Integrated System Power Rates, 2521-2533 [2012-801]

Agencies

• DEPARTMENT OF ENERGY
• Southwestern Power Administration

[Federal Register Volume 77, Number 11 (Wednesday, January 18, 2012)]
[Notices]
[Pages 2521-2533]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-801]


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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 interim 
basis Rate Order No. SWPA-63, which increases the power rates for the 
Integrated System pursuant to the Integrated System Rate Schedules 
which supersede the existing rate schedules.

DATES: The effective period for the rate schedules specified in Rate 
Order No. SWPA-63 is January 1, 2012, through September 30, 2015.

FOR FURTHER INFORMATION CONTACT: Mr. James K. McDonald, Administrator, 
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: Rate Order No. SWPA-63, which has been 
approved and placed into effect on an interim basis, increases the 
power rates for the Integrated System pursuant to the following 
Integrated System Rate Schedules:
    Rate Schedule P-11, Wholesale Rates for Hydro Peaking Power;
    Rate Schedule NFTS-11, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service;
    Rate Schedule EE-11, Wholesale Rate for Excess Energy.
    The rate schedules supersede the existing rate schedules shown 
below:
    Rate Schedule P-09, Wholesale Rates for Hydro Peaking Power 
(superseded by P-11);
    Rate Schedule NFTS-09, Wholesale Rates for Non-Federal 
Transmission/Interconnection Facilities Service (superseded by NFTS-
11);
    Rate Schedule EE-09, Wholesale Rate for Excess Energy (superseded 
by EE-11).

    Southwestern Power Administration's (Southwestern) Administrator 
has determined based on the 2011 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 2011 
Integrated System Power Repayment Studies (PRSs) indicate that an 
increase in annual revenue of $9,569,425, or 5.4 percent, beginning 
January 1, 2012, will satisfy cost recovery criteria for the Integrated 
System projects. The proposed Integrated System rate schedules would 
increase annual revenues from $177,191,800 to $186,761,225, 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 a reduction 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 $0.0062 
per kilowatthour per year as necessary, at his/her discretion, under a 
formula-type rate, with notification to the Federal Energy Regulatory 
Commission, to regulate the account at a level that will recover 
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

[[Page 2522]]

Transmission Rate Adjustments and Extensions'' in connection with the 
proposed rate schedule. On August 8, 2011, Southwestern published 
notice in the Federal Register, (76 FR 48159), 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 because Southwestern did not 
receive any requests that a forum be held. Written comments were 
accepted through October 7, 2011. 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-63, on an interim basis, which increases the 
existing Integrated System annual revenue requirement to $186,761,225 
per year for the period January 1, 2012 through September 30, 2015.

    Dated: January 9, 2012.
Daniel Poneman,
Deputy Secretary.

United States of America

Department of Energy

Deputy Secretary of Energy

In the matter of: Southwestern Power Administration; Rate Order; 
Integrated System Rates; No. SWPA-63

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. EF10-4-000 
issued on October 4, 2010, (133 FERC ] 62,005) effective for the period 
January 1, 2010, through September 30, 2013:
    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.
    Southwestern prepared a 2011 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 Revised PRS indicated the need for a 5.4 percent 
revenue increase. These preliminary results which presented the basis 
for the proposed revenue increase were provided to the customers for 
their review prior to the formal process.
    The final 2011 Revised PRS indicates that an increase in annual 
revenues of $9,569,425 (5.4 percent) is necessary beginning January 1, 
2012, to accomplish repayment in the required number of years. 
Accordingly, Southwestern has prepared proposed rate schedules based on 
the additional revenue requirement and the 2011 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, 
August 8, 2011, (76 FR 48159). 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 Southwestern held a pre-issuance consultation with customers. A 
Public Information and Comment Forum scheduled for August 30, 2011, in 
Tulsa, Oklahoma, was canceled because Southwestern did not receive any 
requests that a forum be held. No request for information or copies of 
the proposed Power Repayment and Rate Design Studies were received from 
any customers or interested parties during the formal period of public 
participation. Written comments were due by October 7, 2011.
    No comments were received during the public participation process 
on Southwestern's preliminary results. Following the conclusion of the 
comment period on October 7, 2011, the 2011 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 2009 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 $9,569,425 or 5.4 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 2011 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 see no change 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 and a transmission specific cost related to 
participation in the Southwest Power Pool Regional Transmission 
Organization.

