[Federal Register Volume 61, Number 26 (Wednesday, February 7, 1996)]
[Notices]
[Pages 4650-4659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2523]



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DEPARTMENT OF ENERGY
Western Area Power Administration


AC Intertie Project; Rate Order

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order.

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SUMMARY: Notice is given of the confirmation and approval by the Deputy 
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-71 
and Rate Schedules INT-FT2 and INT-NFT2 placing firm and nonfirm 
transmission rates into effect on an interim basis. The interim rate, 
called the provisional rate, will remain in effect on an interim basis 
until the Federal Energy Regulatory Commission (FERC) confirms, 
approves, and places it into effect on a final basis or until it is 
replaced by another rate.
    The power repayment studies indicate that the proposed rates for 
firm and nonfirm transmission service are necessary because of 
adjustments in operation and maintenance expenses and an anticipated 
decrease in current marketable capacity on the new 500-kV transmission 
system.
    Three major changes are affecting the rates for the AC Intertie: 
(1) The establishment of separate firm transmission rates for the 
existing 230/345-kV lines and the new 500-kV lines as a result of 
customer comments and concerns expressed in formal and informal 
meetings with Western; (2) changing the methodology of calculating 
interest offsets to be consistent with the other power marketing 
administrations; and (3) adjustments Western made to budgeted 
investments for the AC Intertie Project.

DATES: Rate Schedules INT-FT2 and INT-NFT2 will be placed into effect 
on an interim basis on the first day of the first full billing period 
beginning on or after February 1, 1996, and will be in effect until 
FERC confirms, approves, and places the rate schedules in effect on a 
final basis through September 30, 2000, or until the rate schedule is 
superseded.

FOR FURTHER INFORMATION CONTACT:

Mr. J. Tyler Carlson, Regional Manager, Desert Southwest Customer 
Service Region, Western Area Power Administration, P. O. Box 6457, 
Phoenix, AZ 85005-6457, (602) 352-2453
Mr. Terry D. Waggoner, Western Area Power Administration, P.O. Box 
3402, Golden, CO 80401-0098, (303) 275-1611
Mr. Joel K. Bladow, Power Marketing Liaison Office, Room 8G-027, 
Forrestal Building, 1000 Independence Avenue SW., Washington, DC 20585-
0001, (202) 586-5581

SUPPLEMENTARY INFORMATION: By Amendment No. 3 to Delegation Order No. 
0204-108, published November 10, 1993 (58 FR 59716), the Secretary of 
Energy delegated: (1) The authority to develop long-term power and 
transmission rates on a nonexclusive basis to the Administrator of 
Western; (2) the authority to confirm, approve, and place such rates 
into effect on an interim basis to the Deputy Secretary; and (3) the 
authority to confirm, approve, and place into effect on a final basis, 
to remand, or to disapprove such rates to FERC. Existing DOE procedures 
for public participation in power rate adjustments (10 CFR Part 903) 
became effective on September 18, 1985 (50 FR 37835). These power rates 
are established pursuant to section 302(a) of the Department of Energy 
(DOE) Organization Act, 42 U.S.C. 7152(a), through which the power 
marketing functions of the Secretary of the Interior and the Bureau of 
Reclamation (Reclamation) under the Reclamation Act of 1902, 43 U.S.C. 
371 et seq., as amended and supplemented by subsequent enactments, 
particularly 

[[Page 4651]]
section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), 
and other acts specifically applicable to the project system involved, 
were transferred to and vested in the Secretary.
    Rate Order No. WAPA-71 confirming, approving, and placing the 
proposed AC Intertie rate adjustments into effect on an interim basis, 
is issued, and the new Rate Schedules INT-FT2 and INT-NFT2 will be 
submitted promptly to FERC for confirmation and approval on a final 
basis.

    Issued in Washington, DC. January 30, 1996.
Charles B. Curtis,
Deputy Secretary.
    In the matter of: Western Area Power Administration Rate 
Adjustment for Pacific Northwest-Pacific Southwest Intertie Project, 
Rate Order No. WAPA-71.

Order Confirming, Approving, and Placing the Pacific Northwest-Pacific 
Southwest Intertie Firm and Nonfirm Transmission Service Rates Into 
Effect on an Interim Basis

February 1, 1996.
    These power rates are established pursuant to section 302(a) of the 
Department of Energy (DOE) Organization Act, 42 U.S.C. 7152(a) through 
which the power marketing functions of the Secretary of the Interior 
and the Bureau of Reclamation (Reclamation) under the Reclamation Act 
of 1902, 43 U.S.C. 371 et seq., as amended and supplemented by 
subsequent enactments, particularly section 9(c) of the Reclamation 
Project Act of 1939, 43 U.S.C. 485h(c), and other acts specifically 
applicable to the project involved, were transferred to and vested in 
the Secretary of Energy (Secretary).
    By Amendment No. 3 to Delegation Order No. 0204-108, published on 
November 10, 1993 (58 FR 59176), the Secretary delegated: (1) The 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of the Western Area Power 
Administration (Western); (2) the authority to confirm, approve, and 
place such rates into effect on an interim basis to the Deputy 
Secretary; and (3) the authority to confirm, approve, and place into 
effect on a final basis, to remand, or to disapprove such rates to the 
Federal Energy Regulatory Commission (FERC). Existing DOE procedures 
for public participation in power rate adjustments (10 CFR Part 903) 
became effective on September 18, 1985 (50 FR 37835).

Acronyms and Definitions

    As used in this rate order, the following acronyms and definitions 
apply:

AC Intertie: Pacific Northwest-Pacific Southwest Intertie Project
Additions: A unit of property constructed or acquired which enhances or 
improves a project system.
CIAR: Compound Interest Amortization Repayment
CEP: Cost Evaluation Period, which is the first 5 future years in the 
PRS, normally consistent with the budget period.
CROD: Contract rate of delivery
Current PRS: The PRS used in this rate order, which was used to test 
the adequacy of the existing rate.
Customer Brochure: A document prepared for public distribution 
explaining the background of the rate proposal contained in this rate 
order.
DC: Direct Current
DOE: Department of Energy
DOE Act: Department of Energy Organization Act, August 4, 1977 (42 
U.S.C. 7101 et seq.)
DOE Order RA 6120.2: An order dealing with power marketing 
administration financial reporting.
EIS: Environmental Impact Statement
Engineering Ten Year: A planning document prepared
Construction and Replacement Plan: By Western for transmission system 
construction for a 10-year period. Also referred to as the 
``Engineering 10-Year Plan.''
FERC: Federal Energy Regulatory Commission
FY: Fiscal Year
IDC: Interest During Construction
kW: Kilowatt
$/kW/year: Annual charge for capacity usage--(Sec. per kilowatt per 
year)
kWh: Kilowatthour
mills/kWh: Mills per kilowatthour
Multiproject Costs: These are costs for facilities being charged to one 
project that benefit other projects
MW: Megawatt
NEPA: National Environmental Policy Act of 1969. (42 U.S.C. 4321 et 
seq.)
O&M: Operations and maintenance
pinch-point: The future FY with the largest annual revenue requirement
PMA: Power marketing administration
PRS: Power repayment study
Proposed rate: A rate revision that the Administrator of Western 
recommends to the Deputy Secretary of Energy for approval
Provisional rate: A rate which has been confirmed, approved, and placed 
into effect on an interim basis by the Deputy Secretary
Ratesetting PRS: The PRS that utilizes, in whole or part, proposed or 
assumed rates. It is designed to demonstrate that potential revenue 
levels will satisfy the cost recovery criteria over the remainder of 
the power system's repayment period
Reclamation: Bureau of Reclamation, U.S. Department of the Interior
Replacement: A unit of property constructed or acquired as a substitute 
for an existing unit of property for the purpose of maintaining the 
power features of a project
Replacement study: The cyclical analysis of replacement service lives
Secretary: Secretary of Energy
Treasury: Secretary of the Department of the Treasury
Western: Western Area Power Administration, DOE
WSPP: Western Systems Power Pool

Effective Date

    The AC Intertie rates for firm and nonfirm transmission service 
will become effective on an interim basis beginning on February 1, 
1996, and will be in effect until FERC confirms, approves, and places 
the rate schedules into effect on a final basis through September 30, 
2000, or until superseded. Western is implementing a rate for the AC 
Intertie 230/345-kV transmission lines that is separate from the rate 
for the 500-kV transmission lines for firm transmission service, but a 
combined rate for nonfirm transmission service.

Public Notice and Comment

    The Procedures for Public Participation in Power and Transmission 
Rate Adjustments and Extensions, 10 CFR Part 903, have been followed by 
Western in the development of the firm transmission service and nonfirm 
transmission service rates. The provisional firm transmission rate for 
the existing 230/345-kV transmission system in FY 1996 represents a 
rate increase of 85 percent over the existing step 1 rate, and for the 
period FY 1997 through FY 2000, it represents a 48 percent increase 
over the existing step 1 rate. The provisional nonfirm transmission 
service rate for the existing system represents an increase of 100 
percent from the current nonfirm transmission service rate. The 
provisional firm transmission rate for the 500-kV transmission system 
is $17.98/kW/year for FYs 1996 through 1998 and $17.23/kW/year for FYs 
1999 through 2000. This rate is classified as a major rate adjustment 
as defined at 10 CFR Secs. 903.2(e) and 903.2(f)(1). The distinction 
between a minor and a major rate adjustment is used only to 

[[Page 4652]]
determine the public procedures for the rate adjustment. The following 
summarizes the steps Western took to ensure involvement of interested 
parties in the rate process:
    1. The first informal public information meeting was held on 
February 22, 1995. Western explained the need for the proposed rate 
adjustments and answered questions from those attending.
    2. A Federal Register notice was published on May 17, 1995 (60 FR 
26433), which extended the existing rates for firm and nonfirm 
transmission service that became effective August 1, 1993, until 
October 1, 1996.
    3. The second informal public information meeting was held on July 
6, 1995. Western representatives again explained the need for the 
proposed rate adjustment, provided copies of studies, and answered 
questions from those attending.
    4. A Federal Register notice was published on July 31, 1995 (60 FR 
38955), officially announcing the proposed rate adjustment for firm 
transmission service and nonfirm transmission service rates, initiating 
the public consultation and comment period, announcing the August 24, 
1995, public information forum and the September 18, 1995, public 
comment forum, and presenting procedures for public participation.
    5. A letter was mailed to all AC Intertie customers and other 
interested parties on August 7, 1995, providing a copy of the AC 
Intertie Proposed Rate Adjustment Brochure and announcing the public 
information forum and public comment forum.
    6. At the public information forum held on August 24, 1995, Western 
explained the need for the rate increase in greater detail and answered 
questions.
    7. A letter was mailed to all AC Intertie customers and other 
interested parties on September 13, 1995, providing a copy of the issue 
papers concerning the abandoned plant audit adjustment.
    8. The comment forum was held on September 18, 1995, to give the 
public an opportunity to comment for the record. Four persons 
representing customers and customer groups made oral comments.
    9. A letter was mailed to all AC Intertie customers and interested 
parties on October 14, 1995, providing a copy of the answers to the 
questions that were raised during the comment period. The letter also 
announced an informal meeting on October 25, 1995, to answer any 
questions on the CIAR methodology.
    10. A question and answer informal meeting was held on October 25, 
1995, to discuss the compound interest amortization methodology. 
Questions and comments were also raised at this meeting. These comments 
have also been incorporated and taken into consideration in the final 
rate settings studies.
    11. A Federal Register notice published on November 22, 1995 (60 FR 
57867), extended the comment period until November 27, 1995.
    12. Ten letters were received during the 119-day consultation and 
comment period ending November 27, 1995. All formally submitted 
comments have been considered in the preparation of this rate order.

