Subject: Western Area Colorado Missouri Control Area Energy
[Federal Register: June 11, 2002 (Volume 67, Number 112)]
[Notices]
[Page 39970-39978]
>From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn02-67]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Western Area Colorado Missouri Control Area Energy Imbalance
Service--Rate Order No. WAPA-97
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of rate order.
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SUMMARY: The Secretary of the Department of Energy (DOE) confirmed and
approved Rate Order No. WAPA-97 and Rate Schedule L-AS4, which placed
into effect the provisional formula rate for Energy Imbalance Service
for the Western Area Colorado Missouri control area (WACM). The
provisional formula rate will remain 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 formula rate will provide sufficient revenue to pay all
assigned costs.
DATES: This provisional formula rate will become effective on an
interim basis on the first day of the first full billing period
beginning on or after July 1, 2002. It will remain in effect pending
FERC's approval of it or a substitute formula rate on a final basis
through March 31, 2003, or until superseded.
FOR FURTHER INFORMATION CONTACT: Mr. Daniel T. Payton, Rates Manager,
Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7442, e-mail dpayton@wapa.gov.
SUPPLEMENTARY INFORMATION: The Deputy Secretary approved the existing
Rate Schedule L-AS4 for Energy Imbalance Service on March 23, 1998
(Rate Order No. WAPA-80, 63 FR 16778, April 6, 1998). FERC confirmed
and approved the formula rate schedules on July 21, 1998, under FERC
Docket No. EF98-5181-000 (84 FERC 61,066). The existing formula rate
became effective on April 1, 1998, and is approved through March 31,
2003. Rate Schedule L-AS4 will be amended as necessary to incorporate
the terms of this provisional formula rate, which is needed to
adequately recover the cost of energy purchased when entities
conducting business within WACM are unable to match their resources and
obligations accurately.
The existing rate schedule provides for the ability to charge 100
mills per kilowatt-hour for under deliveries
[[Page 39971]]
occurring more than five times per month outside of a bandwidth of
± 1.5 percent. For over deliveries outside the bandwidth,
the current rate schedule provides for the transmission customer
(customer) to be credited up to 50 percent of the regional average
monthly price for non-firm purchases. Within the bandwidth, the
customer and Western Area Power Administration (Western) exchange
energy.
There has been a great deal of price volatility over the last year,
with on-peak prices ranging from a high of $537 per megawatthour (MWh),
to a low of $23 per MWh. WACM, as a control area operator, must balance
resources against obligations. As such, in times of deficit energy,
WACM must purchase energy to keep the control area in balance. The
existing 100-mill charge is inadequate to repay the costs of balancing
energy in a high-cost market. At other times, it may be excessive. This
proposed pass-through cost methodology will result in an equitable
recovery of expenses.
Any change to Energy Imbalance Service will be as set forth in a
revision to this schedule pursuant to applicable Federal laws,
regulations, and policies and made part of the applicable service
agreement.
Provisional Formula Rate for Energy Imbalance Service
The provisional formula rate for Energy Imbalance Service is
designed to recover purchase power costs made to balance energy
requirements within WACM. This provisional formula rate establishes a
bandwidth of ± 5 percent (10 percent total bandwidth), with
a minimum deviation of 2 MW.
Within the bandwidth, the gross energy imbalance for each
applicable customer within WACM shall be totaled and netted to
determine an aggregate energy imbalance for WACM. For both over and
under deliveries, the customer will receive a credit or charge equal to
the weighted average real-time sale or purchase price.
Outside the bandwidth, each customer's energy imbalance will be
calculated separately. For over deliveries, the customer will be
credited 50 percent of the weighted average real-time sale price. For
under deliveries, the customer will be charged 150 percent of the
weighted average real-time purchase price.
Customers will be granted bandwidth expansions in certain cases for
contributions to frequency bias, large thermal resources, and loss of a
physical resource. The conditions for bandwidth expansion in these
cases are outlined in-depth in the rate order.
This provisional formula rate is developed pursuant to the
Department of Energy Organization Act (42 U.S.C. 7101-7352), through
which the power marketing functions of the Secretary of the Interior
and the Bureau of Reclamation under the Reclamation Act of 1902 (ch.
1093, 32 Stat. 388), as amended and supplemented by subsequent
enactments, particularly section 9(c) of the Reclamation Project Act of
1939 (43 U.S.C. 485h(c)), and other acts that specifically apply to the
project involved, were transferred to and vested in the Secretary of
Energy.
By Delegation Order No. 00-0037.00 published December 6, 2001, the
Secretary delegated: (1) The authority to develop long-term power and
transmission rates on a non-exclusive basis to Western's Administrator;
(2) the authority to confirm, approve, and place such rates into effect
on an interim basis to the Deputy Secretary; and (3) the authority to
confirm, approve, and place into effect on a final basis, to remand, or
to disapprove such rates to the Federal Energy Regulatory Commission
(FERC).
The Procedures for Public Participation in Power and Transmission
Rate Adjustments and Extensions, 10 CFR part 903, effective September
18, 1985 (50 FR 37835), have been followed by Western in developing
this provisional formula rate.
Rate Order No. WAPA-97, confirming, approving, and placing the
proposed WACM Energy Imbalance Service rate into effect on an interim
basis, is issued. New Rate Schedule L-AS4 will be submitted promptly to
FERC for confirmation and approval on a final basis.
Dated: May 30, 2002.
Spencer Abraham,
Secretary.
Department of Energy
Secretary
[Rate Order No. WAPA-97]
In the Matter of: Western Area Power Administration Rate Adjustment
for Western Area; Colorado Missouri Energy Imbalance Service; Order
Confirming, Approving, and Placing the Western Area Colorado Missouri
Control Area Energy Imbalance Service Rate Into Effect on an Interim
Basis.
