Integrated System Power Rates, 1363-1372 [2010-247]

Agencies

• DEPARTMENT OF ENERGY
• Southwestern Power Administration

[Federal Register Volume 75, Number 6 (Monday, January 11, 2010)]
[Notices]
[Pages 1363-1372]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-247]


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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 00-001.00C, effective January 31, 2007, the 
Deputy Secretary has approved and placed into effect on an

[[Page 1364]]

interim basis Rate Order No. SWPA-62, which increases the power rates 
for the Integrated System pursuant to the following Integrated System 
Rate Schedules:

Rate Schedule P-09, Wholesale Rates for Hydro Peaking Power
Rate Schedule NFTS-09, Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service
Rate Schedule EE-09, Wholesale Rate for Excess Energy

    The rate schedules supersede the existing rate schedules shown 
below:


    Rate Schedule P-06A, Wholesale Rates for Hydro Peaking Power 
(superseded by P-09)
Rate Schedule NFTS-06A, Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service (superseded by NFTS-09)
Rate Schedule EE-06, Wholesale Rate for Excess Energy (superseded by 
EE-09)

    The effective period for the rate schedules specified in Rate Order 
No. SWPA-62 is January 1, 2010, through September 30, 2013.

FOR FURTHER INFORMATION CONTACT: Mr. James K. McDonald, Assistant 
Administrator, Office of Corporate Operations, Southwestern Power 
Administration, Department of Energy, Williams Center Tower I, One West 
Third Street, Tulsa, Oklahoma 74103, (918) 595-6690, 
jim.mcdonald@swpa.gov

SUPPLEMENTARY INFORMATION: Southwestern Power Administration's 
(Southwestern) Administrator has determined based on the 2009 
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 2009 Integrated System Power Repayment Studies 
(PRSs) indicate that an increase in annual revenue of $17,330,858, or 
10.8 percent, beginning January 1, 2010, will satisfy cost recovery 
criteria for the Integrated System projects. The proposed Integrated 
System rate schedules would increase annual revenues from $160,255,300 
to $177,586,158, to recover increased investments and replacements in 
the hydroelectric generating and transmission facilities and increased 
operations and maintenance costs for both Southwestern and the U.S. 
Army's Corps of Engineers (Corps). Additionally, the PRS analyzes the 
Purchased Power Deferral Account which indicated no change was needed 
for the Purchased Power Adder which is used to recover average year 
purchased energy costs. This proposal also continues the size and 
frequency of the Administrator's Discretionary Purchased Power Adder 
Adjustment (Adjustment). This Adjustment allows the Administrator to 
adjust the Purchased Power Adder twice annually, limited to $0.0067 per kilowatthour per year as necessary, at his/her 
discretion, under a formula-type rate, with notification to the Federal 
Energy Regulatory Commission, to maintain the balance at a level that 
will recover average year purchased power costs.
    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 September 23, 2009, Southwestern 
published notice in the Federal Register, (74 FR 48527), of a 60-day 
comment period, together with a combined Public Information and Comment 
Forum, 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. The forum was canceled since no one 
expressed an intention to participate. Written comments were accepted 
through November 23, 2009. No comments were received.
    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, Tulsa, Oklahoma 74103. Following review 
of Southwestern's proposal within the Department of Energy, I approved, 
Rate Order No. SWPA-62, on an interim basis, which increases the 
existing Integrated System annual revenue requirement to $177,586,158 
per year for the period January 1, 2010 through September 30, 2013.

    Dated: December 30, 2009.
Daniel Poneman,
Deputy Secretary.
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
DEPUTY SECRETARY OF ENERGY

    In the matter of: Southwestern Power Administration) Integrated 
System Rates: Rate Order No. SWPA-62.

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. 00-037.00, 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. The Deputy Secretary issued this 
interim rate order pursuant to that delegation.

BACKGROUND

    FERC confirmation and approval of the following Integrated 
System (System) rate schedules was provided in FERC Docket No. EF09-
4011-000 issued on June 24, 2009, (127 FERC ] 62,232) effective for 
the period January 1, 2009, through September 30, 2010:

Rate Schedule P-06A, Wholesale Rates for Hydro Peaking Power
Rate Schedule NFTS-06A, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service.

