Integrated System Power Rates, 7765-7776 [06-1356]

Agencies

• DEPARTMENT OF ENERGY
• Southwestern Power Administration

[Federal Register Volume 71, Number 30 (Tuesday, February 14, 2006)]
[Notices]
[Pages 7765-7776]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-1356]


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DEPARTMENT OF ENERGY

Southwestern Power Administration


Integrated System Power Rates

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of Rate Order.

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SUMMARY: Pursuant to Delegation Order Nos. 00-037.00, effective 
December 6, 2001, and 00-001-00B, effective July 28, 2005, the Deputy 
Secretary has approved and placed into effect on an interim basis Rate 
Order No. SWPA-53, which increases the power rates for the Integrated 
System pursuant to the following Integrated System Rate Schedules:
    Rate Schedule P-05, Wholesale Rates for Hydro Peaking Power.
    Rate Schedule NFTS-05, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service.
    Rate Schedule EE-05, Wholesale Rate for Excess Energy.
    The rate schedules supersede the existing rate schedules shown 
below:
    Rate Schedule P-04, Wholesale Rates for Hydro Peaking Power 
(superseded by P-05).
    Rate Schedule NFTS-04, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service (superseded by NFTS-
05).
    Rate Schedule EE-04, Wholesale Rate for Excess Energy (superseded 
by EE-05).

DATES: The effective period for the rate schedules specified in Rate 
Order No. SWPA-53 is February 1, 2006, through September 30, 2009.

FOR FURTHER INFORMATION CONTACT: Forrest E. Reeves, Assistant 
Administrator, Office of Corporate Operations, Southwestern Power 
Administration, Department of Energy, Williams Center Tower I, One West 
Third Street, Tulsa, Oklahoma 74103, (918) 595-6696, 
gene.reeves@swpa.gov.

SUPPLEMENTARY INFORMATION: Southwestern Power Administration's 
(Southwestern) Administrator has determined based on the 2005 
Integrated System Current Power Repayment Study, that existing rates 
will not satisfy cost recovery criteria specified in Department of 
Energy Order No. RA 6120.2 and Section 5 of the Flood Control Act of 
1944. The finalized 2005 Integrated System Power Repayment Studies 
(PRSs) indicate that an increase in annual revenue of $9,016,929, or 
7.3 percent, beginning February 1, 2006, will satisfy cost recovery 
criteria for the Integrated System projects. The proposed Integrated 
System rate schedules would increase annual revenues from $124,325,100 
to $133,342,029, primarily to recover increased expenditures in 
operations and maintenance (O&M) and increased investments in the 
hydroelectric generating facilities. Additionally, the PRS indicates 
the need for an annual increase of $227,100 in revenues received 
through the Purchased Power Adder to recover increased purchased energy 
costs. This rate proposal also includes a provision to continue the 
Administrator's Discretionary Purchased Power Adder Adjustment, to 
adjust the purchased power adder annually, of up to $0.0011 per 
kilowatthour as necessary, at his/her discretion, under a formula-type 
rate, with notification to the FERC.
    The Administrator has followed Title 10, part 903 subpart A, of the 
Code of Federal Regulations, ``Procedures for Public Participation in 
Power and Transmission Rate Adjustments and Extensions'' in connection 
with the proposed rate schedule. On August 16, 2005, Southwestern 
published notice in the Federal Register, (70 FR 48121), of a 90-day 
comment period, together with a Public Information Forum and a Public 
Comment Form, to provide an opportunity for customers and other 
interested members of the public to review and comment on the proposed 
rate increase for the Integrated System. Both public forums were 
canceled since no one expressed an intention to participate. Written 
comments were accepted through November 14, 2005. Comments from three 
entities were received and are addressed in this rate proposal.
    Information regarding this rate proposal, including studies and 
other supporting material, is available for public review and comment 
in the offices of Southwestern Power Administration, Williams Center 
Tower I, One West Third Street, Suite 1400, Tulsa, Oklahoma 74103.
    Following review of Southwestern's proposal within the Department 
of Energy, I approved, Rate Order No. SWPA-53, on an interim basis, 
which increases the existing Integrated System annual revenue 
requirement to $133,342,029 per year for the period February 1, 2006 
through September 30, 2009.


[[Page 7766]]


    Dated: February 1, 2006.
Clay Sell,
Deputy Secretary.

In the Matter of: Southwestern Power Administration Integrated System 
Rates; Rate Order No. SWPA-53; Order Confirming, Approving and Placing 
Increased Power Rate Schedules in Effect on an Interim Basis

    Pursuant to sections 302(a) and 301(b) of the Department of Energy 
Organization Act, Public Law 95-91, the functions of the Secretary of 
the Interior and the Federal Power Commission under section 5 of the 
Flood Control Act of 1944, 16 U.S.C. 825s, relating to the Southwestern 
Power Administration (Southwestern) were transferred to and vested in 
the Secretary of Energy. By Delegation Order No. 0204-108, effective 
December 14, 1983, the Secretary of Energy delegated to the 
Administrator of Southwestern the authority to develop power and 
transmission rates, delegated to the Deputy Secretary of the Department 
of Energy the authority to confirm, approve, and place in effect such 
rates on an interim basis and delegated to the Federal Energy 
Regulatory Commission (FERC) the authority to confirm and approve on a 
final basis or to disapprove rates developed by the Administrator under 
the delegation. Delegation Order No. 0204-108, as amended, was 
rescinded and subsequently replaced by Delegation Orders 00-037.00 
(December 6, 2001) and 00-001-00B (July 28, 2005). The Deputy Secretary 
issued this rate order pursuant to said delegations.