This Energy Imbalance Service formula rate is established pursuant
to section 302 of the Department of Energy (DOE) Organization Act, 42
U.S.C. 7101-7352, through which the power marketing functions of the
Secretary of the Interior and the Bureau of Reclamation (Reclamation)
under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended
and supplemented by subsequent enactments, primarily section 9(c) of
the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), and other acts
specifically applicable to the project involved, were transferred to
and vested in the Secretary of Energy (Secretary).
By Delegation Order No. 00-037.00 published December 6, 2001, the
Secretary delegated: (1) The authority to develop long-term power and
transmission rates on a non-exclusive basis to Western's Administrator,
(2) the authority to confirm, approve, and place such rates into effect
on an interim basis to the Deputy Secretary; and (3) the authority to
confirm, approve, and place into effect on a final basis, to remand, or
to disapprove such rates to the Federal Energy Regulatory Commission
(FERC).
Existing DOE procedures for public participation in power rate
adjustments are found in 10 CFR part 903. Procedures for approving
power marketing administration rates by FERC are found in 18 CFR part
300.
Acronyms/Terms and Definitions
Acronym/Term and Definition
ACE--Area Control Error.
AGC--Automatic Generation Control; a closed loop control system
where generation normally responds to errors in energy balance.
DOE--Department of Energy.
Energy Imbalance Service--Service provided when there is a
difference between a customer's resources and obligations within the
control area.
FERC--Federal Energy Regulatory Commission.
FRR--Frequency Responsive Reserves
LAP--Loveland Area Projects.
LSE--Load-Serving Entity.
minor rate adjustment A rate adjustment that results in an annual
revenue increase of less than 1 percent.
MW--Megawatt; unit of power equal to 1,000 kilowatts.
MWh--Megawatthour; energy delivered when 1 MW is supplied over 1
hour.
MVAR--Megavar, equal to 1,000 kilovolt-amperes reactive (VAR).
MV-90--WACM/RMR's metering database.
NERC--North America Electric Reliability Council (or its
successors).
NITS--Network Integration Transmission Service.
OATT--Open Access Transmission Tariff.
Obligations--Delivery of energy in the name of the LSE or PSE to
physical metered delivery points (load) or to load of another entity
by way of scheduled sales from inside or outside of WACM.
±%Bandwidth--A percentage of metered load as measured
directly at the loads or calculated by boundary metering.
PSE--Purchasing/Selling Entity.
Rate Order No. WAPA-80--Rate Order for Loveland Area Projects
Transmission and Ancillary Services, Effective April 1, 1998.
[[Page 39972]]
Rate Schedule L-AS4--Rate Schedule filed within Rate Order No. WAPA-
80 for Energy Imbalance Service.
real-time--Purchase or sale made for immediate next hour or hours.
Resources--Receipt of energy, either from customer rights to
physical metered generation within WACM or scheduled purchase
traceable to another entity's generation from inside or outside
WACM.
RMR--Rocky Mountain Customer Service Region.
RMRG--Rocky Mountain Reserve Group.
WACM--Western Area Colorado Missouri control area.
WECC--Western Electric Coordinating Council, Western Systems
Coordinating Council successor agency.
Western--Western Area Power Administration, U.S. Department of
Energy.
Effective Date
This provisional formula rate will become effective on an interim
basis on the first day of the first full billing period beginning on or
after July 1, 2002, and will be in effect pending FERC's approval of it
or a substitute formula rate on a final basis through March 31, 2003,
or until superseded. This formula rate will be applied under existing
transmission contracts, Western's OATT, and any subsequent agreements
required. It will replace Schedule L-AS4, Energy Imbalance Service,
updated October 1, 2001.
Public Notice and Comment
The Procedures for Public Participation in Power and Transmission
Rate Adjustments and Extensions, 10 CFR part 903, have been followed by
Western in the development of this formula rate and schedule. The
provisional formula rate for Energy Imbalance Service represents an
increase of less than 1 percent in total LAP revenues; therefore, it is
a minor rate adjustment as defined at 10 CFR part 903.2(f)(1). The
distinction between a minor and a major rate adjustment is used only to
determine the public procedures for the rate adjustment.
The following is a summary of the steps Western took to ensure
involvement of interested parties in the rate adjustment process:
1. On December 20, 2001, RMR published a Notice of Proposed Rate in
the Federal Register for revision of existing Energy Imbalance Service
Rate Schedule L-AS4. The public comment period was to end January 31,
2002.
2. An informal public information meeting was held on January 15,
2002. Fifteen entities were represented at the meeting.
3. Based upon written comments received prior to January 31, 2002,
the end of the public comment period, RMR extended the comment period
to February 28, 2002. At the time of this extension, RMR also delayed
implementation of Energy Imbalance Service to May 1, 2002.
4. In response to requests at the January 15 information meeting,
RMR electronically transmitted trial bills to customers for Energy
Imbalance Service on February 15, 2002, to provide customers an
opportunity to view Energy Imbalance Service calculations and pricing.
5. Western received written comments from seven parties during the
comment period.
6. On March 29, 2002, Western sent a letter to customers stating
that the scheduled implementation date for Energy Imbalance Service had
been changed to June 1, 2002 (implementation has subsequently been
moved to July 1, 2002).
The following organizations submitted written comments:
Basin Electric Power Cooperative, Inc.
Black Hills Power & Light
Colorado Springs Utilities
City of Torrington, Wyoming
Flathead Electric Cooperative, Inc.
Nebraska Municipal Power Pool (Municipal Energy Agency of Nebraska)
Tri-State Generation and Transmission Association, Inc.
