[Federal Register Volume 59, Number 248 (Wednesday, December 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31948]


[Federal Register: December 28, 1994]


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

DEPARTMENT OF ENERGY
Southeastern Power Administration


Notice of Issuance of Final Power Marketing Policy, Georgia-
Alabama-South Carolina System of Projects

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

ACTION: Notice.

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

SUMMARY: The Administrator has adopted the attached Final Power 
Marketing Policy for Southeastern's Georgia-Alabama-South Carolina (Ga-
Ala-SC) System of Projects. It will be effective upon publication in 
the Federal Register and will be applicable to the sale of system power 
when contracts can be negotiated. The policy was developed in 
accordance with Southeastern's Procedure for Public Participation in 
the Formulation of Marketing Policy published in the Federal Register 
on July 6, 1978, 43 FR 29186. The process was initiated by the 
Administrator with a decision that a new written marketing policy for 
the Ga-Ala-SC System of Projects was needed. A Notice of Intent to 
Formulate Power Marketing Policy was subsequently published in the 
Federal Register on September 8, 1993, 58 FR 47273, requesting, among 
other things proposals and recommendations for consideration by 
Southeastern.
    On July 11, 1994, a Proposed Power Marketing Policy for the Ga-Ala-
SC System of Projects was published in the Federal Register, 59 FR 
35332. Seven comments were received relative to the proposed policy. 
Public Comment Forums were held in Columbia, South Carolina on 
September 12, 1994 and in Atlanta, Georgia on September 14, 1994. 
Comments were requested to be provided to the Administrator prior to 
September 30, 1994. Several consultations were held with 
representatives of entities or groups of entities interested in the 
proposed policy. Additionally, a number of conferences were held with 
representatives of the electric power companies in the area and the 
Southeastern Federal Power Customers, Inc. to consider matters inherent 
in facilitating whatever policy might be finally adopted. All of the 
responses and comments from whatever source and within whatever 
timeframe were considered.
    Thereafter, a Southeastern staff committee was selected by the 
Administrator to prepare a Staff Evaluation of all oral and written 
comments and responses received by Southeastern. The Staff Evaluation 
was completed on November 30, 1994.
    Following the Staff Evaluation, the Administrator decided to adopt 
the policy as modified.

SUPPLEMENTARY INFORMATION: The Final Power Marketing Policy sets forth 
the guidelines which Southeastern will follow in the future disposition 
of power from the Ga-Ala-SC System. The policy covers power from the 
Allatoona, Buford, Carters, J. Strom Thurmond, Hartwell, Robert F. 
Henry, Millers Ferry, Walter F. George, West Point and Richard B. 
Russell projects. The policy establishes the marketing area for system 
power and deals with the allocation of power to area preference 
customers. It also deals with utilization of area utility systems for 
essential purposes, wholesale rates, and energy and economic efficiency 
measures.
    An Environmental Assessment and a Finding of No Significant Impact 
for the proposed policy was approved by the Assistant Secretary, 
Environment, Safety and Health on June 9, 1994, and is available at 
Southeastern's headquarters.
    A recital of the primary comments regarding the proposed marketing 
policy brief responses of explanations to those comments, and specific 
decisions and changes in the proposed marketing policy approved by the 
Administrator, precede the text of the final policy as adopted.

    Issued at Elberton, Georgia: December 8, 1994.
John A. McAllister, Jr.,
Administrator.