Project History

    The AC Intertie was authorized as part of a much larger alternating 
current (AC) and direct current (DC) combined transmission system 
(Pacific Intertie Project) by section 8 of the Act of August 31, 1964, 
16 U.S.C. 837g. The basic purpose of the Pacific Intertie Project was 
to provide, through power transmission system interconnections, maximum 
utilization of the total power resources to meet the nation's growing 
demands. This purpose was to be accomplished through: (1) The exchange 
of summer-winter surplus peaking capacity between the Northwest and 
Southwest to reduce capital expenditures for new generating capacity; 
(2) the sale of Northwest secondary energy to the Southwest; (3) the 
sale of Southwest energy to the Northwest to ``firm'' peaking 
hydroelectric sources during critical water years; (4) conservation of 
significant amounts of fuel through the use of surplus hydroelectric 
energy; and (5) increased efficiency in the operation of hydroelectric 
and thermal resources. As authorized, the Pacific Intertie Project was 
to be a cooperative construction venture by Federal and non-Federal 
entities that incorporated the capability for both AC and DC 
transmission components and that provided an intertie among certain 
Federal and non-Federal power systems.
    The Lower Colorado Region (LCR), Bureau of Reclamation, U.S. 
Department of the Interior, (Reclamation) was assigned construction 
jurisdiction for: (1) the Celilo-Mead 750-kV DC transmission line from 
the Oregon-Nevada border to Mead Substation; (2) Mead Substation; and, 
(3) all facilities south of Mead Substation. Several delays in 
congressional construction funding for the DC line revised its 
estimated in-service date to the point that some of the potential users 
withdrew their interest. This, and the subsequent lack of congressional 
funding, resulted in the May 1969 indefinite postponement of the DC 
line construction. Consequently, the facilities constructed provide 
only AC transmission service.
    Pursuant to section 302 of the DOE Organization Act, 42 U.S.C. 
7152(a), dated August 4, 1977, these Reclamation constructed facilities 
were transferred to Western. Only those AC Intertie facilities which 
are administered by Western's Desert Southwest Customer Service Region 
and which provide AC transmission service are the subject of this rate 
adjustment. To simplify identification, these facilities have been 
classified as the AC Intertie and are sometimes referred to as the 
existing system.
    On February 1, 1996, Western will add to the AC Intertie the new 
Mead-Phoenix and Mead-Adelanto 500-kV transmission lines. The 
additional sales of capacity are expected to be 668 MW. A separate 
marketing plan is being developed for the sales of the additional 
capacity.

Power Repayment Studies

    PRSs are prepared each fiscal year to determine if power revenues 
will be sufficient to pay, within the prescribed time periods, all 
costs assigned to the power function. Repayment criteria are based on 
law, policies, and authorizing legislation. DOE Order RA 6120.2, 
section 12.b, states:

    In addition to the recovery of the above costs (operations and 
maintenance and interest expenses) on a year-by-year basis, the 
expected revenues are at least sufficient to recover (1) each dollar 
of power investment at Federal hydroelectric generating plants 
within 50 years after they become revenue producing, except as 
otherwise provided by law; plus (2) each annual increment of Federal 
transmission investment within the average service life of such 
transmission facilities or within a maximum of 50 years, whichever 
is less; plus (3) the cost of each replacement of a unit of property 
of a Federal power system within its expected service life up to a 
maximum of 50 years; plus, (4) each dollar of assisted irrigation 
investment within the period established for the irrigation water 
users to repay their share of construction costs; plus (5) other 
costs such as payments to basin funds, participating projects, or 
States.

Existing and Provisional Rates

    The following table compares the existing transmission service 
rates and the proposed transmission service rates.

[[Page 4653]]


                                Comparison of the Existing and Provisional Rates                                
----------------------------------------------------------------------------------------------------------------
                                                        Existing rates                                          
                                  Existing rate 230/   step two 230/345/  Proposed rate 230/  Proposed rate 500-
         Type of service             345-kV system    500-kV system 10/1/ 345-kV system 2/1/  kV system 2/1/1996
                                   extended through   1996 through 7/31/  1996 through 9/30/   through 9/30/2000
                                       10/1/1996             1998                2000                           
----------------------------------------------------------------------------------------------------------------
Firm transmission service.......  $4.46/kW/year.....  $8.01/kW/year.....  1996 \1\--$8.26/kW/ 1996-1998--$17.98/
                                                                           year, 1997-2000--   kW/year, 1999-   
                                                                           $6.58/kW/year.      2000--$17.23/kW/ 
                                                                                               year             
Nonfirm transmission rate (mills/ 1.00 mills/kWh....  1.52 mills/kWh....  2.00 mills/kWh....  2.00 mills/kWh    
 kWh).                                                                                                          
----------------------------------------------------------------------------------------------------------------
\1\ Rate based upon 8 months.                                                                                   

Certification of Rates

    Western's Administrator has certified that the AC Intertie firm and 
nonfirm transmission service rates placed in effect on an interim basis 
herein are the lowest possible, consistent with sound business 
principles. The rates have been developed in accordance with 
administrative policies and applicable laws.

Discussion

    The power repayment study for the 230/345-kV transmission system 
indicates that the proposed rate adjustments for firm and nonfirm 
transmission service are necessary due to adjustments in operation and 
maintenance expenses of the existing system, and due to capacity in the 
new 500-kV transmission system being sold separately. The existing 
rates were designed to recover all annual costs and investment 
repayment of both the existing 230/345-kV transmission lines and the 
new 500-kV transmission lines. Three major changes are affecting the 
rates for the AC Intertie.
    The first change is the establishment of separate firm transmission 
rates for the existing 230/345-kV transmission lines and the new 500-kV 
transmission lines. This change responds to customer comments and 
concerns during formal and informal meetings Western held with its 
customers. Separate PRSs has been prepared for the 500-kV portion and 
the 230/345-kV portion of the AC Intertie.
    The second change is the determination of interest offsets. An 
interest offset is a credit that is made toward interest expenses. 
Western is changing its methodology of calculating interest offsets to 
be consistent with the other power marketing administrations. The old 
method calculates interest offsets on only the principal that was 
repaid in the current year. The new method calculates interest offsets 
on both the principal and interest for the current year.
    The third change is adjustments Western made to data budgeted for 
investments to the AC Intertie Project. Western's staff determined the 
total O&M costs on the combined system for the AC Intertie Project and 
developed a percentage breakdown based upon O&M costs, to determine a 
method for allocating Other Revenues/Costs.

Existing System

    Based upon FY 1994 data, the PRS for the AC Intertie showed that 
the existing Step II of the firm transmission service rate of $8.01/kW/
year and the nonfirm transmission service rate of 1.52 mills/kWh would 
provide more than sufficient revenues to pay the project costs within 
the prescribed time periods. The ratesetting PRS indicates that a 
transmission service rate for February 1, 1996, through September 30, 
1996, of $8.26/kW/year and a transmission service rate of $6.58 for 
October 1, 1996, through September 30, 2000, for firm transmission 
service is adequate to meet revenue requirements. The rate for FY 1996 
is higher because the revenue will be collected over an 8 month period 
rather than over a 12 month period. The nonfirm rate was determined by 
developing a combined rate for both systems. The provisional nonfirm 
transmission rate of 2.00 mills/kWh for nonfirm transmission service is 
required to meet revenue requirements for FY 1996 through the end of 
the study.

