducing allocations
for existing Tribal contractors with benefit crediting arrangements and
is willing to coordinate with scheduling agents, as requested by
contractors.
Comment: One commenter opposed reducing existing allocations and
recommended creating the resource pool from the additional capacity
expected from the rewind of Davis Dam Unit 3 to preserve existing
allocations.

[[Page 89002]]

The commenter further stated that WAPA markets power consistent with
sound business principles and therefore must weigh the benefit of
creating small allocations (one kW) versus the cost that may be
incurred if existing crediting arrangements are impacted by the
withdrawal.
Response: WAPA appreciates the alternative idea. However, WAPA
believes that the PMI formula, established through an extensive public
process and commonly applied by WAPA in marketing plans across its
territory, remains an effective methodology in the context of P-DP.
WAPA recognizes the impact of reducing allocations for existing
contractors with benefit crediting arrangements and is willing to
coordinate with scheduling agents, as requested by contractors.
WAPA recognizes that small allocations may not be cost effective
for every potential new contractor because associated energy is
currently less than optimal. Each potential contractor will need to
evaluate the cost effectiveness of the resource before entering into a
contract with WAPA.
WAPA believes its decision to apply PMI and the other components of
its Final 2028 Plan are in accordance with its statutory obligation to
offer the lowest possible rates consistent with sound business
principles.
Comment: A commenter that is not an existing P-DP contractor, but
is located in the P-DP marketing area, requested that the resource pool
be formed from a larger percentage of current allocations because if
numerous or large preference entities apply, it would create an
inequity between earlier applying parties who would keep 98 percent of
their allocations, and later applying preference entities who would
have to share two percent of the project's surplus power.
Response: WAPA interprets this commenter's reference to ``surplus
power'' to mean marketable resource from the resource pool. WAPA is
sensitive to the current hydrological conditions that exist in the
Colorado River Basin. Under the existing P-DP marketing plan, energy
allocations are a fixed seasonal amount for the length of contracts,
regardless of hydroelectric generation (49 FR 50582, 50587; 68 FR
23709). Due to challenging hydrological conditions in the Colorado
River Basin, this methodology imposed financial burdens on existing
contractors during the current marketing period, as WAPA has been
required to purchase significant amounts of power to meet contractors'
firm energy requirements. For the Final 2028 Plan, WAPA will eliminate
this methodology and instead offer energy amounts based on
hydroelectric generation forecasts. A WAPA analysis using Reclamation's
July 2024, 24-Month Study showed an approximate 17 percent reduction to
energy deliveries to existing contractors over a 12-month period, with
an even greater impact in the summer months when energy in the
Southwest is needed most. This analysis was included in WAPA's
responses to clarifying questions and can be found on WAPA's website at
<a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a>.
WAPA had to find a balance between encouraging widespread use and
providing valuable energy deliveries. The two-percent resource pool
would be largely offset by an anticipated increase in capacity
resulting from the rewind of Davis Dam Unit 3. However, that additional
capacity will not increase energy deliveries during current
hydrological conditions. Because WAPA is sensitive to concerns over
challenging hydrological conditions and reduced energy deliveries, it
is extending 98 percent of marketable capacity to existing contractors
in the Final 2028 Plan. WAPA believes a modest, two-percent resource
pool is still a reasonable means of encouraging widespread use.
Comment: One commenter opposed the creation of a resource pool
stating that with the loss of roughly 25 percent of energy deliveries
since the execution of the last contracts, there is little additional
energy for a new resource pool. The commenter stated the impacts to the
creation of a new resource pool need to be assessed, and further stated
that WAPA is asking existing contractors to make additional sacrifices
at a point in time in which DSW has been unable to meet the CROD. The
commenter stated that although WAPA indicates that capacity allocations
for new contractors will be made from new capacity associated with a
turbine rewind, there is an absence of associated energy for a new
allocation.
Response: WAPA concurs that challenging hydrological conditions
have reduced the energy output of P-DP generators since 2008. To
clarify the comment, during the current marketing period, as P-DP
energy production decreased, WAPA maintained CROD and associated energy
through market purchases. As a result, existing contractors experienced
rate increases, but no decrease in energy deliveries. As part of the
Final 2028 Plan, contractors will be entitled to energy deliveries
based on their pro rata share of projected hydrogeneration. WAPA
recognizes the two-percent resource pool impacts existing contractors'
CROD and resulting energy delivery. WAPA balanced the marketing of a
limited and valuable resource with its obligation to encourage
widespread use of the Federal resource. Given recent hydrology, and
knowing that potential new contractors may exist, WAPA has decided to
create a modest, two-percent resource pool, which some commenters have
indicated is small. Marketable capacity is expected to increase with
the addition of approximately 3,750 kW from the Davis Dam Unit 3
rewind, which will largely offset the capacity set aside for the
resource pool. Energy deliveries are directly attributable to water
releases and are constrained by the current hydrological conditions.
WAPA assessed the impacts of creating a resource pool, along with
changes using the Quarterly Energy methodology. The results are posted
on WAPA's website as part of its responses to clarifying questions and
show potential P-DP Quarterly Energy projections by contractor,
including with the two-percent resource pool, using July 2024, 24-Month
Study data.
Comment: A commenter opposed creation of the resource pool at this
time because it argued that adopting the Quarterly Energy methodology
while simultaneously proposing a new resource pool presents a conflict.
According to the commenter, the creation of a Quarterly Energy
methodology admits that the P-DP resource cannot sustain the energy
deliveries associated with the allocated capacity.
Response: Given challenging hydrology, WAPA designed the Quarterly
Energy product to achieve alignment with actual generation and to
address the significant costs of purchase power. WAPA chose a modest
resource pool size to reflect the reduction in hydrogeneration while
encouraging widespread use.
Comment: A commenter explained it opposes creation of a resource
pool based on WAPA eliminating the current off peak requirements and
instead requiring minimum schedule requirements to coincide with water
deliveries. The commenter stated this could lead to purchases at times
when the resource is out of the market and at a point in time when it
would not be as economic to the contractors to receive the power. With
potential loss of value against the decision to create a new resource
pool, this commenter suggested that WAPA refrain from creating the new
resource pool until the actual impacts associated with the new
scheduling regime have been disclosed and discussed with the
contractors.

