Kerr-Philpott Project, SEPA-46, 50902-50917 [06-7192]

Agencies

• DEPARTMENT OF ENERGY
• Southeastern Power Administration

[Federal Register Volume 71, Number 166 (Monday, August 28, 2006)]
[Notices]
[Pages 50902-50917]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7192]


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DEPARTMENT OF ENERGY

Southeastern Power Administration


Kerr-Philpott Project, SEPA-46

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of rate order.

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SUMMARY: The Deputy Secretary, Department of Energy, confirmed and 
approved, on an interim basis, Rate Schedules VA-1-A, VA-2-A, VA-3-A, 
VA-4-A, CP&L-1-A, CP&L-2-A, CP&L-3-A, CP&L-4-A, AP-1-A, AP-2-A, AP-3-A, 
AP-4-A, NC-1-A, Replacement-2, and VANC-1. The rates were approved on 
an interim basis through September 30, 2011, and are subject to 
confirmation and approval by the Federal Energy Regulatory Commission 
on a final basis.

DATES: Approval of rates on an interim basis is effective October 1, 
2006.

FOR FURTHER INFORMATION CONTACT: Leon Jourolmon, Assistant 
Administrator, Finance & Marketing, Southeastern Power Administration, 
Department of Energy, 1166 Athens Tech Road, Elberton, Georgia 30635-
4578, (706) 213-3800.

SUPPLEMENTARY INFORMATION: The Federal Energy Regulatory Commission, by 
Order issued March 6, 2002, in Docket No. EF01-3041-000, confirmed and 
approved Wholesale Power Rate Schedules VA-1, VA-2, VA-3, VA-4, CP&L-1, 
CP&L-2, CP&L-3, CP&L-4, AP-1, AP-2, AP-3, AP-4, and NC-1 through 
September 30, 2006. This order replaces these rate schedules.

    Dated: August 15, 2006.
Clay Sell,
Deputy Secretary.

In the Matter of: Southeastern Power Administration B Kerr-Philpott 
System Power Rates; Order Confirming and Approving Power Rates 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 Southeastern 
Power Administration (SEPA), were transferred to and vested in the 
Secretary of Energy. By Delegation Order No. 00-037.00, effective 
December 6, 2001, the Secretary of Energy delegated: (1) The authority 
to develop power and transmission rates to Southeastern's 
Administrator, (2) the authority to confirm, approve, and place such 
rates into effect on an interim basis to the Deputy Secretary of 
Energy, and (3) the authority to confirm approve, and place into effect 
on a final basis, to remand or to disapprove such rates to the Federal 
Energy Regulatory Commission (Commission). Existing DOE procedures for 
public participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985.

Background

    Power from the Kerr-Philpott Projects is presently sold under 
Wholesale

[[Page 50903]]

Power Rate Schedules VA-1, VA-2, VA-3, VA-4, CP&L-1, CP&L-2, CP&L-3, 
CP&L-4, AP-1, AP-2, AP-3, AP-4, and NC-1. These rate schedules were 
approved by the FERC on March 6, 2002, for a period ending September 
30, 2006 (98 FERC 62,156). An examination of SEPA's current system 
power repayment study, prepared in July 2006, for the Kerr-Philpott 
System shows that revenues are not adequate to meet repayment criteria. 
A revised repayment study with a revenue increase of $1,423,000 in 
fiscal year 2007 and all future years over the current repayment study 
shows that all costs are repaid within their service life. Therefore, 
Southeastern is proposing to revise the existing rates to generate this 
additional revenue. The rate adjustment is an increase of about twelve 
percent (12%).