    FERC confirmation and approval of the following System rate 
schedule was provided in FERC Docket No. EF07-4011-000 issued 
February 27, 2007, (118 FERC ] 62,162) for the period October 1, 
2006, through September 30, 2010:
Rate Schedule EE-06, Wholesale Rate for Excess Energy.

    Southwestern prepared a 2009 Current Power Repayment Study (PRS) 
which indicated that the existing rates would not satisfy present 
financial criteria regarding repayment of investment within a 50-
year period due to increased investments, replacements and 
operations and maintenance expenses in the U.S. Army Corps of 
Engineers (Corps) hydroelectric generating facilities and 
Southwestern's transmission facilities. The initial Revised PRS 
indicated the need for an 11.9 percent revenue increase.
    An informal meeting was held in June 2009 with Southwestern's 
customer representatives to review the repayment and rate design 
processes and present the basis for the proposed revenue increase. 
At this informal meeting, suggestions from Southwestern's customers 
relating to investment service lives were discussed. As a result of 
the discussion, Southwestern made the determination to revise the 
proposed PRS. Upon completion of those changes in June 2009, 
Southwestern prepared a final 2009 Revised PRS for the System

[[Page 1365]]

resulting in approximately a one percent decrease in needed revenues 
from the initial proposal. Another informal meeting was tentatively 
scheduled for July 2009. However, none of Southwestern's customers 
requested to convene the meeting and as a result, none was held.
    The final 2009 Revised PRS indicates that an increase in annual 
revenues of $17,330,858 (10.8 percent) is necessary beginning 
January 1, 2010, to accomplish repayment in the required number of 
years. Accordingly, Southwestern has prepared proposed rate 
schedules based on the additional revenue requirement and the 2009 
Rate Design Study which allocates the revenue requirement to the 
various System rate schedules to ensure repayment.
    Title 10, Part 903, Subpart A of the Code of Federal 
Regulations, ``Procedures for Public Participation in Power and 
Transmission Rate Adjustments and Extensions,'' 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 60-day period were announced by notice published in 
the Federal Register, September 23, 2009, (74 FR 48527). The 
consultation and comment period was shortened from the 90 days 
provided for in the regulations by the Administrator in accordance 
with Sec. 903.14 of 10 CFR part 903, because of the pre-issuance 
consultations that were held with Southwestern's customers and the 
need to assure new rates are in place by January 1, 2010. A Public 
Information and Comment Forum scheduled for October 7, 2009, in 
Tulsa, Oklahoma, was canceled since no one expressed an intent to 
attend. Southwestern mailed copies of the proposed June 2009 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. Written comments were due by November 23, 
2009.
    No comments were received during the public participation 
process. Following the conclusion of the comment period on November 
23, 2009, the 2009 Power Repayment and Rate Design Studies were 
finalized. The Administrator made the decision to submit the rate 
proposal for interim approval and implementation.

DISCUSSION

General

    The existing rate schedules as developed in the 2006 Integrated 
System PRS were the basis for the revenue determination in the 
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.
    The Revised PRS indicates it is necessary to increase annual 
revenues by $17,330,858 or 10.8 percent, which satisfies the cost 
recovery criteria outlined in DOE Order No. RA 6120.2 and Section 5 
of the Flood Control Act of 1944.
    In Southwestern's 2009 Rate Design proposal, rates were designed 
to recover the additional revenue requirements. The monthly demand 
charge for the sale of Federal hydroelectric power has increased. 
The base energy and supplemental energy charges also reflect an 
increase over the current rate. In addition, transmission charges 
for non-Federal, firm service have increased. Those customers taking 
transformation service will be affected by an increase in that rate 
component. The increases to the transmission charges are due to 
including projected additions and replacements to Southwestern's 
aging transmission facilities since the last rate change.
    Consistent with FERC's Order No. 888, Southwestern will continue 
charging for the six ancillary services under Rate Schedule P-09 and 
Rate Schedule NTFS-09, and offering network transmission service 
under Rate Schedule NFTS-09. Southwestern's rate design has 
separated the six 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 four 
remaining ancillary services will be made available to any 
transmission user within Southwestern's balancing 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 balancing 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-09.
    With respect to the Purchased Power Adder (Adder), Southwestern 
is proposing, as in all previous proposals beginning with the 1983 
implementation of the purchased power rate component, that the Adder 
is set equal to the current average long-term purchased power 
revenue 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 does not change from the current $0.0067 per kWh of peaking 
energy. The total revenue created through application of this Adder 
should enable Southwestern to cover its average annual purchased 
power costs.