Final Power Marketing Policy Georgia-Alabama-South Carolina System 
of Projects

    Introduction. The efforts to develop a new written power marketing 
policy for Southeastern Power Administration's (Southeastern) Ga-Ala-SC 
System of Porjects began on September 8, 1993. Southeastern has 
followed the step by step requirements of its Procedure for Public 
Participation in Formulation of Marketing Policy published in the 
Federal Register on July 6, 1978, 43 FR 29186. Numerous public comments 
have been received and evaluated. This public input, offered in an 
orderly and timely fashion, was carefully considered in the decision 
making process.
    Purpose and Legal Authority. The purpose of the policy is to 
establish with public input written guidelines which Southeastern will 
follow in the future to reasonably and equitably carry out the 
statutory requirements set forth in section 5 of the Flood Control Act 
of 1944, 16 U.S.C. 825s. Southeastern's authority to formulate the 
policy and perform these functions is derived from section 302(a) of 
the Department of Energy (DOE) Organization Act, 42 U.S.C. 7152, and 
delegations pursuant thereto.
    Reasons for Marketing Policy. The current marketing policy became 
effective on October 1, 1980 and the earliest contracts executed under 
the marketing policy commenced at midnight, January 31, 1985. Contracts 
negotiated under the existing marketing policy in the states of 
Alabama, Florida, Georgia, and Mississippi were scheduled to expire on 
May 31, 1994, but have been extended to expire on January 31, 1995. 
Contracts negotiated under the policy in the states of North and South 
Carolina expire at midnight, September 30, 1995. Because of the 
expiration of contracts as well as DOE requirements for implementation 
of the National Environmental Policy Act (NEPA) and the Energy Policy 
Act of 1992 which is causing changes in the electric industry, it was 
determined that a new marketing policy should be formulated.
    Primary Comments and Responses. The primary comments to the 
proposed marketing policy were:
    1. Comment: We have serious concern about an energy commitment 
exceeding 2\1/2\ hours use per day, on average. Overcommitment during 
drought conditions will severely impact reservoir levels and will 
adversely impact all users of the system. Limit contracts to a one year 
or interim contract pending the results of the Apalachicola-
Chattahoochee-Flint/Alabama-Coosa-Tallapoosa (ACF/ACT) Comprehensive 
Water Resources Study.
    Response: The U.S. Army Corps of Engineers (Corps or Corps of 
Engineers), taking into effect the minimum quantity of water needed for 
electric generation, navigation, water quality, etc., determines the 
quantity of water (energy) available for generation purposes. Energy is 
allocated to customers on a percentage of energy available basis taking 
into consideration that minimum quantities of energy are required to 
make peaking capacity usable. Provisions to accommodate congressionally 
mandated project operational changes which impact power production at 
the Federal projects will be included in the implementing contracts for 
this power marketing policy. Assuming that releases will be scheduled 
by the Corps in accordance with criteria established by the results of 
the ACF/ACT study, it was determined that a temporary contract would 
serve no useful purpose.
    2. Comment: Existing preference customers within the marketing area 
should retain their present allocations of capacity and essentially the 
same energy accompaniment.
    Response: For the purposes of this power marketing policy, 
Southeastern agrees that existing preference customers should retain 
their present allocations of capacity and essentially the same energy 
accompaniments.
    3. Comment: The City of Oxford, Georgia, contends it should receive 
an allocation of ``existing'' power as well as an allocation of any 
future power. The City purchased its power from a neighboring 
municipality when the existing allocation of power was made. The City 
of Oxford received its ``allocation'' as part of the allocation of the 
municipality through which it was purchasing its power. When the City 
of Oxford changed its power source it no longer received an 
``allocation'' of power. Now that the contracts are to be re-
negotiated, the City of Oxford should receive an allocation of 
Government power in its own right.
    Response: After reviewing the previous power marketing policy 
allocation process as applied to the City of Oxford, it has been 
determined that an allocation of existing power can be made to the City 
of Oxford. Utilizing the need to schedule generation in whole megawatt 
increments and the available capacity operating margin, it has been 
determined that capacity is available in the system to provide an 
allocation of power to the City of Oxford. This determination, however, 
is independent of and should not be considered a precedent with regard 
to the establishment of a marketing policy addressing allocation 
portability. The issue of allocation portability is currently under 
examination by Southeastern. (See Comment 4)
    4. Comment: A current preference customer's allocation of SEPA 
power should be freely transferable from one transmission system to 
another.
    Response: This is a very complex issue involving the nature of 
peaking power, different system control areas, transmission systems, 
industry standards, duplication of allocation, etc. Southeastern has 
determined that, because of the complexity of the issue, a separate 
marketing policy is needed to address this issue.
    5. Comment: The Marketing Policy should include a statement that 
pricing for transmission integration service will conform to Federal 
Energy Regulatory Commission (FERC) principles that develop through 
implementation of the National Energy Policy Act of 1992.
    Response: Southeastern has no transmission system of its own. 
Transmission is arranged through negotiated transmission contracts with 
area utilities. Southeastern has always and will continue to consider 
and utilize FERC guidance, however, any specific contract language will 
have to be viewed in the context of overall contract negotiations.
    6. Comment: Southeastern's wholesale rates need to continue to be 
cost based rates.
    Response: Southeastern will continue to use cost based rates, 
subject to Congressional, FERC, and Department of Energy mandates.
    7. Comment: The Policy should allow for contracts with terms up to 
20 years. Not all contracts should be 20 years in length, merely allow 
for such contract terms if appropriate.
    Response: Southeastern agrees that this action will give maximum 
flexibility in the negotiation of contracts under this policy, and will 
allow for contracts to be entered into for a term greater than 10 years 
if necessary or if found desirable during contract negotiations.
    8. Other Comment: It is imperative that new contracts permit real 
time scheduling of preference customers Southeastern declarations by 
the Generation and Transmission (G&T) cooperatives and public power 
joint action agencies for the benefit of their participants which are 
preference customers. Southeastern should offer both unreserved, non-
firm capacity and energy and reserved, firm capacity and energy to its 
current preference customers as a choice. A storage arrangement to be 
able to maximize utilization of the available water is needed. A rating 
based on average water year (not adverse water year) should be used.
    Response: Southeastern considers these diverse comments to be issue 
related to future contract negotiations to implement this policy. 
Traditionally, Southeastern has negotiated contracts in close 
coordination and consultation with our customers; Southeastern intends 
to continue this practice.
    Changes or revisions in proposed marketing policy. It was 
determined to allocate existing power to the City of Oxford, Georgia, 
as well as to provide for an allocation of any future power which might 
become available (See Comment 3). It was determined to allow for 
contracts to be entered into for a period of time greater than 10 years 
if necessary or if found desirable during contract negotiations (see 
comment 7). It was also determined to have a separate power marketing 
policy on the portability of a power allocation. (See Comment 4)
    The Resale Rate section has been eliminated and will be addressed 
in the forthcoming power marketing policy for portability of 
allocations of power to preference customers. A new section, Transfer 
of Preference Customer Allocation Between Utility Service Areas, has 
been added.