Public Notice and Comment

    Notice of a proposed rate adjustment for the Kerr-Philpott System, 
based on a repayment study prepared in February of 2006, was published 
in the Federal Register March 10, 2006 (71 FR 12354). A Public 
Information and Comment Forum was held in Raleigh, North Carolina, on 
April 26, 2006. Transcripts from this forum are included as exhibit A-
4. Written comments were accepted until June 8, 2006. Written comments 
were received from two sources and are attached to this exhibit.
    Comments have been condensed into three major categories. The three 
major categories are as follows:
    1. Power Marketing Policy;
    2. Inclusion of investments that are not currently used and useful;
    3. Establishment of a true-up mechanism;
    4. A question on Corps Operation & Maintenance (O&M) Expense; and
    5. Questions directed at the Corps of Engineers (Corps).
Category 1: Power Marketing Policy
    Comment 1: We don't question the need for a rate increase, but 
suggest that it should be phased in as the project is funded and as we 
see benefits from the increased capacity and hopefully more energy.
    Response 1: The question pertains to marketing policy, rather than 
rates. Over the next five years, SEPA anticipates that at least one 
unit at the John H. Kerr Project will be out of service for 
rehabilitation. During that time, no additional capacity or energy will 
be available to allocate to preference customers. After the 
rehabilitation of the Kerr Project is complete, SEPA will evaluate the 
marketing arrangements and policies and may allocate the additional 
capacity.
Category 2: Inclusion of Investments that are Not Currently Used and 
Useful
    Comment 2: It appears to us that SEPA intends to include amounts in 
the new rate schedules for plant and investment that have not gone into 
commercial operation at this time. The inclusion of these amounts 
appears to violate the general legal principles on cost recovery, as 
well as DOE Regulations that govern the preparation of repayment 
studies and development of rate schedules.
    Response 2: The laws, regulations, methods, and standards for 
establishing rate schedules for Power Marketing Administrations (PMA) 
are different from the standards that apply to Investor Owned 
Utilities. See Generally: Central Electric Power Coop., Inc. v. 
Southeastern Power Administration (4th Cir. 2003). As the commenter has 
cited, ] 10(k.) of RA 6120.2 requires PMAs to include ``investment 
costs for all authorized power system facilities for which Congress has 
appropriated funds for construction and which will be in service within 
the cost evaluation period * * *'' ] 10(l.) provides ``Future 
replacement costs will be included * * *''
    SEPA has traditionally included the cost of power investment that 
is estimated to be in service during the cost evaluation period 
(normally 5 years). SEPA is setting the rate at the beginning of the 
cost evaluation period; therefore it must be an estimate of when it 
will go into service.
    The budget process of the Corps is to request a new start for a 
major rehabilitation. The Corps may ask for several years of additional 
appropriations to complete the rehabilitation. When the first monies 
are appropriated the cost are included in the repayment study if the in 
service date is estimated to be within the cost evaluation period.
    It should be noted that ] 10(l.) does not include a requirement 
that the replacements included in the Repayment Study to have been 
appropriated funds by Congress. The paragraph is discussing costs to be 
included beyond the cost evaluation period. These costs have not been 
appropriated and are estimated assuming the need to be made in order to 
keep the projects in good operating order. It should also be noted that 
RA 6120.2 does not include a requirement that the investment be ``used 
and useful'' before it can be included in the repayment study.
    ] 10(k.) requires that investment costs that ``* * * will be in 
service within the cost evaluation period will be included.'' At this 
time, the customers point out that it is unclear that the ongoing 
rehabilitation of the John H. Kerr Project will be complete at the end 
of the cost evaluation period, which is the end of Fiscal Year 2011. 
Accordingly, SEPA has removed these projected investment costs from the 
Repayment Study used to develop the proposed rate schedules, and 
established a true-up mechanism that is discussed in SEPA's response to 
comments 9 and 10.
    The Repayment Study includes projections of future replacement 
costs for which funds have not been appropriated by Congress, as 
required by ] 10(l.) of RA 6120.2.
    Comment 3: The United States Supreme Court essentially noted that 
electric utilities should recover investments when actually made and 
when the plant or investment is used and useful. It appears that those 
same considerations apply to Power Marketing Administrations as well.
    Response 3: See Response 2, above.
    Comment 4: On page 4 of RA 6120.2, subsection b(3), states ``Fixed 
assets should be carried at the cost of acquisition or construction''. 
There is no suggestion here that the fixed assets should be carried at 
the cost of a predicted acquisition or construction.
    Response 4: See Response 2, above.
    Comment 5: [] 10(k) of RA 6120.2] explains ``The allocated power 
investment costs of all authorized power system facilities for which 
Congress has appropriated funds for construction and which will be in 
service within the cost evaluation period will be included.'' So not 
only does Congress need to provide the funds, but the construction 
needs to be completed before the Department of Energy Regulations allow 
for the recovery of these amounts in the rates.
    Response 5: See Response 2, above.
    Comment 6: [] 10(l.) of RA 6120.2 states] ``Future replacement 
costs will be included in repayment studies by adding the estimated 
capital cost of replacement to the unpaid Federal investment in the 
year each replacement is estimated to go into service.'' The rate 
regulation tells the PMAs that they can include amounts in the rates 
that have been appropriated and then put into plant that has or will go 
into service during the time frame of the repayment schedule.
    Response 6: See Response 2, above.
    Comment 7: The SeFPC believes that SEPA must look to common 
electric utility practice to apply this term of art in the context of 
the proposed increase. Indeed, when considering the inclusion of 
investment that is not yet commercially operable, Federal Courts