COMMENTS AND RESPONSES

    Southwestern received no comments or questions during the public 
participation period.

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 74103.

ADMINISTRATION'S CERTIFICATION

    The June 2009 Revised PRS 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 by the Secretary of Energy, I hereby confirm, approve and 
place in effect on an interim basis, effective January 1, 2010, the 
following Southwestern Integrated System Rate Schedules which shall 
remain in effect on an interim basis through September 30, 2013, or 
until the FERC confirms and approves the rates on a final basis.

    Dated: December 30, 2009.

Daniel Poneman
Deputy Secretary.

UNITED STATES DEPARTMENT OF ENERGY SOUTHWESTERN POWER ADMINISTRATION

RATE SCHEDULE P-09\1\ WHOLESALE RATES FOR HYDRO PEAKING POWER
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    \1\ Supersedes Rate Schedule P-06A
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    Effective: During the period January 1, 2010, through September 
30, 2013, in accordance with Rate Order No. SWPA-62 issued by the 
Deputy Secretary of Energy on December 30, 2009.
    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

[[Page 1366]]

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.''
    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 Balancing Authority 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 Balancing Authority 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: $4.06 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 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:
    (a) PEAKING ENERGY CHARGE: $0.0086 per kilowatthour of Peaking 
Energy delivered; plus (c).
    SUPPLEMENTAL ENERGY CHARGE: $0.0086 per kilowatthour of 
Supplemental Peaking Energy delivered
    (b) A purchased power adder of $0.0067 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 $0.42 
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 
$0.09 per kilowatt of Peaking Billing Demand.
    (b) Spinning Operating Reserve Service:

Monthly rate of $0.0092 per kilowatt of Peaking Billing Demand
Daily rate of $0.00042 per kilowatt for non-Federal generation 
inside Southwestern's Balancing Authority Area.

    (c) Supplemental Operating Reserve Service:
Monthly rate of $0.0092 per kilowatt of Peaking Billing Demand
Daily rate of $0.00042 per kilowatt for non-Federal generation 
inside Southwestern's Balancing Authority Area.

    (d) Energy Imbalance Service: $0.0 per kilowatt for all 
reservation periods.
    Availability of Ancillary Services
    Regulation and Frequency Response Service and Energy Imbalance 
Service are available only for deliveries of power and energy to 
load within Southwestern's Balancing Authority Area. Spinning and 
Supplement Operating Reserve Services are

[[Page 1367]]

