Integrated System Power Rates

AGENCY:

Southwestern Power Administration, DOE.

ACTION:

Notice of public review and comment.

SUMMARY:

The Administrator, Southwestern Power Administration (Southwestern), has prepared Current and Revised 2011 Power Repayment Studies which show the need for an increase in annual revenues to meet cost recovery criteria. Such increased revenues are needed primarily to cover increased costs associated with compliance requirements of the North American Electric Reliability Corporation and to cover increased investments and replacements in hydroelectric generating facilities. The Administrator has developed proposed Integrated System rates, which are supported by a rate design study, to recover the required revenues. The June 2011 Revised Study indicates that the proposed rates would increase annual system revenues approximately 5.4 percent from $177,191,800 to $186,761,225 effective November 1, 2011 through September 30, 2015.

DATES:

The consultation and comment period will begin on the date of publication of this Federal Register notice and will end on October 7, 2011. If requested, a combined Public Information and Comment Forum (Forum) will be held in Tulsa, Oklahoma at 9 a.m. on August 16, 2011.

ADDRESSES:

The Forum will be held in Southwestern's offices, Room 1460, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103.

FOR FURTHER INFORMATION CONTACT:

Mr. James K. McDonald, Assistant Administrator, Office of Corporate Operations, Southwestern Power Administration, U.S. Department of Energy, One West Third Street, Tulsa, Oklahoma 74103, (918) 595-6690, jim.mcdonald@swpa.gov.

SUPPLEMENTARY INFORMATION:

Originally established by Secretarial Order No. 1865 dated August 31, 1943, Southwestern is an agency within the U.S. Department of Energy created by the Department of Energy Organization Act, Public Law 95-91, dated August 4, 1977. Guidelines for preparation of power repayment studies are included in DOE Order No. RA 6120.2 entitled Power Marketing Administration Financial Reporting. Procedures for Public Participation in Power and Transmission Rate Adjustments of the Power Marketing Administrations are found at title 10, part 903, subpart A of the Code of Federal Regulations (10 CFR 903). Procedures for the confirmation and approval of rates for the Federal Power Marketing Administrations are found at title 18, part 300, subpart L of the Code of Federal Regulations (18 CFR 300).

Southwestern markets power from 24 multi-purpose reservoir projects with hydroelectric power facilities constructed and operated by the U.S. Army Corps of Engineers (Corps). These projects are located in the states of Arkansas, Missouri, Oklahoma, and Texas. Southwestern's marketing area includes these States plus Kansas and Louisiana. The costs associated with the hydropower facilities of 22 of the 24 projects are repaid via revenues received under the Integrated System rates, as are those of Southwestern's transmission facilities, which consist of 1,380 miles of high-voltage transmission lines, 25 substations, and 46 microwave and VHF radio sites. Costs associated with the Sam Rayburn and Robert D. Willis Dams, two Corps projects that are isolated hydraulically, electrically, and financially from the Integrated System, are repaid under separate rate schedules and are not addressed in this notice.

Following Department of Energy guidelines, the Administrator, Southwestern, prepared a Current Power Repayment Study using existing system rates. The Study indicates that Southwestern's legal requirement to repay the investment in power generating and transmission facilities for power and energy marketed by Southwestern will not be met without an increase in revenues. The need for increased revenues is primarily due to increased costs associated with compliance requirements of the North American Electric Reliability Corporation and to cover increased investments and replacements in hydroelectric generating facilities for the Corps. The Revised Power Repayment Study shows that additional annual revenues of $9,569,425 (a 5.4 percent increase) are needed to satisfy repayment criteria.

A Rate Design Study has also been completed which allocates the revenue requirement to the various system rate schedules for recovery, and provides for transmission service rates in general conformance with FERC Order No. 888. The proposed new rates would increase estimated annual revenues from $177,191,800 to $186,761,225 and would satisfy the present financial criteria for repayment of the project and transmission system investments within the required number of years. As indicated in the Integrated System Rate Design Study, this revenue would be developed primarily through increases in the charges for power sales capacity and energy and transmission services, including some of the ancillary services for deliveries of both Federal and non-Federal power and associated energy from the transmission system of Southwestern.

