Kerr-Philpott System, 57920-57937 [2010-23793]

Agencies

• DEPARTMENT OF ENERGY
• Southeastern Power Administration

[Federal Register Volume 75, Number 184 (Thursday, September 23, 2010)]
[Notices]
[Pages 57920-57937]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-23793]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Southeastern Power Administration


Kerr-Philpott System

AGENCY: Southeastern Power Administration, (Southeastern), Department 
of Energy.

ACTION: Notice of interim approval.

-----------------------------------------------------------------------

SUMMARY: The Deputy Secretary, Department of Energy, confirmed and 
approved, on an interim basis new rate schedules VA-1-B, VA-2-B, VA-3-
B, VA-4-B, CP&L-1-B, CP&L-2-B, CP&L-3-B, CP&L-4-B, AP-1-B, AP-2-B, AP-
3-B, AP-4-B, NC-1-B, and Replacement-2-A. These rate schedules are 
applicable to Southeastern power sold to existing preference customers 
in the Virginia and North Carolina service area. The rate schedules are 
approved on an interim basis up to September 30, 2015, and are subject 
to confirmation and approval by the Federal Energy Regulatory 
Commission (FERC) on a final basis.

DATES: Approval of rates on an interim basis is effective October 1, 
2010.

FOR FURTHER INFORMATION CONTACT: Leon Jourolmon, Assistant 
Administrator, Finance and 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 December 8, 2006, in Docket No. EF06-3041-000 (117 FERC ] 
62,220), confirmed and approved 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, and Replacement-2 through September 30, 
2011. This order replaces these rate schedules on an interim basis, 
subject to final approval by FERC.

    Dated: September 16, 2010.
Daniel B. Poneman,
Deputy Secretary.

DEPARTMENT OF ENERGY

Deputy Secretary

    In the Matter of:
    Southeastern Power Administration, Kerr-Philpott System Power 
Rates; Rate Order No. SEPA-52

Order Confirming and Approving Power Rates on an Interim Basis

    Pursuant to Sections 302(a) 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 (Southeastern), 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 to Southeastern's 
Administrator the authority to develop power and transmission rates, to 
the Deputy Secretary of Energy the authority to confirm, approve, and 
place in effect such rates on interim basis, and to the Federal Energy 
Regulatory Commission (FERC) the authority to confirm, approve, and 
place into effect on a final basis or to disapprove rates developed by 
the Administrator under the delegation. This rate is issued by the 
Deputy Secretary pursuant to that delegation order.

Background

    Power from the Kerr-Philpott Projects is presently sold under 
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, and Replacement-2. These rate schedules were approved by the FERC on 
December 8, 2006, for a period ending September 30, 2011 (117 FERC 
]62,220).

Public Notice and Comment

    Notice of a proposed rate adjustment for the Kerr-Philpott System 
was published in the Federal Register February 22, 2010 (75 FR 7580). 
The notice advised interested parties that a public information and 
comment forum would be held in Raleigh, North Carolina, on March 30, 
2010. One party, representing the Southeastern Federal Power Customers, 
Inc. (SeFPC), made comments at the forum. Written comments were due on 
or before May 24, 2010. Southeastern received written comments from one 
party, the SeFPC.
    SeFPC's comments have been condensed into the following 3 major 
categories:

1. U.S. Army Corps of Engineers (Corps) Operations and Maintenance 
(O&M) Expense
2. Revenue Tracking
3. True-Up Mechanisms

Southeastern's response follows each comment.

Category 1: Corps O&M

    Comment 1: The SeFPC believes the repayment study includes costs 
for the Corps' joint O&M that have been improperly assigned to the 
hydropower function. Furthermore, SeFPC believes that the amount of O&M 
expense set forth in the repayment study for the Corps joint O&M 
expense is overstated. In fact, the projected overall O&M expense for 
fiscal year (FY) 2010 is likely overstated in light of the fact that 
Congress cut appropriations for O&M at the Kerr and Philpott Projects 
in the most recent Energy and Water Development Appropriations Bill.
    Comment 2: The SeFPC members served by the Kerr-Philpott system of

