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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF ENERGY

Western Area Power Administration

Post-2005 Resource Pool, Pick-Sloan Missouri Basin Program, Eastern Division

AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of proposed procedures and call for applications.
SUMMARY: Western Area Power Administration (Western), Upper Great Plains Customer Service Region, a Federal power marketing agency of the Department of Energy (DOE), is publishing this notice to seek comments on proposed procedures and call for applications from preference entities interested in an allocation of Federal power. The Energy Planning and Management Program (Program) provides for establishing project-specific resource pools and allocating power from these pools to new preference customers and other purposes as determined by Western. Western, in accordance with the Program, proposes allocation procedures for comment and consideration for entities interested in a Federal power resource pool incrementof up to 1 percent (approximately 20 megawatts) of the long-term marketable resource of the Pick-Sloan Missouri Basin Program, Eastern Division (P-SMBP-ED) that may become available January 1, 2006. Preference entities that wish to apply for an allocation of power from Western's Upper Great Plains Customer Service Region must submit formal applications as outlined below.
DATES: The public information and comment forum dates are:

1. April 8, 2003, 1 p.m. to 5 p.m., Billings, Montana.

2. April 9, 2003, 1 p.m. to 5 p.m., Moorhead, Minnesota.

3. April 10, 2003, 9 a.m. to 1 p.m., Sioux City, Iowa.

ADDRESSES: The public information and comment forum locations are:

1. Billings--Holiday Inn Billings Plaza Hotel and Convention Center, 5500 Midland Road, Billings, MT 59101

2. Moorhead--Courtyard by Marriott, Moorhead Area Conference Center, 1080 28th Avenue South, Moorhead, MN 56560

3. Sioux City--Hilton Sioux City, 707 Fourth Street, Sioux City, IA 51101-1701

FOR FURTHER INFORMATION CONTACT: Jon R. Horst, Public Utilities Specialist, Upper Great Plains Customer Service Region, Western Area Power Administration, 2900 4th Avenue North, Billings, MT 59101-1266, telephone (406) 247-7444, e-mailhorst@wapa.gov.

All documents developed or retained by Western in developing this Post-2005 Resource Pool will be available for inspection and copying at the Upper Great Plains Customer Service Region in Billings, Montana. Public comments will be available for viewing athttp://www.wapa.gov/ugp/contracts/post2005/comments.htmafter the close of the comment period.

SUPPLEMENTARY INFORMATION:

On October 20, 1995, Western published the Final Program Rule. The Final Rule became effective on November 20, 1995. Subpart C-Power Marketing Initiative of the Program, Final Rule, 10 CFR part 905, provides for project-specific resource pools and allocations of power from these pools to eligible new customers and/or for other appropriate purposes as determined by Western. The additional resource pool increments shall be established by pro rata withdrawals, on 2 years' notice, from then-existing customers. Specifically, 10 CFR section 905.32 (b) provides:

At two 5-year intervals after the effective date of the extension to existing customers, Western shall create a project-specific resource pool increment of up to 1 percent of the long-term marketable resource under contract at the time. The size of the additional resource pool increment shall be determined by Western based on consideration of the actual fair-share needs of eligible new customers and other appropriate purposes.

On April 22, 2002, Western published a Notice for Letters of Interest in theFederal Register(67 FR 19571) in which Western solicited and received Letters of Interest regarding a resource pool of up to 1 percent (approximately 20 megawatts) of the marketable resource that may become available January 1, 2006, for new customers and/or other appropriate purposes pursuant to the Program. Traditionally, Western has marketed allocations of firm power to be apportioned to eligible new preference entities in such a manner as to encourage the most widespread use thereof, in accordance with Federal Reclamation Law.

Letters of Interest

Western received 65 Letters of Interest regarding the up to 1 percent resource pool. The letters were evaluated and categorized into three main areas of interest. Sixteen letters were from entities interested in becoming a new customer. Eleven letters were from entities that expressed an interest in other appropriate purposes such as: increasing current customer allocations, adjusting past allocations, and supporting renewable resources. Thirty-eight of the letters were from entities that recommended Western forego implementation of the proposed resource pool. The 38 letters also recommended if Western proceeds with the proposed resource pool, the pool should not be made available for other appropriate purposes.

Response to Letters of Interest

Western has historically marketed power from resource pools to new preference customers through marketing plans and initiatives. Western recognizes the interest expressed from 16 potential new customers in an allocation from the P-SMBP-ED. Western encourages the new customer interest that lends support to Western's mission of allocating low-cost hydropower in such a way as to promote the most widespread use thereof.