Background

    FERC confirmation and approval of the following Integrated System 
(System) rate schedules was provided in FERC Docket No. EF05-4011-000 
issued October 11, 2005, for the period January 1, 2005, through 
September 30, 2008:
    Rate Schedule P-04, Wholesale Rates for Hydro Peaking Power.
    Rate Schedule NFTS-04, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service.
    Rate Schedule EE-04, Wholesale Rate for Excess Energy.
    Southwestern Power Administration's (Southwestern), Current Power 
Repayment Study (PRS) indicates that the existing rates will not 
satisfy present financial criteria regarding repayment of investment 
within a 50-year period due to implementing the final cost allocation 
for the Harry S. Truman Project plus increasing operation and 
maintenance expenditures and investment for both the U.S. Army Corps of 
Engineers (Corps) and Southwestern. The revised PRS indicates that an 
increase in annual revenues of $9,016,929 is necessary beginning 
February 1, 2006, to accomplish repayment in the required number of 
years. Accordingly, Southwestern has prepared proposed rate schedules 
based on the additional revenue requirement and the 2005 Rate Design 
Study.
    An informal meeting was held in June 2005 with customer 
representatives to review the repayment and rate design processes and 
present the basis for the 7.3 percent annual revenue increase. In 
September 2005, Southwestern prepared a proposed 2005 PRS for the 
Integrated System.
    Title 10, part 903, subpart A of the Code of Federal Regulations, 
``Procedures for Public Participation in Power and Transmission Rate 
Adjustment,'' has been followed in connection with the proposed rate 
adjustments. More specifically, opportunities for public review and 
comment on proposed System power rates during a 90-day period were 
announced by notice published in the Federal Register, August 16, 2005, 
(70 FR 48121). A Public Information Forum was scheduled for August 30, 
2005, in Tulsa, Oklahoma, and a Public Comment Forum was scheduled for 
September 29, 2005, also in Tulsa. Both were canceled since no one 
expressed an intention to attend. Written comments were due by November 
14, 2005. Southwestern mailed copies of the proposed September 2005 PRS 
and Rate Design Studies to customers and interested parties that 
requested the data, for review and comment during the formal period of 
public participation.
    Following conclusion of the comment period on November 14, 2005, 
comments presented during the formal public participation process were 
reviewed. Once all comments were carefully evaluated and responded to, 
the 2005 PRS and Rate Design Studies were completed. No changes were 
made to the 2005 PRS based on comments received. The studies were 
finalized in November 2005. The Administrator decided to submit the 
rate proposal for interim approval and implementation. The comments 
resulting from the public participation process and responses, as 
developed by Southwestern's staff, are contained in this Rate Order.

Discussion

General

    The existing rate schedules developed in the 2004 Integrated System 
PRS were the basis for revenue determination in the September 2005 
Integrated System Current PRS. The Current PRS indicates that existing 
rates are insufficient to produce the annual revenues necessary to 
accomplish repayment of the capital investment as required by section 5 
of the Flood Control Act of 1944 and Department of Energy (DOE) Order 
No. RA 6120.2.
    A Revised PRS was prepared with annual revenue of $9,016,929 added 
to the Current PRS, to satisfy repayment criteria.
    In Southwestern's 2005 Rate Proposal, rates were designed to 
recover the additional revenue requirements. The monthly demand charge 
for the sale of Federal hydroelectric power has increased. The energy 
charge was separated into a peaking energy charge and a supplemental 
energy charge, both of which reflected increases over the current base 
energy rate. In addition, transmission charges for non-Federal, firm 
service have increased. There is no change in the capacity charge for 
those customers taking transformation service. The increase to the 
transmission charges are due to including projected additions and 
replacements to Southwestern's aging transmission facilities since the 
last rate change.
    Consistant with FERC's Order No. 888, Southwestern will continue 
charging separately for five ancillary services under Rate Schedule P-
05 and Rate Schedule NFTS-05, and offering network transmission service 
under Rate Schedule NFTS-05. Southwestern's rate design has separated 
the five ancillary services for all transmission service. Two ancillary 
services, Scheduling, System Control and Dispatch Service together with 
Reactive and Voltage Support Service, are required for every 
transmission transaction. These charges are also a part of the capacity 
rate for Federal power. This is consistent with Southwestern's long-
standing practice of charging for the sale and delivery of Federal 
power in its Federal demand charge. The three remaining ancillary 
services will be made available to any transmission user within 
Southwestern's control area, including Federal power customers. The 
rate schedules for Peaking Power and Non-Federal Transmission Service 
reflect these charges. Network transmission service is provided to 
those who request the service, within Southwestern's control area, but 
only for non-Federal deliveries. The rate for and application of this 
service are identified in the Non-Federal Transmission/Interconnection 
Facilities Service Rate Schedule, NFTS-05.
    With respect to the Purchased Power Adder (Adder), Southwestern is

[[Page 7767]]

proposing, as in all previous proposals beginning with the 1983 
implementation of the purchased power rate component (45 FR 19032, 
March 24, 1980), that the Adder be set equal to the current average 
long-term purchased power rate requirement. As shown in the Rate Design 
Study, the amount is determined by dividing the estimated total average 
direct purchased power costs by Southwestern's total annual contractual 
1200-hour peaking energy commitments to the customers (exclusive of 
contract support arrangements). In this rate proposal, the resulting 
Adder is $0.0029 per kWh of peaking energy. The total revenue created 
through application of this Adder would enable Southwestern to cover 
its average annual purchased power costs.

Comments and Responses

    The Southwestern Power Administration (Southwestern) responded to 
questions provided during the public participation period which are 
included in the supplemental background information. In addition, 
Southwestern received comments from three entities during the public 
participation process. Southwestern's responses are summarized into 
three general areas of concern, and are as follows:

Cost Control

Comments
    The commenter questions why Southwestern would charge its customers 
for an upgrade to their facilities, which would be owned and operated 
by Southwestern, and then include such costs in its need for a rate 
increase.
Response
    Southwestern requires customers to fully pay for upgrades or 
improvements to its system which improve the customer's own system 
reliability. However, when these upgrades are an integral part of 
Southwestern's system, Southwestern takes ownership and responsibility 
for future maintenance. Since the original costs were fully paid by the 
customer, none of these costs are included in rates to be paid by the 
customer improving its system reliability or any other customer.