[[Page 57921]]

projects have concerns regarding the level of O&M that Southeastern 
modeled for the current fiscal year 2010. Aside from the larger 
disagreement on the Corps improperly assigning costs to hydropower for 
recovery, the customers believe that in the current repayment study 
Southeastern has overstated the amount that the Corps will spend on O&M 
in the current fiscal year. During the forum, SeFPC explained that the 
Corps budget for O&M was cut for 2010, which should lead to a reduced 
amount of actual expenditure for the current fiscal year.
    Southeastern, however, had modeled the level of Corps O&M, based on 
a projection for 2010 that was over one year old. In fact, in reviewing 
the most up to date information, the Corps has indeed revised its 
calculations revealing that the overall O&M expense allocated to 
hydropower in FY 2010 will be $1.5 million less than estimated at this 
time last year. Furthermore, the overall O&M expense for 2011 is now 
projected to be $2 million less in FY 2011 than what Southeastern 
modeled for the repayment study.
    However, the repayment study that currently supports the rate 
increase as noticed in the Federal Register contains Corps O&M 
projected expenses that are based on last year's information. Relying 
on this older vintage information will likely lead Southeastern to 
recover more than is necessary to cover the O&M expense and require the 
customers to pay more than is necessary. Therefore, the hydropower 
customers urge Southeastern to revise the projected O&M expense in the 
repayment study and include a true-up mechanism in the rate that will 
track the actual expense.
    Response to comments 1 and 2: The Corps provides estimates of O&M 
expenses for the next five years to the O&M Committee of the SeFPC 
every April. The new rate schedules for the Kerr-Philpott System were 
proposed before the latest projections were available. Southeastern has 
revised the repayment study to include the latest projections provided 
to the O&M Committee, which allowed Southeastern to lower the proposed 
rate consistent with SeFPC's comment.
    Comment 3: One of the more alarming entries can be found on page 6 
of the detailed report of O&M expense for the Kerr Project. For FY 
2010, slightly less than $1.4 million has been slated for recovery from 
the hydropower customers for maintenance for environmental stewardship. 
The footnote reveals that this entry is for, quote, ``remediation of 
hazardous waste removal (DDT barrels),'' end quote. The footnote also 
indicates that there is a $2.6 million price tag attached to this 
activity.
    But as we begin to look at the estimated cost of the DDT clean-up, 
we began to wonder why hydropower should bear any of this expense. DDT 
was used decades ago to control mosquito populations. The direct 
connection between vector control programs for flying insects and 
hydropower operations is tenuous at best.
    Response 3: Classification of costs as joint or specific to any 
project purpose is determined by the Corps. The Corps has agreed to 
review the classification of the DDT clean-up costs. However, the 
projections used to develop these rates continue to show these costs as 
joint costs. If the Corps classifies these costs as specific to another 
purpose, the true-up discussed below will adjust the rates 
automatically.

Category 2: Revenue Tracking

    Comment 4: Our second primary concern involves the modeling of the 
rate and accounting for revenues that Southeastern expects to receive 
in FY 2010. With generation patterns well above average for the first 
part of FY 2010, and record snow pack in parts of the mid-Atlantic 
region, we believe that generation and the associated revenues will be 
well above average. The proposed rate, however, is modeled on average 
generation and an average level of revenues.
    Response 4: For the Kerr-Philpott System, energy production for the 
first six months of FY2010 has been about 188 percent of average. 
Energy production for the remainder of FY2010 is expected to return to 
average water conditions. Based on this information, Southeastern 
assumed that energy product for FY 2010 would be 140 percent of average 
in the repayment study used to develop these proposed rates.