[[Page 50904]]

have determined that rates should include investment that is ``used and 
useful.'' See Oglethorpe Power Corporation v. FERC, 84 F.3d 1447, 1451 
(D.C. Cir. 1996) citing Town of Norwood v. FERC, 80 F.3d 526, 531 (D.C. 
Cir. 1996).
    Response 7: See Response 2, above.
    Comment 8: If the Corps and SEPA are wrong about the anticipated 
funding and expected completion of the rehabilitation work, there is no 
apparent downside for each of these agencies. SEPA will continue to 
collect the funds for investment that is not commercially operable, and 
the Corps will simply fail to meet the rehabilitation schedule. There 
appears to be no financial accountability for the failure to perform.
    Response 8: See Response 2, above.
3. Establishment of a True-Up Mechanism
    Comment 9: The North Carolina EMC's propose that an annual 
assessment of plant place in service be made, and only then, impose a 
rate increase that reflect the cost of this placed in-service project. 
The customers should not be in a position to pay in advance for service 
that may or may not be completed.
    Response 9: SEPA has agreed to include a true-up mechanism in the 
proposed rates. The true-up mechanism will work as follows: the 
Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Comment 10: To provide a more accurate reflection of the investment 
entering commercial operation and ensure that the rates reflect this 
reality, the Customers encourage SEPA to consider a rate structure that 
recognizes and accounts for rehabilitation work that goes into 
commercial operation for the preceding fiscal year.
    Response 10. See Response 9, above.
4. Question About Corps of Engineers O&M
    Comment 11: What are the specific components of Corps O&M that have 
increased to make up the $2.7 million annual increase to be recovered 
through rates from the hydropower function at the Kerr Project.
    Response: SEPA provides a breakdown of Corps O&M annually. The 
projections that are incorporated into the repayment study used to 
develop the proposed rate schedules were provided to the O&M Committee 
of the SeFPC on June 8, 2005. SEPA and the Corps provided updates of 
O&M activities May 16, 2006. The specific components of Corps O&M that 
make up the $2.7 million annual increase were included in this 
breakdown. SEPA will continue to provide these reports to the SeFPC and 
any other party that requests them.
5. Questions Directed at the Corps of Engineers
    Comment 12: The SeFPC asked several questions that SEPA believes 
are appropriately addressed by the Corps of Engineers. The questions 
are listed below.
    The Corps response follows each question.
    SeFPC 1. Has the Corps requested funding for this project that has 
not been provided in the year requested?
    Corps 1: No. All funding requested in the President's Budget has 
been provided in the year of the request.
    SeFPC 2. Does the Corps intend to take more than one unit out of 
operation at a time to perform rehabilitation?
    Corps 2: No. The contract allows for a 50-day overlap between unit 
outages. This overlap is to provide better efficiency of the contract 
work force. This will reduce the overall contract time between assembly 
and reassembly of the main hydropower units (Units 2-7). Likewise there 
is a weight restriction and physical size limitation to one main rotor 
removal (215 tons) in the powerhouse on the generator floor erection 
bay.
    SeFPC 3. Are there any infrastructure repairs that must occur 
before the rehabilitation of the generators can take place? i.e. 
overhead bridge crane?
    Corps 3: The only outstanding work is the refurbishment of the 
existing draft tube gates. A new set of draft tube gates has been 
delivered to the project and now being used on Unit 1. This 
refurbishment should not delay any future contract work. The bridge 
crane was refurbished and upgraded already prior to the start of the 
major GE Hydro contract.
    SeFPC 4. Has the Corps ordered all of the equipment needed to make 
the needed replacements? If not, when will this take place?
    Corps 4: All Government furnished equipment required to support the 
rehabilitation contractor has been ordered.
    SeFPC 5. What contingencies have been put in place to address any 
delays from suppliers of equipment or problems with equipment quality, 
installation, or performance?
    Corps 5: The last of the Government furnished equipment is to be 
delivered to the project site within 30 days, well in advance of the 
needs of the rehabilitation contractor. The rehabilitation contractor 
is required by contract to provide a contractor quality control system 
to manage the procurement, installation and testing of the remaining 
equipment. The performance of the contractor's quality control system 
and the contract schedule are continuously evaluated by the Government.
    SeFPC 6. How many Corps Full Time Employees (``FTEs'') were 
anticipated to be allocated to the hydropower function at the Kerr 
project in 2000?
    Corps 6: There have been several reorganizations in Operations 
since FY 2000. None of the positions identified in Operations or 
Maintenance of the powerhouses were established or abolished based on 
the major rehabilitation of the powerhouse. The permanent FTE assigned 
to John H. Kerr in 2000 was approx. 21. The projected FTE this year and 
future years is 22 FTE for the Kerr project. The Hydropower District 
Function (Wilmington-1 FTE) was absorbed into the regular O&M staff at 
the powerhouse to make a total of 22 permanent FTE. There will be a 
projected increase in Philpott FTE by 1 for FY 07 and will remain 
constant into the future for a staff of 4. One additional J.H. Kerr FTE 
may be transferred to Philpott (net gain 0) in the next several years 
based on attrition or upcoming retirements at John H. Kerr. For the 
Kerr-Philpott system this will remain a total of 26 FTE. These totals 
are consistent with other hydropower stations of our size within SAD. 
In the case of the remote operated Philpott Powerhouse the staff is 
somewhat smaller than other remote powerhouse sites in SAD. The John H. 
Kerr staff also has the responsibility for the O&M of another station; 
the Island Creek Pumping Station to support the 22 FTE. The District 
approved Objective Organization, reviewed quarterly, that accounts for 
all USACE Wilmington District FTE for FY 06 through FY 10 allocates a 
combined total staff of 26 permanent FTE for the Hydropower Branch for 
both powerhouses and the pumping station. There are no plans to 
increase or decrease this staffing in the next 4 years.
    SeFPC 7. How many Corps FTEs are anticipated to be allocated to the 
hydropower function at the Kerr project in 2011?
    Corps 7: 22 FTE.