Southwest Power Pool Issues

Comment
    A commenter has stated that withdrawal of Southwestern's 
transmission facilities from the Southwest Power Pool (SPP) has 
adversely affected those customers not directly connected to 
Southwestern's facilities and suggests a transmission rate credit to 
offset perceived adverse impacts.
Response
    Southwestern has not withdrawn its Transmission Facilities from the 
Southwest Power Pool (SPP). Southwestern and SPP are currently 
operating under an independent contractual coordination agreement that 
allows SPP to utilize Southwestern's transmission facilities under the 
SPP Tariff, and for SPP to provide Southwestern services such as OASIS 
administration, regional reliability coordination services, and 
administration of Southwestern's Open Access Transmission Tariff. The 
separate agreement is necessary in order for Southwestern to comply 
with Federal statutes and regulations while allowing Southwestern to 
participate in the SPP Regional Transmission Organization (RTO) per the 
Department of Energy's direction to support the formation of RTO's.
    The issue of Southwestern's participation in the SPP RTO and 
customers receiving service under the SPP tariff is not germane to this 
rate filing. Further, Southwestern is not required by FERC Order No. 
888 or Order No. 2000 to offer unbundled services to its customers. 
Section 5 of the Flood Control Act of 1944 sets forth the statutory 
requirements for the sale and delivery of Federal power and energy. 
Southwestern's sales of Federal power and energy are based on a 
``postage-stamp'' type rate, which is based on the financial 
integration of all the projects marketed under the Integrated System, 
as well as various components of Southwestern's transmission system. 
The capacity rate for all Federal power customers includes a 
transmission component and the two required ancillary services. The 
transmission component of this rate has been set to assure that 
Southwestern charges itself the same rates it charges for the use of 
the transmission system for wheeling non-Federal power. Southwestern 
must recover all costs of its generation and transmission systems 
through its rates according to section 5 of the Flood Control Act of 
1944.
    Furthermore, based on DOE policy as stated in a press release dated 
December 31, 1997, ``each of the PMAs that own transmission facilities 
will publish generally applicable open access wholesale transmission 
tariffs and will take service itself under such tariffs. The tariffs 
will include rates, terms, and conditions, and will offer transmission 
services, including ancillary services, to all entities eligible to 
seek a transmission order under section 211 of the Federal Power Act * 
* *'' Southwestern has complied with this policy in separating its non-
Federal transmission service and to provide for ancillary services.
    The delivery of Federal power over the transmission facilities of 
Southwestern is currently excluded from SPP's Tariff, and has been 
excluded from SPP's tariff under all previous agreements between SPP 
and Southwestern since we believe that such inclusion would be 
inconsistent with Federal statutes related to Southwestern's marketing 
authority including section 5 of the 1944 Flood Control Act and Public 
Law 95-456. In accordance with Public Law 95-456, Southwestern must 
charge all customers the same rate for the delivery of Federal power 
over Federal facilities without regard to where they are physically 
located in relation to our grid. Any individual credit would be in 
violation of Public Law 95-456 which states in part:
    ``* * * That power and energy marketed by the Southwestern Power 
Administration pursuant to Section 825s of title 16, United States code 
(1970), shall be sold at uniform system wide rates, without 
discrimination between customers to whom the Southwestern Power 
Administration delivers such power and energy by means of transmission 
lines or facilities constructed with appropriated funds, and customers 
to whom the Southwestern Power Administration delivers such power and 
energy by means of transmission lines or facilities, the use of which 
is acquired by lease, wheeling or other contractual arrangements.''
    In addition, the recently enacted Energy Policy Act of 2005, 
section 1232, reinforces this position by providing that Southwestern's 
participation in an RTO does not exempt us from any provision of 
Federal law currently in effect, or authorize abrogation of any 
contract.

Purchased Power Adder

Comment
    A commenter has stated that the Purchased Power Adder should only 
apply to those customers requesting firming energy under Southwestern's 
1200 hour peaking contractual obligations.
Response
    This comment is not germane to the rate proposal since it relates 
to Southwestern's marketing plan and

[[Page 7768]]

power sales contract provisions. The rate schedule provision for the 
Purchased Power Adder merely provides a charge for energy delivered 
under a contract provision. Under Southwestern's marketing plan 
published in the Federal Register (45 FR 19032), Southwestern has 
allocated Federal Peaking Power with 1200 hours of firm Peaking Energy 
from its integrated hydroelectric system. During some periods, such as 
we are currently experiencing with high power demands and low pool 
levels, Southwestern must purchase non-Federal energy to support these 
1200 hour integrated firm Peaking Power sales contracts. The power we 
receive from these hydroelectric dams is not customer or project 
specific, nor is the energy we purchase to support the 1200 hour 
peaking sales. All of the Integrated System projects combined support 
the system-wide requirements, thus it would be inappropriate to attempt 
to segregate firming energy purchases, and it would be inconsistent 
with Southwestern's marketing plan and power sales contracts.

Other Issues

    Other issues are discussed in the Administrator's Record of 
Decision.

Availability of Information

    Information regarding this rate proposal, including studies, 
comments and other supporting material, is available for public review 
and comment in the offices of Southwestern Power Administration, One 
West Third Street, Tulsa, OK 74101.

Administrator's Certification

    The November 2005 Revised Power Repayment Study indicates that the 
increased power rates will repay all costs of the Integrated System 
including amortization of the power investment consistent with the 
provisions of Department of Energy Order No. RA 6120.2. In accordance 
with Delegation Order No. 00-037.00, December 6, 2001, and section 5 of 
the Flood Control Act of 1944, the Administrator has determined that 
the proposed System rates are consistent with applicable law and the 
lowest possible rates consistent with sound business principles.

Environment

    The environmental impact of the proposed System rates was evaluated 
in consideration of DOE's guidelines for implementing the procedural 
provisions of the National Environmental Policy Act and was determined 
to fall within the class of actions that are categorically excluded 
from the requirements of preparing either an environmental Impact 
Statement or an Environmental Assessment.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me the Deputy Secretary of Energy, I hereby confirm, approve and place 
in effect on an interim basis, effective February 1, 2006, the 
following Southwestern Integrated System Rate Schedules which shall 
remain in effect on an interim basis through September 30, 2009, or 
until the FERC confirms and approves the rates on a final basis.

Dated: February 1, 2006.

Clay Sell,

Deputy Secretary.

Rate Schedule P-05 \1\ Wholesale Rates for Hydro Peaking Power
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    \1\ Supersedes Rate Schedule P-04
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Effective

    During the period February 1, 2006, through September 30, 2009, in 
accordance with Rate Order No. SWPA-53 issued by the Deputy Secretary 
of Energy on February 1, 2006.

Available

    In the marketing area of Southwestern Power Administration 
(Southwestern), described generally as the States of Arkansas, Kansas, 
Louisiana, Missouri, Oklahoma, and Texas.

Applicable

    To wholesale Customers which have contractual rights from 
Southwestern to purchase Hydro Peaking Power and associated energy 
(Peaking Energy and Supplemental Peaking Energy).

Character and Conditions of Service

    Three-phase, alternating current, delivered at approximately 60 
Hertz, at the nominal voltage(s), at the points of delivery, and in 
such quantities as are specified by contract.

Definitions of Terms

    ``Customer'' is the entity which is utilizing and/or purchasing 
hydroelectric power and associated energy and services from 
Southwestern pursuant to this rate schedule.
    The ``Demand Period'' used to determine maximum integrated rates of 
delivery for the purpose of power accounting is the 60-minute period 
which begins with the change of hour. The term ``peak demand'' means 
the highest rate of delivery, in kilowatts, for any Demand Period 
during a particular month, at any particular point of delivery.
    For the purposes of this Rate Schedule, the term ``point of 
delivery'' is used to mean either a single physical point at which 
electric power and energy are delivered from the System of Southwestern 
(defined below), or a specified set of delivery points which together 
form a single, electrically integrated load. ``Peak demand'' for such 
set of delivery points is computed as the coincidental highest rate of 
delivery among the specified points rather than as the sum of peak 
demands for each individual physical point of delivery.
    The term ``Peaking Contract Demand'' means the maximum rate in 
kilowatts at which Southwestern is, by contract, obligated to deliver 
Peaking Energy during any Demand Period. Unless otherwise provided by 
contract, the ``Peaking Billing Demand'' for any month shall be equal 
to the ``Peaking Contract Demand.''
Supersedes Rate Schedule P-04
    The term ``Uncontrollable Force,'' as used herein, shall mean any 
force which is not within the control of the party affected, including, 
but not limited to failure of water supply, failure of facilities, 
flood, earthquake, storm, lightning, fire, epidemic, war, riot, civil 
disturbance, labor disturbance, sabotage, or restraint by court of 
general jurisdiction, which by exercise of due diligence and foresight 
such party could not reasonably have been expected to avoid.
    The term ``System of Southwestern'' means the high-voltage 
transmission lines and related facilities Southwestern owns and 
operates, and/or has contractual rights to such transmission facilities 
owned by others.
    ``Ancillary Services'' are those services necessary to support the 
transmission of capacity and energy from resources to loads while 
maintaining reliable operation of the System of Southwestern in 
accordance with good utility practice. Definitions of the Ancillary 
Services are as follows:
    ``Scheduling, System Control, and Dispatch Service'' is provided by 
Southwestern as Control Area operator and is in regard to interchange 
and load-match scheduling and related system control and dispatch 
functions.
    ``Reactive Supply and Voltage Control from Generation Sources 
Service'' is provided at transmission facilities in the System of 
Southwestern to produce or absorb reactive power and to maintain 
transmission voltages within specific limits.
    ``Regulation and Frequency Response Service'' is the continuous 
balancing of generation and interchange resources accomplished by 
raising or lowering the output of on-line generation as

