[Federal Register Volume 68, Number 195 (Wednesday, October 8, 2003)]
[Notices]
[Pages 58074-58082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25501]


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DEPARTMENT OF ENERGY


Cumberland System of Projects

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of rate order.

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SUMMARY: The Deputy Secretary of the Department of Energy, confirmed 
and approved, on an interim basis, Rate Schedules CBR-1-E, CSI-1-E, 
CEK-1-E, CM-1-E, CC-1-F, CK-1-E, CTV-1-E, and SJ-1-B. The rates were 
approved on an interim basis, effective on October 1, 2003 and expire 
on September 30, 2008, and are subject to confirmation and final 
approval by the Federal Energy Regulatory Commission.

DATES: Approval of rate on an interim basis is effective through 
September 30, 2008.

FOR FURTHER INFORMATION CONTACT: Leon Jourolmon, Assistant 
Administrator, Finance & Marketing, Southeastern Power Administration,

[[Page 58075]]

Department of Energy, 1166 Athens Tech Road, Elberton, Georgia 30635-
6711, (706) 213-3800.

SUPPLEMENTARY INFORMATION: The Federal Energy Regulatory Commission, by 
Order issued March 17, 2000, in Docket No. EF99-3021-000 (rehearing 
denied), confirmed and approved Wholesale Power Rate Schedules CBR-1-D, 
CSI-1-D, CK-1-D, CM-1-D, CC-1-E, CK-1-D, CEK-1-D, CTV-1-D, and SJ-1-A. 
Rate schedules CBR-1-E, CSI-1-E, CEK-1-E, CM-1-E, CC-1-F, CK-1-E, CTV-
1-E, and SJ-1-B replace these schedules.

    Dated: September 26, 2003.
Kyle E. McSlarrow,
Deputy Secretary.

Order Confirming and Approving Power Rates on an Interim Basis

[Rate Order; No. SEPA-43]

    Pursuant to Sections 302(a) and 301(b) of the Department of Energy 
Organization Act, Public Law 95-91, the functions of the Secretary of 
the Interior and the Federal Power Commission under Section 5 of the 
Flood Control Act of 1944, 16 U.S.C. 825s, relating to the Southeastern 
Power Administration (Southeastern), were transferred to and vested in 
the Secretary of Energy. By Delegation Order No. 00-037.00 (December 6, 
2001), the Secretary of Energy delegated to the Administrator of 
Southeastern the authority to develop power and transmission rates, and 
delegated to the Deputy Secretary of the Department of Energy the 
authority to confirm, approve, and place in effect such rates on an 
interim basis, and delegated to the Federal Energy Regulatory 
Commission (FERC) the authority to confirm and approve on a final basis 
or to disapprove rates developed by the Administrator under the 
delegation. This rate order is issued by the Deputy Secretary pursuant 
to said delegation.

Background

    Power from the Cumberland System of Projects is presently sold 
under Wholesale Power Rate Schedules CBR-1-D, CSI-1-D, CEK-1-D, CM-1-D, 
CC-1-E,CK-1-D, CTV-1-D, and SJ-1-A. These rate schedules were approved 
by the FERC on March 17, 2000 (90 FERC 61266).

Discussion

System Repayment

    An examination of Southeastern's revised system power repayment 
study, prepared in July 2003, for the Cumberland System shows that with 
an annual revenue increase of $6,230,000 over the revenues in the 
current repayment study using current rates, all system power costs are 
paid within the 50-year repayment period required by existing law and 
DOE Procedure RA 6120.2. The Administrator of Southeastern has 
certified that the rates are consistent with applicable law and that 
they are the lowest possible rates to customers consistent with sound 
business principles.

Public Notice and Comment

    Opportunities for Public Review and Comment on Wholesale Power Rate 
Schedules CBR-1-E, CSI-1-E, CEK-1-E, CM-1-E, CC-1-F, CK-1-E, CTV-1-E, 
and SJ-1-B, was announced by notice published in the Federal Register 
on March 25, 2003. A Public Information and Comment Forum was held May 
1, 2003, in Nashville, Tennessee, and written comments were invited 
through June 23, 2003. The notice proposed rates with a revenue 
increase of $8,063,000 in Fiscal Year 2004 and all future years. Based 
on comments received, Southeastern revised the proposed rates. The 
proposed rate adjustment now shows a revenue increase of $6,230,000. 
Transcripts of the Public Information and Comment Forums are included 
as Exhibit A-4. A review of comments is included as Exhibit A-5. The 
following is a summary of the comments.