[[Page 89003]]

Response: WAPA does not believe there is a direct correlation
between the decision to establish a resource pool and minimum
scheduling requirements. Furthermore, it is not feasible to delay the
resource pool determination.
WAPA is developing a tool to optimize scheduling requirements to
reduce WAPA's purchase power requirements and minimize energy sales in
low load hours. The tool will create minimum requirements that are
based on actual limitations around the resource. The process to develop
the tool will take time, but WAPA believes having a collaborative
approach and providing contractors the opportunity to help shape the
results will provide the best possible outcome. Prior to the execution
of contracts for the 2028-2048 marketing period, WAPA will provide
examples of methods being considered, seek feedback from existing
contractors and potential new allottees, and select which option
provides the greatest flexibility and achieves the goals identified in
the Final 2028 Plan. Minimum scheduling requirements will be included
in the MSI.
Comment: A commenter opposed creation of a resource pool because if
WAPA is eliminating the scheduling flexibility and requiring
contractors to purchase power at times when it is not economic, WAPA is
not following its principle to set rates at the lowest possible rate
consistent with sound business principles. The commenter states WAPA is
allocating capacity, resources, and energy to new contractors at a time
when WAPA does not have the full resources to meet contract rates of
delivery, thus creating a situation in which existing allottees are
being deprived of the value of the resource. To the extent that WAPA
reduces energy allocations, the commenter stated contractors with
longstanding allocations are forced to seek higher-cost replacement
energy, and the record to date does not explain how promoting
widespread use ensures that the power is sold at the lowest possible
cost. The commenter also stated that the Federal Register notice fails
to reconcile this proposed departure from the longstanding policy of
keeping rates as low as possible, consistent with sound business
principles, with an increased dilution of the resource under the guise
of promoting widespread use of the power.
Response: WAPA believes that by changing the minimum scheduling
requirements and developing the Quarterly Energy product, WAPA will be
marketing power in alignment with its obligation to provide the lowest
possible rates consistent with sound business principles, especially
given the challenging hydrological conditions in the Colorado River
Basin and the agency's obligation to encourage widespread use.
Extending the benefit of Federal hydropower to new potential
contractors who do not have an existing Federal hydropower allocation
encourages widespread use with minimal impact to WAPA's rates.
Comment: A commenter provided further reasoning for opposing the
resource pool at this time because there needs to be an understanding
in terms of the flexibility of the transmission rights up to CROD, and
decisions on creating a new resource pool should also be held until the
customers fully understand the impact of how the transmission rights up
to CROD are delineated and understood by the customers.
Response: WAPA has defined the transmission use it intends to
provide to contractors. WAPA discerns no reason to delay its
determination to create a resource pool.
Comment: A commenter noted that the impact from the creation of the
resource pool is isolated to those contractors who are not Priority Use
Power (PUP) contractors, and the new resource pool would not reduce
capacity or energy deliveries to contractors who receive PUP. The
commenter did not oppose any change to allocations for PUP or any
change in those operations for PUP contractors.
Response: A portion of P-DP capacity and energy is first reserved
for PUP requirements and remaining marketable capacity is marketed by
WAPA as FES. Therefore, PUP capacity and energy allocations will not be
reduced with the creation of the resource pool as part of the Final
2028 Plan.

VI. Eligibility Criteria for Resource Pool Allocations

Background: Qualified applicants must not have an existing
allocation of Federal power or be a member of a parent entity that has
an allocation of Federal power.
Comment: WAPA received comments in support of limiting resource
pool eligibility to those who do not have other Federal hydropower
allocations.
Response: WAPA appreciates the support.
Comment: WAPA received comments from three entities requesting that
the eligibility criteria be changed to allow those with existing
Boulder Canyon Project (BCP) and/or CRSP Federal hydropower allocations
to be eligible for a P-DP allocation from the 2028 resource pool.
Response: WAPA chose to create a two-percent resource pool at a
time when drought is already reducing P-DP energy production. Existing
contractors have experienced rate increases and PPW deficits because P-
DP generation could not meet contractual requirements. WAPA determined
that limiting eligibility for resource pool allocations to those
entities that do not already have a Federal power allocation is an
appropriate means of encouraging widespread use, while the modest size
of the resource pool also recognizes the strains on the P-DP resource
and existing contractors.
Comment: One commenter requested WAPA consider adjusting the
proposed eligibility criteria language to ``Qualified applicants must
not have a significant allocation of Federal power . . .'' to not
disqualify small electric utilities that currently receive a small BCP
Federal power allocation from being considered as a 2028 P-DP qualified
applicant.
Response: Given that Federal hydropower is a finite resource in the
Southwest, WAPA considers all allocations to be beneficial and
significant. In WAPA's view, determining a threshold at which an
allocation is ``significant'' is not possible, and could not be
accomplished in an equitable manner. WAPA's policy is to encourage
widespread use of P-DP power at the lowest rates possible consistent
with sound business principles. Adhering to the proposal to limit the
resource pool eligibility to those entities without an existing Federal
power allocation accomplishes both goals.
Comment: A commenter noted that WAPA is proposing that its resource
pool allocations be returned to existing contractors if enough new
preference customers are not found. The commenter requested that WAPA
should reconsider this option and allow for additional qualified
applicants that may have a small share of existing Federal power
resources to be considered in lieu of returning the unused allocation
pool back to the existing P-DP contractors.
Response: As discussed previously, WAPA considers all allocations
to be beneficial and significant. WAPA created the two-percent resource
pool to encourage widespread use at a time when it is experiencing
challenging hydrological conditions. Granting resource pool allocations
to entities that already have a Federal power allocation does not
encourage widespread use to the same extent as making allocations to
entities without an existing allocation. Returning the resource pool
power to existing P-DP contractors if new

[[Page 89004]]

