FAC 04-06

1. Introduction. The above acts allow Reclamation to develop electrical power to aid in the irrigation of project lands and to use such electrical power for such, and other project purposes as authorized by Congress. 

Early Reclamation projects used the electrical power called “project use power” primarily to pump water associated with irrigating project lands. Eventually, Reclamation projects began serving purposes other than irrigation and included authorization for multiple purposes. Although additional project purposes were authorized that utilized electrical power produced by the project, the term “project use power” remained to define power for irrigation use, and other terms such as “project power” and “priority use” were created to define power for use on the project for purposes other than irrigation.

This Directive serves to consolidate the uses of Federally-produced electrical power at a Reclamation project for such purposes as authorized into a single term called “project use power.”

2. Project Use Power. Electric power generated at Reclamation projects will first be used to meet project load requirements including station service requirements.

   A. Project Use Power. Project use power is that electrical energy, and its associated ancillary service components, required to provide the full electrical service needed to operate and maintain project facilities, and to provide electric service for project purposes and loads in conformance with the Reclamation project authorization.

   B. Reclamation Project. For the purposes of this Directive and Standard, the term "Reclamation project" means those facilities or features of a project constructed/developed/or transferred to Reclamation under the authority of Federal Reclamation law (or the Water Conservation and Utilization Act) for which ownership is retained by the United States, unless otherwise authorized by Congress.

   C. Use of Project Use Power. Project use power is used to meet the electrical service requirements of a Reclamation project pursuant to congressional authorization. In general, Reclamation reserves as project use power only the amount necessary to meet the minimum requirements to provide service using the most economical methods. The amount of power required to provide the minimum irrigation service will not be more than the amount required to sufficiently lift the water enough to provide irrigation service by gravity, unless specifically authorized by the Congress. Project use power may be used for the primary delivery of water for Municipal and Industrial (M&I) service when such service is congressionally authorized. Unless specifically authorized by Congress, project use power is not available to pump non-project water, to operate pumps that were not built as Federal facilities as part of the project, to pump project water outside the authorized service area, or provided for on-farm uses such as pressurizing sprinkler systems or pumping from wells. Other uses of electric power generated at Reclamation projects include station service requirements at Reclamation dams, power plants, pumping plants, switchyards, substations, Government camps and offices, and designated loads directly associated with the Reclamation project facilities.

3. Cost Recovery/Rate Setting for Project Use Power. The Department of the Interior establishes the cost recovery associated with project use power. Such cost recovery can be accomplished through various mechanisms including inclusion in project water rates or a project use power rate. Cost recovery may merit special consideration as follows:

A. Irrigation Pumping. Cost recovery/rate setting for irrigation pumping should be consistent with the repayment requirements for that purpose. The basis for irrigation pumping cost recovery/rate setting varies among authorized projects. However, Reclamation’s standard is to establish a uniform cost recovery/rate to be no more than the wholesale commercial rates the Federal power marketing agencies charge preference customers over as wide an area as practicable. Such cost recovery/rates, at the minimum, should cover the average cost per kilowatt‑hour of operation, maintenance and replacement expenses of the power system, and the repayment, without interest, of that part of the power investment allocated to irrigation.

B. Government CampUse. The departmental policy requires that rates for electric service provided to occupants of Government furnished quarters be comparable to the prevailing rates in the community or locality (refer to Department of the Interior, Departmental Quarters Handbook (400 DM)). In accordance with the guidelines, rates for electric power from the Reclamation projects provided to Reclamation employees, or others, occupying Government-owned quarters will be established by Reclamation and will be comparable to the prevailing rates for similar service in the private market. (Note that this departmental policy includes any Government supplied utility.)

C. Municipal and IndustrialPumping and Other Uses. Cost recovery/rate setting for M&I pumping and other uses should be consistent with the repayment requirements for that purpose. The basis for the M&I pumping and other uses cost recovery/rate setting varies among authorized projects. However, Reclamation’s standard is to establish a uniform cost recovery/rate to be no more than the wholesale commercial rates the Federal power marketing agencies charge preference customers. Such cost recovery/rate, at the minimum, will cover the average cost per kilowatt‑hour of operation, maintenance and replacement expenses of the power system, and such fixed charges, including interest, as the Secretary deems proper. Other special circumstances, such as the relationship between a project and a particular power system, may justify special treatment.

4. Power Distribution Facilities for Project Use Power. Power distribution facilities for project use power will be operated within the following guidelines:

A. Noninterest-bearing Investment Category. Reclamation considers distribution lines and pumping plant electrical facilities, constructed solely for the purpose of supplying project irrigation pumping plants, as part of the "irrigation plant" and, as such, in the "noninterest-bearing investment category.” Such distribution lines and pumping plant electrical facilities are, in general, restricted to low voltage distribution lines and line takeoffs at the power system substations; to intermediate-voltage lines exclusively used for feeding one or several pumping plants; and to pumping substations fed from these lines. They may also include special facilities provided solely for irrigation pumping needs, such as full-voltage tap lines from the power trunk lines and transformer step-down substations from the trunk transmission system to intermediate voltage lines, when these facilities are constructed solely for the Reclamation project and are not an extension of the transmission system.

B. Point of Demarcation. The point of demarcation is that point on the power distribution system which separates managerial and financial responsibility for operation, maintenance, and replacements. This point of demarcation may also be the same point that separates the facilities for purposes of project allocation of costs and noninterest-bearing investment determinations, or the same point defined as the power marketing agency’s “contract point of delivery.” In all cases, the point of demarcation should be consistent with project authorizations and existing agreements with the Federal power marketing agencies.

5. Transmission Charges on Non Federal Systems. When transmission service over a non-Federal system is needed, the Department of Energy's power marketing administration will negotiate and contract for the transmission service. Where transmission over the lines of other parties is involved, the guidelines for transmission charges for project use power are as follows:

A. Irrigation Transmission Charge. Historically, and under special circumstances, the irrigation cost recovery/rate was established to include not more than one mill per kilowatt-hour transmission charge plus related losses, for the delivery of energy to the low side of the substation step down voltage from transmission to distribution voltage. Transmission expenses in excess of one mill, plus related losses, were included as an additive to the regular cost recovery/rate for service. This historical practice may be discontinued for new irrigation projects or contract renewals in order to reflect the existing transmission conditions.

B. Distribution of Energy and Transmission Expenses. Generally, the project will bear the expenses of distribution of energy, including transmission, if any, on the load side of the contact point of delivery, or the demarcation point, except that, where service to point of utilization is being, or may be supplied, under an existing transmission agreement, the charge for use of both the carrier’s transmission and distribution lines, plus related losses, may be absorbed in the regular cost recovery/rate for service.

6. TransmissionCharges on Federal Systems. The Federal marketing agencies have the responsibility to provide transmission service and wheeling arrangements to project loads and the cost of such service is normally a component of the project use power cost recovery/rate.

(219) 05/16/05
NEW RELEASE