A second component of the Integrated System rates for power and energy, the Purchased Power Adder (PPA), produces revenues which are segregated to cover the cost of power purchased to meet contractual obligations. The PPA is established to reflect what is expected to be needed by Southwestern to meet purchased power needs on an average annual basis. The PPA rate will decrease slightly to reflect the incorporation of the White River Minimum Flows legislation as applied to our projected power needs. The Administrator's authority to adjust the PPA at his discretion with the Purchased Power Adder Adjustment (PPAA) will remain in force. The PPAA is limited to two adjustments per year not to exceed a total of ± 6.2 mills per kilowatthour per year. The PPA will decrease to $0.0062 per kilowatthour and the PPAA will remain at zero effective November 1, 2011.

A revision to the component for Regulation Purchased Adder service has been proposed to the existing rate schedules to include a refinement of current procedures for calculating the prorated share of the costs for supplying regulation service to those customers inside the Balancing Authority Area. This revision to the Regulation Purchased Adder is being proposed so that all users of regulation service within the Balancing Authority Area are appropriately assessed for their consumption of the service that is purchased to supplement the Federal resource used to support the Balancing Authority's requirement to regulate for loads. A copy of the proposed Regulation Purchased Adder language contained within the proposed Rate Schedules can be requested from Mr. James K. McDonald at the address listed above.

Below is a general comparison of the existing and proposed system rates:

Opportunity is presented for Southwestern's customers and other interested parties to receive copies of the Integrated System Studies. If you desire a copy of the Integrated System Power Repayment Studies and Rate Design Study Data Package, submit your request to Mr. James K. McDonald, Assistant Administrator, Office of Corporate Operations, Southwestern Power Administration, One West Third, Tulsa, OK 74103; phone: (918) 595-6690; e-mail: jim.mcdonald@swpa.gov.

A Public Information and Comment Forum is tentatively scheduled for August 30, 2011, to explain to the public the proposed rates and supporting studies and to allow for comment. A chairman, who will be responsible for orderly procedure, will conduct the Forum if a Forum is requested. Questions concerning the rates, studies, and information presented at the Forum will be answered, to the extent possible, at the Forum. Questions not answered at the Forum will be answered in writing. Questions involving voluminous data contained in Southwestern's records may best be answered by consultation and review of pertinent records at Southwestern's offices.

Persons desiring to attend the Forum should indicate in writing (address cited above) by letter, email or facsimile transmission (918-595-6656) by August 22, 2011, their intent to appear at such Forum. If no one so indicates his or her intent to attend, no such Forum will be held. Persons interested in speaking at the Forum should submit a request to Mr. James K. McDonald, Assistant Administrator, Southwestern, at least seven (7) calendar days prior to the Forum so that a list of forum participants can be developed. The chairman may allow others to speak if time permits.

A transcript of the Forum will be made. Copies of the transcript and all documents introduced will be available for review at Southwestern's offices (see ADDRESSES) during normal business hours. Copies of the transcript and all documents introduced may also be obtained, for a fee, from the transcribing service. A copy of all written comments or an electronic copy in MS Word on the proposed Integrated System Rates is due on or before October 7, 2011. Comments should be submitted to Mr. James K. McDonald, Assistant Administrator, Southwestern, at the above-mentioned address for Southwestern's offices.

Following review of the oral and written comments and the information gathered in the course of the proceeding, the Administrator will submit the finalized Integrated System Rate Proposal, Power Repayment Studies, and Rate Design Study in support of the proposed rates to the Deputy Secretary of Energy for confirmation and approval on an interim basis, and subsequently to the Federal Energy Regulatory Commission (Commission) for confirmation and approval on a final basis. The Commission will allow the public an opportunity to provide written comments on the proposed rate increase before making a final decision.