Western received various Letters of Interest regarding the need for other appropriate purposes. Several letters were received from entities desiring adjustments or increases to their current allocations. Specifically, two letters were received in support of adjusting two separate Tribal allocations from the P-SMBP-ED Post-2000 Resource Pool (62 FR 11174) (Post-2000 Resource Pool). Also, several letters were received from municipal utilities in support of increasing their current allocations. Historically, Western has not changed or increased allocations within the P-SMBP-ED that were established in past marketing initiatives. Western recognizes that customer loads continue to grow and change and increases in individual allocations would be beneficial. However, if Western were to entertain requests for increases or adjustments to allocations, all customers would need to be afforded the opportunity to submit new applications. If this were to occur, it is likely Western would receive significant modification requests, which would be extremely difficult to substantiate and likely not be supportable with the power available from this resource pool. Any significant modifications could result in a newmarketing plan which is not the intent of the Program. Therefore, Western is not proposing to adjust or increase current customer allocations.

Other comments received suggested supporting renewable resources as an other appropriate purpose for the resource pool. Comments suggested that any commitment of the resource pool to support renewable resources through allocations should be subject to existing laws, regulations, and guidelines set forth in previous marketing initiatives, specifically the requirement that any applicant must meet preference status. Western agrees that any use of the resource pool must comply with existing laws, regulations, and guidelines, and must be made to preference entities. Western has allocated power to the majority of eligible preference entities within the P-SMBP-ED marketing area. Should a renewable resource program be developed using power from this resource pool, Western would be withdrawing power from entities across the region to develop a very small renewable program available to these same entities. Western believes the best manner to support renewable resources with this power is to allow existing customers to retain the power that may be available after allocating to new customers. This will allow all preference entities across the marketing area to leverage this power and use existing allocations to support renewable resources if they so choose. Western recognizes that many customers are already demonstrating support of renewable resources through their investments in various wind projects across the P-SMBP-ED marketing area near Moorhead, Minnesota; Lincoln, Nebraska; Grand Forks, Minot, and Valley City, North Dakota; and also in Chamberlain and Howard, South Dakota. Wind projects are being developed and implemented by Western's customers regardless of any potential new allocation from this resource pool.

Use of the Post-2005 Resource Pool

Based on examination of the Letters of Interest, Western has determined the resource pool should be made available to new preference customers and is not proposing to use a share of the resource pool for other appropriate purposes. Allocations to new preference customers shall be made in accordance with the P-SMBP-ED Final Post-1985 Marketing Plan (45 FR 71860) (Post-1985 Marketing Plan) and the Program. Western intends to carry forward the key principles and criteria that were established in the Post-2000 Resource Pool, except as modified herein.

The Proposed Post-2005 Resource Pool Allocation Procedures

These proposed procedures for the P-SMBP-ED address (1) eligibility criteria; (2) how Western plans to allocate the resource pool in accordance with the Program to eligible applicants as new preference customers and not for other appropriate purposes; and (3) the terms and conditions under which Western will sell the power allocated.

I. Amount of Pool Resources

Western proposes to allocate up to 1 percent (approximately 20 megawatts) of the P-SMBP-ED long-term firm hydroelectric resource available as of January 1, 2006, as firm power to eligible new preference customers. Firm power means capacity and associated energy allocated by Western and subject to the terms and conditions specified in the Western electric service contract.

II. General Eligibility Criteria

Western proposes to apply the following general eligibility criteria to applicants seeking an allocation of firm power under the proposed Post-2005 Resource Pool Allocation Procedures.

A. Qualified applicants must be preference entities as defined by section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), as amended and supplemented.

B. Qualified applicants must be located within the currently established P-SMBP-ED marketing area.

C. Qualified applicants must not be currently receiving benefits, directly or indirectly, from a current P-SMBP-ED firm power allocation. Qualified Native American applicants, who did not receive an allocation from the Post-2000 Resource Pool, are not subject to this requirement.

D. Qualified utility and non-utility applicants must be able to use the firm power directly or be able to sell it directly to retail customers.

E. Qualified utility applicants that desire to purchase power from Western for resale to consumers, including cooperatives, municipalities, public utility districts, and public power districts must have met utility status by January 1, 2003. Utility status means the entity has responsibility to meet load growth, has a distribution system, and is ready, willing, and able to purchase Federal power from Western on a wholesale basis.