New System

    Based upon FY 1994 data, the PRS for the new Mead-Phoenix and Mead-
Adelanto 500-kV transmission system showed that a rate of $17.98/kW/
year for February 1, 1996, through September 30, 1998, and a 
transmission service rate of $17.23/kW/year for October 1, 1998, 
through September 30, 2000, would satisfy the repayment criteria. The 
nonfirm rate was determined by developing a combined rate for both 
systems. The proposed rate for nonfirm transmission service of 2.00 
mills/kWh will meet revenue requirements for FY 1996 through the end of 
the study.
    The provisional rates filed with FERC have been updated from the 
rate originally proposed in the customer brochure and Federal Register 
notice dated July 31, 1995.
    The changes to the PRS are as follows:
    1. Revised budget data for the 230/345-kV existing system.
    2. Revised power repayment studies that include the new interest 
offset methodology.
    3. Revised budget data for the 500-kV system.
    4. Increase in other revenue sales based upon proposed transmission 
rate.

Firm Transmission Revenue Requirements

    A comparison of the transmission revenue requirements estimated for 
the step II of the existing rate for 1996 to the proposed revenue 
requirements for the existing 230/345-kV AC Intertie system and to the 
proposed revenue requirements for the new 500-kV system based upon the 
pinch-point methodology is as follows:

------------------------------------------------------------------------
Step II of the existing      Proposed revenue        Proposed revenue   
  system transmission      requirements for the    requirements for the 
  revenue requirements      230/345-kV system        new 500-kV system  
------------------------------------------------------------------------
$24,883,655............         $8,709,909              $12,352,554     
------------------------------------------------------------------------

    The rate adjustment is necessary to satisfy the cost-recovery 
criteria set forth in DOE Order RA 6120.2.

Replacement and Addition Activities

    The decrease from the existing Step II 230/345-kV transmission 
system rate is largely due to a decrease in replacements and additions 
and a decrease in the O&M costs for the existing system. The AC 
Intertie initial investment will not be fully paid until FY 2028. The 
capitalized costs for future replacements and additions in the cost 
evaluation period includes IDC. The IDC calculation for each 
replacement is determined by the interest rate in the year construction 
begins. The annual interest expense for replacements and additions is 
also based on the interest rate in the year construction begins. The 

[[Page 4654]]
total replacement cost for the cost evaluation period through the end 
of the study is $42,891,147.
    The 500-kV transmission system has been pulled out of the existing 
230/345-kV transmission power repayment study. A 500-kV transmission 
system power repayment study has been developed to determine the 
transmission rate for the new system. The new transmission system will 
provide better service to the customers and additional transmission 
paths that are presently not available. The total cost of the 500-kV 
Mead-Phoenix and Mead-Adelanto transmission line for the cost 
evaluation period through the end of the study is $134,103,799 and is 
to be repaid by 2046.

Abandoned Plant

    Western's auditors have identified approximately $14.5 million in 
equipment and interest charges that are contained in the financial 
statements as abandoned plant that Western has not included in the rate 
base. Western's financial statements show that these charges have 
accumulated since 1964 for the construction of the Direct Current (DC) 
portion of the Intertie Project.
    The construction of the DC line was discontinued in 1969 by the 
Assistant Secretary of the Department of the Interior. At the time of 
the decision, the total expenditure amounted to approximately $10.5 
million. Since that time the amount has increased to approximately 
$14.5 million. This amount includes $2,399,747 of IDC and approximately 
$952,574 of tangible assets and studies. The remaining $11.1 million 
represents the remaining charges for which no tangible assets/studies 
exist. These costs are not in the PRS, because they were expended on a 
feature that was never placed in service.

Statement of Revenue and Related Expenses

    The following table provides a summary of revenue and expense data 
for the 5-year proposed rate approval period for the existing 230/345-
kV system.

                   AC Intertie Project--5-Year Rate Study Summary Period Revenues and Expenses                  
----------------------------------------------------------------------------------------------------------------
                                                 Existing rate step                                             
                                                  II 230/345/500-kV    Proposed rates 230/                      
             Revenue and expenses                  system 10/1/96     245-kV system 2/1/96       Difference     
                                                  through 9/30/2000     through 9/30/2000                       
----------------------------------------------------------------------------------------------------------------
Revenues:                                                                                                       
    Firm Transmission.........................           105,009,620            35,545,000            70,464,620
    Other Revenues............................            19,503,775             8,906,743            10,597,032
                                               -----------------------------------------------------------------
        Total Revenues........................           124,513,395            43,451,743            81,061,652
                                               =================================================================
Revenue Distribution:                                                                                           
    Operations & Maintenance..................            17,486,459            12,643,540             4,842,919
    Other Deductions..........................             1,077,007             1,640,012             (563,005)
    Interest on Deferred......................                     0               490,316             (490,316)
Annual Cost:                                                                                                    
    Interest..................................            93,042,899            23,102,897            69,940,002
    Investment Repayment......................            12,814,649             1,984,977            10,829,672
    Capitalized Expenses......................                92,381             3,590,002           (3,497,621)
    Study-Year Adjustments....................                     0                     0                     0
                                               -----------------------------------------------------------------
        Total.................................           124,513,395            43,451,744            81,061,651
----------------------------------------------------------------------------------------------------------------

    The following table provides a summary of revenue and expense data 
for the 5-year proposed rate approval period for the new 500-kV system.

                  AC Intertie Project.--5-Year Rate Study Summary Period Revenues and Expenses                  
----------------------------------------------------------------------------------------------------------------
                                                              Existing rate                                     
                                                            step II 230/345/   Proposed rates                   
                   Revenue and expenses                     500-kV system 10/ 500-kV system 2/     Difference   
                                                             1/96 through 9/   1/96 through 9/                  
                                                                 30/2000           30/2000                      
----------------------------------------------------------------------------------------------------------------
Revenues:                                                                                                       
    Firm Transmission.....................................       105,009,620        59,051,200        45,958,420
    Other Revenues........................................        19,503,775         1,807,372        17,696,403
                                                           -----------------------------------------------------
        Total Revenues....................................       124,513,395        60,858,572        63,654,823
                                                           =====================================================
Revenue Distribution:                                                                                           
    Operations & Maintenance..............................        17,486,459         3,569,559        13,916,900
    Other Deductions......................................         1,077,007           487,620           589,387
    Interest on Deferred..................................                 0                 0                 0
Annual Cost:                                                                                                    
    Interest..............................................        93,042,899        52,707,044        40,335,855
    Investment Repayment..................................        12,814,649         4,094,349         8,720,300
    Capitalized Expenses..................................            92,381                 0            92,381
    Study-Year Adjustments................................                 0                 0                 0
                                                           -----------------------------------------------------
        Total.............................................       124,513,395        60,858,572        63,654,823
----------------------------------------------------------------------------------------------------------------


[[Page 4655]]

    The table provides a summary of revenue and expense data for the 5-
year proposed rate approval period for the combined system.