Description of WACM
WACM is operated by RMR and has within its borders Federal
generating resources from the Pick-Sloan Missouri Basin Program,
Fryingpan-Arkansas Project, and the Colorado River Storage Project.
There are also large thermal generators within WACM that are not
Federal resources, such as the Laramie River Station and Craig
Powerplant, operated by Basin Electric Power Cooperative, Inc. and Tri-
State Generation and Transmission Association, Inc., respectively. A
number of smaller thermal units also exist within WACM.
The Federal generation is currently the only generation resource
that responds to energy imbalances within WACM. The thermal generators
located within WACM are either not on AGC, or are operated to an ACE
signal that responds only to their sub-control area.
WACM has interconnections with seven other control areas: Nebraska
Public Power District, Western Area Upper Missouri East, Western Area
Upper Missouri West, Public Service Company of Colorado, Public Service
Company of New Mexico, Pacificorp East, and Western Area Lower
Colorado.
The peak load within WACM is about 2,900 MW with approximately
4,700 MW of generation, 1,000 MW of which is Federal generation.
Energy Imbalance Service
WACM provides Energy Imbalance Service when there is a difference
between a customer's resources and obligations. Energy Imbalance is
calculated as resources minus obligations (adjusted for transmission
and transformer losses) for any combination of scheduled transfers/
transactions integrated over each hour.
Resources are defined as actual generation plus scheduled
resources, imports, or receipts. Obligations are defined as actual
deliveries plus scheduled obligations, exports or deliveries plus
losses not accounted for separately. Some deviation from zero is
expected, and a bandwidth based on metered load is established to
accommodate reasonable variations from an exact match. Deviation beyond
an acceptable bandwidth is not considered prudent utility practice.
Through-schedules, imports, and exports will not be included in the
determination of the bandwidth.
Balancing energy is provided by WACM, most of which must be
purchased in the real-time market.
Existing Rate Schedule and Need for Action
The rate adjustment is needed to adequately recover the cost of
energy purchased when entities conducting business within WACM are
unable to match their resources and obligations.
Rate Schedule L-AS4 currently provides for a charge of 100 mills
per kilowatt-hour for under deliveries occurring more than five times
per month outside a bandwidth of ±1.5 percent. For over
deliveries outside the bandwidth, the current rate schedule provides
for a credit of 50 percent of the regional weighted average monthly
price for non-firm purchases. Within the bandwidth, energy is exchanged
between the customer and Western.
There has been a great deal of price volatility over the last year,
with on-peak prices ranging from a high of $537 per MWh, to a low of
$23 per MWh. The existing 100-mill charge is inadequate to repay the
expenses of balancing energy in a high-cost market. At other times, 100
mills may be excessive. The provisional formula rate for Energy
Imbalance Service uses a cost-based methodology, which will result in
an equitable assessment of expenses to customers and WACM.
[[Page 39973]]
Applicability of Energy Imbalance Service
Energy Imbalance Service will apply to any entity that falls into
one or more of the following categories:
1. Those serving load internal to WACM.
2. Those operating or holding scheduling rights to generators
within WACM.
3. Those receiving scheduled resources as a buyer whose load is
within WACM at a point where the buyer is the PSE at that Point of
Delivery (POD).
4. Those delivering scheduled obligations as a seller whose
resource is within WACM from a point where the seller is the PSE at
that Point of Receipt (POR).
Energy Imbalance Bandwidth
WACM is establishing a bandwidth of ±5 percent (based on
customer load) with a minimum deviation of 2 MW, applied hourly to any
energy imbalance that occurs as a result of a difference in the
customers' resources and obligations. WACM has increased the bandwidth
from ±1.5 percent to ±5 percent to accommodate
the widest range of imbalanced energy in a non-punitive manner. The 2
MW minimum allows for situations in which entities with loads less than
40 MW have a wider bandwidth than ±5 percent; e.g., using
the ±5 percent, a load of 30 MW would normally have a
bandwidth of ±1.5 MW, but the minimum bandwidth of 2 MW
results in an increased bandwidth of ±7 percent. This
accommodation allows the smaller customer more flexibility to deal with
scheduling requirements (in whole megawatts) and forecasting
difficulties.
In situations where a customer has elected to functionally
integrate its load with another customer's and provide one schedule,
that combined schedule will be treated as one entity for purposes of
bandwidth calculation. The bandwidth will be determined by the sum of
the load(s), not the sum of the bandwidths. The 2 MW minimum will only
apply once in this scenario.
Formula Rate
All Energy Imbalance Service provided, both inside and outside the
bandwidth, will be settled financially, accounted for hourly at the end
of each month.
There are four scenarios for Energy Imbalance Service, each of
which receive a specific pricing calculation. They are: (1) Over
delivery within the bandwidth; (2) under delivery within the bandwidth;
(3) over delivery outside the bandwidth; and (4) under delivery outside
the bandwidth.
Within the bandwidth, the gross energy imbalance for each
applicable entity within WACM shall be totaled and netted to determine
an aggregate energy imbalance for WACM. The sign of the aggregate
energy imbalance will determine whether sale or purchase pricing will
be used (surplus conditions will use sale pricing and deficit
conditions will use purchase pricing). One-hundred percent of the real-
time weighted average sale or purchase price is charged or credited to
the customer, using hourly data when available.
Outside the bandwidth, WACM energy imbalance will not be
aggregated. Each entity within WACM will be charged or credited
independently for Energy Imbalance Service taken, dependent upon their
over- or under-delivery status. For an under delivery outside the
bandwidth, the charge will be 150 percent of the real-time hourly
weighted average purchase price. For an over delivery outside the
bandwidth, the credit will be 50 percent of the real-time hourly
weighted average sale price.