[[Page 50905]]

    SeFPC 8. If there is an increase in Corps FTE allocated to the 
hydropower function between FY 2007 and FY 2011, please explain why the 
Corps expects FTEs allocated to hydropower to rise as the project is 
rehabilitated?
    Corps 8: There is no projected increase or decrease in FTE 
anticipated due to the rehabilitation of the powerhouse. Replacing the 
old generators with new still will require normal O&M and biennial 
inspections on all 7 units. The hydropower staff is allocated certain 
labor charge numbers to assist with the GE Hydro contract for review of 
P&S, submittals, meetings, plant security, and Lockout & Tag out of the 
equipment. Mostly this represents the managers and senior craft staff 
for about 5-10% of their time.
    SeFPC 9. Are any of these Corps FTEs allocated to hydropower 
working on a full time or part-time basis on rehabilitation work?
    Corps 9: No. Administration of the major rehabilitation contract is 
the responsibility of the Wilmington District Construction Branch. The 
Resident Engineer's office of the Wilmington District Construction 
Branch did increase their staff for the administration of the major 
rehabilitation contract with 3.5 FTE. Those employees will be 
reassigned upon completion of the rehabilitation project.

Discussion

System Repayment

    An examination of SEPA's revised system power repayment study, 
prepared in July 2006, for the Kerr-Philpott System shows that with the 
proposed rates, all system power costs are paid within the 50-year 
repayment period required by existing law and DOE Procedure RA 6120.2. 
The Administrator of SEPA has certified that the rates are consistent 
with applicable law and that they are the lowest possible rates to 
customers consistent with sound business principles.

Environmental Impact

    SEPA has reviewed the possible environmental impacts of the rate 
adjustment under consideration and has concluded that, because the 
adjusted rates would not significantly affect the quality of the human 
environment within the meaning of the National Environmental Policy Act 
of 1969, the proposed action is not a major Federal action for which 
preparation of an Environmental Impact Statement is required.