Final Power Marketing Policy, Georgia-Alabama-South Carolina System 
of Projects

    General. The projects and power subject to this policy are:

------------------------------------------------------------------------
                                                     Capacity    Energy 
                                                       (kw)      (mwh)  
                     Projects                         (name-    (average
                                                      plate)    annual) 
------------------------------------------------------------------------
Allatoona.........................................     74,000    156,000
Buford............................................     86,000    193,000
Carters:                                                                
(1)...............................................    250,000   *198,000
(2)...............................................    250,000  .........
J. Strom Thurmond.................................    280,000    729,000
Hartwell..........................................    344,000    483,000
Robert F. Henry...................................     68,000    343,000
Millers Ferry.....................................     75,000    397,000
Walter F. George..................................    130,000    436,000
West Point........................................     73,375    208,000
Richard B. Russell:                                                     
(1)...............................................    300,000   *484,000
(2)...............................................    340,000  .........
------------------------------------------------------------------------
(1) Carters has 2 generating units rated at 125,000 kw each. Russell has
  4 generating units rated at 75,000 kw each.                           
(2) Carters has 2 pumping units rated at 125,000 kw each. Russell has 4 
  pumping units rated at 80,000 kw each. Based upon latest test         
  information.                                                          
*Natural stream flow energy only.                                       