If hourly data is unavailable, pricing defaults are as shown below
in Table 1.
Examples of Energy Imbalance Service Calculations
Table 1
------------------------------------------------------------------------
Within the bandwidth
------------------------------------------------------------------------
Credits for under deliveries
Credits for over deliveries (based on (based on weighted average real-
weighted average real-time sale price) time purchase price)
------------------------------------------------------------------------
Scenario: WACM Aggregate Net Over Scenario: WACM Aggregate Net
Delivery. Under Delivery.
Sale 1 25 MW @ $22 ($550).
Sale 2 25 MW @ $20 ($500).
Sale 3 25 MW @ $17 ($425).
Sale 4 25 MW @ $12 ($300).
Purchase 1 100 MW @
$35($3,500).
Purchase 2 50 MW @$32
($1,600).
Purchase 3 100 MW @ $15
($1,500).
Purchase 4 50 MW @ $10 ($
500).
Calculation: Calculation:
($550+$500+$425+$300) = $1,775..... ($3,500+$1,600+$1,500+$500)=
$7,100
$1,775 / 100 MW = $17.75/MW........ $7,100 / 300 MW = $23.67/MW.
Weighted Average Real-Time Sale Price Weighted Average Real-Time
Price = $17.75/MW. Purchase Price = $23.67/MW.
Customer would be credited $17.75/MW... Customer would be charged
$23.67/MW.
Pricing Defaults: If no hourly real- Pricing Defaults: If no hourly
time sales, default is to daily real- real-time purchase, default is
time sales weighted average on/off- to daily real-time purchase
peak. If no daily real-time sales, weighted averaged on-/off-
default is to monthly real-time sales peak. If no daily real-time
weighted averaged on-/off-peak. If no purchase, default is to
monthly real-time sales, default is to monthly real-time purchase
the prior month real-time sales weighted averaged on-/off-
weighted average on-/off-peak. peak. If no monthly real-time
purchase, default is to prior
month real-time purchase
weighted average on-/off-peak.
Applicable transmission cost deducted.. Applicable transmission cost
added.
------------------------------------------------------------------------
Table 2
------------------------------------------------------------------------
Credits for over deliveries
(based on weighted average real-
time sale price)
Outside the bandwidth --------------------------------
Credits for under deliveries
(based on weighted average real-
time purchase time)
------------------------------------------------------------------------
Scenario: Customer A Over Delivered.... Scenario: Customer B Under
Delivered.
[[Page 39974]]
Sale 1 25 MW @ $22 ($550). Purchase 1 100 MW @
$35 ($3,500)
Sale 2 25 MW @ $20 ($500). Purchase 2 50 MW @ $32
($1,600)
Sale 3 25 MW @ $17 ($425). Purchase 3 100 MW @
$15 ($1,500)
Sale 4 25 MW @ $12 ($300). Purchase 4 50 MW @ $10
($ 500)
Calculation: Calculation:
($550+$500+$425+$300) = $1,775..... ($3,500+$1,600+$1,500+$500)=
$7,100
$1,775 / 100 MW = $17.75/MW........ $7,100 / 300 MW = $23.67/MW.
Weighted Average Real-Time Sale Price = Weighted Average Real-Time
$17.75/MW. Price = $23.67/MW.
Customer credited 50% = $8.88/MW....... Customer charged 150% = $35.50/
MW.
Pricing Defaults: Same as shown in Pricing Defaults: Same as shown
Table 1. in Table 1.
Applicable transmission cost deducted.. Applicable transmission cost
added.
------------------------------------------------------------------------
Comparison of Existing and Provisional Formula Rate for Energy
Imbalance Service
The following is a comparison of the existing rate and the
provisional formula rate for Energy Imbalance Service.
------------------------------------------------------------------------
Existing rate schedule effective Provisional formula rate
October 1, 2001 schedule effective July 1, 2002
------------------------------------------------------------------------
Energy imbalance will be settled with All energy imbalance will be
both energy and dollars. settled financially, accounted
for hourly, at the end of each
month.
Within the bandwidth, the customer and Within the bandwidth, the gross
Western will exchange energy through energy imbalance for each
energy deviation accounting. applicable entity within WACM
shall be totaled and netted to
determine an aggregate energy
imbalance for WACM (deficit
conditions use purchase
pricing; surplus conditions
use sale pricing). One-hundred
percent of the weighted
average real-time purchase or
sale price is charged or
credited to the customer,
using hourly pricing data when
available (see Table 1 for
defaults).
Outside the ± 1.5% Outside the bandwidth, for
bandwidth, for negative excursions (2 negative excursions (2 MW
MW minimum) and occurring more than 5 minimum), RMR will charge the
times per month, RMR reserves the customer 150% of the hourly
right to charge 100 mills/kWh. weighted average real-time
purchase price (with defaults
as stated herein).
Outside the ± 1.5% Outside the bandwidth, for
bandwidth, positive excursions may be positive excursions (2 MW
credited to the customer within 30 minimum), RMR will credit the
days for 50% of the regional weighted customer 50% of the hourly
average monthly price for non-firm weighted average real-time
purchases. sales price (with defaults as
stated herein).
A credit for over delivery will be A credit for over delivery may
provided if over deliveries do not not apply during times of WACM
impinge upon WACM operations. For operating constraints; e.g.,
example, during times of high water or high-water ``must-run''
operating constraints, RMR reserves conditions. During these
the right to eliminate credits for times, RMR reserves the right
over deliveries.. to eliminate credits for over
deliveries.
No bandwidth expansion provided........ Bandwidth may be expanded
during certain hours in
response to loss of physical
resource, frequency bias
contribution, and start up/
shut down of large thermal
resources.