                  AC Intertie Project.--5-Year Rate Study Summary Period Revenues and Expenses                  
----------------------------------------------------------------------------------------------------------------
                                                              Existing rate       Proposed                      
                                                            step II 230/345/    combined rate                   
                   Revenue and expenses                     500-kV system 10/   study 2/1/96       Difference   
                                                             1/96 through 9/    through 9/30/                   
                                                                 30/2000            2000                        
----------------------------------------------------------------------------------------------------------------
Revenues:                                                                                                       
    Firm Transmission.....................................       105,009,620        90,195,000        14,814,620
    Other Revenues........................................        19,503,775        10,714,115         8,789,660
                                                           -----------------------------------------------------
        Total Revenues....................................       124,513,395       100,909,115        23,604,280
                                                           =====================================================
Revenue Distribution:                                                                                           
    Operations & Maintenance..............................        17,486,459        16,213,099         1,273,360
    Other Deductions......................................         1,077,007         2,127,632       (1,050,625)
    Interest on Deferred..................................                 0           286,491         (286,491)
Annual Cost:                                                                                                    
    Interest..............................................        93,042,899        71,141,078        21,901,821
    Investment Repayment..................................        12,814,649         7,458,773         5,355,876
    Capitalized Expenses..................................            92,381         3,682,042       (3,589,661)
    Study-Year Adjustments................................                 0                 0                 0
                                                           -----------------------------------------------------
        Total.............................................       124,513,395       100,909,115        23,604,280
----------------------------------------------------------------------------------------------------------------

Basis for Rate Development

    The provisional rates were designed to meet cost recovery criteria. 
The power repayment studies indicate that the proposed rates for firm 
and nonfirm transmission service are necessary because of the 
redistribution of costs from the current rate setting study. The 
current rate setting study anticipated 1,718 MW of capacity available 
for sale. The existing rates were designed to recover all annual costs 
and investment repayment of both the existing 230/345-kV transmission 
lines and the new 500-kV transmission lines. Three major changes are 
affecting the rates for the AC Intertie.
    The first change is the establishment of separate firm transmission 
rates for the existing 230/345-kV transmission lines and the new 500-kV 
transmission lines. This change is due to customer comments and 
concerns during the informal and formal meetings Western held with its 
customers. Separate PRSs have been prepared for the 500-kV portion and 
the 230/345-kV portion of the AC Intertie.
    The second change is the determination of interest offsets. An 
interest offset is a credit that is made toward interest expenses. 
Western is changing its methodology of calculating interest offsets to 
be consistent with the other power marketing administrations. The old 
method calculates interest offsets on only the principal that was 
repaid in the current year. The new method calculates interest offsets 
on both the principal and interest for the current year.
    The third change is adjustments Western made to data budgeted for 
investments to the AC Intertie Project. Western's staff determined the 
total O&M costs on the combined system for the AC Intertie Project and 
developed a percentage breakdown based upon O&M costs, to determine a 
method for allocating Other Revenues/Costs.

Existing 230/345-kV Transmission System

    Operations and Maintenance expenses have decreased for the 230/345-
kV system, since the O&M expenses for the 500-kV transmission system 
are in a separate power repayment study as well as the additional 
facilities. The 230/345-kV system is projecting 1,050 MW of capacity 
for sale.

500-kV Transmission System

    There is also a anticipated decrease in current marketable capacity 
on the new 500-kV system. This is now projected to be 668 MW which is 
156 MW decrease from the current rate setting study. Once the 500-kV 
transmission lines are energized and go into service, these 500-kV 
transmission lines will become an integral part of the AC Intertie.

Nonfirm Transmission Service

    Western decided to maintain one nonfirm transmission service rate 
for the AC Intertie Project. This maintains consistency with other 
Western projects and allows for the ability to market nonfirm 
transmission service through the WSPP Agreement and Joint Transmission 
Agreement which Western is a participant. The single nonfirm 
transmission rate has been derived by calculating a firm rate from a 
combined transmission line power repayment study. Once the yearly kW 
rate is determined, it is divided by 8760 hours in a year and 
multiplied by a 60 percent load factor. This number is then converted 
to mills/kWh.

Comments

    During the 119 day comment period, Western received 10 written 
comments. In addition, five persons commented during the September 18, 
1995, public comment forum. All comments were reviewed and considered 
in the preparation of this rate order.
    Written comments were received from the following sources:

Irrigation & Electrical Districts Association of Arizona (Arizona)
K. R. Saline & Associates (Arizona)
Arizona Power Authority (Arizona)
Central Arizona Water Conservation District (Arizona)
Salt River Project (Arizona)

    Representatives of the following organizations made oral comments:

Irrigation and Electrical Districts Association of Arizona (Arizona)
K. R. Saline & Associates (Arizona)
Arizona Power Authority (Arizona)
Central Arizona Water Conservation District (Arizona)
Salt River Project (Arizona)