[[Page 7769]]

necessary to follow the moment-by-moment changes in load and to 
maintain frequency within a Control Area.
    ``Spinning Operating Reserve Service'' maintains generating units 
on-line, but loaded at less than maximum output, which may be used to 
service load immediately when disturbance conditions are experienced 
due to a sudden loss of generation or load.
    ``Supplemental Operating Reserve Service'' provides an additional 
amount of operating reserve sufficient to reduce Area Control Error to 
zero within 10 minutes following loss of generating capacity which 
would result from the most severe single contingency.
    ``Energy Imbalance Service'' corrects for differences over a period 
of time between schedules and actual hourly deliveries of energy to a 
load. Energy delivered or received within the authorized bandwidth 
(defined below) for this service is accounted for as an inadvertent 
flow and is returned to the providing party by the receiving party in 
accordance with standard utility practice.

Energy Associated With Hydro Peaking Power

Peaking Energy

    1,200 kilowatthours of Peaking Energy per kilowatt of Peaking 
Contract Demand will be furnished during each contract year.

Supplemental Peaking Energy

    Supplemental Peaking Energy (in addition to Peaking Energy) will be 
furnished if and when determined by Southwestern to be available, and 
at rates of delivery which do not exceed the Customer's Peaking 
Contract Demand.

Monthly Rates for Peaking Contract Demand

Capacity Charge for Hydro Peaking Power

    $3.03 per kilowatt of Peaking Billing Demand.

Services Associated With Capacity Charge for Hydro Peaking Power

    The capacity charge for Hydro Peaking Power includes such 
transmission services as are necessary to integrate Southwestern's 
resources in order to reliably deliver Hydro Peaking Power and 
associated energy to Customers. This capacity charge also includes two 
ancillary services charges, Scheduling, System Control and Dispatch 
Service and Reactive Supply and Voltage Control from Generation Sources 
Service.

Secondary Transmission Service Under Capacity Associated With Hydro 
Peaking Power

    Customers may utilize the capacity associated with Peaking Contract 
Demand for the transmission of non-Federal energy, on a non-firm, as-
available basis, at no additional charge for such transmission service 
or associated Ancillary Services, under the following terms and 
conditions:
    (1) The sum of the capacity, for any hour, which is used for 
Peaking Energy, Supplemental Peaking Energy, and Secondary Transmission 
Service, may not exceed the Peaking Contract Demand;
    (2) The non-Federal energy transmitted under such secondary service 
is delivered to the Customer's point of delivery for Hydro Peaking 
Power;
    (3) The Customer pays for or commits to provide Real Power Losses 
associated with such deliveries of non-Federal energy; and
    (4) Southwestern determines that sufficient transfer capability 
exists between the point of receipt into the System of Southwestern of 
such non-Federal energy and the Customer's point of delivery for Hydro 
Peaking Power for the time period that such secondary transmission 
service is requested.

Rates for Energy Associated With Hydro Peaking Power

Energy Charge

    (a) $0.0082 per kilowatthour of Peaking Energy delivered; plus (c).
    (b) $0.0055 per kilowatthour of Supplemental Peaking Energy 
delivered;
    (c) A purchased power adder of $0.0029 per kilowatthour of Peaking 
Energy delivered, as adjusted by the Administrator, Southwestern, in 
accordance with the procedure within this rate schedule. This adder 
does not apply to:
    Supplemental Peaking Energy, or
    Sales to any Customer which, by contract, has assumed the 
obligation to supply energy to fulfill the minimum of 1,200 
kilowatthours of Peaking Energy per kilowatt of Peaking Contract Demand 
during a contract year (Contract Support Arrangements).

Monthly Rates for Transformation Service

Capacity Charges for Transformation Service

    A charge of $0.30 per kilowatt will be assessed for capacity used 
to deliver energy at any point of delivery at which Southwestern 
provides transformation service for deliveries at voltages of 69 
kilovolts or less from higher voltage facilities.

Application of Capacity Charges for Transformation Service

    For any particular month, charges for transformation service will 
be assessed on the greater of (1) that month's actual peak demand, or 
(2) the highest peak demand recorded during the previous 11 months, at 
any point of delivery. For the purpose of this Rate Schedule, the peak 
demand will be based on all deliveries, of both Federal and non-Federal 
energy, from the System of Southwestern, at such point during such 
month.

Rates for Ancillary Services

Capacity Charges for Ancillary Services

    (a) Regulation and Frequency Response Service: Monthly rate of 
$0.08 per kilowatt of Peaking Billing Demand.
    (b) Spinning Operating Reserve Service: Monthly rate of $0.0079 per 
kilowatt of Peaking Billing Demand. Daily rate of $0.00036 per kilowatt 
for non-Federal generation inside Southwestern's control area.
    (c) Supplemental Operating Reserve Service: Monthly rate of $0.0079 
per kilowatt of Peaking Billing Demand. Daily rate of $0.00036 per 
kilowatt for non-Federal generation inside Southwestern's control area.
    (d) Energy Imbalance Service: $0.0 per kilowatt for all reservation 
periods.

Availability of Ancillary Services

    Ancillary Services (a) and (d) listed above are available only for 
deliveries of power and energy to load centers within Southwestern's 
Control Area. Ancillary Services (b) and (c) listed above are available 
only for deliveries of non-Federal power and energy generated by 
resources located within Southwestern's Control Area and for deliveries 
of all Hydro Peaking Power and associated energy from and within 
Southwestern's Control Area. Where available, such Ancillary Services 
must be taken from Southwestern; unless, subject to Southwestern's 
approval, they are provided by others.