[[Page 2523]]

    Consistent with FERC's Order No. 888, Southwestern will continue 
charging for the six ancillary services under Rate Schedule P-11 and 
Rate Schedule NFTS-11, and offering non-Federal transmission service 
under Rate Schedule NFTS-11. 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 have contracted for the service, 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-11.
    With respect to the Purchased Power Adder (Adder), Southwestern 
proposed, 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 Southwestern's rate proposal, the resulting 
Adder decreases from the current $0.0067 per kWh of peaking energy to 
$0.0062 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 2011 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, 2012, the following 
Southwestern Integrated System Rate Schedules which shall remain in 
effect on an interim basis through September 30, 2015, or until the 
FERC confirms and approves the rates on a final basis.
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    \1\ Supersedes Rate Schedule P-09.

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Dated: January 9, 2012.

Daniel Poneman,

Deputy Secretary.

United States Department of Energy

Southwestern Power Administration

Rate Schedule P-11 \1\
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    \1\ Supersedes Rate Schedule P-09.
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Wholesale Rates for Hydro Peaking Power

    Effective:
    During the period January 1, 2012, through September 30, 2015, in 
accordance with interim approval from Rate Order No. SWPA-63 issued by 
the Deputy Secretary of Energy on January 9, 2012, and pursuant to 
final approval by the Federal Energy Regulatory Commission.
    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 point(s) of delivery, and in 
such quantities as are specified by contract.

1. Definitions of Terms

1.1. Ancillary Services

    The 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, 
which include the following:
    1.1.1. 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.
    1.1.2. 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.
    1.1.3. 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.
    1.1.4. 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.
    1.1.5. 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.
    1.1.6. Energy Imbalance Service corrects for differences over a 
period of time between schedules and actual

[[Page 2524]]

hourly deliveries of energy to a load. Energy delivered or received 
within the authorized bandwidth 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 or a 
contractual arrangement between the parties.

1.2. Customer

    The entity which is utilizing and/or purchasing Federal Power and 
Federal Energy and services from Southwestern pursuant to this Rate 
Schedule.

1.3. Demand Period

    The period of time used to determine maximum integrated rates of 
delivery for the purpose of power accounting which is the 60-minute 
period that begins with the change of hour.

1.4. Federal Power and Energy

    The power and energy provided from the System of Southwestern.

1.5. Hydro Peaking Power

    The Federal Power that Southwestern sells and makes available to 
the Customers through their respective Power Sales Contracts in 
accordance with this Rate Schedule.

1.6. Peaking Billing Demand

    The quantity equal to the Peaking Contract Demand for any month 
unless otherwise provided by the Customer's Power Sales Contract.

1.7. Peaking Contract Demand

    The maximum rate in kilowatts at which Southwestern is obligated to 
deliver Federal Energy associated with Hydro Peaking Power as set forth 
in the Customer's Power Sales Contract.

1.8. Peaking Energy

    The Federal Energy associated with Hydro Peaking Power that 
Southwestern sells and makes available to the Customer in accordance 
with the terms and conditions of the Customer's Power Sales Contract.

1.9. Power Sales Contract

    The Customer's contract with Southwestern for the sale of Federal 
Power and Federal Energy.

1.10. Supplemental Peaking Energy

    The Federal Energy associated with Hydro Peaking Power that 
Southwestern sells and makes available to the Customer if determined by 
Southwestern to be available and that is in addition to the quantity of 
Peaking Energy purchased by the Customer in accordance with the terms 
and conditions of the Customer's Power Sales Contract.