Category 3: True-up Mechanisms

    Comment 5: The customers have developed an interest in pursuing 
appropriate mechanisms in the rate design to minimize the potential for 
accumulated deficits, which is our third primary point. Part of this 
interest is borne from the experience that we have had with the current 
rate and the true-up mechanism that Southeastern has implemented with 
regard to the capital additions associated with the ongoing rewind. 
Drawing upon this experience, the customers would like Southeastern to 
include a true-up mechanism for revenues and Corps expenses to minimize 
the potential for deficits to accumulate. At a minimum, a true-up 
mechanism needs to be adopted for FY 2010, so that it accurately 
reflects actual revenues and expenses incurred in FY 2010.
    Comment 6: While the discussion above encourages Southeastern to 
adopt a true up mechanism to address both the Corps O&M expenditures 
and revenues, the customers also encourage Southeastern to adopt, as a 
function of the new rate, appropriate measures to ensure transparency 
in the rate making process. First, Southeastern will need to identify 
the date upon which the rate will change based on prior year's 
expenditure levels and performance. The beginning of the fiscal year 
for Southeastern would appear to be the best date possible to implement 
this annual change.
    Second, the customers would need some advance notice of how the 
rate would change. For some customers, the change in rates will require 
filing appropriate paperwork with State level commissions. To meet this 
obligation, the customers ask Southeastern to provide this notice no 
later than sixty (60) days before the rate would change.
    Third, the customers would need publication or any other such 
suitable notice of the underlying data that led to the change in the 
rate. If at all possible, the customers would appreciate having this 
information in advance of the implementation of any change in the 
rates.
    Response to 5 and 6: Based of the comments received, Southeastern 
has included a true-up in the design of the proposed rates. To meet the 
customer's request of a sixty (60) day notice and accommodate the 
existing accounting process, Southeastern will provide notice of the 
true-up by February 1 of each year and the true-up will take effect on 
April 1 of each year. Notice will be provided by mail to the customers.
    The true-up will work as follows: The base capacity charge will 
include the rehabilitation true-up adjustment. The proposed initial 
base capacity charge will be $3.65 per kilowatt per month and the 
initial base energy charge will be 14.63 mills per kilowatt-hour. The 
proposed rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 


[[Page 57922]]

    Southeastern proposes to establish a true-up of the capacity and 
energy rates based on the variance of the actual net revenue available 
for repayment from the planned net revenue available for repayment in 
the table above. For every $100,000 under-recovery of the planned net 
revenue available for repayment, Southeastern will increase the base 
capacity charge by $0.02 per kilowatt per month, up to a maximum of 
$0.75 per kilowatt per month, and increase the base energy charge by 
0.10 mills per kilowatt-hour, up to a maximum of 3.0 mills per kilowatt 
per hour, to be implemented April 1 of the next fiscal year. For every 
$100,000 of over-recovery of the planned net revenue available for 
repayment, Southeastern will reduce the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and reduce the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. Southeastern will give 
notice by mail to the customers of the amount of the true-up to the 
capacity and energy rates by February 1 of the next fiscal year.
    Comment 7: In the last rate structure that Southeastern adopted for 
the Kerr Philpott system of projects, Southeastern implemented a true 
up mechanism to track the inclusion of major capital improvements that 
became commercially operable. This feature saved the customers from 
paying significant sums in advance of the plant going into commercial 
operation. The main focus of this cost recovery was on the major 
rehabilitation effort for the turbines at the Kerr Project.
    Although the rehabilitation effort with the turbines is nearing 
completion, it is clear that the Corps will continue to add major 
capital investments at the projects. With this anticipated action, the 
customers ask Southeastern to continue the true up mechanism for the 
capital additions.
    Response 7: Southeastern will continue the true-up mechanism for 
capital additions, with the revision that the adjustment will take 
effect on April 1 of each year.

Discussion

System Repayment

    An examination of Southeastern's revised system power repayment 
study, prepared in July 2010, for the Kerr-Philpott System shows that 
with the proposed rates, all system power costs are paid within the 
appropriate repayment period required by existing law and DOE Procedure 
RA 6120.2. The Administrator of Southeastern Power Administration 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

    Southeastern 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 and transcripts of the public information and 
comment forum, 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, 2010, or the first day of the month 
following this interim approval, attached Wholesale Power Rate 
Schedules VA-1-B, VA-2-B, VA-3-B, VA-4-B, CP&L-1-B, CP&L-2-B, CP&L-3-B, 
CP&L-4-B, AP-1-B, AP-2-B, AP-3-B, AP-4-B, NC-1-B, and Replacement-2-A. 
The Rate Schedules shall remain in effect on an interim basis up to 
September 30, 2015, unless such period is extended or until the FERC 
confirms and approves them or substitutes Rate Schedules on a final 
basis.