------------------------------------------------------------------------
Energy Imbalance and Control Area Operating Constraints
WACM reserves the right to eliminate credits for over deliveries
during times of WACM operating constraints, such as ``must-run''
hydrologic conditions, or when WACM cannot dispose of surplus energy.
It is not feasible for Western to offer a credit for energy when the
market price is zero (or near zero).
In the case of over delivery, if the disposition of over-delivered
energy results in zero value sales, there is no income to disburse. Due
to the unpredictable nature of hour-to-hour energy imbalance and the
very short notice for disposition of over deliveries, Western expects
some hours of zero value sales and the elimination of credits.
Additionally, if Western is unable to dispose of the entire net
over delivery, and operating criteria for the control area are not met,
there may be financial penalties to Western from reliability oversight
agencies such as NERC or WECC. In these cases, credit to customers will
be eliminated and parties over delivering may share in the cost to
Western of the penalty.
Treatment for Jointly Owned Generation
In the case of a jointly owned generator, the charges and/or
credits for Energy Imbalance Service will be assigned to the operating
agent of the generator. Unless WACM is provided with a legally binding
signed agreement from the owners designating a specific methodology to
allocate among owners and entitlees, the amount of aggregate energy
imbalance will be assigned to the operating agent of the generator(s).
Western reserves the right to refuse a designation that does not
provide for the full and accurate recovery of all generator energy
imbalances existing among owners and/or entitlees.
Generation owners and/or entitlees will be responsible for the
actual implementation of the allocation among the multiple owners.
Providing WACM with a methodology within a signed agreement will not in
itself be sufficient. The generation owners must ensure that
[[Page 39975]]
proper tagging and scheduling of the generation is accomplished so that
the Energy Imbalance Service is assigned accurately to each generation
owner.
Physical Resource Loss
Western recognizes that the loss of a physical resource or
generator due to an uncontrollable event (forced outage), can result in
a loss of a significant percentage of an entity's resource(s), and may
result in an energy condition outside the bandwidth. To lessen the
impact of such instances, the bandwidth will be widened to accommodate
the amount of time required for an emergency response.
Western will apply this expanded bandwidth to those cases where a
resource is lost (either internal to or scheduled into WACM) due to an
uncontrollable event, that is replaced for 1 or 2 hours by a
coordinated response from a Western-recognized reserve-sharing group,
such as RMRG.
Responses to another group member's loss of a unit during a reserve
group activation will be accounted for by an after-the-fact schedule
for the response. Therefore, no bandwidth expansion is required. For
those entities for which real-time ACE is used to measure energy
imbalance, bandwidth expansion will be evaluated on a customer-by-
customer basis.
Contributions for Frequency Bias
For those entities operating generation in a tie-line bias mode,
subject to the requirements for FRR, Western intends to offset the
calculated raw energy imbalance by an amount equal to the weighted
average hourly frequency multiplied by the entity's frequency response
bias factor. This will eliminate any Energy Imbalance Service costs
incurred due to provision of frequency support to the interconnection.
Inadvertent energy accumulated between sub-control areas and WACM due
to activation of FRR will be separately tracked. For an entity to
qualify for this accommodation, the requesting entity must provide
Western with data required for physical confirmation of FRR
participation. Minimum data that must be provided in real time includes
the scan-by-scan information regarding individual unit capability, real
MW output, and reactive MVAR output. Engineering data commonly used for
system modeling must also be provided. Other data may be required and
will be requested in writing. No credit will be allowed for frequency
bias contributions until the requested real-time and engineering data
is provided to WACM.
Consideration of Large Thermal Resources
Western recognizes the difficulty in transitioning large base-load
thermal resources between an on-line and off-line state. During such
transitions, these units generate energy that is not easily predicted,
controlled, or scheduled, and over-supply may result if the unit is
still synchronized and generating, but the delivery schedules are zero.
During these transitional periods, Western will expand the bandwidth
until the unit is adjusted to its desired position: on or off line.
These transitional periods should be infrequent occurrences and not
considered normal operation. The expanded bandwidth will be applied
hourly beginning with the first hour containing synchronized generation
from the unit. The period of expanded bandwidth will continue until the
unit has reached an output level deemed by the operating agent and
agreed to by Western to be sufficient for scheduling energy (minimum
scheduling level).
For scheduled transitions from on line to off line, expanded
bandwidth will be applied hourly beginning with the hour in which the
unit generates less than the minimum scheduling level.
Forced transitions from on-line to off-line will receive credit as
explained in the ``Physical Resource Loss'' section of this notice.
The bandwidth will not be expanded when ramping services have been
acquired by an entity.
Treatment of Intermittent Renewable Resources
Western promotes the installation of renewable sources of energy,
but recognizes that these resources fluctuate significantly as a normal
part of their operation. WACM is a geographically large control area
with few resources available to balance loads and resources, which
limits WACM's ability to cover the fluctuation anticipated with an
intermittent renewable resource. Western will apply Energy Imbalance
Service to renewable energy resources. However, Western is willing to
purchase, on a pass-through cost basis, the regulation and energy
required to mitigate the fluctuations inherent in intermittent
resources. This will assure that the intermittent resources only pay
for their impact on the system and are not penalized for out-of-band
excursions.
Contractual Vehicle for Energy Imbalance Service
All entities currently operating within WACM post revenues and
expenses for energy deviation under their interconnection agreements.
Energy Imbalance Service will replace energy deviation accounting for
all transactions, effective July 1, 2002. Some customers within WACM
serve load without the use of the Federal transmission system. Prior to
July 1, 2002, as Western works through the implementation of Energy
Imbalance Service with its customers, Western will determine whether or
not a customer has an existing contract or needs to execute an
additional agreement.