F. Qualified Native American applicants must be a Native American tribe as defined in the Indian Self Determination Act of 1975, 25 U.S.C. 450b, as amended.

III. General Allocation Criteria

Western proposes to apply the following general allocation criteria to applicants seeking an allocation of firm power under the proposed Post-2005 Resource Pool Allocation Procedures.

A. Allocations of firm power will be made in amounts as determined solely by Western in exercise of its discretion under Federal Reclamation Law.

B. An allottee will have the right to purchase firm power only upon the execution of an electric service contract between Western and the allottee, and satisfaction of all conditions in that contract.

C. Firm power allocated under these procedures will be available only to new preference customers in the existing P-SMBP-ED marketing area. This marketing area includes Montana (east of the Continental Divide), North Dakota, South Dakota, and specific areas in western Iowa, western Minnesota and eastern Nebraska. The marketing area of the P-SMBP-ED is Montana east of the Continental Divide, all of North and South Dakota, Nebraska east of the 101° meridian, Iowa west of the 941/2° meridian, and Minnesota west of a line on the 941/2° meridian from the southern boundary of the state to the 46° parallel and thence northwesterly to the northern boundary of the state at the 961/2° meridian.

D. Allocations made to Native American tribes will be based on the actual load experienced in calendar year 2002. Western has the right to use estimated load values should actual load data not be available. Western will adjust inconsistent estimates during the allocation process.

E. Allocations made to qualified utility and non-utility applicants will be based on the actual loads experienced in calendar year 2002. Western will apply the Post-1985 Marketing Plan and the Program criteria to these loads. Western will carry forward key principles and criteria established in the Post-2000 Resource Pool, except as modified herein.

F. Energy provided with firm power will be based upon the customer's monthly system load pattern.

G. Any electric service contract offered to a new customer shall be executed by the customer within 6 months of a contract offer by Western, unless otherwise agreed to in writing by Western.

H. The resource pool will be dissolved subsequent to the closing date for executing firm power contracts. Firmpower not under contract will be used as determined by Western.

I. The minimum allocation shall be 100 kilowatts (kW).

J. The maximum allocation for qualified utility and non-utility applicants shall be 5,000 kilowatts (kW).

K. Contract rates of delivery shall be subject to adjustment in the future as provided for in the Program.

L. If unanticipated obstacles to the delivery of hydropower benefits to Native American tribes arise, Western retains the right to provide the economic benefits of its resources directly to the tribes.

IV. General Contract Principles

Western proposes to apply the following general contract principles to all applicants receiving an allocation of firm power under the proposed Post-2005 Resource Pool Allocation Procedures.

A. Western shall reserve the right to reduce a customer's summer season contract rate of delivery by up to 5 percent for new project pumping requirements, by giving a minimum of 5 years' written notice in advance of such action.

B. Western, at its discretion and sole determination, shall reserve the right to adjust the contract rate of delivery on 5 years' written notice in response to changes in hydrology and river operations. Any such adjustments shall only take place after a public process by Western.

C. Each allottee is ultimately responsible for obtaining its own third-party delivery arrangements. Western may assist the allottee in obtaining third-party transmission arrangements for delivery of firm power allocated under these procedures to new customers.

D. Contracts entered into under the Post-2005 Resource Pool Allocation Procedures shall provide for Western to furnish firm electric service effective from January 1, 2006, through December 31, 2020.

E. Contracts entered into as a result of the proposed procedures shall incorporate Western's standard provisions for power sales contracts, integrated resource planning, and the general power contract provisions.

F. Contracts entered into will include provisions for a reduction of up to 1 percent of the current contracted rate of delivery effective January 1, 2011, in accordance with the Program.

V. Applications for Firm Power

This notice formally requests applications from qualified entities wishing to purchase power from the Upper Great Plains Customer Service Region. Applicant Profile Data (APD) is requested so Western will have a uniform basis upon which to evaluate the applications. To be considered, applicants must submit an application to the Upper Great Plains Customer Service Region as requested below. To ensure that full consideration is given to all applicants, Western will not consider applications submitted before publication of this notice or after the deadlines specified in the Dates Section. Applications are available upon request or may be accessed athttp://www.wapa.gov/ugp/contracts/post2005/APD.htm.Applicants are encouraged to use the application form provided at the above Web site.