Staff Evaluation of Public Comments

    Notice of proposed rate adjustment was published in the Federal 
Register March 25, 2003 (68 FR 14418). The notice advised interested 
parties of a public information and comment forum that would be held in 
Nashville, Tennessee on May 1, 2003. Written comments were accepted on 
or before June 23, 2003. Written comments were received from six 
sources pursuant to this notice.

A. Comments Regarding Cost Estimates

    1. Many comments pertained to the inclusion of a plan of 
rehabilitation for the Cumberland Projects provided by the Corps of 
Engineers. The Customers, the Corps of Engineers, and Southeastern are 
in the process of drafting a Memorandum of Agreement (MOA) that would 
provide for Customer funding of Renewals and Replacements. Many of the 
comments stated that the customers did not believe it was appropriate 
to include costs in the Cumberland System rates until the MOA was 
executed. These comments include the following:
    [sbull] The proposed rate over collects funds for the Corps 
Operations and Maintenance (``O&M'') and Renewals and Replacements 
(``R&R'') activities. (SeFPC, SMEPA)
    [sbull] The members of the SeFPC believe that Southeastern should 
only include those amounts in rates for O&M and R&R that reflect the 
amounts that the Corps actually allocates to hydropower activities in 
the Cumberland System of Projects. (SeFPC)
    [sbull] Unless and until an MOA is in place, the Customers believe 
that only those amounts that Corps will receive in appropriations 
should be included in the rates. (SeFPC)
    [sbull] The SeFPC submits that the proposed rate increase should 
only include those amounts where Southeastern can verify that the funds 
provided to the Corps are actually spent for hydropower purposes. 
(SeFPC)
    [sbull] If Congress does not intend to provide Construction General 
funds in the Fiscal Year 2004 Appropriations for the Corps and there is 
no MOA to provide funding of renewals, replacements, and rehabilitation 
work, the Customers contend that Southeastern cannot legally recover 
the amounts in the rates for these activities. (SeFPC)
    [sbull] In light of the fact that the President's budget request 
does not contain any construction general funds for the projects on the 
Cumberland River Basin, the SeFPC notes that Southeastern should not 
recover any joint capitalized cost from the hydropower customers. 
(SeFPC)
    [sbull] Only in the event that the Customers, Southeastern, and the 
Corps find consensus for an MOA should Southeastern include amounts in 
the 20-rates for renewals and replacements. Unless this occurs prior to 
the implementation of the rate[s] on an interim basis Southeastern 
should not include these amounts in the proposed rate schedule[s]. 
(SeFPC)
    [sbull] Southeastern will be collecting revenue for capital 
improvements that do not have guaranteed funds available. Southeastern 
customers may end up paying more for less reliable power. (KU 
Municipals)
    [sbull] TVA strongly recommends that Southeastern make the 
implementation of the Rehabilitation funding components of the proposed 
rate increase, and the proposed changes in Southeastern's billing of 
TVA, conditioned upon mutual agreement being reached by the various 
parties on a funding mechanism that will result in the Corps actually 
receiving the funding generated by the Rehabilitation funding component 
of the proposed rate increase for those Rehabilitation work items which 
have been approved by Southeastern customers. (TVA)
    [sbull] Southeastern has included in its rates future costs of 
replacements or

[[Page 58076]]