1.11. System of Southwestern

    The transmission and related facilities owned by Southwestern, and/
or the generation, transmission, and related facilities owned by 
others, the capacity of which, by contract, is available to and 
utilized by Southwestern to satisfy its contractual obligations to the 
Customer.

1.12. Uncontrollable Force

    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, Congressional 
act, 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.

2. Wholesale Rates, Terms, and Conditions for Hydro Peaking Power, 
Peaking Energy, Supplemental Peaking Energy, and Associated Services

    Unless otherwise specified, this Section 2 is applicable to all 
sales under the Customer's Power Sales Contract.

2.1. Hydro Peaking Power Rates, Terms, and Conditions

2.1.1. Monthly Capacity Charge for Hydro Peaking Power
    $4.29 per kilowatt of Peaking Billing Demand.
2.1.2. 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 the Customer. 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.
2.1.3. Secondary Transmission Service under Capacity Associated With 
Hydro Peaking Power
    Customers may utilize the transmission 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:
    2.1.3.1. 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;
    2.1.3.2. The non-Federal energy transmitted under such secondary 
service is delivered to the Customer's point of delivery for Hydro 
Peaking Power;
    2.1.3.3. The Customer commits to provide Real Power Losses 
associated with such deliveries of non-Federal energy; and
    2.1.4. 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.
    2.1.5. Adjustment for Reduction in Service. If, during any month, 
the Peaking Contract Demand associated with a Power Sales Contract in 
which Southwestern has the obligation to provide 1,200 kilowatthours of 
Peaking Energy per kilowatt of Peaking Contract Demand 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

[[Page 2525]]

Hydro Peaking Power and Peaking Energy.

2.2. Peaking Energy and Supplemental Peaking Energy Rates, Terms, and 
Conditions

2.2.1. Peaking Energy Charge
    $0.0091 per kilowatthour of Peaking Energy delivered plus the 
Purchased Power Adder as defined in Section 2.2.3 of this Rate 
Schedule.
2.2.2. Supplemental Energy Charge
    $0.0091 per kilowatthour of Supplemental Peaking Energy delivered.
2.2.3. Purchased Power Adder
    A purchased power adder of $0.0062 per kilowatthour of Peaking 
Energy delivered, as adjusted by the Administrator, Southwestern, in 
accordance with the procedure within this Rate Schedule.
2.2.3.1. Applicability of Purchased Power Adder
    The Purchased Power Adder shall apply to sales of Peaking Energy. 
The Purchased Power Adder shall not apply to sales of 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 (hereinafter ``Contract Support Arrangements'').
2.2.3.2. Procedure for Determining Net Purchased Power Adder Adjustment
    Not more than twice annually, the Purchased Power Adder of $0.0062 
(6.2 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 $0.0062 (6.2 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 per kilowatthour amount of the total adjustment, 
plus or minus, to be applied to the net Purchased Power Adder, 
rounded to the nearest $0.0001 per kilowatthour, provided that the 
total ADJ to be applied in any year shall not vary from the then-
effective ADJ by more than $0.0062 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 ($13,838,800 per year) of 
Southwestern's System Direct Purchases used as the basis for the 
Purchased Power Adder of $0.0062 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 $0.0062 per 
kilowatthour Purchased Power Adder.

2.3. Transformation Service Rates, Terms, and Conditions

2.3.1. Monthly Capacity Charge for Transformation Service
    $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.
2.3.2. Applicability of Capacity Charge for Transformation Service
    Unless otherwise specified by contract, for any particular month, a 
charge for transformation service will be assessed on the greater of 
(1) that month's highest metered demand, or (2) the highest metered 
demand recorded during the previous 11 months, at any point of 
delivery. For the purpose of this Rate Schedule, the highest metered 
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.