Application of Ancillary Services Charges

    For any month, the charges for Ancillary Services (a), (b), (c) and 
(d) listed above for deliveries of Hydro Peaking Power shall be based 
on the Peaking Billing Demand.
    The daily charge for Ancillary Services (b) and (c) for non-Federal 
generation inside Southwestern's Control Area shall be applied to the 
greater of Southwestern's previous day's estimate of the peak, or the 
actual peak,

[[Page 7770]]

in kilowatts, of the internal non-Federal generation.

Provision of Ancillary Services by Others

    Customers for which Ancillary Services (a), (b), (c) and (d) are 
made available as specified above, must inform Southwestern by written 
notice of the Ancillary Services which they do not intend to take and 
purchase from Southwestern, and of their election to provide all or 
part of such Ancillary Services from their own resources or from a 
third party.
    Subject to Southwestern's approval of the ability of such resources 
or third parties to meet Southwestern's technical requirements for 
provision of such Ancillary Services, the Customer may change the 
Ancillary Services which it takes from Southwestern and/or from other 
sources at the beginning of any month upon the greater of 60 days 
notice or upon completion of any necessary equipment modifications 
necessary to accommodate such change.

Limitations on Energy Imbalance Service

    Energy Imbalance Service primarily applies to deliveries of power 
and energy which are required to satisfy a Customer's load. As Hydro 
Peaking Power and associated energy are limited by contract, the Energy 
Imbalance Service bandwidth specified in Southwestern's Open Access 
Transmission Service tariff does not apply to deliveries of Hydro 
Peaking Power, and therefore Energy Imbalance Service is not charged on 
such deliveries. Customers who consume a capacity of Hydro Peaking 
Power greater than their Peaking Contract Demand may be subject to a 
Capacity Overrun Penalty.

Application of Capacity Overrun Penalty

    Customers which have loads within Southwestern's Control Area are 
obligated by contract to provide resources, over and above the Hydro 
Peaking Power and associated energy purchased from Southwestern, 
sufficient to meet their loads. A Capacity Overrun Penalty shall be 
applied only when the formulas provided in Customers' contracts 
indicate an overrun on Hydro Peaking Power, and investigation 
determines that all resources, both firm and non-firm, which were 
available at the time of the apparent overrun were insufficient to meet 
the Customer's load.

Capacity Overrun Penalty

    For each hour during which Hydro Peaking Power was provided at a 
rate greater than that to which the Customer is entitled, the Customer 
will be charged a capacity overrun penalty at the following rates:

------------------------------------------------------------------------
                                                                Rate per
                Months associated with charge                   kilowatt
------------------------------------------------------------------------
March, April, May, October, November, December...............      $0.15
January, February, June, July, August, September.............       0.30
------------------------------------------------------------------------

Application of Energy Overrun Penalty

    By contract, the Customer is subject to limitations on the maximum 
amounts of Peaking Energy which may be scheduled during any month or 
during any four consecutive months. When the Customer schedules an 
amount in excess of such maximum amounts for any month, or schedules 
more than 1,200 hours of Peaking Energy per kilowatt of Peaking 
Contract Demand in any contract year, such Customer is subject to the 
Energy Overrun Penalty.

Energy Overrun Penalty

    For each kilowatthour of overrun: $0.0902 per kilowatthour.

Rates for Real Power Losses

    The Customer shall purchase real power losses unless it elects to 
self-provide such losses under the provision detailed below in Annual 
Election to Self Provide Real Power Losses.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted under a particular Customer's 
Peaking Contract Demand. The monthly charge for such Real Power Losses 
will be computed on a per kilowatthour basis as follows:

MC = .04 x NFE x R

with the factors defined as follows:

MC = The monthly charge ($) by Southwestern for Real Power Losses of 
non-Federal energy transmitted under the capacity associated with Hydro 
Peaking Power;
NFE = The amount of non-Federal energy (kWh) transmitted under a 
Customer's Peaking Contract Demand during a particular month; and
R = The rate for Real Power Losses ($ per kWh), is equal to the average 
of Southwestern's actual costs for the purchase of energy to replace 
Real Power Losses during the previous fiscal year (October through 
September), as reflected in Southwestern's financial records.

    The rate for Real Power Losses will be posted on Southwestern's 
OASIS by November 1 of each year. This rate will be effective for one 
year beginning January 1 of each calendar year.
    Annual Election to Self Provide Real Power Losses: The Customer may 
elect, on an annual basis, to self-provide all loss energy for which it 
is responsible subject to the following conditions:
    (1) Such election for self-provision shall be for a full calendar 
year (January through December) for that Customer and shall be 
exercised by execution of a service agreement, or equivalent, before 
December 1 of the prior calendar year;
    (2) Unless otherwise specified in the service agreement, the 
Customer shall schedule the delivery of real power losses into the 
System of Southwestern at the rate of one megawatt of real power losses 
for every 25 megawatts of non-Federal power and energy delivered to 
Customers' loads served from the points of delivery set forth in the 
Southwestern/Customer contract;
    (3) For any new customer taking transmission service from 
Southwestern, election to self-provide real power losses shall be made 
at the time the contract is negotiated. Such service shall be 
implemented as provided for in the contract and the election to self-
provide shall apply through the end of that calendar year for all 
transmission services.

Requirements Related to Power Factor

    Any Customer served from facilities owned by or available by 
contract to Southwestern will be required to maintain a power factor of 
not less than 95 percent and will be subject to the following 
provisions.

Determination of Power Factor

    The power factor will be determined for all Demand Periods and 
shall be calculated under the formula:
[GRAPHIC] [TIFF OMITTED] TN14FE06.004

with the factors defined as follows:

PF = The power factor for any Demand Period of the month.
kWh = The total quantity of energy which is delivered during such 
Demand Period to the point of delivery or interconnection.
rkVAh = The total quantity of reactive kilovolt-ampere-hours (kvars) 
delivered during such Demand Period to the point of delivery or 
interconnection.

Power Factor Penalty and Assessment

    The Customer shall be assessed a penalty for all Demand Periods of 
a month where the power factor is less

[[Page 7771]]

than 95 percent lagging. For any Demand Period during a particular 
month such penalty shall be in accordance with the following formula:

C = D x (.95-LPF) x $0.10

with the factors defined as follows:

C = The charge in dollars to be assessed for any particular Demand 
Period of such month that the Determination of Power Factor ``PF'' is 
calculated to be less than 95 percent lagging.
D = The Customer's demand in kilowatts at the point of delivery for 
such Demand Period in which a low power factor was calculated.
LPF = The lagging power factor, if any, determined by the formula 
``PF'' for such Demand Period.

If C is negative, then C = zero (0).