    There will be one policy for the Ga-Ala-SC System of Projects 
progressively implemented. It will become effective upon publication in 
the Federal Register and will be applicable to the sale of system power 
in respective utility areas as then existing contracts, or necessary 
extensions, expire.
    The policy will be implemented through negotiated contracts for 
terms of approximately 10 years, but may be negotiated for terms of up 
to 20 years if found desirable or necessary.
    Transmission facilities owned by utilities within the marketing 
area will be used for all necessary purposes including transmitting 
power to load centers. Deliveries may be made at the projects, at 
utilities interconnections or at customer substations, as determined by 
Southeastern. The projects will be hydraulically, electrically, and 
financially integrated, and will be operated to make maximum 
contribution to the power supply of the selected utility areas. 
Preference in the sale of the power shall be given to public bodies and 
cooperative.
    Marketing area. The marketing area shall consist of the approximate 
112,000 square mile area generally known as The Southern Company 
service area, and the approximate 40,000 square mile area generally 
known as the service areas of the South Carolina Public Service 
Authority and the South Carolina Electric and Gas Company plus that 
portion of the Duke Power Company's service area within a radius of 150 
miles of the Hartwell, Russell or Thurmond projects. Eligible public 
bodies and cooperatives in this marketing area are listed in Appendix A 
attached hereto.
    Allocations of Existing Power. Existing power available under this 
policy for allocation from the Ga-Ala-SC System will primarily be 
peaking power. The power will be allocated as follows subject to 
possible future adjustments to conform to a power marketing policy 
regarding portability of allocation, change of power suppliers, change 
of control areas, scheduling requirements, or other relevant factors 
pertaining to portability of allocations:

------------------------------------------------------------------------
                          Customer                                KW    
------------------------------------------------------------------------
Alabama Electric Cooperative...............................       91,000
South Carolina Public Service Authority....................      215,000
South Mississippi Electric Power Association...............       61,000
Customers in Duke Power Company service area...............      238,000
Customers in S.C. Electric & Gas Co. service area..........       16,000
Customers in The Southern Company service area (including               
 Oxford, GA)...............................................   *1,298,000
------------------------------------------------------------------------
*Increased for scheduling purposes.                                     

    Except where duplication of allocation would result, each public 
body and cooperative within the marketing areas as shown in Appendix A 
will be eligible for an allocation of existing power. Existing 
preference customers within the marketing area will retain their 
present allocations of capacity and essentially the same energy 
accompaniment. The City of Oxford, Georgia, will receive an allocation 
of existing power. It is Southeastern's goal to allocate all available 
and useful system power (that power remaining after provision for an 
appropriate capacity operating margin and losses) to preference 
customers, except power that may be used for pumping.
    Allocation of Power From Russell Pumped Storage Units. Currently, 
pump generator units at the Richard B. Russell Project are undergoing a 
series of environmental tests to meet the requirements of an injunction 
imposed by the U.S. District Court in the case of South Carolina 
Department of Wildlife and Marine Resources v. Marsh et al, 866 F.2d 97 
(4th Cir 1989). The first opportunity for commercial operation of the 
pumping units is after the completion of these tests. The environmental 
tests and schedules were agreed upon by the Corps of Engineers and the 
party litigants, and the results of the tests must be approved by the 
district court before the units become commercially available. Should 
pumped storage units at the Russell project become commercially 
available during the tenure of contracts implementing this policy, 
after the approval of the district court, after further mitigating 
modifications required by environmental concerns, or by any other 
means, Southeastern will allocate this additional power to those 
preference customers identified in the Power Marketing Policy for the 
Ga-Ala-SC System of Projects promulgated on October 1, 1980 in the 
Federal Register (45 FR 65140) and the City of Oxford, Georgia. The 
Russell pumped storage power will be allocated as follows subject to 
possible future adjustments to conform to a power marketing policy 
regarding portability of allocation, change of power suppliers, change 
of control areas, scheduling requirements, or other relevant factors 
pertaining to portability of allocations:

------------------------------------------------------------------------
                           Customer                                KW   
------------------------------------------------------------------------
Alabama Electric Cooperative.................................      9,000
South Carolina Public Service Authority......................     60,000
South Mississippi Electric Power Association.................      7,000
Customers in Duke Power Company service area.................     65,000
Customers in S.C. Electric & Gas Co. service area............      5,000
Customers in The Southern Company service area (including               
 City of Oxford).............................................    114,000
------------------------------------------------------------------------

    Adequate capacity may be retained to provide an appropriate 
capacity operating margin. Russell pumped storage capacity is predicted 
at this time on testing accomplished to date and reflects the best 
estimate at this time. Energy accompaniment to the pumped storage 
capacity will be sufficient to provide viable peaking capacity.
    Power From Pumped Water. Southeastern will utilize its combination 
pumped storage and generation resources to produce high-value on-peak 
power. Pumping power, whether generated within the system of projects 
or obtained by purchasing or exchange agreement, will be used in pumped 
storage operations, at Southeastern's discretion. Should the purchase 
alternative be selected, Southeastern will obtain pumping energy from 
utilities offering the best terms, and/or resulting in the most 
benefits to the system. Should the exchange alternative be selected, 
pumped storage operations will be handled with public bodies, 
cooperatives and the utilities in a manner not involving the direct 
purchase and sales approach, with preference given to public bodies and 
cooperatives.
    Utilization of Utility Systems. In the absence of transmission 
facilities of its own, Southeastern will use area generation and 
transmission systems to integrate the Government's projects, provide 
firming, wheeling, exchange and backup services and such other 
functions as may be necessary to dispose of system power under 
reasonable and acceptable marketing arrangements. Utilities systems 
providing such services shall be entitled to adequate compensation. 
Specific terms and conditions of all such arrangements shall be the 
subject of negotiations between Southeastern and the generation and 
transmission utilities providing the services. Individual preference 
agencies directly affected by the negotiations shall, through 
representatives selected at the outset of negotiations, be kept 
currently advised on the status and progress of negotiations. 
Southeastern also will consult with and seek advice from these affected 
parties.
    Wholesale Rates. Rate schedules shall be drawn to recover all costs 
associated with producing and transmitting the power in accordance with 
then current repayment criteria. Production costs will be determined on 
a system basis and rate schedules will relate to the integrated output 
of the projects. Rate schedules may be revised periodically.
    Energy and Economic Efficiency Measures. Each customer who 
purchases Southeastern's power is encouraged to participate in an 
integrated resource plan that considers both supply and demand side 
alternatives. It is recognized that some Southeastern customers are 
members of a power supply organization that does resource planning for 
its customers (i.e., power supply cooperatives and joint action 
agencies). Where a customer, or a power supply organization that does 
resource planning for a Southeastern customer, is responsible to a 
regulatory body or another Government agency for an integrated resource 
plan, the customer will make a copy of such integrated resource plan 
available to Southeastern. All Southeastern customers shall agree to 
encourage the efficient use of energy by ultimate customers.
    Transfer of Preference Customer Allocation Between Utility Service 
Areas. This subject is being examined for formulation of a proposed 
marketing policy on power allocation portability. Until such time as a 
policy is established, Southeastern intends to include a clause in any 
contract negotiated under this policy to leave this matter open for 
negotiation after a policy has been established.