available only for deliveries of non-Federal power and energy 
generated by resources located within Southwestern's Balancing 
Authority Area and for deliveries of all Hydro Peaking Power and 
associated energy from and within Southwestern's Balancing Authority 
Area. Where available, such Ancillary Services must be taken from 
Southwestern; unless, arrangements are made in accordance with the 
``Provision of Ancillary Services by Others'' section of this rate 
schedule.
    Application of Ancillary Services Charges
    For any month, the charges for Ancillary Services listed above 
for deliveries of Hydro Peaking Power shall be based on the Peaking 
Billing Demand.
    The daily charge for Spinning and Supplemental Operating Reserve 
Services for non-Federal generation inside Southwestern's Balancing 
Authority Area shall be applied to the greater of Southwestern's 
previous day's estimate of the peak, or the actual peak, in 
kilowatts, of the internal non-Federal generation.
    Provision of Ancillary Services by Others
    Customers for which Ancillary Services 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 and 
operational 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;
    Provided; that if the Customer chooses not to take Regulation 
and Frequency Response Service, which includes the associated 
Regulation Purchased Adder, the Customer must pursue these services 
from a different host Balancing Authority; thereby moving all 
metered loads and resources from Southwestern's Balancing Authority 
Area to the Balancing Authority Area of the new host Balancing 
Authority. Until such time as that meter reconfiguration is 
accomplished, the Customer will be charged for the Regulation and 
Frequency Response Service and Regulation Purchased Adder then in 
effect. The Customer must notify Southwestern by July 1 of this 
choice, to be effective January 1 of the subsequent calendar year. 
Provided; that such Customers shall be assessed for all costs 
incurred by Southwestern for the Regulation Purchased Adder for the 
calendar year in which they give notice. Such assessment will be 
paid in twelve equal monthly payments during the subsequent calendar 
year.
    Regulation Purchased Adder
    From time to time, at Southwestern's sole discretion, 
Southwestern will make a determination that additional regulation 
purchases are necessary in order to meet its Balancing Authority 
Area requirements. With the exception of the initial year of 
implementation, this Regulation Purchased Adder will be estimated 
annually before May 1, and Southwestern will provide written notice 
to Customers of the estimated Regulation Purchased Adder charge to 
be recovered in the next calendar year. Provided; that should 
Southwestern incur additional costs beyond the estimate, such cost 
will be included in the Regulation Purchased Adder for that same 
calendar year.
    The monthly charge will be placed into effect from January 1 
through December 31. The cost for such Regulation Purchased Adder 
shall be recovered by Customers located within Southwestern's 
Balancing Authority Area on a non-coincident peak load-ratio share 
(LRS) basis, divided into twelve equal monthly payments. If the 
Regulation Purchased Adder is determined and applied under rate 
schedule NFTS-09, then it shall not be applied here.
    The Regulation Purchased Adder is based on the following formula 
rate, calculated to include the costs incurred by Southwestern for 
regulation purchases for the previous calendar year.

    REGULATION PURCHASED ADDER FORMULA:

RPA = (LRS customer x RP) / 12

Where:

LRS customer = (Net Load + Generation for the Customer 
Peak Hour) / Balancing Area Authority Non-Coincident Peak Load
RP = (Dollar per MWh of Regulation Purchased - Supplemental Energy 
Rate) x Total MWh of Regulation Purchased.

    With factors defined as follows:

RPA = The Customer's specific monthly dollar amount of Regulation 
Purchased Adder.
LRS customer = The ratio of net load and generation for 
the customer peak hour in the previous calendar year, to the sum of 
the non-coincident net load and generation for each customer in the 
Balancing Authority Area for the same period.
RP = The dollar amount per megawatthour of regulation purchased, 
less the supplemental energy rate times the total megawatthour of 
regulation purchased.

    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 for Non-Federal 
Transmission Service 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 Balancing 
Authority 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: 
$0.0946 per kilowatthour.
    Real Power Losses
    Customers are required to self-provide all Real Power Losses for 
non-Federal energy transmitted by Southwestern on behalf of such 
Customers under the provisions detailed below.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted by Southwestern. The 
Customer's Monthly Real Power Losses are computed each month on a 
megawatthour basis as follows:

ML = .04 x NFE

with the factors defined as follows:

ML = The total monthly loss energy, rounded to the nearest 
megawatthour, to be scheduled by a Customer for receipt by 
Southwestern for Real Power Losses associated with non-Federal 
energy transmitted on behalf of such Customer; and
NFE = The amount of non-Federal energy that was transmitted by 
Southwestern on behalf of a Customer during a particular month.

    The Customer must schedule or cause to be scheduled to 
Southwestern, Real Power Losses for which it is responsible subject 
to the following conditions:
    (1) The Customer shall schedule and deliver real power losses 
back to Southwestern during the second month after they were 
incurred by Southwestern in the transmission of the Customer's non-
Federal power and energy over the System of Southwestern.
    (2) On or before the twentieth day of each month, Southwestern 
shall determine the amount of non-Federal loss energy it

[[Page 1368]]

provided on behalf of the Customer during the previous month and 
provide a written schedule to the Customer setting forth hour-by-
hour the quantities of non-Federal energy to be delivered to 
Southwestern as losses during the next month.
    (3) Real Power Losses not delivered to Southwestern by the 
Customer, according to the schedule provided, during the month in 
which such losses are due shall be billed by Southwestern to the 
Customer to adjust the end-of-month loss energy balance to 0 
megawatthours and the Customer shall be obliged to purchase such 
energy at the following rates:

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

     (4) Real Power Losses delivered to Southwestern by the Customer 
in excess of the losses due during the month shall be purchased by 
Southwestern from the Customer at a rate per megawatthour equal to 
Southwestern's rate per megawatthour for Supplemental Peaking 
Energy, as set forth in Southwestern's then-effective Rate Schedule 
for hydro peaking power to adjust such hourly end-of-month loss 
energy balance to 0 megawatthours.
    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] TN11JA10.006

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 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 twice annually, the Purchased Power Adder of 
$.0067 (6.7 mills) per kilowatthour of Peaking Energy, as noted in 
this Rate Schedule, may be adjusted by the Administrator, 
Southwestern, by an amount up to a total of  $.0067 (6.7 
mills) per kilowatthour per year, 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 
$.0067 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 ($15,064,500 per year) of 
Southwestern's System Direct Purchases used as the basis for the 
Purchased Power Adder of $.0067 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 $.0067 per 
kilowatthour Purchased Power Adder.

UNITED STATES DEPARTMENT OF ENERGY SOUTHWESTERN POWER ADMINISTRATION

RATE SCHEDULE NFTS-09\1\ WHOLESALE RATES FOR NON-FEDERAL 
TRANSMISSION/INTERCONNECTION FACILITIES SERVICE
---------------------------------------------------------------------------

    \1\ Supersedes Rate Schedule NFTS--06A
---------------------------------------------------------------------------

    Effective: During the period January 1, 2010, through September 
30, 2013, in accordance with Rate Order No. SWPA-62 issued by the 
Deputy Secretary of Energy on December 30, 2009.
    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

[[Page 1369]]

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).
    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.
    ``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 the Southwest Power Pool, Inc. (SPP) 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 SPP, 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 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'' 
(``Scheduling'') is provided by Southwestern as Balancing Authority 
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'' (``Reactive Supply'') 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 Balancing Authority 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: $1.18 per kilowatt of transmission capacity reserved in 
increments of one month of service or invoiced in accordance with a 
longer term agreement
Weekly: $0.295 per kilowatt of transmission capacity reserved in 
increments of one week of service
Daily: $0.0536 per kilowatt of transmission capacity reserved in 
increments of one day of service

    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 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:

[[Page 1370]]

    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.
    Rates for Network Integration Transmission Service:

ANNUAL REVENUE REQUIREMENT FOR NETWORK INTEGRATION SERVICE: 
$13,107,700
MONTHLY REVENUE REQUIREMENT FOR NETWORK INTEGRATION SERVICE: 
$1,092,308
NET CAPACITY AVAILABLE FOR NETWORK INTEGRATION SERVICE: 929,000 kW
CAPACITY CHARGE FOR NETWORK INTEGRATION TRANSMISSION SERVICE: $1.18 
per kilowatt of Network Load ($1,092,308/929,000 kW)

    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 shall 
also be assessed.
    Real Power Losses
    Customers are required to self-provide all Real Power Losses for 
non-Federal energy transmitted by Southwestern on behalf of such 
Customers under the provisions detailed below.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted by Southwestern. The 
Customer's Monthly Real Power Losses are computed each month on a 
megawatthour basis as follows:

ML = .04 x NFE

with the factors defined as follows:

ML = The total monthly loss energy, rounded to the nearest 
megawatthour, to be scheduled by a Customer for receipt by 
Southwestern for Real Power Losses associated with non-Federal 
energy transmitted on behalf of such Customer; and
NFE = The amount of non-Federal energy that was transmitted by 
Southwestern on behalf of a Customer during a particular month.

    The Customer must schedule or cause to be scheduled to 
Southwestern, Real Power Losses for which it is responsible subject 
to the following conditions:
    (1) The Customer shall schedule and deliver real power losses 
back to Southwestern during the second month after they were 
incurred by Southwestern in the transmission of the Customer's non-
Federal power and energy over the System of Southwestern.
    (2) On or before the twentieth day of each month, Southwestern 
shall determine the amount of non-Federal loss energy it provided on 
behalf of the Customer during the previous month and provide a 
written schedule to the Customer setting forth hour-by-hour the 
quantities of non-Federal energy to be delivered to Southwestern as 
losses during the next month.
    (3) Real Power Losses not delivered to Southwestern by the 
Customer, according to the schedule provided, during the month in 
which such losses are due shall be billed by Southwestern to the 
Customer to adjust the end-of-month loss energy balance to 0 
megawatthours and the Customer shall be obliged to purchase such 
energy at the following rates:

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

     (4) Real Power Losses delivered to Southwestern by the Customer 
in excess of the losses due during the month shall be purchased by 
Southwestern from the Customer at a rate per megawatthour equal to 
Southwestern's rate per megawatthour for Supplemental Peaking 
Energy, as set forth in Southwestern's then-effective Rate Schedule 
for hydro peaking power to adjust such hourly end-of-month loss 
energy balance to 0 megawatthours.
    Monthly Capacity Charges for Transformation Service: A charge of 
$0.42 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 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: $0.07 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: $0.018 per kilowatt of transmission capacity reserved in 
increments of one week of service
Daily: $0.0032 per kilowatt of transmission capacity reserved in 
increments of one day of service
Hourly: $0.00020 per kilowatt of transmission energy delivered as 
non-firm transmission service.

    (b) Reactive Supply and Voltage Control from Generation Sources 
Service:

Monthly: $0.04 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: $0.010 per kilowatt of transmission capacity reserved in 
increments of one week of service
Daily: $0.0018 per kilowatt of transmission capacity reserved in 
increments of one day of service
Hourly: $0.00011 per kilowatt of transmission energy delivered as 
non-firm transmission service.

    (c) Regulation and Frequency Response Service:

Monthly: $0.09 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: $0.023 per kilowatt of transmission capacity reserved in 
increments of one week of service
Daily: $0.0041 per kilowatt of transmission capacity reserved in 
increments of one day of service
Hourly: $0.00026 per kilowatt of transmission energy delivered as 
non-firm transmission service.

    (d) Spinning Operating Reserve Service:

Monthly: $0.0092 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: $0.0023 per kilowatt of transmission capacity reserved in 
increments of one week of service

[[Page 1371]]

Daily: $0.00042 per kilowatt of transmission capacity reserved in 
increments of one day of service
Hourly: $0.00003 per kilowatt of transmission energy delivered as 
non-firm transmission service.

    (e) Supplemental Operating Reserve Service:

Monthly: $0.0092 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: $0.0023 per kilowatt of transmission capacity reserved in 
increments of one week of service
Daily: $0.00042 per kilowatt of transmission capacity reserved in 
increments of one day of service
Hourly: $0.00003 per kilowatt of transmission energy delivered as 
non-firm transmission service.

    (f) Energy Imbalance Service: $0.0 per kilowatt for all periods 
of reservation.
    Availability of Ancillary Services: Scheduling and Reactive 
Supply Services are available for all transmission services in and 
from the System of Southwestern and shall be provided by 
Southwestern. Regulation and Frequency Response Service and Energy 
Imbalance Service listed above are available only for deliveries of 
power and energy serving load within Southwestern's Balancing 
Authority Area and shall be provided by Southwestern, unless, 
subject to Southwestern's approval, they are provided by others. 
Spinning and Supplemental Operating Reserve Services are available 
only for deliveries of power and energy generated by resources 
located within Southwestern's Balancing Authority 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. Such notice requirements also apply to requests for 
Southwestern to provide Ancillary Services when such services are 
available as specified above.
    Subject to Southwestern's approval of the ability of such 
resources or third parties to meet Southwestern's technical and 
operational 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 
any necessary equipment modifications necessary to accommodate such 
change;
    Provided; that if the Customer chooses not to take Regulation 
and Frequency Response Service, which includes the associated 
Regulation Purchased Adder, the Customer must pursue these services 
from a different host Balancing Authority; thereby moving all 
metered loads and resources from Southwestern's Balancing Authority 
Area to the Balancing Authority Area of the new host Balancing 
Authority. Until such time as that meter reconfiguration is 
accomplished, the Customer will be charged for the Regulation and 
Frequency Response Service and Adder then in effect. The Customer 
must notify Southwestern by July 1 of this choice, to be effective 
January 1 of the subsequent calendar year. Provided; that such 
Customers shall be assessed for all costs incurred by Southwestern 
for the Regulation Purchased Adder for the calendar year in which 
they give notice. Such assessment will be paid in twelve equal 
m