Application of Power Factor Penalty

    The Power Factor Penalty is applicable to radial interconnections 
with the System of Southwestern. The total Power Factor Penalty for any 
month shall be the sum of all charges ``C'' for all Demand Periods of 
such month. No penalty is assessed for leading power factor. 
Southwestern, in its sole judgment and at its sole option, may 
determine whether power factor calculations should be applied to a 
single physical point of delivery or to multiple physical points of 
delivery where a Customer has a single, electrically integrated load 
served through multiple points or interconnections. The general 
criteria for such decision shall be that, given the configuration of 
the Customer's and Southwestern's systems, Southwestern will determine, 
in its sole judgment and at its sole option, whether the power factor 
calculation more accurately assesses the detrimental impact on 
Southwestern's system when the above formula is calculated for a single 
physical point of delivery or for a combination of physical points or 
for an interconnection as specified by an Interconnection Agreement.
    Southwestern, at its sole option, may reduce or waive power factor 
penalties when, in Southwestern's sole judgment, low power factor 
conditions were not detrimental to the System of Southwestern due to 
particular loading and voltage conditions at the time the power factor 
dropped below 95 percent lagging.

Adjustment for Reduction in Service

    If, during any month, the quantity of Peaking Contract Demand of 
Southwestern's 1200 hour peaking power sales customers that is 
scheduled by the customer for delivery is reduced by Southwestern for a 
period or periods of not less than two consecutive hours by reason of 
an outage caused by either an Uncontrollable Force or by the 
installation, maintenance, replacement or malfunction of generation, 
transmission and/or related facilities on the System of Southwestern, 
or insufficient pool levels, the Customer's capacity charges for such 
month will be reduced for each such reduction in service by an amount 
computed under the formula:

R = (C x K x H) / S

with the factors defined as follows:

R = The dollar amount of reduction in the monthly total capacity 
charges for a particular reduction of not less than two consecutive 
hours during any month, except that the total amount of any such 
reduction shall not exceed the product of the Customer's capacity 
charges associated with Hydro Peaking Power times the Peaking Billing 
Demand.
C = The Customer's capacity charges associated with Hydro Peaking Power 
for the Peaking Billing Demand for such month.
K = The reduction in kilowatts in Peaking Billing Demand for a 
particular event.
H = The number of hours duration of such particular reduction.
S = The number of hours that Peaking Energy is scheduled during such 
month, but not less than 60 hours times the Peaking Contract Demand.

    Such reduction in charges shall fulfill Southwestern's obligation 
to deliver Peaking Power and Peaking Energy.

Procedure for Determining Southwestern's Net Purchased Power Adder 
Adjustment

    Not more than once annually, the Purchased Power Adder of $.0029 
(2.9 mills) per kilowatthour of Peaking Energy, as noted in this Rate 
Schedule, may be adjusted by the Administrator, Southwestern, by an 
amount up to $.0011 (1.1 mills) per kilowatthour, as 
calculated by the following formula:

ADJ = (PURCH-EST + DIF) / SALES

with the factors defined as follows:

ADJ = The dollar amount of the total adjustment, plus or minus, to be 
applied to the Net Purchased Power Adder, rounded to the nearest $.0001 
per kilowatthour, provided that the total ADJ to be applied in any year 
shall not vary from the then-effective ADJ by more than $.0011 per 
kilowatthour;
PURCH = The actual total dollar cost of Southwestern's System Direct 
Purchases as accounted for in the financial records of the Southwestern 
Federal Power System for the period;
EST = The estimated total dollar cost ($6,505,400 per year) of 
Southwestern's System Direct Purchases used as the basis for the 
Purchased Power Adder of $.0029 per kilowatthour of Peaking Energy;
DIF = The accumulated remainder of the difference in the actual and 
estimated total dollar cost of Southwestern's System Direct Purchases 
since the effective date of the currently approved Purchased Power 
Adder set forth in this rate schedule, which remainder is not projected 
for recovery through the ADJ in any previous periods;
SALES = The annual Total Peaking Energy sales projected to be delivered 
(2,241,300,000 KWh per year) from the System of Southwestern, which 
total was used as the basis for the $.0029 per kilowatthour Purchased 
Power Adder.

Rate Schedule NFTS-05 \1\ Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service

Effective

    During the period February 1, 2006, through September 30, 2009, in 
accordance with Rate Order No. SWPA-53 issued by the Deputy Secretary 
of Energy on February 1, 2006.

Available

    In the region where Southwestern Power Administration 
(Southwestern) owns and operates high-voltage transmission lines and 
related facilities, and/or has contractual rights to such transmission 
facilities owned by others (System of Southwestern).

Applicable

    To Customers which have executed Service Agreements with 
Southwestern for the transmission of non-Federal power and energy over 
the System of Southwestern or for its use for interconnections. 
Southwestern will provide services over those portions of the System of 
Southwestern in which the Administrator, Southwestern, in his or her 
sole judgment, has determined that uncommitted transmission and 
transformation capacities in the System of Southwestern are and will be 
available in excess of the capacities required to market Federal power 
and energy pursuant to section 5 of the Flood Control Act of 1944 (58 
Stat. 887,890; 16 U.S.C. 825s).

[[Page 7772]]

Character and Conditions of Service

    Service will be provided as 3-phase, alternating current, at 
approximately 60 Hertz, and at the voltage level of the point(s) 
specified by Service Agreement or Transmission Service Transaction.

Definitions of Terms

    A Customer is the entity which is utilizing and/or purchasing 
services from Southwestern pursuant to this rate schedule.
    A ``Service Agreement'' is a contract executed between a Customer 
and Southwestern for the transmission of non-Federal power and energy 
over the System of Southwestern or for interconnections. Service 
Agreements include:
    ``Firm Transmission Service Agreements'' that provide for reserved 
transmission capacity on a firm basis, for a particular point-to-point 
delivery path.
    ``Non-Firm Transmission Service Agreements'' that provide for the 
Customer to request transmission service on a non-firm basis.
    ``Network Transmission Service Agreements'' that provide for the 
Customer to request firm transmission service for the delivery of 
capacity and energy from the Customer's network resources to the 
Customer's network load, for a period of one year or more.