For customers who are unwilling to take Energy Imbalance Service,
Western will work with them to meter their load out of WACM. Until such
time as that meter reconfiguration is accomplished, Western will charge
or credit the customer for Energy Imbalance Service taken.
Certification of Rates
Western's Administrator has certified that the Energy Imbalance
Service, Rate Schedule L-AS4, placed into effect on an interim basis
herein is the lowest rate possible consistent with sound business
principles. The formula rate has been developed in accordance with
agency administrative policies and applicable laws.
Energy Imbalance Service Written Comments
Following is a summary of written comments received during the
public comment period and RMR's response. Comments were combined and
paraphrased to address similar issues. Several requests for
clarification and definition of various words, phrases or processes
were made, and Western has addressed those within the context of this
order.
In addition to clarification, changes have been made to the
proposed rate methodology published in the Federal Register on December
20, 2001, based upon the input received during the public process.
Comment: Several comments received related to: (1) The complexity
of the billing and the volume of data; (2) the use of network
transmission billing as a starting point for Energy Imbalance Service
calculation; and (3) the ability of the control area and customers to
implement this service.
Response: RMR has both the staff and systems in place to implement
Energy Imbalance Service. Western will continue to work with customers
to simplify the presentation of material and assure that the customer
understands the Energy Imbalance Service calculation. RMR has
eliminated
[[Page 39976]]
the marginal pricing methodology to simplify the billing process.
Western agreed with the comment to begin with the NITS billing data
as a starting point for Energy Imbalance Service calculation and has
made that change for any customer currently receiving a network
transmission bill from Western.
Customers are not required to develop or maintain any new systems
in response to Energy Imbalance Service. However, they must maintain
full, active, and ongoing communication with Western. Additionally, it
will be the customers' responsibility to review the bill and promptly
notify Western of any concerns.
Western will provide customers the detail necessary to support the
Energy Imbalance Service calculations. This will include, but not be
limited to, hourly details of all import and export schedules and
generation and load data. Each customer will receive a summary file
combining all elements into a final Energy Imbalance Service bill.
Comment: A commenter asked whether Western's current energy
deviation accounting will now be handled through Energy Imbalance
Service and result in a net cash transaction versus energy exchange.
Response: Effective June 30, 2002, existing energy deviation
accounts will be ``frozen'' and settled consistent with the terms of
existing contracts or mutual agreements. Energy Imbalance Service and
subsequent billing will replace all previous WACM internal deviation
energy accounting and will be settled financially.
Comment: A commenter asked how an existing contract for regulation
and frequency response service outside the OATT would be handled within
the scope of Energy Imbalance Service calculation.
Response: Western will honor all existing contracts and will expand
the bandwidth accordingly for regulation service taken as provided by
the customer's contract with Western.
Comment: Several comments were received concerning administrative
issues for Energy Imbalance Service, specifically: (1) defining the
process for Energy Imbalance Service to be followed when a generator is
jointly owned; and (2) requesting information about how Western will
charge for loads off the Federal transmission system.
Response: Western has addressed both of these issues in separate
sections within the text of this rate order, entitled ``Treatment of
Jointly-Owned Generation'' and ``Contractual Vehicle for Energy
Imbalance.''
Comment: A commenter raised a question about a single PSE that
currently uses two PSE codes (one for merchant activity and one for
reliability) in the tagging system. Will they be treated separately?
Response: These types of tagging situations will be addressed on a
case-by-case basis by WACM. It would appear that the two entities will
be treated (accounted for) separately, as the tags indicate that they
are separate entities. However, at the customer's request and with
WACM's concurrence, Western will manually merge them into a final
energy accounting and bill.
Comment: Customers employing AGC in a tie-line bias mode as
recommended by WECC and NERC may be penalized by their efforts to
support regional reliability. The commenter feels WACM should offer a
penalty adjustment to allow for AGC control.
Response: Western agrees and has addressed this issue in the
section entitled ``Contribution for Frequency Bias'' in this final rate
order.
Comment: Comments were made concerning the processes to be used in
the administration of Energy Imbalance Service, specifically: (1)
Extension of the comment period; (2) equal treatment of all parties;
and (3) dispute resolution and the processes that are in place when the
service is implemented.
Response: Western officially extended the comment period until
February 28, 2002, to allow parties sufficient time to comment after
viewing sample data.
Western will continue to work with all parties to ensure the
accuracy of data and equitable treatment. If any customer has
information that would assist Western in reconciling its energy
accounts, Western encourages them to initiate a timely exchange so that
the information can be considered in the customer's Energy Imbalance
Service calculation.
It is Western's intention that any and all disputes over the
calculation of Energy Imbalance Service will be resolved between
Western and the customer prior to billing for the service. However, if
no resolution is achieved, the process to address disputes outlined in
the customer's service contract will be used.
Comment: Various comments were made concerning the final
calculation of the energy imbalance bills. These included comments and
questions on (1) after-the-fact checkouts and related adjustments; (2)
calculation of ACE; (3) metering errors and energy-only meters; (4)
proper accounting for losses; and (5) the timing and disposition of
bills.
Response: The primary principle of Energy Imbalance Service is to
account for generation, load, and control area boundary flow on an
hourly basis. However, Western recognizes that scheduling differences
among control areas may require changes to be made in accordance with
inadvertent resolution procedures established by NERC and WECC. Western
has expanded its checkout processes and will continue to work with
individual generation operators and LSEs toward improving daily and
monthly checkouts. Affected customers will be responsible for
contacting Western concerning tagging and checkout issues and working
through the discrepancies in a timely manner prior to Energy Imbalance
Service billing. Once inter-control area schedules are agreed upon,
Western will consider additional corrections to schedules totally
inside the control area on a case-by-case basis.