Availability of Information

    Information regarding these rates, including studies and other 
supporting materials, is available for public review in the offices of 
Southeastern Power Administration, 1166 Athens Tech Road, Elberton, 
Georgia 30635, and in the Power Marketing Liaison Office, James 
Forrestal Building, 1000 Independence Avenue, SW., Washington, DC 
20585.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I hereby confirm and approve on an 
interim basis, effective October 1, 2001, attached Wholesale Power Rate 
Schedules VA-1-A, VA-2-A, VA-3-A, VA-4-A, CP&L-1-A, CP&L-2-A, CP&L-3-A, 
CP&L-4-A, AP-1-A, AP-2-A, AP-3-A, AP-4-A, NC-1-A, Replacement-2, and 
VANC-1. The Rate Schedules shall remain in effect on an interim basis 
through September 30, 2011, unless such period is extended or until the 
FERC confirms and approves them or substitutes Rate Schedules on a 
final basis.

    Dated: August 15, 2006.

Clay Sell,
Deputy Secretary.

Wholesale Power Rate Schedule VA-1-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia and North Carolina to whom power may be transmitted and 
scheduled pursuant to contracts between the Government, Virginia 
Electric and Power Company (hereinafter called the Company) , the 
Company's Transmission Operator, currently PJM Interconnection LLC 
(hereinafter called PJM), and the Customer. This rate schedule is 
applicable to customers receiving power from the Government on an 
arrangement where the Company schedules the power and provides the 
Customer a credit on their bill for Government power. Nothing in this 
rate schedule shall preclude modifications to the aforementioned 
contracts to allow an eligible customer to elect service under another 
rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and any ancillary services 
provided under this rate schedule shall be the rates charged 
Southeastern Power Administration by the Company or PJM. Future 
adjustments to these rates will become effective upon acceptance for 
filing by the Federal Energy Regulatory Commission of the Company's 
rate.

Transmission

    $2.43 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.

Ancillary Services

    3.63 Mills per kilowatt-hour of energy as of February 2006, is 
presented for illustrative purposes.
    The initial charge for transmission and Ancillary Services will be 
the Customer's ratable share of the charges for transmission, 
distribution, and ancillary services paid by the Government. The 
charges for transmission and ancillary services are governed by and 
subject to refund based upon the determination in proceedings before 
the Federal Energy Regulatory Commission (FERC) involving the Company's 
or PJM's Open Access Transmission Tariff (OATT).
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may

[[Page 50906]]

charge the Customer for any and all separate transmission, ancillary 
services, and distribution charges paid by the Government in behalf of 
the Customer. These charges could be recovered through a capacity 
charge or an energy charge, as determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the determination in the 
proceeding involving the Company's or PJM's Open Access Transmission 
Tariff.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission is specified in the OATT.
    These losses shall be effective until modified by the Federal 
Energy Regulatory Commission, pursuant to application by the Company or 
PJM under section 205 of the Federal Power Act or Southeastern Power 
Administration under section 206 of the Federal Power Act or otherwise.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule VA-2-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia and North Carolina to whom power may be transmitted pursuant 
to contracts between the Government, Virginia Electric and Power 
Company (hereinafter called the Company), the Company's Transmission 
Operator, currently PJM Interconnection LLC (hereinafter called PJM), 
and the Customer. The Customer has chosen to self-schedule and does not 
receive Government power under an arrangement where the Company 
schedules the power and provides a credit on the Customer's bill for 
Government power. The Customer is responsible for providing a 
scheduling arrangement with the Government. The Government is 
responsible for arranging transmission with the Company and PJM. 
Nothing in this rate schedule shall preclude modifications to the 
aforementioned contracts to allow an eligible customer to elect service 
under another rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and any ancillary services 
provided under this rate schedule shall be the rates charged 
Southeastern Power Administration by the Company or PJM. Future 
adjustments to these rates will become effective upon acceptance for 
filing by the Federal Energy Regulatory Commission of the Company's 
rate.

Transmission

    $2.43 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.

