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DEPARTMENT OF ENERGY

Western Area Power Administration

NOTICE: NOTICES

DOCUMENT ACTION: Notice of Order Concerning Non-Firm Power Formula Rate.

SUBJECT CATEGORY: Washoe Project-Rate Order No. WAPA-136

DATES: Rate Schedule SNF-7 will be placed into effect on an interim basis on the first day of the first full billing period beginning on or after August 1, 2008, and will be in effect until FERC confirms, approves, and places the rate schedule in effect on a final basis through July 31, 2013, or until the rate schedule is superseded.

DOCUMENT SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate Order No. WAPA136 and Rate Schedule SNF7, placing a nonfirm power formula rate from the Stampede Powerplant (Stampede) of the Washoe Project of the Western Area Power Administration (Western) into effect on an interim basis. The provisional rate will be in effect until the Federal Energy Regulatory Commission (FERC) confirms, approves, and places it into effect on a final basis or until it is replaced by another rate. The provisional rate will provide sufficient revenue to pay all annual costs, including interest expense, and repayment of power investment within allowable periods.

SUMMARY: Washoe Project-Rate Order No. Wapa-136,

SUPPLEMENTAL INFORMATION

The Deputy Secretary of Energy approved existing Rate Schedule SNF6, a nonfirm power formula rate on August 16, 2005.\1\ Rate Schedule SNF6 is effective from October 1, 2005, through September 30, 2010. Rate schedule SNF6 links the existing non firm power formula rate to a contract with the Sierra Pacific Power Company (Sierra). The index that Western uses in SNF6 to set the ``floor rate'' in SNF6 is linked to the same contract. Western terminated the contract with Sierra on July 31, 2007. As a result, it is necessary for Western to initiate a new rate case to align the non firm power formula rate to future thirdparty contractors. As explained below, the provisional formula rate for Rate Schedule SNF7 will rectify the mismatches to the terminated contract and will continue to calculate the Stampede annual transferred Power Revenue Requirement (PRR) as a cost transferred to the Central Valley Project (CVP). \1\ Rate Order No. WAPA119, August 29, 2005. FERC confirmed and approved the rate schedule on May 4, 2006, under FERC Docket EF05 5161000.

In order to serve project use loads and effectively market the energy from Stampede, Western has contracted with a third party (Contractor) that provides for a Stampede Energy Exchange Account (SEEA). The SEEA is an annual energy exchange account for Stampede energy. Under this contract, the Contractor accepts delivery of all energy generated from Stampede and integrates this generation into its resource portfolio. The monthly calculation of revenue from Stampede energy received by the Contractor is credited into the SEEA at the SEEA Rate. Western can use the SEEA to benefit project use facilities and market energy from Stampede to CVP preference customers.

From 1994 to 2007, Sierra, through Contract 94SAO00010 (Contract 00010), has served as the Contractor integrating Stampede generation into its resource portfolio and serving station service and project use loads in Sierra's service territory. SNF6 links the current nonfirm power formula rate to Contract 00010 and the management of the SEEA. In addition, the index that was used in Rate Schedule SNF6 to set the floor rate was contained in Contract 00010.

On May 10, 2007, the Truckee Donner Public Utility District (Truckee Donner) and the City of Fallon (Fallon), two preference customers located within Sierra's Balancing Authority, entered into a contract with Western that replaces Contract 00010. This new contract with Truckee Donner and Fallon (TDF), Contract 07SNR01026 (Contract 01026), uses a market index methodology as the basis for valuing Stampede generation. The effective date of Contract 01026 was August 1, 2007. The change in contractors and the ``floor rate'' definition makes it necessary for Western to initiate a new rate adjustment to update the nonfirm power formula rate. In this new rate design, Western is using a general term of ``Contractor'' in the development of the formula rate and resulting rate schedule in order to provide flexibility in the event the Contractor changes in the future. [[Page 42566]]

The existing nonfirm power Rate Schedule set the SEEA rate (previously known as the floor rate in SNF6) at 17.89 mills per kilowatthour (mills/kWh). Western estimates the proposed formula rate for nonfirm power for the Washoe Project in Rate Schedule SNF7 will result in an average SEEA Rate for the rate period of 47.85 mills/kWh. This will result in an increase of 167 percent when compared with the existing Washoe Project nonfirm power SEEA Rate under Rate Schedule SNF6.