other capital costs when Southeastern is fully aware that under the 
current state of affairs there is no reasonable certainty that such 
capital costs will be incurred. TVPPA, on behalf of the TVA area 
preference customers, cannot support the continued collection of funds 
through the Southeastern rates that simply are sent to the U.S. 
Treasury, and ultimately either never used, or used for some purpose 
other than rehabilitating the projects for which they were collected. 
The inclusion in the rate design of such Phantom Capital Costs is 
contrary to statute. (TVPPA)
    [sbull] By including the Phantom Capital Costs as stated above, 
Southeastern fails to charge the lowest possible rates to consumers 
consistent with sound business practices as required by statute. 
(TVPPA)
    [sbull] We do not see any basis for attempting to recover, in the 
form of proposed increases in Southeastern rates in accordance with 
section 5 of the Flood Control Act of 1944, costs that have not yet 
been incurred (and which may never be incurred unless a contractual 
funding mechanism is implemented), except where Southeastern customers 
have agreed in accordance with the type of funding mechanisms 
referenced earlier. It seems challenging to justify use of rate-setting 
methodology that is based upon amortization and repayment of 
appropriation investments to recover, in rates charged to TVA, 
investments that have not yet been made, and which might never be made. 
(TVA)
    [sbull] Given the financial impacts that assuming the financing 
responsibility for as much as $260 million of Rehabilitation capital 
expenditures over the next 20 or more years will have on Southeastern 
customers, it appears appropriate that, as part of any funding 
mechanism, Southeastern customers should have approval and oversight 
rights with regard to those Cumberland Basin Project work items they 
would be financing. (TVA)
    [sbull] Under any funding mechanism, it also would be more 
appropriate for the Rehabilitation funding component of Southeastern 
rates for any given year to be governed by the funding requirements of 
work items approved by Southeastern customers, and not by the amount of 
funding proposed for work items that are not yet approved. (TVA)
    [sbull] Southeastern customers, by virtue of their assuming of 
future financing responsibility under a funding mechanism that offers 
no prospect of their being financially repaid, deserve a role in:
    1. Helping determine what specific work items at the Cumberland 
Basin Projects warrant the funding they will provide;
    2. Exercising reasonable oversight over the performance of such 
work to help assure that it is completed as intended; and
    3. Having appropriate guarantees to help assure that they will 
ultimately receive the intended value from the funding they will 
provide. (TVA)
    Response: Based on the comments received, Southeastern has revised 
the projected hydropower replacement costs for the Cumberland System. 
The revised projections for the cost evaluation period will reflect the 
amount the Corps actually allocated to hydropower activities in the 
Cumberland System. After the cost evaluation period, projections will 
be based on a statistical projection of replacements from a Corps of 
Engineers depreciation study.
    Section 10 (l.) of DOE Procedure RA 6120.2 requires that ``Future 
replacement costs will be included in the repayment studies by adding 
the estimated capital cost of replacement to the unpaid Federal 
Investment in the year each replacement is estimated to go into 
service, and adding it to the allowable unamortized investment.''
    If an MOA is executed and the customers agree to fund the Corps' 
plan to rehabilitate the Cumberland projects, it may be necessary for 
Southeastern to file another rate adjustment.
    2. It is TVA's understanding that approximately three-fourths of 
the proposed rate increase is designed to recover amounts to fund, over 
the next 20 or more years, approximately $260 million of new projects 
for renewals, rehabilitations, and replacements (Rehabilitation) work 
at Corps hydroelectric projects in the Cumberland Basin System. (TVA)
    Response: The comment overstates the impact of the Corps' 
Rehabilitation program on Southeastern's rates. Without including the 
Corps' 20-year plan for renewals, rehabilitations, and replacements, 
Southeastern will propose a rate increase of about fifteen percent 
(15%). The proposed rate adjustment, with the Corps' 20-year plan of 
renewals, rehabilitations, and replacements, is an increase of about 
twenty percent (20%). As such, the Corps' plan for rehabilitation of 
the Cumberland projects accounts for about one-fourth of the rate 
adjustment proposed in the Federal Register on March 25, 2003, (68 FR 
14419).
    3. Southeastern is proposing a rate that will satisfy expense and 
repayment requirements for capital additions over the next 50 years. 
However, Southeastern is not offering a 50 year contract or any 
guarantee that the improvements will be made or the power will be 
available over the next 50 years. It would be more appropriate to 
propose a rate for a five-year period that provides revenue for 
projected expenses and repayment requirements over that same 5 years. 
(KU Municipals)
    Response: To conform to requirements of RA 6120.2, the repayment 
study must extend to the end of the repayment life of the repayment 
period for the last investment in service. It is Southeastern's opinion 
that the proposal in this comment does not conform to the requirements 
of RA 6120.2.