2.4. Ancillary Services Rates, Terms, and Conditions

2.4.1. Capacity Charges for Ancillary Services
2.4.1.1. Regulation and Frequency Response Service
    Monthly rate of $0.09 per kilowatt of Peaking Billing Demand plus 
the Regulation Purchased Adder as defined in Section 2.4.5 of this Rate 
Schedule.
2.4.1.2. Spinning Operating Reserve Service
    Monthly rate of $0.0112 per kilowatt of Peaking Billing Demand.
    Daily rate of $0.00051 per kilowatt for non-Federal generation 
inside Southwestern's Balancing Authority Area.
2.4.1.3. Supplemental Operating Reserve Service
    Monthly rate of $0.0112 per kilowatt of Peaking Billing Demand.
    Daily rate of $0.00051 per kilowatt for non-Federal generation 
inside Southwestern's Balancing Authority Area.
2.4.1.4. Energy Imbalance Service
    $0.0 per kilowatt for all reservation periods.
2.4.2. 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 Operating 
Reserve Service and Supplemental Operating Reserve Service are 
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 Section 2.4.4 of this Rate 
Schedule.
2.4.3. Applicability of Charges for Ancillary Services
    For any month, the charges for Ancillary Services for deliveries of 
Hydro Peaking Power shall be based on the Peaking Billing Demand.
    The daily charge for Spinning Operating Reserve Service and 
Supplemental Operating Reserve Service 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.
2.4.4. 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,

[[Page 2526]]

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 applicable 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.
2.4.5. Regulation Purchased Adder
    At Southwestern's sole discretion, Southwestern may make a 
determination that additional regulation purchases are necessary in 
order to meet Southwestern's Balancing Authority Area requirements. 
Such regulation purchases shall be provided for through the Regulation 
Purchased Adder, which shall be estimated annually before May 1. 
Southwestern will provide written notice to the Customer of the 
estimated Regulation Purchased Adder charge to be recovered during the 
time period of January 1 through December 31 of the next calendar year; 
Provided, That, should Southwestern incur additional regulation costs 
beyond the initial estimate, such costs will be recovered in the 
Regulation Purchased Adder for the calendar year following when such 
costs were incurred.
2.4.5.1. Applicability of Regulation Purchased Adder
    The costs for regulation purchases shall be recovered by Customers 
located within Southwestern's Balancing Authority Area on a non-
coincident peak ratio share basis, divided into twelve equal monthly 
payments, in accordance with the formula in Section 2.4.5.2. If the 
Regulation Purchased Adder is determined and applied under 
Southwestern's Rate Schedule NFTS-11, then it shall not be applied 
here.
2.4.5.2. Procedure for Determining Regulation Purchased Adder
    Unless otherwise specified by contract, the Regulation Purchased 
Adder for an individual Customer shall be based on the following 
formula rate, calculated to include all costs incurred by Southwestern 
for regulation purchases from the previous calendar year.

RPA = The Regulation Purchased Adder for an individual Customer per 
month, which is as follows:

[(LCustomer / LTotal) x RPTotal] / 12

with the factors defined as follows:

LCustomer = The sum in MW of the following three factors:

    (1) The Customer's highest metered load plus generation used to 
serve the Customer's load that is accounted for through a reduction 
in the Customer's metered load (referred to as ``generation behind 
the meter'') during the previous calendar year, and
    (2) The Customer's highest rate of Scheduled Exports* during the 
previous calendar year, and
    (3) The Customer's highest rate of Scheduled Imports* during the 
previous calendar year.

LTotal = The sum of all LCustomer factors for 
all Customers inside Southwestern's Balancing Authority Area in MW.
RPTotal = The cost in dollars and cents of all capacity 
and ``net energy'' purchases made by Southwestern during the 
previous calendar year to support Southwestern's ability to regulate 
within its Balancing Authority Area. The cost in dollars and cents 
associated with ``net energy'' purchases shall be adjusted by 
subtracting the product of the quantity of such energy purchased in 
MWh and Southwestern's highest rate in dollars per MWh for 
Supplemental Peaking Energy during the previous calendar year.