By Delegation Order No. 00037.00, effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates to Western's Administrator, (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary of Energy, and (3) the authority to confirm, approve, and place into effect on a final basis, to remand or to disapprove such rates to FERC. DOE published its existing procedures for public participation in power rate adjustments on September 18, 1985 (10 CFR Part 903 (2008)).

Pursuant to paragraph 1.5 of Delegation Order No. 00037.00, Western's Administrator approved the power formula rate for the sale of shortterm, nonfirm power to TDF effective August 1, 2007. The Administrator's approval provided interim rate authority between the effective date of the new contract, August 1, 2007, and the effective date of the interim rate, August 1, 2008. The Administrator's approval will expire on July 31, 2008.

Under Delegation Order Nos. 00037.00 and 00001.00C, 10 CFR Part 903, and 18 CFR Part 300, I hereby confirm, approve, and place Rate Order No. WAPA136, the Washoe nonfirm power formula rate into effect on an interim basis. The new Rate Schedule SNF7 will be promptly submitted to FERC for confirmation and approval on a final basis.

Dated: July 14, 2008.
Jeffrey F. Kupfer,
Acting Deputy Secretary.

Department of Energy Deputy Secretary

In the matter of: Western Area Power Administration, Rate Adjustment for the Washoe Project, Stampede Division NonFirm Power Formula Rate; Rate Order No. WAPA136
Order Confirming, Approving, and Placing the Washoe Project, Stampede Division, NonFirm Power Formula Rate Into Effect on an Interim Basis

This rate was established in accordance with section 302 of the Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This Act transferred to and vested in the Secretary of Energy the power marketing functions of the Secretary of the Department of the Interior under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent laws, particularly section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), and other Acts that specifically apply to the project involved.

By Delegation Order No. 00037.00, effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates to Western Area Power Administration's (Western) Administrator, (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary of Energy, and (3) the authority to confirm, approve, and place into effect on a final basis, to remand or to disapprove such rates to FERC. DOE published its existing procedures for public participation in power rate adjustments (10 CFR Part 903) on September 18, 1985.

Acronyms and Definitions

As used in this Rate Order, the following acronyms and definitions apply:

2004 Power Marketing Plan: The 2004 Power Marketing Plan (64 FR 34417) effective January 1, 2005.

Administrator: The Administrator of the Western Area Power Administration.

Capacity: The electric capability of a generator, transformer, transmission circuit, or other equipment expressed in kilowatts.

Composite Rate: The rate for nonfirm power which is the total annual revenue requirement for capacity and energy divided by the total annual energy sales. It is expressed as mills/kWh and used for comparison purposes.

Contractor: The third party(ies) who, under contract with Western, are responsible for (1) managing the Stampede Energy Exchange Account (SEEA) (2) integrating Stampede generation into their resource portfolio, and (3) ensuring that station service and project use loads are served for the Washoe Project.

Customer: An entity with a contract that receives service from Western's Sierra Nevada Customer Service Region (SNR).

FOR FURTHER INFORMATION CONTACT Mr. Thomas Boyko, Regional Manager, Sierra Nevada Customer Service Region, Western Area Power
Administration, 114 Parkshore Drive, Folsom, CA 956304710, (916) 353 4418 or Ms. Sonja A. Anderson, Power Marketing Manager, Sierra Nevada Customer Service Region, Western Area Power Administration, 114 Parkshore Drive, Folsom, CA 956304710, (916) 3534421, email sanderso@wapa.gov.