B. Comments Regarding Purchased Power Costs

    4. Southeastern received comments that Southeastern overstated the 
impact of replacement energy costs on the proposed rates. These 
comments included the following:
    [sbull] There is little evidence to support the claim in the 
Federal Register Notice that the rate adjustment is driven by increased 
purchased power costs. (SeFPC)
    [sbull] The SeFPC understands replacement energy expenditures have 
only amounted to a little over $3.5 million since the implementation of 
the last rate increase in 1999. There appears to be little foundation 
therefore for Southeastern to raise rates over $40 million for a five 
year period to account for purchased power costs that have averaged a 
little over $1 million in each year since the last rate increase. 
(SeFPC)
    Response: The Federal Register Notice reads ``Existing rates have 
been in effect since July 1, 1999. The Cumberland System region has 
incurred a severe drought since that time. This has impacted repayment 
in two ways. First, revenues have been reduced because Southeastern has 
had less energy available for sale. Second, expenses have increased 
because it has been necessary for Southeastern to purchase replacement 
energy to meet its minimum energy obligations.''
    The notice further states, ``The Corps of Engineers has provided 
Southeastern with a plan of capital expenditures necessary to 
rehabilitate the projects in the Cumberland System. These costs are 
included in the proposed rates.''
    Cumberland System purchased power totaled about $3.5 million since 
rates for the Cumberland System were last adjusted in 1999. The 1999 
rate adjustment for the Cumberland System included no estimate for 
purchased power. As such, the purchased power costs are a factor in the 
proposed rate adjustment. However, Southeastern does not claim that 
this proposed rate

[[Page 58077]]

adjustment is driven exclusively by purchased power costs. Purchased 
power costs are among the factors causing this rate adjustment.
    5. Some comments requested Southeastern implement a pass-though 
charge for purchases of replacement energy. These comments included the 
following:
    [sbull] The SeFPC would encourage Southeastern to implement a rate 
recovery mechanism that would allow immediate pass through of purchased 
power costs for the Cumberland System of Projects. (SeFPC, SMEPA)
    [sbull] When the Southeastern anticipates making expenditures for 
purchased power, the Customers would ask Southeastern to work with Team 
Cumberland Group to minimize high costs. In the event Southeastern 
expects to make extended replacement power purchases, the Customers 
would ask Southeastern to implement a consultation process that 
involves more frequent coordination with the Customers so that 
replacement power purchases are the lowest possible consistent with 
sound business principles. (SeFPC)
    [sbull] Because of the need to raise rates in light of previous 
purchases of replacement energy, the SeFPC submits that Southeastern 
needs to revise the rate proposal to account for the purchased power 
costs in a more transparent manner so that the Customers can accurately 
measure the costs in the Customers' individual resource portfolios. In 
this regard, the SeFPC recommends changing the rate schedule to provide 
for the immediate pass through of purchased power cost and coordination 
with the Team Cumberland Group to ensure that such costs are incurred 
in a manner consistent with sound business principles. (SeFPC)
    Response: Southeastern implemented a pass-through mechanism to 
recover purchases of replacement energy in Southeastern's Georgia-
Alabama-South Carolina System starting in fiscal year 2003. However, 
marketing arrangements and rate design issues make implementation of a 
replacement energy pass-through rate on the Cumberland System complex. 
As the rates are proposed, most of the customers outside the TVA system 
have no energy charge. Most of Southeastern's Cumberland customers 
outside the TVA system receive a firm energy allocation of 1500 
kilowatt-hours of energy for each kilowatt of capacity. TVA and the 160 
preference entities on the TVA system receive the residual output of 
the Cumberland Projects.
    Southeastern believes it is inappropriate to propose a pass-through 
to attempt to implement a replacement energy pass-through without 
soliciting comments from all interested parties. Southeastern will 
consider developing a proposed pass-through mechanism for comment from 
all interested parties. As such, Southeastern will give consideration 
to the comment and may propose a pass-through of replacement energy 
costs with the next proposed rate adjustment for the Cumberland 
Projects.

C. Comments Regarding Sales of Water Storage

    6. The proposed rate does not accurately capture the revenues that 
the Corps should be receiving from sale of water storage at Corps 
projects. The Southeastern should verify whether the Corps has executed 
all necessary contracts for water storage at facilities in the 
Cumberland River Basin system. To remain consistent with the Flood 
Control Act, Southeastern must factor into rates the recovery of the 
revenues to be provided in Water Storage contracts. In the event that 
Southeastern is aware of non-authorized use of water storage at the 
projects for which the Corps has not executed a water storage contract, 
the members of the SeFPC believe that Southeastern has an obligation to 
disclose such use in the rate schedules. (SeFPC, SMEPA)
    Response: The Corps expects to execute and collect new water 
storage agreements for projects in the Cumberland System in the near 
future. When the Corps has executed these agreements and collects funds 
for the sale of water storage, Southeastern will include these revenues 
as part of the cost recovery for the Cumberland System projects.