    * Scheduled Exports and Scheduled Imports are transactions, such as 
sales and purchases respectively, which are in addition to a Customer's 
metered load that contribute to Southwestern's Balancing Authority Area 
need for regulation. The Scheduled Exports and Scheduled Imports for 
calendar year 2011 shall not factor into the Customers' Regulation 
Purchased Adders for calendar year 2012.
    For Customers that have aggregated their load, resources, and 
scheduling into a single node by contract within Southwestern's 
Balancing Authority Area, the individual Customer's respective 
Regulation Purchased Adder shall be that Customer's ratio share of the 
Regulation Purchased Adder established for the node. Such ratio share 
shall be determined for the Customer on a non-coincident basis and 
shall be calculated for the Customer from their highest metered load 
plus generation behind the meter.
2.4.6. Energy Imbalance Service Limitations
    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.

3. Hydro Peaking Power Penalties, Terms, and Conditions

3.1. Capacity Overrun Penalty

3.1.1. Penalty Charge for Capacity Overrun
    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
------------------------------------------------------------------------

3.1.2. Applicability 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' 
respective Power Sales 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.

3.2. Energy Overrun Penalty

3.2.1. Penalty Charge for Energy Overrun
    $0.1001 per kilowatthour for each kilowatthour of overrun.

[[Page 2527]]

3.2.2. Applicability of Energy Overrun Penalty
    By contract, the Customer is subject to limitations on the maximum 
amounts of Peaking Energy which may be scheduled under the Customer's 
Power Sales Contract. When the Customer schedules an amount in excess 
of such maximum amounts, such Customer is subject to the Energy Overrun 
Penalty.

3.3. Power Factor Penalty

3.3.1. 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.
3.3.2. Determination of Power Factor
    The power factor will be determined for all Demand Periods and 
shall be calculated under the formula:

PF = (kWh) / [radic] (kWh\2\ + rkVAh\2\)

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 in 
accordance with Section 3.3.4.
rkVAh = The total quantity of reactive kilovolt-ampere-hours (kVARs) 
delivered during such Demand Period to the point of delivery or 
interconnection in accordance with Section 3.3.4.
3.3.3. Penalty Charge for Power Factor
    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 (0.95-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).
3.3.4. Applicability 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 (i) a 
single physical point of delivery, (ii) a combination of physical 
points of delivery where a Customer has a single, electrically 
integrated load, (iii) 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, a combination of physical points of delivery, 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.

4. Hydro Peaking Power Miscellaneous Rates, Terms, and Conditions

4.1. 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 = 0.04 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:
    4.1.1. 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 unless such Customer has 
accounted for Real Power Losses as part of a metering arrangement with 
Southwestern.
    4.1.2. 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.
    4.1.3. 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 zero (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
------------------------------------------------------------------------

    4.1.4. 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 
zero (0) megawatthours.

United States Department of Energy

Southwestern Power Administration

Rate Schedule NFTS-11 \1\
---------------------------------------------------------------------------

    \1\ Supersedes Rate Schedule NFTS-09.
---------------------------------------------------------------------------

Wholesale Rates for Non-Federal Transmission/Interconnection Facilities 
Service

    Effective: During the period January 1, 2012, through September 30, 
2015, in accordance with interim approval from Rate Order No. SWPA-63 
issued by the Deputy Secretary of Energy on January 9, 2012, and 
pursuant to final approval by the Federal Energy Regulatory Commission.

[[Page 2528]]

    Available: In the region of the 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: Three-phase, alternating 
current, delivered at approximately 60 Hertz, at the nominal 
voltage(s), at the point(s) specified by Service Agreement or 
Transmission Service Transaction.