Ancillary Services

    3.63 Mills per kilowatt-hour of energy as of February 2006, is 
presented for illustrative purposes.
    The initial charge for transmission and ancillary services will be 
the Customer's ratable share of the charges for transmission, 
distribution, and ancillary services paid by the Government. The 
charges for transmission and ancillary services are governed by and 
subject to refund based upon the determination in proceedings before 
the Federal Energy Regulatory Commission (FERC) involving the Company's 
or PJM's Open Access Transmission Tariff (OATT).
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission, ancillary services, and 
distribution charges paid by the Government in behalf of the Customer. 
These charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the

[[Page 50907]]

border of the Carolina Power & Light System. These charges could be 
recovered through a capacity charge or an energy charge, as determined 
by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the determination in the 
proceeding involving the Company's or PJM's Open Access Transmission 
Tariff.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission is specified in the OATT.
    These losses shall be effective until modified by the Federal 
Energy Regulatory Commission, pursuant to application by the Company or 
PJM under section 205 of the Federal Power Act or Southeastern Power 
Administration under section 206 of the Federal Power Act or otherwise.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule VA-2-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia and North Carolina to whom power may be transmitted pursuant 
to contracts between the Government, Virginia Electric and Power 
Company (hereinafter called the Company), the Company's Transmission 
Operator, currently PJM Interconnection LLC (hereinafter called PJM), 
and the Customer. The Customer has chosen to self-schedule and does not 
receive Government power under an arrangement where the Company 
schedules the power and provides a credit on the Customer's bill for 
Government power. The Customer is responsible for providing a 
scheduling arrangement with the Government. The Government is 
responsible for arranging transmission with the Company and PJM. 
Nothing in this rate schedule shall preclude modifications to the 
aforementioned contracts to allow an eligible customer to elect service 
under another rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and any ancillary services 
provided under this rate schedule shall be the rates charged 
Southeastern Power Administration by the Company or PJM. Future 
adjustments to these rates will become effective upon acceptance for 
filing by the Federal Energy Regulatory Commission of the Company's 
rate.

Transmission

    $2.43 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.

Ancillary Services

    3.63 Mills per kilowatt-hour of energy as of February 2006, is 
presented for illustrative purposes.
    The initial charge for transmission and ancillary services will be 
the Customer's ratable share of the charges for transmission, 
distribution, and ancillary services paid by the Government. The 
charges for transmission and ancillary services are governed by and 
subject to refund based upon the determination in proceedings before 
the Federal Energy Regulatory Commission (FERC) involving the Company's 
or PJM's Open Access Transmission Tariff (OATT).
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission, ancillary services, and 
distribution charges paid by the Government in behalf of the Customer. 
These charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the determination in the 
proceeding involving the Company's or PJM's Open Access Transmission 
Tariff.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

[[Page 50908]]

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission is specified in the OATT.
    These losses shall be effective until modified by the Federal 
Energy Regulatory Commission, pursuant to application by the Company or 
PJM under Section 205 of the Federal Power Act or Southeastern Power 
Administration under Section 206 of the Federal Power Act or otherwise.

Billing Month

    The billing month for power sold under this schedule shall end at 
12:00 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule VA-4-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia and North Carolina served through the transmission facilities 
of Virginia Electric and Power Company (hereinafter called the Company) 
and PJM Interconnection LLC (hereinafter called PJM). The Customer has 
chosen to self-schedule and does not receive Government power under an 
arrangement where the Company schedules the power and provides a credit 
on the Customer's bill for Government power. The Customer is 
responsible for providing a scheduling arrangement with the Government 
and for providing a transmission arrangement. Nothing in this rate 
schedule shall preclude modifications to the aforementioned contracts 
to allow an eligible customer to elect service under another rate 
schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects (hereinafter called the Projects) and sold under 
appropriate contracts between the Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the Projects.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company or PJM. Future adjustments to these rates 
will become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.