preference contractors are not found recognizes the resource strains on
existing contractors. WAPA's decision is also consistent with the
framework set forth in the PMI, which provides, ``[i]f power is
reserved for new customers but not allocated, or resources are offered
but not placed under contract, this power will be offered on a pro rata
basis to customers that contributed to the resource pool through
application of the extension formula in [10 CFR] 905.33.'' 10 CFR
905.32(e)(1).
Comment: One commenter asked if it is a new requirement that
qualified applicants must not have an existing allocation of Federal
power or be a member of a parent entity that has an allocation of
Federal power. Two commenters noted that at least one of WAPA's current
FES allocation contractors obtained Federal power from more than one
Federal source. A commenter located in the P-DP marketing area with a
CRSP allocation stated that this eligibility requirement seems to be an
inequity and a bias against later applying preference customers, as
well as a violation of the widespread use mandate.
Response: WAPA's eligibility criterion is not new. The EPAMP Final
Rule, published October 20, 1995, provided a framework for the
marketing of power while also allowing for project-specific approaches
to be used during future proceeding and marketing plan development. The
Final Rule noted, ``[i]n the past, [WAPA] has allowed preference
entities to receive power from more than one project when marketing
areas overlap. Given the significant new customer load that exists in
portions of [WAPA]'s service territory, [WAPA] is not willing to
continue this policy on a [WAPA]-wide basis. On this issue, [WAPA] will
retain the flexibility set forth in the proposed Program. An existing
customer will not be eligible to receive power from a resource pool
unless [WAPA] provides otherwise on a project-specific basis. Comments
on the eligibility of existing customers to receive resource pool power
will be accepted as part of the project-specific public process'' (60
FR 54151, 54163).
Given the hydrological conditions impacting P-DP generation, it is
prudent for WAPA to maintain that existing Federal power contractors
will not be eligible to receive P-DP power from the resource pool.
Comment: One commenter requested that if there are fewer applicants
than can equitably use the resource pool, then the unallocated power be
shared among all customers.
Response: WAPA interprets this comment to mean that unallocated
power be shared among all resource pool applicants and existing
contractors. WAPA has wide discretion to balance relative amounts of
load being served by Federal hydropower as part of establishing the
resource pool. WAPA's goal is to find applicants that meet the
eligibility criteria up to the two percent.
Comment: A Tribe with an existing CRSP Federal hydropower
allocation commented that it considers its ability to receive
allocations and Federal hydropower resources (generation and
transmission systems) to be trust resource under the DOE definitions
and related to the construction of Coolidge Dam. Although the Tribe has
a CRSP allocation, it requested the ability to apply for an allocation
of P-DP power as well.
Response: WAPA's power marketing authority is defined by
Reclamation law, which grants the agency-wide discretion as to who and
under what terms it will contract for the sale of Federal power. While
WAPA will create a modest resource pool to encourage widespread use, it
also chose to limit applicant eligibility for the resource pool because
P-DP energy has been limited in recent years due to drought conditions.
WAPA believes expanding resource pool eligibility to entities already
holding a Federal power allocation would not encourage widespread use
given current conditions.
Although there is no federal legislation requiring WAPA to expand
its eligibility criteria to make the Tribe eligible for a P-DP resource
pool allocation, WAPA notes the San Carlos Irrigation Project, owned
and operated by the Department of Interior, Bureau of Indian Affairs,
is an existing P-DP contractor and is required by Federal law to
provide power to the Tribe.\1\ WAPA values its relationships with
tribal preference customers and understands the challenges the Tribe
faces in obtaining affordable electric service. WAPA is willing to
further collaborate with the Tribe and the Bureau of Indian Affairs in
addressing these challenges.
---------------------------------------------------------------------------

\1\ See Act of March 7, 1928, 45 Stat. 200, 210-212.
---------------------------------------------------------------------------

VII. General Criteria and Contract Principles--Minimum Scheduling
Requirements

Background: P-DP contractors will have a new minimum scheduling
requirement that aligns with Reclamation's generation schedule and how
energy is scheduled within the Western Interconnection. Please also see
comments and responses under V. Application of PMI and Creation of
Resource Pool regarding implementing minimum scheduling requirements at
the same time as creating a resource pool.
Comment: One commenter noted that the details regarding minimum
scheduling requirements are unclear and requested WAPA ensure that
changes are coordinated with its scheduling agent and are acceptable to
all parties.
Response: WAPA will collaboratively develop the minimum scheduling
requirements tool with contractors and is willing to coordinate changes
with scheduling agents, as requested by contractors.
Comment: A commenter supported changing minimum scheduling
requirements to provide scheduling flexibility, reduce purchase power
costs, and minimize sales in low load hours. The commenter questioned
how changing minimum scheduling requirements to meet water requirements
will affect schedules and noted that it appears that this impact has
not been fully examined by DSW personnel. The commenter stated that
removing the 25 percent off peak minimum could improve resource
availability but remains uncertain as to how that change will benefit
contractors. The commenter asks WAPA to improve transparency regarding
scheduling requirements and operational needs.
Response: WAPA is developing a tool to identify contractor minimum
schedules needed to meet Reclamation water release requirements. When
P-DP contractors schedule less energy than Reclamation generates, WAPA
may need to sell P-DP energy to balance hourly loads and resources.
WAPA intends to produce an hourly minimum schedule each month for each
contractor. The change will benefit P-DP contractors by reducing sales
of short-term surplus energy when such energy could have been delivered
to P-DP contractors and will decrease potential WAPA purchases in more
expensive hours to replace generation that was sold. Selling generation
and replacing it with purchases in more expensive hours increases the
purchase power requirement for the project. Consequently, there is a
direct relationship between potential scheduling flexibility and the
need for purchase power. WAPA intends to collaborate with contractors
when identifying levels of purchase power to align with contractors'
preference for scheduling flexibility.
Comment: A commenter stated that the proposal does not indicate any

[[Page 89005]]

limits to the amount of off peak power that would have to be required
and could lead to a further diminishment of the value of the P-DP
resource by eliminating scheduling flexibility and requiring
contractors to purchase power at times when it is non-economic.
Response: P-DP generation is based on Reclamation water release
requirements. WAPA will continue to coordinate with Reclamation to
optimize generation timing and intends to work out a collaborative
solution with contractors during negotiations of electric service
contracts and the MSI. WAPA received requests specifically asking WAPA
to reserve the details of operational changes to the MSI and contracts.
Comment: A commenter requested WAPA confirm that, although the
scheduling may evolve to a more dynamic model, WAPA will provide
suitable advance notice for contractors to schedule the resource for
maximum benefit.
Response: WAPA agrees that it is beneficial for all parties to
receive suitable advance notice for scheduling parameters. Minimum
scheduling requirements will be included in the MSI.
Comment: One commenter stated that as WAPA reserves the right to
enter exchange transmission service and other related agreements, such
reservation of authorities should also include WAPA's discretion to
manage its interconnection queue to meet these objectives.
Response: Thank you for this recommendation.
Comment: One commenter acknowledged that P-DP generation is based
on Reclamation water orders and asked, to the extent possible, for
increased flexibility to provide peak shaving in the summer and to
avoid competing with solar resources.
Response: WAPA appreciates the recommendation. WAPA acknowledges
that the energy market has changed with the increase in solar resources
and there are times when P-DP energy is more valuable to contractors.
WAPA will continue to stay engaged in the energy market and will
collaborate with Reclamation to optimize generation dispatch within
water release requirements.