    Most of the comments received at the public meetings and in 
correspondence 

[[Page 4656]]
were related to the issue on abandoned plant, the separation of the new 
500-kV transmission system from the existing system, and the change in 
the ratesetting methodology from the pinch-point methodology to the 
CIAR method. All comments were considered in developing the provisional 
rates.
    Comment: The customers support the idea of moving away from the 
pinch-point methodology to the compound interest amortization repayment 
method as was done in the Parker-Davis Project.
    Response: Western developed power repayment studies based upon the 
CIAR method and the pinch-point method. After review of these studies 
with the customers through working groups, the customers request is to 
remain with the traditional pinch-point methodology. This rate 
submittal in based upon the pinch-point methodology.
    Comment: The rate brochure includes approximately $13,558,108 in 
replacements associated with Mead Substation Stage 05. Would Western 
please provide a breakdown of the proposed work including the rationale 
to allocate all of these proposed expenditures to the 230/345-kV 
transmission system project versus the 500-kV transmission system 
project?
    Response: The Intertie Project Proposed Rate Adjustment Brochure 
refers to replacements at Mead Substation (see page 15) which are part 
of a multifaceted construction project, Mead Stage 05. The portion of 
the work related to Intertie expenses is described below (excerpt from 
the Congressional Budget document Facility Data Sheet):
    Activity 2: The work to be performed is as follows:
    At Mead: This portion of the project consists of replacing 18 power 
circuit breakers at Mead Substation, provide new wiring and associated 
control cabinets, and new line relaying to protect the lines. Four of 
the 18 breakers to be replaced are a result of the planned addition of 
a 500-kV AC transmission line from Liberty Substation to Mead 
Substation to McCullough Substation, where it will tie into a 500-kV 
line into the Los Angeles area. The associated costs will be recovered 
from the Mead-Phoenix 500-kV Project. Add an additional fault recorder 
to assist in determining causes of system failures. Provide two vehicle 
crossing in the switchyard to improve access to equipment necessary for 
maintenance of the breakers. Replace the bolted bus connections with 
compression fittings to reduce thermal hot spots. Replace a portion of 
the station service power distribution system to provide 120VAC 
convenience power at the breakers. At Liberty Substation: Replace the 
line relaying and control cabinet.
    The objective is to replace the breakers at Mead that are 
associated with the Intertie facilities. These circuit breakers will be 
under rated due to increased fault current. The fault current has 
increased due to the interconnected power system growth in the area.
    The southern Division of the Pacific Northwest-Pacific Southwest 
Intertie Transmission System (Intertie) is part of the Pacific 
Northwest-Pacific Southwest Intertie authorized August 31, 1964, by 
Public Law 88-552. The Intertie consists of a 345-kV AC transmission 
line from Mead Substation, near Hoover Dam and Boulder City, Nevada, to 
Liberty Substation near Phoenix, Arizona, and a 230-kV line from 
Liberty Substation to Pinnacle Substation north of Phoenix. The 
Intertie facilities are interconnected with additional AC Intertie 
transmission facilities which are owned and operated by various Federal 
and non-Federal entities.
    In the first paragraph of the description, in the bold and 
underlined portion, it states that: ``Four of the 18 breakers to be 
replaced are a result of the planned addition of a 500-kV AC 
transmission line from Liberty Substation to Mead Substation to 
McCullough Substation, where it will tie into a 500-kV line into the 
Los Angeles area. The associated costs will be recovered from the Mead-
Phoenix 500-kV Project.'' This statement should clarify that the 
portion of the Intertie expense that is the result of the 500-kV 
Project has been accounted for and properly funded. The accounting 
process for the proper expending has been done by accounting 
adjustments through the use of Journal Vouchers in our financial 
management system.
    Comment: When Western decided to split the Intertie into two 
separate projects (230/345-kV and 500-kV) how has Western allocated the 
interconnection facilities between Mead Substation and Market Place 
Substation? The tie between the two substations was not required for 
the operation of the existing 345-kV project and therefore should be 
allocated to the 500-kV project. At a minimum Western needs to identify 
the offsetting benefits to the existing Intertie customers of these 
additions.
    Response: The tie between Mead Substation and Marketplace 
Substation is 13 miles of 500-kV transmission line. The cost to build, 
operate and maintain these facilities is being allocated to the 500-kV 
transmission system.
    Comment: It is our understanding that there is approximately 67 MW 
(Phoenix to Mead) of excess capacity available of the existing Intertie 
(345-kV line). Since Western has indicated they believe that they will 
be successful in marketing 668 MW on the 500-kV project. It seems 
appropriate that 67 MW of those sales would in reality be contract over 
the 345-kV line. Would Western provide its rational for not including 
marketing the additional 67 MW on the 345-kV line before projecting 
sales on the more expensive 500-kV line.
    Response: The referenced 67 MW of transmission system capacity was 
the estimated amount of capacity that was not under firm contractual 
arrangements for the existing system. This was stated at the August 18, 
1995, public information forum. The existing system for the AC Intertie 
has a total marketable transmission system capability of 1,050,000 
kilowatts.
    Western currently has 987,643 kW of the 230/345-kV transmission 
system capacity under firm contracts.
    Comment: Included in Western's FY 1995 10-Year Plan is 
approximately $5,016,000 to replace the 345-kV Series Capacitor Control 
and Bypass System. Has the installation of the 500-kV transmission line 
caused or contributed to the need to replace the series capacitor 
controls? Given the fact that the 500-kV transmission line may have 
excess capacity for some time, is there potential to delay this 
expenditure until additional transfer capability is needed? What is the 
rate impact of the proposed replacement of the capacitor controls?
    Response: The series capacitor banks at Mead and Liberty 
substations were installed in July 1977. The PCB capacitor units were 
replaced in 1992 with new non-PCB units. The pneumatic control system 
is deteriorating and preliminary review indicates it should be replaced 
with an electronic and optical control system.
    The installation of the 500-kV line did not cause or contribute to 
the deteriorating of the pneumatic control system. The series 
capacitors were not included in the cost base of the power repayment 
study because the projected in-service date went beyond the cost 
evaluation period for power repayment consideration. Although the costs 
were not included, a separate study has been run to determine the 
effect on the rate. The existing system rate would increase about $.23/
kW-year.
    Comment: Would Western provide its rational for allocating Other 
Revenues/Costs on miles of transmission?
    Response: Western's staff used the following rationale to 
distribute projected Other Deductions and Other Revenues for the AC 
Intertie Project to the two systems as follows: 

[[Page 4657]]