A. Applicant Profile Data Application

The content and format of the APD are outlined below. Requested information should be submitted in the sequence listed. The applicant must provide all requested information or the most reasonable available estimate. The applicant should note any requested information that is not applicable. Western is not responsible for errors in data or missing pages. All items of information in the APD should be answered as if prepared by the organization seeking the allocation. The APD shall consist of the following:

1. Applicant

a. Applicant's (entity requesting a new allocation) name and address.

b. Person(s) representing applicant: Please provide the name, title, address, telephone and fax number, and e-mail address of such person(s).

c. Type of organization: For example, Federal or state agency, irrigation district, municipal, rural, or industrial user, municipality, Native American tribe, public utility district, or rural electric cooperative. Please provide a brief description of the organization that will interact with Western on contract and billing matters and whether the organization owns and operates its own electric utility system.

d. Parent organization of applicant, if any.

e. Name of members, if any.

f. Applicable law under which the organization was established.

g. Applicant's geographic service area: if available, submit a map of the service area, and indicate the date prepared.

2. Loads

a. Utility and Non-utility Applicants:

i. If applicable, number and type of customers served;e.g., residential, commercial, industrial, military base, agricultural.

ii. The actual monthly maximum demand (in kilowatts) and energy use (in kilowatt-hours) experienced in calendar year 2002.

b. Native American Tribe Applicants:

i. If applicable, number and type of customers served;e.g., residential, commercial, industrial, military base, agricultural.

ii. The actual monthly maximum demand (in kilowatts) and energy use (in kilowatt-hours) experienced in calendar year 2002.

iii. If actual demand and energy data is not available, provide estimated monthly demand (in kilowatts) with a description of the method and basis for this estimated demand.

3. Resources

a. A list of current power supplies, including the applicant's own generation and purchases from others. For each supply, provide capacity and location.

b. Status of power supply contract(s), including a contract termination date. Indicate whether power supply is on a firm basis or some other type of arrangement.

4. Transmission

a. Point(s) of delivery: Provide the preferred point(s) of delivery on Western's system or a third-party's system and the required service voltage.

b. Transmission arrangements: Describe the transmission arrangements necessary to deliver firm power to the requested points of delivery. Provide a single-line drawing of applicant's system, if one is available.

5. Other Information: The applicant may provide any other information pertinent to receiving an allocation.

6. Signature: The signature and title of an appropriate official who is able to attest to the validity of the APD and who is authorized to submit the request for allocation is required.

B. Western's Consideration of Applications

1. When Western receives the APD, Western will verify the general eligibility criteria set forth in Section II have been met, and that all items requested in the APD have been provided.

a. Western will request in writing additional information from any applicant whose APD is determined to be deficient. The applicant shall have 15 days from the date on Western's letter of request to provide the information.

b. If Western determines the applicant does not meet the general eligibilitycriteria, Western will send a letter explaining why the applicant did not qualify.

c. If the applicant has met the eligibility criteria, Western will determine the amount of firm power to be allocated pursuant to the general allocation criteria set forth in Section III. Western will send a draft contract to the applicant for review which identifies the terms and conditions of the offer and the amount of firm power allocated to the applicant.

2. All firm power shall be allocated according to the procedures in the general allocation criteria set forth in Section III.

3. Western reserves the right to determine the amount of firm power to allocate to an applicant, as justified by the applicant in its APD.

VI. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601,et seq., requires Federal agencies to perform a regulatory flexibility analysis if a final rule is likely to have a significant economic impact on a substantial number of small entities and there is a legal requirement to issue a general notice of proposed rulemaking. Western has determined this action does not require a regulatory flexibility analysis since it is a rulemaking of particular applicability involving rates or services applicable to public property.

VII. Small Business Regulatory Enforcement Fairness Act

Western determined this rule is exempt from congressional notification requirements under 5 U.S.C. 801 because the action is a rulemaking of particular applicability relating to rates or services and involves matters of procedure.

VIII. Determination 12866

DOE has determined this is not a significant regulatory action because it does not meet the criteria of Executive Order 12866, 58 FR 51735. Western has an exemption from centralized regulatory review under Executive Order 12866; accordingly, this notice requires no clearance by the Office of Management and Budget.

IX. Environmental Compliance

Western has completed an environmental impact statement on the Program, pursuant to the National Environmental Policy Act of 1969 (NEPA). The Record of Decision was published in 60 FR 53181, October 12, 1995. Western's NEPA review assured all environmental effects related to these actions have been analyzed.

Dated: February 13, 2003. Michael S. Hacskaylo, Administrator.