1. Definitions of Terms

1.1. Ancillary Services

    The 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, 
which include the following:
    1.1.1. 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.
    1.1.2. 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.
    1.1.3. 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.
    1.1.4. 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.
    1.1.5. 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.
    1.1.6. 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 
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 or a contractual arrangement between the 
parties.

1.2. Customer

    The entity which is utilizing and/or purchasing services from 
Southwestern pursuant to this Rate Schedule.

1.3. Demand Period

    The period of time used to determine maximum integrated rates of 
delivery for the purpose of power accounting which is the 60-minute 
period that begins with the change of hour.

1.4. Firm Point-to-Point Transmission Service

    Transmission service reserved on a firm basis between specific 
points of receipt and delivery pursuant to either a Firm Transmission 
Service Agreement or to a Transmission Service Transaction.

1.5. Interconnection Facilities Service

    A service that provides for the use of the System of Southwestern 
to deliver energy and/or provide system support at an interconnection.

1.6. Network Integration Transmission Service

    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.

1.7. Non-Firm Point-to-Point Transmission Service

    Transmission service reserved on a non-firm basis between specific 
points of receipt and delivery pursuant to a Transmission Service 
Transaction.

1.8. Point of Delivery

    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.

1.9. Secondary Transmission Service

    Service that 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 Service 
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.

1.10. Service Agreement

    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 which include the following:
    1.10.1. Firm Transmission Service Agreement provides for reserved 
transmission capacity on a firm basis, for a particular point-to-point 
delivery path.
    1.10.2. Interconnection Agreement provides for the use of the 
System of Southwestern and recognizes the exchange of mutual benefits 
for such use or provides for application of a charge for 
Interconnection Facilities Service.
    1.10.3. Network Transmission Service Agreement provides 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.
    1.10.4. Non-Firm Transmission Service Agreement provides for the 
Customer to request transmission service on a non-firm basis.

1.11. Service Request

    The request made under a Transmission Service Agreement through the 
Southwest Power Pool, Inc. (hereinafter ``SPP'') Open Access Same-

[[Page 2529]]

Time Information System (hereinafter ``OASIS'') for reservation of 
transmission capacity over a particular point-to-point delivery path 
for a particular period. The Customer must submit hourly schedules for 
actual service in addition to the Service Request.

1.12. System of Southwestern

    The transmission and related facilities owned by Southwestern, and/
or the generation, transmission, and related facilities owned by 
others, the capacity of which, by contract, is available to and 
utilized by Southwestern to satisfy its contractual obligations to the 
Customer.

1.13. Transmission Service Transaction

    A Service Request that has been approved by SPP.

1.14. Uncontrollable Force

    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, Congressional 
act, 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.

2. Wholesale Rates, Terms, and Conditions for Firm Point-to-Point 
Transmission Service, Non-Firm Point-to-Point Transmission Service, 
Network Integration Transmission Service, and Interconnection 
Facilities Service

2.1. Firm Point-to-Point Transmission Service Rates, Terms, and 
Conditions

2.1.1. Monthly Capacity Charge for Firm Point-to-Point Transmission 
Service
    $1.28 per kilowatt of transmission capacity reserved in increments 
of one month of service or invoiced in accordance with a longer term 
agreement.
2.1.2. Weekly Capacity Charge for Firm Point-to-Point Transmission 
Service
    $0.320 per kilowatt of transmission capacity reserved in increments 
of one week of service.
2.1.3. Daily Capacity Charge for Firm Point-to-Point Transmission 
Service
    $0.0582 per kilowatt of transmission capacity reserved in 
increments of one day of service.
2.1.4. Services Associated With Capacity Charge for Firm Point-to-Point 
Transmission Service
    The capacity charge for Firm Point-to-Point Transmission Service 
includes Secondary Transmission Service, but does not include charges 
for Ancillary Services associated with actual schedules.
2.1.5. Applicability of Capacity Charge for Firm Point-to-Point 
Transmission Service
    Capacity charges for Firm Point-to-Point Transmission Service are 
applied to quantities reserved by contract under a Firm Transmission 
Service Agreement or in accordance with a Transmission Service 
Transaction.
    A Customer, unless otherwise specified by contract, will be 
assessed capacity charges on the greatest of (1) the highest metered 
demand at any particular Point of Delivery during a particular month, 
rounded up to the nearest whole megawatt, or (2) the highest metered 
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 Customer 
shall be limited during any month to the most recent metered demand on 
which that Customer is billed or to the capacity reserved by contract, 
whichever is greater.