VIII. General Criteria and Contract Principles--Renewable Energy
Certificates

Background: Renewable energy certificates (RECs) associated with P-
DP power will be made available to contractors and may be sold or
transferred to third parties, provided such sale or transfer is
consistent with WAPA policy and documented in electric service
contracts. As stated in the responses to clarifying questions posted on
WAPA's website, it is WAPA's intention that P-DP RECs will be made
available to contractors with similar flexibility offered to BCP
contractors; however, the end result for P-DP will need to be
consistent with WAPA policy.
Comment: Two commenters supported WAPA's RECs proposal and
requested WAPA to make its RECs policy available as soon as practicable
and before P-DP contract negotiations.
Response: WAPA is currently working on changing its RECs policy and
is attempting to achieve resolution as soon as possible.
Comment: One commenter strongly supported WAPA's RECs proposal to
help mitigate rate impacts from generation reductions. WAPA was asked
to consider using similar language as that used in the BCP contracts
when drafting P-DP RECs language to ensure contractors receive the
``environmental benefits'' of hydropower.
Response: WAPA appreciates this recommendation and agrees that
language from the BCP electric service contracts may be appropriate for
use in the P-DP contracts, consistent with WAPA policy and project-
specific legal authorities.

IX. General Criteria and Contract Principles--Undepreciated Replacement
Advances

Background: Consistent with the current P-DP Advancement of Funds
contract, new allottees would be required to reimburse existing
contractors for undepreciated replacement advances, to the extent
existing contractors' allocations are reduced as a result of creating
the resource pool.
Comment: WAPA received comments from three entities supporting the
requirement for new allottees to reimburse existing contractors for
undepreciated replacement advances. Additionally, commenters stated it
is imperative that potential new allottees understand that a P-DP
allocation includes responsibility for their portion of the
undepreciated replacement advances and understanding how the deferred
purchase power repayments could impact their future rates. The
commenters noted these issues could severely change a potential new
contractor's decision to sign the contract, especially benefit
crediting contractors.
Response: WAPA appreciates the supportive comments. It is accurate
that new potential allottees need to consider all costs associated with
a P-DP allocation, including their share of undepreciated replacement
advances. WAPA agrees that it is prudent for new allottees to evaluate
the costs and value associated with a P-DP allocation, especially if a
bill crediting or benefit crediting partnership will be required. WAPA
would like to clarify that, as stated in its proposal and in the Final
2028 Plan, deficits incurred during the current marketing period will
not be passed through to new allottees in the forthcoming marketing
period. Such deficits include purchase power deficits.

X. General Criteria and Contract Principles--Deficit Repayment

Background: Deficits for costs incurred during a previous marketing
period will not be passed through to new allottees.
Comment: One commenter stated that a portion of the current period
deficit should be repaid by future potential allottees under the new
resource pool since purchase power expenses were accumulated in
connection with the rewind at Davis Dam and purchase power costs
related to that outage should not be solely borne by the existing
allottees.
Response: PPW deficits were incurred from fiscal years 2018-2023
when challenging hydrological conditions were experienced at the same
time as numerous variables affecting the energy market, resulting in
higher than anticipated P-DP purchase power costs. New potential
contractors will have a different energy product than existing
contractors, and WAPA's ability to level PPW costs in rates does not
mean that future contractors should pay for annual expenses from the
prior marketing period.
It is accurate that the Davis Dam Unit 3 rewind requires a unit
outage and results in reduced capacity during the current marketing
period. However, there is not a reduction to energy resulting from the
outage because Reclamation dispatches the same amount of generation to
maintain water releases. The impact to existing contractors is not an
overall reduction in energy, but is from the timing of purchases, to
the extent WAPA needs to buy power due to capacity shortages in higher
priced hours. Existing contractors will experience the benefit of WAPA
retaining the additional capacity for the remainder of the current
marketing period and that additional capacity could help defer power
purchases in high demand hours. To quantify the estimated PPW costs
associated with this Davis Dam Unit 3

[[Page 89006]]

outage, WAPA would need to conduct a post-hoc analysis to determine
when WAPA may or may not have purchased or sold power in various hours.
Such analysis would be speculative and hypothetical. Therefore, WAPA
believes that a balanced approach is to not pass such outage-related
PPW expenses onto potential new contractors, but rather WAPA may use
the unallocated, additional capacity from the rewind for the remainder
of the current marketing period to help offset PPW expenses incurred
during maintenance on the unit, thereby benefitting existing
contractors.

XI. Changes in the Electric Utility Industry

Comment: Two commenters noted expansion of markets in the West and
requested WAPA to include contract language to protect the value of P-
DP to enable WAPA's contractors to use the resource in current and
future energy markets. Some of the examples provided in which WAPA has
worked with contractors included use of RECs, dynamic signals, and
pseudo-ties. The commenters requested language to allow technical
solutions for changing market dynamics in the future.
Response: WAPA appreciates this comment. WAPA will work with
contractors to include language in contracts to protect the value of
contractors' Federal hydropower resources in the event WAPA joins a
market.
Comment: A Tribe requested government-to-government consultation if
WAPA continues forward with participation in SPP.
Response: WAPA interprets this comment's reference to SPP as the
Southwest Power Pool (SPP). WAPA appreciates this request and comment.
Currently, DSW does not intend to participate in the SPP regional
transmission organization or expand current market participation with
SPP. DSW will engage in government-to-government consultation in the
event changes to current market participation are contemplated.

XII. Additional Comments

Comment: Commenters expressed appreciation for the effort and
careful thought that WAPA put into this process; WAPA's effort to
preserve the existing contractors' allocations and provide a more
workable construct for future rates; WAPA's deliberate approach to the
2028 marketing plan; and WAPA recognizing the impact of drought on
hydropower generation.
Response: WAPA appreciates the support and engagement throughout
this process.