Appendix A.--Preference Agencies in the Georgia-Alabama-South 
Carolina System Area

Distribution--Type Preference Agencies

Alabama
    Alexander City, Dothan, Evergreen, Fairhope, Foley, Hartford, 
LaFayette, Lanett, Luverne, Opelika, Piedmont, Robertsdale, Sylacauga, 
Troy, Tuskegee, Baldwin County EMC, Black Warrior EMC, Central Alabama 
EC, Clarke-Washington EMC, Coosa Valley EC, Dixie EC, Pea River EC, 
Pioneer EC, Tallapoosa River EC, Tombigbee EC, Wiregrass EC.
Florida
    Choctawhatchee EC, West Florida ECA.
Georgia
    Acworth, Adel, Albany, Barnesville, Blakely, Brinson, Buford, 
Cairo, Calhoun, Camilla, Cartersville, College Park, Commerce, 
Covington, Dalton, Doerun, Douglas, East Point, Elberton, Ellaville, 
Fairburn, Fitzgerald, Forsyth, Fort Vallley, Grantville, Griffin, 
Hampton, Hogansille, Jackson, LaFayette, LaGrange, Lawrenceville, 
Mansfield, Marietta, Monroe, Monticello, Moultrie, Newnan, Norcross, 
Oxford, Palmetto, Quitman, Sandersville, Sylvania, Sylvester, 
Thomaston, Thomasville, Washington, West Point, Whigham, Crisp County 
Power Commission, Altamaha EMC, Amicalola EMC, Canoochee EMC, Carroll 
EMC, Central Georgia EMC, Coastal EMC, Cobb EMC, Colquitt EMC, Coweta-
Fayette EMC, Excelsior EMC, Flint EMC, Grady EMC, GreyStone Power 
Corporation, Habersham EMC, Hart EMC, Irwin EMC, Jackson EMC, Jefferson 
EMC, Lamar EMC, Little Ocmulgee EMC, Middle Georgia EMC, Mitchell EMC, 
Ocmulgee EMC, Oconee EMC, Okefenoke REMC, Pataula EMC, Planters EMC, 
Rayle EMC, Satilla Rural EMC, Sawnee EMC, Slash Pine EMC, Snapping 
Shoals EMC, Sumter EMC, Three Notch EMC, Tri-County EMC, Troup EMC, 
Upson County EMC, Walton EMC, Washington EMC.
Mississippi
    Coast EPA, East Mississippi EPA, Singing River EPA.
North Carolina
    Bostic, Cherryville, Concord, Cornelius, Dallas, Drexel, Forest 
City, Gastonia, Granite Falls, Huntersville, Kings Mountain, Landis, 
Lincolton, Maiden, Monroe, Morgantown, Newton, Pineville, Shelby, 
Stateville, Blue Ridge EMC, Crescent EMC, Haywood EMC, Pee Dee EMC, 
Rutherford EMC, Union EMC.
South Carolina
    Abbeville, Bamberg, Clinton, Due West, Easley, Gaffney, Georgetown, 
Greenwood, Greer, Laurens, McCormick, Newberry, Orangeburg, Prosperity, 
Seneca, Rock Hill, Union, Westminster, Winnsboro, S.C. Public Service 
Authority,\1\ Blue Ridge EC, Broad River EC, Laurens EC, Little River 
EC, York EC.
---------------------------------------------------------------------------

    \1\Also operates generation and transmission facilities and 
serves at wholesale.
---------------------------------------------------------------------------

Publicly-Owned Wholesale Power Supply Agencies

    Alabama Electric Cooperative, South Mississippi Electric Power 
Association. Central Electric Power Cooperative (S.C.), on behalf of 
Aiken EC, Berkeley EC, Black River EC, Coastal EC, Edisto EC, Fairfield 
EC, Horry EC, Lynches River EC, Marlboro EC, Mid-Carolina EC, Newberry 
EC, Palmetto EC, Pee Dee EC, Santee EC and Tri-County EC.22.

[FR Doc. 94-31948 Filed 12-27-94; 8:45 am]
BILLING CODE 6150-01-M