    In the early studies, Western determined the total miles of the AC 
Intertie Project and developed a percentage breakdown by transmission 
miles. The existing system (230/345-kV transmission lines) consists of 
271 miles of transmission lines or 37 percent of the combined system. 
The new system (500-kV transmission lines) consists of 458 miles of 
transmission lines or 63 percent of the combined system.
    Based upon customer request and comment, Western changed its 
methodology and based the other deductions and other revenues upon the 
total O&M in the combined power repayment study. Western's staff 
determined the total O&M costs on the combined system for the AC 
Intertie Project and developed a percentage breakdown based upon O&M 
costs, to determine a method for allocating Other Revenues/Costs to 
each of the separate systems. The allocation of other costs and other 
revenues obtained through the Multiproject Cost calculations, has been 
applied by the above methodology.
    Comment: Would Western provide its rational for a single nonfirm 
rate? What has been the historical nonfirm uses of the existing 345-kV 
system? Would Western please provide its projection of nonfirm energy 
sales on each of the proposed projects (345-kV and 500-kV)?
    Response: Due to customer request to develop a single firm 
transmission service rate for the 230/345-kV and 500-kV transmission 
lines, Western decided to maintain one nonfirm transmission service 
rate for the AC Intertie Project. This maintains consistency with other 
Western projects and allows for the ability to market nonfirm 
transmission service through the WSPP Agreement and Joint Transmission 
Agreement of which Western is a participant. The single nonfirm 
transmission rate has been derived by calculating a firm rate from a 
combined transmission line power repayment study. Once the yearly kW 
rate is determined, it is divided by 8760 hours in a year and 
multiplied by a 60 percent load factor. This number is then converted 
to mills/kWh.
    Typically, Western's non-firm sales on the existing AC Intertie are 
made through our membership in the WSPP or under our fuel replacement 
program. For example, in FY 1995, WSPP sales totaled approximately 195 
GWh and revenues of approximately $2.3 million; fuel replacement sales 
totaled approximately 67 GWh and revenues of approximately $670,000.
    Projections for non-firm energy sales on the AC Intertie system 
should remain at the same levels. These sales could be split between 
the existing and 500-kV AC Intertie systems in the future.
    Western determines future year projections for nonfirm transmission 
sales revenues for the AC Intertie Project by calculating a 3-year 
average of total nonfirm sales as reflected in the results of 
operations. Western does not keep a separate log of nonfirm sales by 
transmission line voltages; therefore information pertaining to 
separate projections of nonfirm sales on the 230/345-kV and 500-kV 
transmission lines is unavailable.
    Comment: Western's white paper addresses the options to resolve the 
$11.1 million in abandoned plant that Western has indicated as a cost 
responsibility of the AC Intertie project. We support Western's option 
number 4, and hereby request Western seek authority through the budget 
cycle to declare the abandoned plant as nonreimbursable.
    Response: With customer support, Western will seek authority 
through the Department to declare the $11.1 million of abandoned plant 
as nonreimbursable.
    Comment: Consider the acceptability of directly assigning non-firm 
transmission revenues, which are based on the historical level of non-
firm transmission, to the existing 345/230-kV system. Also, all ``Other 
Revenues and Expenses'' would be allocated based on an O&M factor 
versus the presently proposed ``Line Miles'' method.
    Response: Western has been directly assigning all nonfirm 
transmission revenues, which are based on the historical level of 
nonfirm transmission, to the existing 230/345-kV system. We are 
estimating future nonfirm transmission revenues for the 500-kV system 
to be $300,000 per year. Distribution of Other ``Revenue and Expenses'' 
which is due to Multiproject Cost and Revenues, are based upon O&M 
factors.
    Comment: (1) Investigate what is included in the $2.3 million 
revenue number stated in Western's October 13th letter. (2) What is the 
appropriate level of GWH for the Intertie and what would be the 
corresponding level of revenues?
    Response: The $2.3 million of WSPP sales mentioned in the October 
13, 1995, letter includes total WSPP nonfirm transactions including 
energy sales made under WSPP during FY 1995. The transmission portion 
associated with the AC Intertie is approximately $70,000. The GWH 
associated with these particular WSPP nonfirm transmission transactions 
for FY 1995 was approximately 26 GWH.
    Comment: Continue the use of the 1,050,000 KW as the Marketable 
Capacity for the Existing 230/345 System. This issue centers on whether 
or not Western needs to reserve 50 MW of capacity on the existing 
system considering the ability to use both the 230/345-kV lines and 
500-kV lines for ``operation flexibility.''
    Response: The 1,050,000 kW is the estimated transmission capacity 
which is projected to be marketed, for the purposes of determining the 
existing 230/345-kV AC Intertie rate adjustment. This estimate is based 
on projected demand for transmission capacity in the region and on 
transmission service requests received by Western. Transmission 
capacity in excess of 1,050,000 kW exists on the 230/345-kV AC Intertie 
system, but is primarily available from Mead Substation to the Phoenix 
area and is in limited demand. If transmission capacity in excess of 
1,050,000 kW is marketed in the future, future rate adjustments will 
reflect the addition.
    Comment: The information distributed by Western at the August 24, 
1995, public information forum contains a page of ``AC Intertie Project 
Investments'' which are to be assigned to the existing and new systems. 
All of the investments, except the ``Mead-Phoenix 500-kV transmission 
line'' and the ``Mead-Adelanto 500-kV transmission line'' have been 
assigned to the existing 230/345 system. Yet, we know that at least a 
component of the ``Mead-Substation Stage 05'' investment should be 
allocated to the 500-kV system, specifically, the costs associated with 
four (4) of the 18 breakers. What are the costs associated with these 
four breakers and should any portion of the other investments be 
assigned to the 500-kV system.
    Response: The costs associated with the four breakers which are 
attributed to the 500-kV system are cost for breaker hardware, 
installation, sectionalizing breaker, portion of design, portion of 
switch gear, portion of control boards, and portion of site 
preparation. The total cost attributed to the 500-kV system is 
$1,945,071.
    Breakdown of theses costs are as follows:

Mead 05 Breaker Hardware....................................    $589,200
Mead 05 Breaker Installation................................     494,030
Mead 05 Sectionalizing Breaker..............................     103,345
Mead 05 Portion of Design...................................      98,868
Mead 05 Portion of Switchgear...............................      55,000
Mead 05 Portion of CNTRL Boards.............................      79,448
Portion of Mead:                                                        
  CNTRL Bldg., Site Prep....................................     525,181
                                                             -----------
    Total Itemized Cost:....................................   1,945,071
                                                                        


[[Page 4658]]


    Western believes that all other investments have been properly 
allocated to the 230/345-kV system and the 500-kV system. We are in the 
process of closing out work for the 500-kV system and would be willing 
to provide detailed information on the allocation of equipment. If an 
adjustment is necessary, Western will work with customers during the 
next rate adjustment process.
    Comments: Repayment of the Capitalized Deficits in FY 96. In 
accordance with a customer's request, run a new PRS in which the 
capitalized deficit is repaid in FY 1996, and then a separate PRS for 
years 1997 forward.
    Response: Based upon the request, Western ran a new study forcing 
the deficits to be paid by 1996, the results, using the Compound 
Interest Amortization method are: Rates: FY 1995--$4.46, FY 1996--
$10.36, FY 1997--$7.21.
    Comment: Customer request Western to determine separate nonfirm 
transmission rates for the existing 230/345-kV transmission system and 
the new 500-kV transmission line.
    Response: The calculated nonfirm transmission service rate for the 
230/345-kV transmission lines is 1.40 mills/kWh. The calculated nonfirm 
transmission service rate for the 500-kV transmission lines is 3.28 
mills/kWh.
    Comment: We have heard that the Area Manager of the Boulder City 
Area Office may have written off the abandoned plant dollars in 1983. 
Does any document exist writing off the abandoned plant?
    Response: Western has not been able to locate the document and is 
not sure that such a document exists. Area Managers do not have the 
authority to write off a dollar amount of such magnitude. Western will 
continue to search for the document and check for the legality of the 
document.