Ancillary Services

    3.63 Mills per kilowatt-hour of energy as of February 2006, is 
presented for illustrative purposes.
    The initial charge for transmission and ancillary services will be 
the Customer's ratable share of the charges for transmission, 
distribution, and ancillary services paid by the Government. The 
charges for transmission and ancillary services are governed by and 
subject to refund based upon the determination in proceedings before 
the Federal Energy Regulatory Commission (FERC) involving the Company's 
or PJM's Open Access Transmission Tariff (OATT).
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission, ancillary services, and 
distribution charges paid by the Government in behalf of the Customer. 
These charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the determination in the 
proceeding involving the Company's or PJM's Open Access Transmission 
Tariff.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission is specified in the OATT.
    These losses shall be effective until modified by the Federal 
Energy Regulatory Commission, pursuant to application by the Company or 
PJM under Section 205 of the Federal Power Act or Southeastern Power 
Administration under Section 206 of the Federal Power Act or otherwise.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

[[Page 50909]]

Wholesale Power Rate Schedule CP&L-1-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
North Carolina and South Carolina to whom power may be transmitted and 
scheduled pursuant to contracts between the Government and Carolina 
Power & Light Company (hereinafter called the Company) and the 
Customer. This rate schedule is applicable to customers receiving power 
from the Government on an arrangement where the Company schedules the 
power and provides the Customer a credit on their bill for Government 
power. Nothing in this rate schedule shall preclude modifications to 
the aforementioned contracts to allow an eligible customer to elect 
service under another rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company. Future adjustments to these rates will 
become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.

Transmission

    $1.0475 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.
    The initial transmission charge will be the Customer's ratable 
share of the transmission and distribution charges paid by the 
Government. The rate is subject to periodic adjustment and will be 
computed in accordance with the terms of the Government-Company 
contract.
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission and distribution charges 
paid by the Government on behalf of the Customer. These charges could 
be recovered through a capacity charge or an energy charge, as 
determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the terms of the 
Government-Company contract.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission, in accordance with the Government-Company 
contract, is six (6) per cent. This loss factor will be governed by the 
terms of the Government-Company contract.
    Billing Month:
    The billing month for power sold under this schedule shall end at 
12:00 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule CP&L-2-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
North Carolina and South Carolina to whom power may be transmitted 
pursuant to contracts between the Government and Carolina Power & Light 
Company (hereinafter called the Company) and the Customer. The Customer 
has chosen to self-schedule and does not receive Government power under 
an arrangement where the Company schedules the power and provides a 
credit on the Customer's bill for Government power. The Customer is 
responsible for providing a scheduling arrangement with the Government. 
The Government is responsible for arranging transmission with the 
Company. Nothing in this rate schedule shall preclude modifications to 
the aforementioned contracts to allow an eligible customer to elect 
service under another rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under

[[Page 50910]]

this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company. Future adjustments to these rates will 
become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.

Transmission

    $1.0475 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.
    The initial transmission charge will be the Customer's ratable 
share of the transmission and distribution charges paid by the 
Government. The rate is subject to periodic adjustment and will be 
computed in accordance with the terms of the Government-Company 
contract.
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission and distribution charges 
paid by the Government in behalf of the Customer. These charges could 
be recovered through a capacity charge or an energy charge, as 
determined by the Government.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the terms of the 
Government-Company contract.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission, in accordance with the Government-Company 
contract, is six (6) per cent. This loss factor will be governed by the 
terms of the Government-Company contract.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule CP&L-3-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
North Carolina and South Carolina to whom power may be scheduled 
pursuant to contracts between the Government and Carolina Power & Light 
Company (hereinafter called the Company) and the Customer. The 
Government is responsible for providing the scheduling. The Customer is 
responsible for providing a transmission arrangement. Nothing in this 
rate schedule shall preclude modifications to the aforementioned 
contracts to allow an eligible customer to elect service under another 
rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects (hereinafter called the Projects) and sold under 
appropriate contracts between the Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the Projects.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company. Future adjustments to these rates will 
become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.
    Proceedings before FERC involving the OATT or the Distribution 
charge may result in the separation of charges currently included in 
the transmission rate. In this event, the Government may charge the 
Customer for any and all separate transmission and distribution charges 
paid by the Government in behalf of the Customer.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power

[[Page 50911]]

from the John H. Kerr Project to the border of the Carolina Power & 
Light System. These charges could be recovered through a capacity 
charge or an energy charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the terms of the 
Government-Company contract.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission, in accordance with the Government-Company 
contract, is six (6) per cent. This loss factor will be governed by the 
terms of the Government-Company contract.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule CP&L-4-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
North Carolina and South Carolina served through the transmission 
facilities of Carolina Power & Light Company (hereinafter called the 
Company). The Customer has chosen to self-schedule and does not receive 
Government power under an arrangement where the Company schedules the 
power and provides a credit on the Customer's bill for Government 
power. The Customer is responsible for providing a scheduling 
arrangement with the Government and for providing a transmission 
arrangement. Nothing in this rate schedule shall preclude modifications 
to the aforementioned contracts to allow an eligible customer to elect 
service under another rate schedule.