Summary of Revisions to the Proposed Plan

WAPA revised the Proposed 2028 Plan as a result of the comments
received during the consultation and comment period and public forums.
Revisions have been made to define the intent of the marketing plan
more clearly; the revisions do not alter the substance of the original
proposal. The revisions are summarized as follows:
WAPA was asked to clarify the meaning of ``prescheduling''
regarding prescheduling timetables for Quarterly Energy, Optional
Energy, and generation forecast changes to Quarterly Energy. WAPA
provided a response to this clarifying question on its website during
the consultation and comment period. WAPA modified references to
``prescheduling'' in the Proposed 2028 Plan to ``day-ahead
prescheduling'' in the Final 2028 Plan for enhanced clarity.
In response to recommendations that WAPA leave the majority of
details concerning the implementation of the new operational strategy,
such as the final process and operational changes related to
estimating, committing, and scheduling the hydropower resource, in the
contract and MSI, WAPA has added language in the Final 2028 Plan to
indicate that additional details will be addressed, as appropriate, in
FES contracts or MSI, which will be incorporated into such contracts as
an attachment.
The Proposed 2028 Plan stated that WAPA expected the addition of
3,750 kW of capacity resulting from the rewind of Davis Dam Unit 5. The
unit number was incorrect; the rewind will occur at Davis Dam Unit 3.
WAPA has made this correction in the Final 2028 Plan.
The Final 2028 Plan clarifies that ``approximately'' 3,750 kW of
additional marketable capacity is expected to be available as a result
of the rewind of Davis Dam Unit 3. The modification was necessary
because the rewind is not yet complete, and the actual capacity gains
from the rewind cannot be determined until the project is complete.
The Final 2028 Plan clarifies that WAPA will allow contractors to
use transmission capacity, reserved for delivery of their P-DP FES
allocation, for ``contractor-owned or contractor-purchased resources.''
The Proposed 2028 Plan used the term, ``contractor-owned or -purchased
resources.''
The Final 2028 Plan also clarifies that transmission used for
contractor-owned or contractor-purchased resources will only be
available to contractors after minimum scheduling requirements for P-DP
generation have been met.
Finally, the Final 2028 Plan fixes an error in the statutory
citation for Section 9(c) of the Reclamation Project Act. The correct
citation is 43 U.S.C. 485h(c).

Final 2028 Plan

The Final 2028 Plan provides new power marketing criteria for
Parker-Davis Project (P-DP). The Final 2028 Plan addresses: (1) the
power to be marketed after September 30, 2028, which is the termination
date for all existing P-DP firm electric service (FES) contracts; (2)
the general terms and conditions under which the power will be marketed
starting on October 1, 2028, and going through September 30, 2048; and
(3) the criteria to determine eligibility for allocations from the
resource pool.
Within broad statutory guidelines and operational constraints of P-
DP, WAPA has wide discretion as to whom and under what terms it will
contract for the sale of Federal power, if preference is accorded to
statutorily defined entities. WAPA markets power in a manner that will
encourage the most widespread use at the lowest possible rates
consistent with sound business principles. All products and services
provided under this Final 2028 Plan will be subject to the operational
requirements and constraints of the P-DP, transmission availability,
purchase power limitations, and Federal authorities. WAPA will continue
a collaborative process in implementing the terms set forth in this
Final 2028 Plan.

I. Marketable Power Resource

The primary purpose of P-DP is water control and delivery. The
water control system consists of storage reservoirs that provide daily,
seasonal, and annual flow regulation. Power generated from these
resources depends on hydrology and water operation requirements.
Some of the power generated by P-DP is reserved for priority use by
the United States (herein referred to as ``Priority Use Power'' or
``PUP''). PUP is capacity and energy required for the development and
operation of Reclamation projects as required by legislation
(Reclamation project use power), and irrigation pumping on certain
Indian lands. Reclamation project use power is defined to mean that
capacity and energy for Reclamation projects in the Lower Colorado
River Basin. The following is a list of facilities and projects for
which Reclamation project use power is reserved: relift and drainage
pumps;

[[Page 89007]]

construction campsites; the Yuma-Mesa Irrigation and Drainage District;
Gila Project drainage pumps; Wellton-Mohawk Irrigation and Drainage
District Plant Nos. 1, 2, and 3; and the Colorado River Front Work and
Levee System. Power for irrigation pumping on certain Indian lands is
defined to mean capacity and energy for use in irrigation pumping on
Indian irrigation projects which are adjacent to the Lower Colorado
River south of Davis Dam and north of the border between the United
States and Mexico.
P-DP power in surplus to that reserved for PUP shall be reserved
for allocation to existing contractors and a resource pool shall be
offered to potential new contractors, consistent with applicable law
and the terms and conditions provided herein. Power that is reserved as
PUP, but not presently needed, also may be marketed to contractors as
withdrawable power. Withdrawable power is power that can be withdrawn
for Reclamation project use power and power for irrigation pumping on
Indian lands, which shall have equal priority. When PUP is requested,
WAPA will confirm that the power to be withdrawn will be used for the
above specified purposes, and then will withdraw the necessary amount
of PUP upon a two-year advance notice. Withdrawals of power will be
made as requested and confirmed until the total amount of power
reserved for priority use purposes is in use.