2.2. Non-Firm Point-to-Point Transmission Service Rates, Terms, and 
Conditions

2.2.1. Monthly Capacity Charge for Non-Firm Point-to-Point Transmission 
Service
    80 percent of the monthly capacity charge for Firm Point-to-Point 
Transmission Service reserved in increments of one month.
2.2.2. Weekly Capacity Charge for Non-Firm Point-to-Point Transmission 
Service
    80 percent of the monthly capacity charge divided by 4 for Firm 
Point-to-Point Transmission Service reserved in increments of one week.
2.2.3. Daily Capacity Charge for Non-Firm Point-to-Point Transmission 
Service
    80 percent of the monthly capacity charge divided by 22 for Firm 
Point-to-Point Transmission Service reserved in increments of one day.
2.2.4. Hourly Capacity Charge for Non-Firm Point-to-Point Transmission 
Service
    80 percent of the monthly capacity charge divided by 352 for Firm 
Point-to-Point Transmission Service reserved in increments of one hour.
2.2.5. Applicability of Charges for Non-Firm Point-to-Point 
Transmission Service
    Capacity charges for Non-Firm Point-to-Point Transmission Service 
are applied to quantities reserved under a Transmission Service 
Transaction, and do not include charges for Ancillary Services.

2.3. Network Integration Transmission Service Rates, Terms, and 
Conditions

2.3.1. Annual Revenue Requirement for Network Integration Transmission 
Service
    $14,267,100.
2.3.2. Monthly Revenue Requirement for Network Integration Transmission 
Service
    $1,188,925.
2.3.3. Net Capacity Available for Network Integration Transmission 
Service
    930,000 kilowatts.
2.3.4. Monthly Capacity Charge for Network Integration Transmission 
Service
    $1.28 per kilowatt of Network Load (charge derived from $1,188,925 
/ 930,000 kilowatts).
2.3.5. Applicability of Charges 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 highest metered demand at any particular point of delivery during a 
particular month, rounded up to the nearest whole megawatt, or (2) the 
highest metered demand recorded at such point of delivery during any of 
the previous 11 months, rounded up to the nearest whole megawatt.
    For a Customer taking Network Integration Transmission Service who 
is also taking delivery of Federal Power and Energy, the highest 
metered 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 a Customer shall be limited 
during any month to the most recent highest metered demand on which 
such Customer is billed. Charges for

[[Page 2530]]

Ancillary Services shall also be assessed.

2.4. Interconnection Facilities Service Rates, Terms, and Conditions

2.4.1. Monthly Capacity Charge for Interconnection Facilities Service
    $1.28 per kilowatt.
2.4.2. Applicability of Capacity Charge for Interconnection Facilities 
Service
    Any Customer that requests an interconnection from Southwestern 
which, in Southwestern's sole judgment and at its sole option, does not 
provide commensurate benefits or compensation to Southwestern for the 
use of its facilities shall be assessed a capacity charge for 
Interconnection Facilities Service. For any month, charges for 
Interconnection Facilities Service shall be assessed on the greater of 
(1) that month's actual highest metered demand, or (2) the highest 
metered demand recorded during the previous eleven months, as metered 
at the interconnection. The use of Interconnection Facilities Service 
will be subject to power factor provisions as specified in this Rate 
Schedule. The interconnection customer shall also schedule and deliver 
Real Power Losses pursuant to the provisions of this Rate Schedule 
based on metered flow through the interconnection where Interconnection 
Facilities Services is assessed.