Western is working with all customers impacted by the
implementation of Energy Imbalance Service to ensure that where Western
calculates an individual customer's ACE within the control area, it is
in agreement with the customer's ACE measurement. This will be an
ongoing effort up to, through, and beyond implementation of Energy
Imbalance Service. Western will continue to work toward the real-time
notification to customers of potential imbalance. This action, however,
will not postpone implementation of Energy Imbalance Service within
WACM.
Metering errors will also be addressed on a case-by-case basis.
Western will account for energy-only meters by dividing monthly energy
by the number of hours in the month. Monthly meters are normally used
in applications where load characteristics are primarily flat, such as
small 24-hour industrial operations without large hour-to-hour
variations. Most loads in WACM with a significant impact to Energy
Imbalance Service calculations are already metered with interval
recording devices. Any remaining monthly energy-only meters in WACM
that Western believes to have a load profile other than the flat model
will need to be replaced at the customer's expense.
Western assesses applicable control area, network, or grandfathered
contract service with a uniform loss rate associated with physical load
in WACM. Western will allow customers to ``scale up'' each hourly meter
reading (multiplying by 1 plus the applicable loss rate) in the same
manner currently in force; i.e., the increase of load meters having the
same loss factor. Losses associated with point-to-point transmission
service on Western's transmission system, or through the WACM control
area for purposes of
[[Page 39977]]
merchant transactions, will remain, for now, under a separate ongoing
loss collection process.
The issuance of final Energy Imbalance Service bills for any month
will take place at the earliest possible date following the end of the
month. However, Energy Imbalance Service billing is not possible until
all relevant energy schedules have been through the NERC and WECC
checkout process and all after-the-fact pricing calculations have been
completed. This may take several months. Western's research has shown
that most utilities billing for Energy Imbalance Service have a lag
from ``month-end to bill'' of about 60 to 90 days.
Comment: Comments expressed concern about WACM's MV-90 metering
system as the determinant of actual load obligations within WACM on an
after-the-fact basis.
Response: Western currently reads 300 meters by remote means and
achieves an error rate of less than 1 percent. Remote readings for the
previous month (including error processing) are usually completed by
the third day of the following month.
Comment: Many comments were received concerning the Energy
Imbalance Service methodology. They included requests for: (1) An
expansion of the ±4 percent bandwidth; (2) revised treatment
of forced resource outages; (3) elimination of out-of-band penalties
for non-firm intermittent renewable resources; and (4) elimination of
out-of-band penalties for large thermal units during startup and
shutdown transitions.
Response: Western has expanded the previously proposed bandwidth of
±4 percent to ±5 percent. Please refer to the
section of this rate order entitled, ``Energy Imbalance Bandwidth.''
Western will allow some expansion of the bandwidth under certain
criteria during times of loss of a physical resource. Western has
addressed the issue of forced resource outages in the section of this
rate order entitled ``Physical Resource Loss.''
Western will apply Energy Imbalance Service to renewable energy
resources. However, Western is willing to purchase, on a pass-through
cost basis, the regulation and energy required to mitigate the
fluctuations inherent in intermittent resources. Western has addressed
the issue of non-firm intermittent renewable resources in the section
of this rate order entitled ``Treatment of Intermittent Renewable
Resources.''
Western will allow some expansion of the bandwidth under certain
criteria during startup and shutdown of large thermal resources.
Western has addressed this issue in the section of this rate order
entitled ``Consideration of Large Thermal Resources.''
Comment: Comments questioned the use of WACM prices versus
published indices, how these prices are determined, and whether WACM
will make them available to the customers.
Response: Western has eliminated the use of industry indices in its
pricing structure. Prices are derived from WACM hourly real-time sales
and purchases (in some cases multiple-hour transactions).
The prices may or may not bear a relationship to a published market
index, but Western maintains that the best method to ensure that
Western does not over- or under-collect revenue, nor under- or over-
credit for surpluses, is to adhere to the actual real-time purchase and
sales pricing.
The WACM sales and purchase pricing will be posted after-the-fact
on a web site currently under development. Customers will be provided
information related to the web site's access and use prior to the first
issuance of an Energy Imbalance Service bill.
Comment: Several comments were received concerning: (1) The
complexity of the pricing structure; (2) the need for an out-of-band
penalty; (3) how Western makes the distinction between merchant and
reliability related transmission; and (4) and the application of
revenues received for the out-of-band penalties.
Response: Western has simplified the pricing mechanism by
eliminating both marginal pricing and the use of industry indices. This
rate order contains the details of these changes. Pricing for both
within and outside of the bandwidth will be the average prices for
real-time transactions, with penalties for out-of-band imbalances.
Federal transmission transactions correspond with an energy
transaction. Western determines its merchant versus reliability energy
transactions by virtue of the transaction either being done in
preschedule or real-time mode. The transmission transactions would
follow the associated energy transaction and be deemed to be either for
merchant or reliability purposes.
Western's analysis substantiated out-of-band penalties as: (1) An
appropriate economic disincentive for entities operating outside the
expanded bandwidth of ±5 percent; and (2) a mitigation of
Western's risk in crediting customers for over deliveries.
Compensation from the penalties applied outside the bandwidth will
cover unplanned maintenance costs associated with unscheduled unit
responses, as well as Western's expenses for disruption of generation
schedules.
Comment: The provision that allows WACM the ability to offer no
financial credit during periods when control area operations are
compromised by over delivery (e.g., during periods of high water or
other operating constraints) was questioned.