II. Products and Services

WAPA will market a fixed amount of capacity, referred to as
Contract Rate of Delivery (CROD), for summer and winter seasons. WAPA
will have at least 259,206 kW of marketable capacity in the summer and
at least 198,337 kW of marketable capacity in the winter, beginning
October 1, 2028, with an expected capacity increase of approximately
3,750 kW resulting from a rewind of Davis Dam Unit 3. The summer season
for any calendar year is the seven-month period beginning the first day
of P-DP's March billing period and continuing through the last day of
its September billing period. The winter season is the five-month
period beginning the first day of P-DP's October billing period and
continuing through the last day of its February billing period in the
next succeeding calendar year.
Under the existing P-DP marketing plan, energy allocations are a
fixed seasonal amount for the length of customers' contracts and are
equal to 3,441 kWh/kW, a 67 percent capacity factor, in the summer
season, and 1,703 kWh/kW, a 47 percent capacity factor, in the winter
season (49 FR 50582, 50587; 68 FR 23709). Due to challenging
hydrological conditions in the Colorado River Basin, this methodology
has imposed increasing financial burdens on contractors during the
current marketing period, as WAPA has been required to purchase
significant amounts of power to meet contractors' firm energy
requirements. Accordingly, WAPA will eliminate this methodology and
instead offer energy amounts for three-month periods (``Quarterly
Energy'') based on Reclamation's 24-month generation projection studies
(``24-Month Study''), which are released every month. The Quarterly
Energy will be published for contractors by no later than the last day
of August for October through December, the last day of November for
January through March, the last day of February for April through June,
and the last day of May for July through September, of each year during
the marketing period. This will allow for energy deliveries to be
aligned with actual generation. Under the Final 2028 Plan, available
generation, less PUP (which will be fixed on the same terms as under
the existing marketing plan), will be published for contractors in the
form of Quarterly Energy based on a pro rata share of their seasonal
CROD. Details for Quarterly Energy will be further outlined, as
appropriate, in FES contracts or Metering and Scheduling Instructions
(MSI), which will be incorporated into such contracts as an attachment.
WAPA will purchase energy on behalf of contractors to supplement
projected hydropower generation (``Optional Energy''), if requested.
Contractors must elect to purchase Optional Energy from WAPA no later
than the day before day-ahead prescheduling takes place. The amount of
Optional Energy requested, combined with the contractor's monthly
energy entitlement pursuant to its Quarterly Energy, must not exceed
the contractor's CROD scheduled at a hundred percent capacity factor
(contractor's CROD multiplied by twenty-four hours multiplied by the
number of days in the month). An estimated monthly price for Optional
Energy will be published by WAPA at least quarterly but may be revised
and re-published as conditions dictate. The actual costs associated
with Optional Energy purchased by WAPA will be passed through to the
contractor who elects to receive it. Details for Optional Energy will
be further outlined, as appropriate, in FES contracts or MSI, which
will be incorporated into such contracts as an attachment.
There may be instances, after Quarterly Energy has been published,
that Reclamation makes significant reductions to generation
projections. For example, sustained periods of precipitation and/or run
off from water sources other than the Colorado River can result in
water being stored in Lake Mead for later use, thereby reducing P-DP
generation. To minimize power purchases resulting from these
situations, WAPA will revise contractors' monthly energy entitlements
when significant generation reductions occur after Quarterly Energy has
been published. A significant reduction in generation will occur when
dollars associated with projected purchase power requirements needed to
maintain the Quarterly Energy for a particular month exceed dollars
associated with that month's portion of WAPA's Annual Purchase Power
Projection. The Annual Purchase Power Projection is an annual estimate
of what power WAPA will purchase in the upcoming fiscal year, from
October 1 through September 30. Currently, WAPA's Annual Purchase Power
Projection is used as a component of the P-DP firm electric service
(FES) rate. When such significant reductions occur, WAPA will publish
contractors' revised energy for the month using the reduced generation
projections. Revised energy will continue to be based on a pro rata
share of contractors' CROD and will be effective no later than one day
prior to day-ahead prescheduling. Contractors may request that WAPA
purchase Optional Energy on their behalf per the terms described above
to obtain energy following a revision.
WAPA will designate the portion of projected annual generation
exceeding a kWh calculation of all projected marketable capacity
(including PUP) multiplied by a 67 percent capacity factor in the
summer season and 47 percent capacity factor in the winter season as
``Excess Energy.'' If the current 24-Month Study generation projection
for a year exceeds the result of the capacity factor calculation
described above, energy exceeding that calculation (Excess Energy) will
be distributed to all contractors and PUP recipients based on a pro
rata share of their seasonal CROD. Excess Energy will be distributed to
contractors monthly and included as an addition to each contractor's
Quarterly Energy. Excess Energy will be subject to the same rate and
payment requirements as other available P-DP hydropower. The 24-Month
Study yearly projections could show Excess Energy at the beginning of a
year, but such Excess Energy may not remain at originally projected
levels for the full year. Excess Energy distributed

[[Page 89008]]

in part of a year may be subject to adjustment in subsequent months if
the 24-Month Study yearly generation projection drops below the Excess
Energy threshold later that year. WAPA will establish procedures for
designating and adjusting Excess Energy in MSI, which will be
incorporated into the electric service contracts, to minimize
subsequent energy adjustments as much as possible. Additional details
for Excess Energy will be outlined, as appropriate, in FES contracts or
MSI.
WAPA also will allow contractors to use transmission capacity,
reserved for delivery of their P-DP FES allocation, for contractor-
owned or contractor-purchased resources, after hourly minimum
scheduling requirements have been met. Transmission capacity used for
such energy must not exceed a contractor's CROD.

III. Resource Extensions and Resource Pool Allocations

WAPA will apply the principles of the Power Marketing Initiative
(PMI) (10 CFR 905.30 through 10 CFR 905.37) to P-DP for the forthcoming
marketing period. WAPA will extend 98 percent of P-DP marketable
resource as of September 30, 2028, to existing contractors' CROD, for
an additional 20 years, from October 1, 2028, through September 30,
2048. The existing CROD for PUP contractors will remain unchanged. WAPA
will establish a single, one-time resource pool of two percent of P-DP
marketable capacity for new allottees. Energy associated with the new
resource pool will be based on a pro rata share of the allottee's
seasonal CROD and published in the form of Quarterly Energy. Specific
terms and conditions governing the extensions and resource pool are
described below.
A. Extension for Existing Contractors
WAPA will have at least 259,206 kW of marketable capacity in the
summer and at least 198,337 kW of marketable capacity in the winter,
beginning October 1, 2028. WAPA expects an addition of approximately
3,750 kW of capacity resulting from the rewind of Davis Dam Unit 3,
anticipated to be available in July 2025 or earlier. The actual
marketable capacity for the forthcoming marketing period will be
adjusted to include the final Davis Dam Unit 3 capacity increase.
WAPA will extend existing contractors' allocations using the
formula contained in the PMI: ``Customer Contract Rate of Delivery
(CROD) today/total project CROD under contract today x project-specific
percentage x marketable resource determined to be available at the time
future resource extensions begin = CROD extended'' (10 CFR 905.33(a)).
The creation of a resource pool will not affect PUP customers' CROD.
In the event any existing contractors forfeit or express an
intention not to extend some or all of their allocations prior to
October 1, 2028, such resources will be returned to the other existing
contractors on a pro rata basis.
B. Resource Pool Allocations
WAPA will establish a resource pool by reserving a portion of the
power available during the forthcoming marketing period for allocation
to new, eligible preference entities, or returned to existing
contractors if enough new preference contractors are not found.
Allocations for the resource pool will be determined through a separate
public process as described under Call for Resource Pool Applications
herein.
The 2028 resource pool will consist of two percent of the
marketable resources available beginning October 1, 2028. When reducing
existing allocations to create the resource pool, WAPA will first take
energy from existing contractors' withdrawable allocations up to the
total reduction, when available. The remaining reductions will come
from nonwithdrawable energy.
C. Eligibility Criteria for Resource Pool Allocations
WAPA will apply the following Eligibility Criteria to all
applicants seeking a resource pool allocation under the new marketing
plan.
1. Qualified applicants must meet the preference requirements under
Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C.
485h(c)), as amended and supplemented.
2. Qualified applicants will be located within the P-DP marketing
area that includes: (1) all of the drainage area considered tributary
to the Colorado River below a point one mile downstream from the mouth
of the Paria River (Lees Ferry); (2) the State of Arizona, excluding
that portion lying in the Upper Colorado River Basin; (3) that portion
of the State of New Mexico lying in the Lower Colorado River Basin and
the independent Quemada Basin lying north of the San Francisco River
drainage area; (4) those portions of the State of California lying in
the Lower Colorado River Basin and in drainage basins of all streams
draining into the Pacific Ocean south of Calleguas Creek; and (5) those
parts of the States of California and Nevada in the Lahontan Basin
including and lying south of the drainages of Mono Lake, Adobe Meadows,
Owens Lake, Amargosa River, Dry Lakes, and all closed independent
basins or other areas in southern Arizona not tributary to the Colorado
River.
3. Qualified applicants must not have an existing allocation of
Federal power or be a member of a parent entity that has an allocation
of Federal power.
4. Qualified applicants, except Native American tribes, must be
ready, willing, and able to receive and distribute or use power from
WAPA. Ready, willing, and able means that the potential allottee has
the facilities needed for the receipt of power or has made the
necessary arrangements for transmission and/or distribution service;
and the potential allottee's power supply contracts with third parties
permit the delivery of WAPA power.
5. Qualified applicants that desire to purchase power from WAPA for
resale to consumers, including cooperatives, public utility districts,
public power districts and municipalities, must achieve electric
utility status and have necessary arrangements for transmission and/or
distribution service in place by January 31, 2028. Native American
tribes are not subject to this requirement. Electric utility status
means the applicant has responsibility to meet load growth, has a
distribution system, and is ready, willing, and able to purchase P-DP
Federal power from WAPA on a wholesale basis for resale to retail
customers.
6. Qualified Native American applicants must be a Native American
tribe as defined in the Indian Self Determination Act of 1975 (25
U.S.C. 5301, et seq., as amended or supplemented).
7. Qualified applicants must apply in response to the Call for
Resource Pool Applications, as described in the Call for Resource Pool
Applications section herein. Completed applications must be received by
WAPA within the time required in the DATES section.
D. Allocation Criteria for Resource Pool Allocations
WAPA will apply the following Allocation Criteria to all applicants
seeking a resource pool allocation under the new marketing plan.
1. Allocations will be made in amounts as determined solely by WAPA
in exercise of its discretion consistent with its governing authorities
and considered to be in the best interest of the United States.
2. Allocations will be based on the applicant's load during the
calendar year prior to the Call for Resource Pool Applications or the
amount requested, whichever is less.
3. WAPA will base allocations made to Native American tribes on the
actual