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects (hereinafter called the Projects) and sold under 
appropriate contracts between the Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the Projects.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company. Future adjustments to these rates will 
become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.

Tandem Transmission Charge

    $1.69 Per kilowatt of total contract demand per month, as an 
estimated cost as of February 2006.
    The tandem transmission charge will recover the cost of 
transmitting power from a project to the border of another transmitting 
system. This rate will be a formulary rate based on the cost to the 
Government for transmission of power from the Philpott project to the 
border of the Virginia Electric and Power Company System and the cost 
to the Government for transmission of power from the John H. Kerr 
Project to the border of the Carolina Power & Light System. These 
charges could be recovered through a capacity charge or an energy 
charge, as determined by the Government.

Transmission and Ancillary Services

    The charges for Transmission and Ancillary Services shall be 
governed by and subject to refund based upon the terms of the 
Government-Company contract.

Contract Demand

    The contract demand is the amount of capacity in kilowatts stated 
in the contract which the Government is obligated to supply and the 
Customer is entitled to receive.

Energy To Be Furnished by the Government

    The Government will sell to the Customer and the Customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to the 
Company (less applicable losses). The Customer's contract demand and 
accompanying energy will be allocated proportionately to its individual 
delivery points served from the Company's system. The applicable energy 
loss factor for transmission, in accordance with the Government-Company 
contract, is six (6) per cent. This loss factor will be governed by the 
terms of the Government-Company contract.

Billing Month

    The billing month for power sold under this schedule shall end at 
12 midnight on the last day of each calendar month.

Wholesale Power Rate Schedule AP-1-A

Availability

    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia to whom power may be transmitted and scheduled pursuant to 
contracts between the Government, American Electric Power Service 
Corporation (hereinafter called the Company), the Company's 
Transmission Operator, currently PJM Interconnection LLC (hereinafter 
called PJM), and the Customer. This rate schedule is applicable to 
customers receiving power from the Government on an arrangement where 
the Company schedules the power and provides the Customer a credit on 
their bill for Government power. Nothing in this rate schedule shall 
preclude modifications to the aforementioned contracts to allow an 
eligible customer to elect service under another rate schedule.

[[Page 50912]]

Applicability

    This rate schedule shall be applicable to the sale at wholesale of 
power and accompanying energy generated at the John H. Kerr and 
Philpott Projects and sold under appropriate contracts between the 
Government and the Customer.

Character of Service

    The electric capacity and energy supplied hereunder will be 
delivered at the delivery points of the Customer on the Company's 
transmission and distribution system.

Monthly Rate

    The monthly rate for capacity, energy, and generation services 
provided under this rate schedule for the period specified shall be:
    Capacity Charge:
    $2.35 Per kilowatt of total contract demand per month.
    Energy Charge:
    9.38 Mills per kilowatt-hour.
    The Capacity Charge and the Energy Charge will be subject to annual 
adjustment on January 1 of each year based on transfers to plant in 
service for the preceding Fiscal Year that are not included in the 
proposed repayment study. The adjustment will be for each increase of 
$1,000,000 to plant in service an increase of $0.01 per kilowatt per 
month added to the capacity charge and 0.04 mills per kilowatt-hour 
added to the energy charge.
    Additional rates for Transmission and Ancillary Services provided 
under this rate schedule shall be the rates charged Southeastern Power 
Administration by the Company. Future adjustments to these rates will 
become effective upon acceptance for filing by the Federal Energy 
Regulatory Commission of the Company's rate.

Transmission

    $2.43 Per kilowatt of total contract demand per month as of 
February 2006, is presented for illustrative purposes.

Ancillary Services

    3.63 Mills per kilowatt-hour of energy as of February 2006, is 
presented for illustrative purposes.
    The initial charge for transmission and ancillary services will be 
the Customer's ratabl