Environmental Evaluation

    In compliance with the National Environmental Policy Act of 1969, 
42 U.S.C. 4321 et seq.; Council on Environmental Quality Regulations 
(40 CFR Parts 1500-1508); and DOE NEPA Regulations (10 CFR Part 1021), 
Western has determined that this action is categorically excluded from 
the preparation of the environmental assessment or an environmental 
impact statement.

Executive Order 12866

    DOE has determined that this is not a significant regulatory action 
because it does not meet the criteria of Executive Order 12866, 58 FR 
51735. Western has an exemption from centralized regulatory review 
under Executive Order 12866; accordingly, no clearance of this notice 
by OMB is required.

Availability of Information

    Information regarding this rate adjustment, including PRSs, 
comments, letters, memorandums, and other supporting material made or 
kept by Western for the purpose of developing the power rates, is 
available for public review at the Desert Southwest Customer Service 
Region, Western Area Power Administration, Office of the Assistant 
Regional Manager for Power Marketing, 615 South 43rd Avenue, Phoenix, 
Arizona 85009-5313; and Power Marketing Liaison Office, Room 8G-027, 
Forrestal Building, 1000 Independence Avenue SW., Washington, DC 20585-
0001.

Submission to Federal Energy Regulatory Commission

    The rates herein confirmed, approved, and placed in effect on an 
interim basis, together with supporting documents, will be submitted to 
FERC for confirmation and approval on a final basis.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I confirm and approve on an interim 
basis, effective February 1, 1996, the Rate Schedules INT-FT2 and INT-
NFT2. The rate schedules shall remain in effect on an interim basis, 
pending FERC confirmation and approval of them or substitute rates on a 
final basis, through September 30, 2000.

    Issued in Washington, D.C., January 30, 1996.
Charles B. Curtis

Supersedes Rate Schedule INT-FT1

United States Department of Energy Western Area Power Administration

Pacific Northwest-Pacific Southwest Intertie Project

Schedule of Rates for Firm Transmission Service

Effective

    The first day of the first full billing period beginning on or 
after February 1, 1996, and will remain in effect through September 30, 
2000, or until superseded, whichever occurs first.

Available

    In the marketing area served by the Pacific Northwest-Pacific 
Southwest Intertie Project.

Applicable

    To firm transmission service customers where capacity and energy 
are supplied to the Pacific Northwest-Pacific Southwest Intertie 
Project (AC Intertie) system at points of interconnection with other 
systems and transmitted and delivered, on a bi-directional basis, less 
losses, to points of delivery on the AC Intertie system specified in 
the service contract.

Character and Conditions of Service

    Alternating current at 60 Hertz, three-phase, delivered and metered 
at the voltages and points of delivery established by contract over the 
230/345-kV transmission lines.

Rates 230/345-kv System

    Firm Transmission Service Charge: February 1, 1996, through 
September 30, 1996: $8.26 per kilowatt per year for each kilowatt 
delivered at the point of delivery, as established by contract: payable 
monthly at the rate of $0.688 per kilowatt.
    October 1, 1996, through September 30, 2000: $6.58 per kilowatt per 
year for each kilowatt delivered at the point of delivery, as 
established by contract, payable monthly at the rate of $0.548 per 
kilowatt.

Rates 500-kv System

    Alternating current at 60 Hertz, three-phase, delivered and metered 
at the voltages and points of delivery established by contract over the 
500-kV transmission lines.
    Firm Transmission Service Charge: February 1, 1996, through 
September 30, 1998: $17.98 per kilowatt per year for each kilowatt 
delivered at the point of delivery, as established by contract, payable 
monthly at the rate of $1.50 per kilowatt.
    October 1, 1998, through September 30, 2000: $17.23 per kilowatt 
per year for each kilowatt delivered at the point of delivery, as 
established by contract, payable monthly at the rate of $1.44 per 
kilowatt

Adjustments

For Reactive Power

    None. There shall be no entitlement to transfer of reactive 
kilovolt-amperes at points of delivery, except when such transfers may 
be mutually agreed upon by contractor and contracting officer or their 
authorized representatives.

For Losses

    Capacity and energy losses incurred in connection with the 
transmission and delivery of capacity and energy under this rate 
schedule shall be supplied by 

[[Page 4659]]
the customer in accordance with the service contract.

Rate Schedule INT-NFT2;Supersedes Rate Schedule INT-NFT1

United States Department of Energy Western Area Power Administration

Pacific Northwest-Pacific Southwest Intertie Project

Schedule of Rates for Nonfirm Transmission Service

Effective

    The first day of the first full billing period beginning on or 
after February 1, 1996, and will remain in effect through September 30, 
2000, or until superseded, whichever occurs first.

Available

    In the marketing area served by the Pacific Northwest-Pacific 
Southwest Intertie Project.

Applicable

    To nonfirm transmission service customers where capacity and energy 
are supplied to the Pacific Northwest-Pacific Southwest Intertie 
Project (AC Intertie) system at points of interconnection with other 
systems and transmitted and delivered, on a bi-directional basis, less 
losses, to points of delivery on the AC Intertie system established by 
contract.

Character and Conditions of Service

    Alternating current at 60 Hertz, three-phase, delivered and metered 
at the voltages and points of delivery established by contract.

Rate

    Nonfirm Transmission Service Charge: 2.00 mills per kilowatthour of 
the scheduled delivered kilowatthours at the point of delivery, 
established by contract, payable monthly.

Adjustments

For Reactive Power

    None. There shall be no entitlement to transfer of reactive 
kilovolt-amperes at points of delivery, except when such transfers may 
be mutually agreed upon by contractor and contracting officer or their 
authorized representatives.

For Losses

    Capacity and energy losses incurred in connection with the 
transmission and delivery of capacity and energy under this rate 
schedule shall be supplied by the customer in accordance with the 
service contract.

[FR Doc. 96-2523 Filed 2-6-96; 8:45 am]
BILLING CODE 6450-01-P