[[Page 89009]]

load experienced during the calendar year prior to the Call for
Resource Pool Applications or the amount requested, whichever is less.
WAPA may use estimated load values if actual load data is not
available. WAPA will review and adjust, where necessary, inaccurate
estimates received during the allocation process.
4. WAPA will consider allocations below 1,000 kW.
5. Qualified applicants seeking an allocation as an aggregated
group must demonstrate to WAPA's satisfaction the existence of a
contractual aggregation arrangement prior to WAPA's notice of final
allocations. Members of an aggregated group must individually and
collectively meet preference status and all other eligibility
requirements. Qualified applicants aggregating their loads will be
required to enter into a single firm power contract with WAPA, with the
aggregated group entity as the contracting party.
6. An allottee will have the right to purchase power from WAPA only
upon execution of an electric service contract between WAPA and the
allottee, and satisfaction of all conditions in that contract.

IV. General Criteria and Contract Principles

WAPA will apply the following criteria and contract principles to
all contracts executed under the new marketing plan:
A. Electric service contracts shall be executed no later than May
31, 2028, unless otherwise agreed to in writing by WAPA.
B. Contracts will include clauses specifying criteria that
contractors must meet on a continuous basis to be eligible to receive
electric service from WAPA.
C. All power supplied by WAPA will be delivered pursuant to MSI,
which will be part of contractors' electric service contracts.
D. Contracts shall provide for WAPA to furnish electric service
effective October 1, 2028, through September 30, 2048.
E. Contracts shall incorporate WAPA's standard provisions for
electric service contracts, integrated resource plans, and General
Power Contract Provisions, as determined by WAPA.
F. WAPA will adopt a new minimum scheduling requirement that aligns
with Reclamation's generation schedule and how energy is scheduled
within the Western Interconnection. WAPA intends for contractors to
receive the maximum benefit of their resource allocations while
accommodating the following goals: meeting Reclamation's water
requirements; reducing purchase power and wheeling costs; and
minimizing sales of energy in low load hours. WAPA will develop a tool
that uses Reclamation's 24-Month Study data, the status of generators,
water volumes and elevation, reduced water releases, hourly pricing and
projected hourly load, and other relevant information to model and
produce an optimized monthly capacity and monthly minimum energy
requirement for each contractor. Prior to the execution of contracts
for the 2028-2048 marketing period, WAPA will provide examples of
methods being considered, seek feedback from existing contractors and
potential new allottees, and select which option provides the greatest
flexibility and achieves the goals identified herein. Minimum
scheduling requirements will be included in the MSI.
G. WAPA may, as it deems reasonable and necessary, enter into other
agreements such as: transmission service agreements, interchange
agreements, reserve agreements, load regulation agreements, exchange
agreements, maintenance and emergency service agreements, power pooling
agreements, or other transactions.
H. P-DP will remain operationally integrated with the Boulder
Canyon Project, subject to applicable operational restraints of the
Bureau of Reclamation, applicable laws, and the other requirements of
the marketing plan.
I. WAPA, at its discretion and sole determination, reserves the
right to adjust the CROD on five years' written notice in response to
changes in hydrology and river operations. Such adjustments will take
place only after WAPA conducts a public process.
J. Renewable energy certificates associated with P-DP power will be
made available to contractors and may be sold or transferred to third
parties, provided such sale or transfer is consistent with WAPA policy
and documented in electric service contracts.
K. Each entity is ultimately responsible for obtaining its own
delivery or other arrangements to its load. Transmission service over
the P-DP system will be provided in accordance with Part V of this
Final 2028 Plan.
L. WAPA may develop rate schedules for services provided under the
Final 2028 Plan. Such rates will be developed through a separate public
process.
M. Contractors must pay all applicable rates and charges in the
manner and within the time prescribed in the contract.
N. P-DP will remain financially segregated for the purposes of
accounting and project repayment. Beginning June 1, 2005, and until the
end of the repayment period for the Central Arizona Project, P-DP
provides for surplus revenues by including the equivalent of 4\1/2\
mills per kWh in the rates charged to contractors in Arizona and by
including the equivalent of 2\1/2\ mills per kWh in the rates charged
to contractors in California and Nevada. After the repayment period for
the Central Arizona Project, the equivalent of 2\1/2\ mills per kWh
shall be included in the rate charged to all contractors in Arizona,
Nevada, and California.
O. Consistent with the current P-DP Advancement of Funds contract,
new allottees will be required to reimburse existing contractors for
undepreciated replacement advances, to the extent existing contractors'
allocations are reduced as a result of creating the resource pool. New
allottees who receive an allocation will be required to prepay for
service according to the applicable rate schedule and may participate
in advance funding of WAPA's and Reclamation's operation and
maintenance expenses, consistent with the existing Advancement of Funds
contract, or an updated version of the contract that addresses the
status of P-DP, as appropriate.
P. Deficits for costs incurred during a previous marketing period
will not be passed through to new allottees.