2.5. Transformation Service Rates, Terms, and Conditions

2.5.1. Monthly Capacity Charge for Transformation Service
    $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.
2.5.2. Applicability of Capacity Charge for Transformation Service
    Unless otherwise specified by contract, for any particular month, a 
charge for transformation service will be assessed on the greater of 
(1) that month's highest metered demand, or (2) the highest metered 
demand recorded during the previous 11 months, at any point of 
delivery. For the purpose of this Rate Schedule, the highest metered 
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.

2.6. Ancillary Services Rates, Terms, and Conditions

2.6.1. Capacity Charges for Ancillary Services
2.6.1.1. Scheduling, System Control, and Dispatch Service
    Monthly rate of $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 Service Agreement or 
Network Transmission Service Agreement.
    Weekly rate of $0.023 per kilowatt of transmission capacity 
reserved in increments of one week of service.
    Daily rate of $0.0041 per kilowatt of transmission capacity 
reserved in increments of one day of service.
    Hourly rate of $0.00026 per kilowatt of transmission energy 
delivered as non-firm transmission service.
2.6.1.2. Reactive Supply and Voltage Control From Generation Sources 
Service
    Monthly rate of $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 Service Agreement or 
Network Transmission Service Agreement.
    Weekly rate of $0.010 per kilowatt of transmission capacity 
reserved in increments of one week of service.
    Daily rate of $0.0018 per kilowatt of transmission capacity 
reserved in increments of one day of service.
    Hourly rate of $0.00011 per kilowatt of transmission energy 
delivered as non-firm transmission service.
2.6.1.3. Regulation and Frequency Response Service
    Monthly rate of $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 Service Agreement or 
Network Transmission Service Agreement plus the Regulation Purchased 
Adder as defined in Section 2.6.5 of this Rate Schedule.
    Weekly rate of $0.023 per kilowatt of transmission capacity 
reserved in increments of one week of service plus the Regulation 
Purchased Adder as defined in Section 2.6.5 of this Rate Schedule.
    Daily rate of $0.0041 per kilowatt of transmission capacity 
reserved in increments of one day of service plus the Regulation 
Purchased Adder as defined in Section 2.6.5 of this Rate Schedule.
    Hourly rate of $0.00026 per kilowatt of transmission energy 
delivered as non-firm transmission service plus the Regulation 
Purchased Adder as defined in Section 2.6.5 of this Rate Schedule.
2.6.1.4. Spinning Operating Reserve Service
    Monthly rate of $0.0112 per kilowatt of transmission capacity 
reserved in increments of one month of service or invoiced in 
accordance with a Long-Term Firm Transmission Service Agreement or 
Network Transmission Service Agreement.
    Weekly rate of $0.0028 per kilowatt of transmission capacity 
reserved in increments of one week of service.
    Daily rate of $0.00051 per kilowatt of transmission capacity 
reserved in increments of one day of service.
    Hourly rate of $0.00003 per kilowatt of transmission energy 
delivered as non-firm transmission service.
2.6.1.5. Supplemental Operating Reserve Service
    Monthly rate of $0.0112 per kilowatt of transmission capacity 
reserved in increments of one month of service or invoiced in 
accordance with a Long-Term Firm Transmission Service Agreement or 
Network Transmission Service Agreement.
    Weekly rate of $0.0028 per kilowatt of transmission capacity 
reserved in increments of one week of service.
    Daily rate of $0.00051 per kilowatt of transmission capacity 
reserved in increments of one day of service.
    Hourly rate of $0.00003 per kilowatt of transmission energy 
delivered as non-firm transmission service.
2.6.1.6. Energy Imbalance Service
    $0.0 per kilowatt for all reservation periods.
2.6.2. Availability of Ancillary Services
    Scheduling, System Control, and Dispatch Service and Reactive 
Supply and Voltage Control from Generation Sources Service 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 are available 
only for deliveries of power and ene