Response: Western maintains that during times of control area
constraints, it reserves the right to offer no credit for over delivery
of energy. Western addressed this comment in the section of this rate
order entitled ``Energy Imbalance Service and Control Area Operating
Constraints.''
Comment: Concern was expressed that small-load entities that are
required to schedule in whole MW increments would be penalized by
Energy Imbalance Service.
Response: The size of an entity will not exempt a customer from the
responsibility of balancing resources with obligations. However, the 2
MW minimum bandwidth was established expressly for the smaller
customer, so that scheduling in whole MWs would not push them outside
the bandwidth. More detailed information on this comment appears in the
sections of this rate order entitled ``Energy Imbalance Bandwidth'' and
``Formula Rate.''
Environmental Compliance
In compliance with the National Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321, et seq.); Council on Environmental Quality
Regulations (40 CFR parts 1500-1508); and DOE NEPA Regulations (10 CFR
part 1021), Western determined that this action is categorically
excluded from the preparation of an environmental assessment or an
environmental impact statement.
Determination Under Executive Order 12866
Western 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.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (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 that this action does not require a regulatory flexibility
analysis since it is a rulemaking of particular applicability
[[Page 39978]]
involving rates or services applicable to public property.
Small Business Regulatory Enforcement Fairness Act
Western has determined that 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.
Availability of Information
Comments, letters, memorandums, or other documents made or kept by
Western in developing the proposed rate will be made available for
inspection and copying at the Rocky Mountain Customer Service Region
located at 5555 East Crossroads Boulevard, Loveland, CO 80538-8986.
Submission to the Federal Energy Regulatory Commission
The interim rate herein confirmed, approved, and placed into
effect, together with supporting documents, will be submitted to FERC
for confirmation and final approval.
Order
I confirm and approve on an interim basis, effective July 1, 2002,
Rate Schedule L-AS4 for Energy Imbalance Service for the Western Area
Colorado Missouri control area for the Western Area Power
Administration. The rate schedule shall remain in effect on an interim
basis, pending FERC confirmation and approval of it or a substitute
rate on a final basis through March 31, 2003.
Dated: May 30, 2002.
Spencer Abraham,
Secretary.
Rate Schedule L-AS4, (Supersedes L-T3); Schedule 4 to OATT,
July 1, 2002.
Department of Energy
Western Area Power Administration, Rocky Mountain Region, Western Area
Colorado Missouri Control Area; Schedule of Rate for Energy Imbalance
Service
Effective
The first day of the first full billing period beginning on or
after July 1, 2002, through March 31, 2003.
Available
Within the Rocky Mountain Customer Service Region's Western Area
Colorado Missouri control area (WACM).
Applicable
To customers receiving Energy Imbalance Service from WACM.
Character and Conditions of Service
WACM provides Energy Imbalance Service when there is a difference
between a customer's resources and obligations. Energy Imbalance is
calculated as resources minus obligations (adjusted for transmission
and transformer losses) for any combination of scheduled transfers,
transactions, or actual load integrated over each hour. Both Federal
transmission customers and customers on others' transmission systems
within WACM must either obtain this service from WACM or make
alternative comparable arrangements to satisfy its Energy Imbalance
Service obligation.
Formula Rate
All Energy Imbalance Service provided, both inside and outside the
bandwidth, will be settled financially, accounted for hourly at the end
of each month. The WACM shall establish a deviation band of
±5 percent (with a minimum of 2 MW) of the actual load to be
applied hourly to any energy imbalance that occurs as a result of a
customer's schedules and/or meter data.
Normally, there are four scenarios for Energy Imbalance Service,
each of which receive a specific pricing calculation. They are: (1)
Over delivery within the bandwidth; (2) under delivery within the
bandwidth; (3) over delivery outside the bandwidth; and (4) under
delivery outside the bandwidth. During periods of control area
operating constraints, Western reserves the right to eliminate credits
for over deliveries and parties over delivering may share in the cost
to Western of the penalty.
Within the Bandwidth
The gross energy imbalance for each applicable entity within WACM
shall be totaled and netted to determine an aggregate energy imbalance
for WACM. The sign of the aggregate energy imbalance will determine
whether sale or purchase pricing will be used (surplus conditions use
sale pricing and deficit conditions will use purchase pricing).
Depending upon the sign of the aggregate energy imbalance for all
entities within WACM, the pricing for charges and credits within the
bandwidth will be: Weighted Average Sale or Purchase Price @ 100%.
Outside the Bandwidth
Each entity within WACM will be charged or credited independently
for Energy Imbalance Service taken, dependent upon their over- or
under-delivery status.
Under Delivery (customer deficit) = Customer will be charged 150% of
the weighted average real-time purchase price.
Over Delivery (customer surplus) = Customer will be credited 50% of the
weighted average real-time sale price.
Expansion of the bandwidth will be allowed during the following
instances:
--The loss of a physical resource.
--Upon evidence of proven frequency bias contribution for control area
needs.
--The transition (start up/shut down) period for large thermal
resources.
Pricing Defaults
When no hourly data is available, the pricing defaults for sales
and purchase pricing both within and outside the bandwidth will be
applied in the following order:
--Weighted average real-time sale or purchase pricing for the day (on
and off peak).
--Weighted average real-time sale or purchase pricing for the month (on
and off peak).
--Weighted average real-time sale or purchase pricing for the prior
month (on and off peak).
--Weighted average real-time sale or purchase pricing for the month
prior to the prior month (and continuing until sale or purchase pricing
located) (on and off peak).
Billing
The billing determinants for the above formula rates are specified
in the final rate order and in the associated service agreement.
[FR Doc. 02-14609 Filed 6-10-02; 8:45 am]
BILLING CODE 6450-01-P