Supersedes Rate Schedule NFTS-04

    ``Interconnection Agreements'' that provide for the use of the 
System of Southwestern and recognize the exchange of mutual benefits 
for such use or provide for application of a charge for Interconnection 
Facilities Service.
    A ``Service Request'' is made under a Transmission Service 
Agreement through Southwestern's Open Access Same-Time Information 
System (OASIS) for reservation of transmission capacity over a 
particular point-to-point delivery path for a particular period. When a 
Service Request is approved by Southwestern, it becomes a 
``Transmission Service Transaction.'' The Customer must submit hourly 
schedules for actual service in addition to the Service Request.
    ``Firm Point-to-Point Transmission Service'' is transmission 
service reserved on a firm basis between specific points of receipt and 
delivery pursuant to either a Firm Transmission Agreement or to a 
Transmission Service Transaction. ``Non-Firm Point-to-Point 
Transmission Service'' is transmission service reserved on a non-firm 
basis for specific points of receipt and delivery pursuant to a 
Transmission Service Transaction. ``Network Integration Transmission 
Service'' is transmission service provided under Part III of 
Southwestern's Open Access Transmission Service Tariff which provides 
the Customer with firm transmission service for the delivery of 
capacity and energy from the Customer's resources to the Customer's 
load.
    ``Secondary Transmission Service'' is associated with Firm Point-
to-Point Transmission Service and Network Integration Transmission 
Service. For Firm Point-to-Point Transmission Service, it consists of 
transmission service provided on an as-available, non-firm basis, 
scheduled within the limits of a particular capacity reservation for 
transmission service, and scheduled from points of receipt, or to 
points of delivery, other than those designated in a Long-Term Firm 
Transmission Agreement or a Transmission Service Transaction for Firm 
Point-to-Point Transmission Service. For Network Integration 
Transmission Service, Secondary Transmission Service consists of 
transmission service provided on an as-available, non-firm basis, from 
resources other than the Network Resources designated in a Network 
Transmission Service Agreement, to meet the Customer's Network Load. 
The charges for Secondary Transmission Service, other than Real Power 
Losses and Ancillary Services, are included in the applicable capacity 
charges for Firm Point-to-Point Transmission Service and Network 
Integration Transmission Service.
    The ``Demand Period'' used to determine a maximum integrated rate 
of delivery for the purposes of power accounting is the 60-minute 
period which begins with the change of hour. The term ``Peak Demand'' 
means the highest rate of delivery, in kilowatts, for any Demand Period 
during a particular month, at any particular point of delivery or 
interconnection.
    For the purposes of this rate schedule, the term ``Point of 
Delivery'' is used to mean either a single physical point to which 
electric power and energy are delivered from the System of 
Southwestern, or a specified set of delivery points which together form 
a single, electrically integrated load. Peak Demand for such set of 
points is computed as the coincidental highest rate of delivery among 
the specified points rather than as the sum of peak demands for each 
individual physical point.
    ``Ancillary Services'' are those services necessary to support the 
transmission of capacity and energy from resources to loads while 
maintaining reliable operation of the System of Southwestern in 
accordance with good utility practice. Ancillary Services include:
    ``Scheduling, System Control, and Dispatch Service'' is provided by 
Southwestern as Control Area operator and is in regard to interchange 
and load-match scheduling and related system control and dispatch 
functions.
    ``Reactive Supply and Voltage Control from Generation Sources 
Service'' is provided at transmission facilities in the System of 
Southwestern to produce or absorb reactive power and to maintain 
transmission voltages within specific limits.
    ``Regulation and Frequency Response Service'' is the continuous 
balancing of generation and interchange resources accomplished by 
raising or lowering the output of on-line generation as necessary to 
follow the moment-by-moment changes in load and to maintain frequency 
within a Control Area.
    ``Spinning Operating Reserve Service'' maintains generating units 
on-line, but loaded at less than maximum output, which may be used to 
service load immediately when disturbance conditions are experienced 
due to a sudden loss of generation or load.
    ``Supplemental Operating Reserve Service'' provides an additional 
amount of operating reserve sufficient to reduce Area Control Error to 
zero within 10 minutes following loss of generating capacity which 
would result from the most severe single contingency.
    ``Energy Imbalance Service'' corrects for differences over a period 
of time between schedules and actual hourly deliveries of energy to a 
load.
    ``Interconnection Facilities Service'' provides for the use of the 
System of Southwestern to deliver energy and/or provide system support 
at an interconnection.

Rates for Firm Point-to-Point Transmission Service

Capacity Charges for Firm Transmission Service

    Monthly: $0.90 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
longer term agreement.
    Weekly: $0.225 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.0409 per kilowatt of transmission capacity reserved in 
increments of one day of service.

[[Page 7773]]

Service Associated With Capacity Charges for Firm Point-to-Point 
Transmission Service

    The capacity charge for firm transmission service includes 
Secondary Transmission Service, but does not include charges for 
Ancillary Services or for Real Power Losses associated with actual 
schedules.

Application of Capacity Charges for Firm Point-to-Point Transmission 
Service

    Capacity charges for firm transmission service are applied to 
quantities reserved by contract under a Firm Transmission Agreement or 
in accordance with a Transmission Service Transaction.
    Customers, unless otherwise specified by contract, will be charged 
on the greatest of (1) the Peak Demand at any particular point of 
delivery during a particular month, rounded up to the nearest whole 
megawatt, or (2) the highest Peak Demand recorded at such point of 
delivery during any of the previous 11 months, rounded up to the 
nearest whole megawatt, or (3) the capacity reserved by contract; which 
amount shall be considered such Customer's reserved capacity. Secondary 
Transmission Service for such Customers shall be limited during any 
month to the most recent Peak Demand on which a particular Customer is 
billed or to the capacity reserved by contract, whichever is greater.

Rates for Non-Firm Point-to-Point Transmission Service

Capacity Charges for Non-Firm Transmission Service

    Monthly: 80 percent of the firm monthly charge of transmission 
capacity reserved in increments of one month of service.
    Weekly: 80 percent of the firm monthly charge divided by 4 of 
transmission capacity reserved in increments of one week of service.
    Daily: 80 percent of the firm monthly charge divided by 22 of 
transmission capacity reserved in increments of one day of service.
    Hourly: 80 percent of the firm monthly charge divided by 352 of 
transmission capacity reserved in increments of one hour of service.

Application of Charges for Non-Firm Point-to-Point Transmission Service

    Capacity charges for Non-Firm Transmission Service are applied to 
quantities reserved under a Transmission Service Transaction, and do 
not include charges for Ancillary Services or Real Power Losses.

Rates for Network Integration Transmission Service

Annual Revenue Requirement for Network Integration Service

    $9,155,900.

Monthly Revenue Requirement for Network Integration Service

    $762,992.

Net Capacity Available for Network Integration Service

    845,000 kilowatts.

Capacity Charge for Network Integration Transmission Service

    $0.90 per kilowatt of Network Load ($762,992/845,000 kilowatts).

Application of Charge for Network Integration Transmission Service

    Network Integration Transmission Service is available only for 
deliveries of non-Federal power and energy, and is applied to the 
Customer utilizing such service exclusive of any deliveries of Federal 
power and energy. The capacity on which charges for any particular 
Customer utilizing this service is determined on the greatest of (1) 
The Peak Demand at any particular point of delivery during a particular 
month, rounded up to the nearest whole megawatt, or (2) the highest 
Peak Demand recorded at such point of delivery during any of the 
previous 11 months, rounded up to the nearest whole megawatt.
    For those Customers taking Network Integration Transmission Service 
who are also taking delivery of Federal Power and Energy, the Peak 
Demand shall be determined by subtracting the energy scheduled for 
delivery of Federal Power and Energy for any hour from the metered 
demand for such hour.
    Secondary transmission Service for such Customers shall be limited 
during any month to the most recent Peak Demand on which a particular 
Customer is billed. Charges for Ancillary Services and for Real Power 
Losses shall also be assessed.