V. Transmission Service

P-DP power will be delivered to designated points of delivery on
WAPA's P-DP transmission system. Contractors must secure all necessary
transmission service to deliver Federal power beyond WAPA's P-DP
transmission system. WAPA may assist new contractors in obtaining
third-party transmission arrangements for delivery of firm power
allocated during the forthcoming marketing period. WAPA will determine
the use of its transmission resources concurrently with further
development of the products and services under this Final 2028 Plan. A
list of designated delivery points will be provided on WAPA's website
at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a>. WAPA
will market surplus transmission capacity on P-DP under WAPA's Open
Access Transmission Tariff and other applicable arrangements.

Call for Resource Pool Applications

The Final 2028 Plan describes how WAPA will market its P-DP power
resources beginning October 1, 2028, through September 30, 2048. As
part of

[[Page 89010]]

the Final 2028 Plan, WAPA is creating a resource pool to offer two
percent of P-DP's marketable power resource to qualified applicants.
WAPA, at its discretion, will allocate the resource pool to selected
applicants that meet the Eligibility Criteria and Allocation Criteria
defined in the Final 2028 Plan. The process by which WAPA will make
final allocation decisions and implement such allocations is outlined
below.

I. Applications for Power

Through this Federal Register notice, WAPA formally requests
applications from qualified preference entities seeking to purchase
power from P-DP from October 1, 2028, through September 30, 2048.
Existing contractors do not need to submit an application. All
applicants must submit applications using the APD form so that WAPA has
a uniform basis upon which to evaluate the applications. To be
considered, applicants must meet the Eligibility Criteria and
Allocation Criteria contained in the Final 2028 Plan and must submit a
completed APD application form by the deadline specified in the DATES
section. To ensure full consideration is given to all applicants, WAPA
will not consider requests for power or applications submitted before
publication of this Federal Register notice or after the deadlines
specified in the DATES section.
A list of designated delivery points will be provided on WAPA's
website at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a>.

II. Applicant Profile Data

The APD form has been approved by the Office of Management and
Budget under Control No. 1910-5136. Applications may be submitted by
mail or email, as described in the ADDRESSES section. APD forms are
available on WAPA's website at <a href="https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/">https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/</a> or by request to Jennifer Henn, Power Marketing
Advisor, Desert Southwest Region, Western Area Power Administration,
(602) 605-2572 or email: <a href="/cdn-cgi/l/email-protection#d8a8bca8f5aabdb5b9aab3bdacb1b6bf98afb9a8b9f6bfb7ae"><span class="__cf_email__" data-cfemail="ef9f8b9fc29d8a828e9d848a9b868188af988e9f8ec1888099">[email&#160;protected]</span></a>. It is the
applicant's responsibility to ensure it submits its application in a
timely manner, so WAPA receives the applications before the date and
time stated in the DATES section.
Applicants must provide all information requested on the APD form,
if available and applicable. Please indicate if the requested
information is not applicable or not available. WAPA may request, in
writing, additional information from any applicant whose application is
deficient. The applicant will have 10 business days from the date on
WAPA's request to provide the information. In the event an applicant
fails to provide all information to WAPA, the application will not be
considered.
The information in the APD form should be answered as if prepared
by the entity/organization seeking the allocation of Federal power.
The information collected under this process will not be part of a
system of records covered by the Privacy Act and may be available under
the Freedom of Information Act. If you are submitting any confidential
or business sensitive information, please mark such information before
submitting your application.

III. Recordkeeping Requirement

If WAPA accepts an application and the applicant receives an
allocation of Federal power, the applicant must keep all information
related to the APD for a period of 3 years after signing a contract for
Federal power. There is no recordkeeping requirement for unsuccessful
applicants who do not receive an allocation of Federal power.
WAPA has obtained Office of Management and Budget Clearance Number
1910-5136 for collection of the above information. The APD form is
collected to enable WAPA to properly perform its function of marketing
limited amounts of Federal hydropower. The data supplied will be used
by WAPA to evaluate who will receive an allocation of Federal power.

IV. Contracting Process

After WAPA has evaluated the applications, WAPA will publish a
notice of Proposed 2028 Allocations in the Federal Register. The public
will have an opportunity to comment on the Proposed 2028 Allocations.
After reviewing the comments, WAPA will publish a notice of Final 2028
Allocations in the Federal Register. WAPA will begin the contracting
process with the new allottees after publishing final allocations in
the Federal Register, tentatively scheduled for summer 2026. WAPA will
offer a pro forma contract for power allocated under the Final 2028
Allocations. Allottees will be required to sign their electric service
contract for WAPA to execute no later than May 31, 2028. Electric
service contracts will be effective upon WAPA's signature, and service
will begin on October 1, 2028, and continue through September 30, 2048.

Legal Authorities

WAPA developed the Final 2028 Plan and Call for Resource Pool
Applications in accordance with its power marketing authorities
pursuant to the Department of Energy Organization Act (42 U.S.C. 7101,
et seq.); the Reclamation Act of June 17, 1902 (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)); and
other acts specifically applicable to P-DP.

Procedural Requirements

Review Under the Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
3501, et seq.), WAPA has received approval from the Office of
Management and Budget for the collection of customer information under
control number 1910-5136.

Environmental Compliance

WAPA has determined this action fits within the following
categorical exclusions listed in appendix B to subpart D of 10 CFR part
1021: B4.1 (Contracts, policies, and marketing and allocation plans for
electric power) and B4.4 (Power marketing services and activities).
Categorically excluded projects and activities do not require
preparation of either an environmental impact statement or an
environmental assessment.\2\ A copy of the categorical exclusion
determination is available on WAPA's website under the 2024 accordion
menu at <a href="http://www.wapa.gov/about-wapa/regions/dsw/environment">www.wapa.gov/about-wapa/regions/dsw/environment</a>.
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\2\ The determination was done in compliance with NEPA (42
U.S.C. 4321 through 4347); the Council on Environmental Quality
Regulations for implementing NEPA (40 CFR parts 1500 through 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.

Signing Authority

This document of the Department of Energy was signed on October 30,
2024, by Tracey A. LeBeau, Administrator, Western Area Power
Administration. 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

[[Page 89011]]

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 6, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2024-26162 Filed 11-8-24; 8:45 am]
BILLING CODE 6450-01-P

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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.