Dated: September 16, 2010

Daniel B. Poneman,
Deputy Secretary.

Wholesale Power Rate Schedule VA-1-B

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

    $3.65 per kilowatt of total contract demand per month.

Initial Base Energy Charge

    14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 


[[Page 57923]]

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the 
Company's rate.

Transmission

$-0.91 Per kilowatt of total contract demand per month as of December 
2009, is presented for illustrative purposes.

Ancillary Services

1.46 Mills per kilowatt-hour of energy as of December 2009, 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 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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.

    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 OATT.

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 FERC, 
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-B

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

    $3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

    14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to

[[Page 57924]]

annual adjustment on April 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 $0.013 per kilowatt per 
month added to the capacity charge and 0.052 mills per kilowatt-hour 
added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................       $ 578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the 
Company's rate.

Transmission

$-0.91 Per kilowatt of total contract demand per month as of December 
2009, is presented for illustrative purposes.

Ancillary Services

1.46 Mills per kilowatt-hour of energy as of December 2009, 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 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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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 OATT.

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 FERC, 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-3-B

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 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. 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.

[[Page 57925]]

Monthly Rate

    The initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

$3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the Company's rate.

Ancillary Services

1.46 Mills per kilowatt-hour of energy as of December 2009, 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 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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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 OATT.

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-4-B

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

[[Page 57926]]

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

$3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the Company's rate.

Ancillary Services

1.46 Mills per kilowatt-hour of energy as of December 2009, 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 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 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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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 OATT.

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 FERC, 
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 CP&L-1-B

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

[[Page 57927]]

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

$3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................       $ 578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the Company's rate.

Transmission

$1.1453 Per kilowatt of total contract demand per month as of December 
2009, 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 Company's Open Access 
Transmission Tariff (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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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-2-B

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

[[Page 57928]]

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

$3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the Company's rate.

Transmission

$1.1453 Per kilowatt of total contract demand per month as of December 
2009, 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 Company's Open Access 
Transmission Tariff (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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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-B

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

[[Page 57929]]

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 initial base monthly rate for capacity, energy, and generation 
services provided under this rate schedule for the period specified 
shall be:

Initial Base Capacity Charge

$3.65 Per kilowatt of total contract demand per month.

Initial Base Energy Charge

14.63 Mills per kilowatt-hour.
    The Base Capacity Charge and the Base Energy Charge will be subject 
to annual adjustment on April 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 $0.013 per kilowatt 
per month added to the capacity charge and 0.052 mills per kilowatt-
hour added to the energy charge.
    The rates are based on a repayment study that projects that the 
Kerr-Philpott System will produce the following net revenue available 
for repayment by fiscal year:

 
 
 
FY 2010.................................................        $578,000
FY 2011.................................................       2,030,000
FY 2012.................................................       1,032,000
FY 2013.................................................         825,000
FY 2014.................................................         863,000
FY 2015.................................................         908,000
 

    The rates include a true-up of the capacity and energy rates based 
on the variance of the actual net revenue available for repayment from 
the planned net revenue available for repayment in the table above. For 
every $100,000 under-recovery of the planned net revenue available for 
repayment, Southeastern will increase the base capacity charge by $0.02 
per kilowatt per month, up to a maximum of $0.75 per kilowatt per 
month, and increase the base energy charge by 0.10 mills per kilowatt-
hour, up to a maximum of 3.0 mills per kilowatt per hour, to be 
implemented April 1 of the next fiscal year. For every $100,000 of 
over-recovery of the planned net revenue available for repayment, 
Southeastern will reduce the base capacity charge by $0.02 per kilowatt 
per month, up to a maximum of $0.75 per kilowatt per month, and reduce 
the base energy charge by 0.10 mills per kilowatt-hour, up to a maximum 
of 3.0 mills per kilowatt per hour, to be implemented April 1 of the 
next fiscal year. Southeastern will give written notice to the 
customers of the amount of the true-up to the capacity and energy rates 
by February 1 of the next fiscal year.
    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 (FERC) of the Company's rate.
    Proceedings before FERC involving the Company's Open Access 
Transmission Tariff (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

$2.14 Per kilowatt of total contract demand per month, as an estimated 
cost as of December 2009.
    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