Rates for Real Power Losses

    The Customer shall purchase real power losses unless it elects to 
self-provide such losses under the provisions detailed below in Annual 
Election to Self-Provide Real Power Losses.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted on behalf of a Customer. The 
monthly charge for such Real Power Losses will be computed on a per 
kilowatthour basis as follows:

MC = .04 x NFE x R

with the factors defined as follows:

MC = The monthly charge ($) by Southwestern for Real Power Losses of 
non-Federal energy transmitted on behalf of a Customer;
NFE = The amount of non-Federal energy (kWh) transmitted on behalf of a 
Customer during a particular month; and
R = The rate for Real Power Losses ($ per kWh), is an average of 
Southwestern's actual costs for the purchase of energy to replace Real 
Power Losses during the previous fiscal year (October through 
September), as reflected in Southwestern's financial records.

    The rate for Real Power Losses will be posted on Southwestern's 
OASIS by November 1 of each year. This rate will become effective for 
one year beginning January 1 of each calendar year.
    Annual Election to Self-Provide Real Power Losses: The Customer may 
elect, on an annual basis, to self-provide all loss energy for which it 
is responsible, subject to the following conditions:
    (1) Such election for self-provision shall be for a full calendar 
year (January through December) for that Customer and shall be 
exercised by execution of a Service Agreement, or equivalent, before 
December 1 of the prior calendar year.
    (2) Unless otherwise specified in the Service Agreement, the 
Customer shall schedule the delivery of real power losses in the System 
of Southwestern at the rate of one megawatt of real power losses for 
every 25 megawatts of non-Federal power and energy delivered to 
Customers' loads served from the points of delivery set forth in the 
Southwestern/Customer contract.
    (3) For any new Customer taking transmission service from 
Southwestern, election to self-provide real power losses shall be made 
at the time the contract is negotiated. Such service shall be 
implemented as provided for in the contract and the election to self-
provide shall apply through the end of that calendar year for all 
transmission services.

Monthly Capacity Charges for Transformation Service

    A charge of $0.30 per kilowatt will be assessed for capacity used 
to deliver energy at any point of delivery at which Southwestern 
provides transformation for deliveries at voltages of 69 kilovolts or 
less from higher voltage facilities.

Application of Capacity Charges for Transformation Service

    For any particular month, charges for transformation service will 
be assessed

[[Page 7774]]

on the greater of (1) that month's actual Peak Demand, or (2) the 
highest Peak Demand recorded during the previous 11 months. For the 
purpose of this rate schedule, the Peak Demand will be based on all 
deliveries, of both Federal and non-Federal energy, from the System of 
Southwestern, at such point during such month.

Rates for Ancillary Services

Capacity Charges for Ancillary Services Associated With Transmission 
Services

(a) Scheduling, System Control, and Dispatch Service
    Monthly: $0.06 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
Long-Term Firm Transmission Agreement or Network Transmission Service 
Agreement.
    Weekly: $0.015 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.0027 per kilowatt of transmission capacity reserved in 
increments of one day of service.
    Hourly: $0.00017 per kilowatthour of energy delivered as non-firm 
transmission service.
(b) Reactive Supply and Voltage Control from Generation Sources Service
    Monthly: $0.03 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
Long-Term Firm Transmission Agreement or Network Transmission Service 
Agreement.
    Weekly: $0.008 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.0014 per kilowatt of transmission capacity reserved in 
increments of one day of service.
    Hourly: $0.00009 per kilowatthour of energy delivered as non-firm 
transmission service.
(c) Regulation and Frequency Response Service
    Monthly: $0.08 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
Long-Term Firm Transmission Agreement or Network Transmission Service 
Agreement.
    Weekly: $0.020 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.0036 per kilowatt of transmission capacity reserved in 
increments of one day of service.
    Hourly: $0.00023 per kilowatthour of energy delivered as non-firm 
transmission service.
(d) Spinning Operating Reserve Service
    Monthly: $0.0079 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
Long-Term Firm Transmission Agreement or Network Transmission Service 
Agreement.
    Weekly: $0.00198 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.00036 per kilowatt of transmission capacity reserved in 
increments of one day of service.
    Hourly: $0.00002 per kilowatthour of energy delivered as non-firm 
transmission service.
(e) Supplemental Operating Reserve Service
    Monthly: $0.0079 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
Long-Term Firm Transmission Agreement or Network Transmission Service 
Agreement.
    Weekly: $0.00198 per kilowatt of transmission capacity reserved in 
increments of one week of service.
    Daily: $0.00036 per kilowatt of transmission capacity reserved in 
increments of one day of service.
    Hourly: $0.00002 per kilowatthour of energy delivered as non-firm 
transmission service.
(f) Energy Imbalance Service
    $0.0 per kilowatt for all periods of reservation.

Availability of Ancillary Services

    Ancillary Services (a) and (b) are available for all transmission 
services in and from the System of Southwestern and shall be provided 
by Southwestern. Ancillary Services (c) and (f) listed above are 
available only for deliveries of power and energy serving load within 
Southwestern's Control Area and shall be provided by Southwestern, 
unless, subject to Southwestern's approval, they are provided by 
others. Ancillary Services (d) and (e) are available only for 
deliveries of power and energy generated by resources located within 
Southwestern's Control Area and shall be provided by Southwestern, 
unless, subject to Southwestern's approval, they are provided by 
others.

Application of Ancillary Services Charges

    Charges for all Ancillary Services are applied to the reserved or 
network transmission service taken by the Customer in accordance with 
the rates listed above when such services are provided by Southwestern.
    The charges for Ancillary Services are considered to include 
Ancillary Services for any Secondary Transmission Service, except in 
cases where Ancillary Services (c) through (f) are applicable to a 
Secondary Transmission Service transaction, but are not applicable to 
the firm capacity reservation under which Secondary Transmission 
Service is provided. When charges for Ancillary Services are applicable 
to Secondary Transmission Service, the charge for the Ancillary Service 
shall be the hourly rate applied to all energy transmitted utilizing 
the Secondary Transmission Service.

Provision of Ancillary Services by Others

    Customers for which Ancillary Services (c) through (f) are made 
available as specified above must inform Southwestern by written notice 
of the Ancillary Services which they do not intend to take and purchase 
from Southwestern, and their election to provide all or part of such 
Ancillary Services from their own resources or a third party.
    Subject to Southwestern's approval of the ability of such resources 
or third parties to meet Southwestern's technical requirements for 
provision of such Ancillary Services, the customer may change the 
Ancillary Services which it takes from Southwestern and/or from other 
sources at the beginning of any month upon the greater of 60 days 
written notice or upon the completion of