D. Comments Regarding TVA Transmission

    7. The proposed rate includes Tennessee Valley Authority (``TVA'') 
transmission charges that have not been deemed to be just and 
reasonable. As the Customers have held longstanding concerns regarding 
the appropriateness of the TVA transmission rate, the detailed concerns 
of the SeFPC on this specific topic, which were not addressed in 
Southeastern's prior rate proposal, are incorporated herein by 
reference. (SeFPC, SMEPA)
    Response: The review of public comments in Southeastern's prior 
rate proposal states ``Section 9.1 of the TVA-Southeastern Contract, 
executed October 1, 1997, allows TVA to adjust rates for delivering 
power to the points of delivery to the ``Other Customers'' defined as 
customers outside the TVA area. Section 9.1 does not provide any means 
for Southeastern to determine an appropriate transmission rate. TVA and 
``Other Customers'' are disagreeing over the appropriateness of the 
rate increase.'' The comments further state ``Southeastern will support 
discussions between TVA and the customers outside the TVA system in an 
effort to reach a negotiated settlement on an appropriate amount for 
the TVA transmission charge.''
    As such, Southeastern's role in this issue is as a facilitator. 
Southeastern remains willing to support discussions between TVA and the 
customers outside the TVA system in an effort to reach a negotiated 
settlement on an appropriate amount for the TVA transmission charge.

E. Comments Regarding Marketing

    8. In Southeastern's forum exhibit 6 the base energy shown for East 
Kentucky Power Cooperative (EKPC) is 251,618 MWh. Based on EKPC's 
entitlement to 1500 kWh/kW capacity (170 MW), this should be 255,000 
MWh. (East Kentucky)
    Response: Southeastern's marketing arrangements with East Kentucky 
provide that East Kentucky receive the entire output of the Laurel 
Project (70 megawatt), plus 100 megawatt from the other projects in the 
Cumberland System. East Kentucky receives 36,900 megawatt-hours of 
additional energy from the other Cumberland projects to supplement the 
generation available at the Laurel Project. With the additional energy 
from the other Cumberland projects, the Laurel Project was expected to 
provide an average of 1500 megawatt-hours of energy per megawatt of 
capacity per contract year. In actual operation during the past few 
years, the Laurel Project has produced less energy, on average, than 
was forecast. The average energy available to East Kentucky has been 
251,618 megawatt-hours per year. Southeastern has revised the repayment 
study to show that East Kentucky is expected to receive an estimated 
average of 255,000 megawatt-hours of energy per contract year.
    9. Since 70 MW of EKPC's total Southeastern allocation of 170 MW 
and related energy is to be produced by the Laurel Project, EKPC is at 
the mercy of the actual annual rainfall in the Laurel Lake watershed 
and resulting power production. EKPC asks that provisions be made to 
guarantee that EKPC receive its entitlement of a minimum of 255,000 MWh 
each and every year. (East Kentucky)
    Response: The comment relates to Southeastern's marketing 
arrangements with East Kentucky, and is not pertinent

[[Page 58078]]

to the proposed rates. Southeastern's marketing arrangements with East 
Kentucky are discussed in the response to comment 8 above. Southeastern 
is willing to consider any revisions to the contract between 
Southeastern and East Kentucky that East Kentucky may propose. Such 
revisions would have to be evaluated for their impact on other 
customers of the Cumberland System.

F. Comments Regarding Rate Design

    10. East Kentucky Power Cooperative requests that Southeastern 
revise its Proposed Wholesale Power Rate Schedule CEK-1-E as follows: 
[The design includes an energy charge for energy from the Laurel 
Project and reduces the capacity charge for capacity from the Laurel 
Project by the anticipated 1500 hours energy per year] (East Kentucky)
    Response: Southeastern will revise the proposed rate schedule CEK-
1-E to provide no energy with the capacity charge. All energy provided 
under this rate schedule will be billed at the additional energy rate.

Order

    In view of the foregoing and pursuant to the authority vested in me 
as the Deputy Secretary of Energy, I hereby confirm and approve on an 
interim basis, effective October 1, 2003, attached Wholesale Power Rate 
Schedules CBR-1-E, CSI-1-E, CEK-1-E, CM-1-E, CC-1-F, CK-1-E, CTV-1-E, 
and SJ-1-B.
    The Rate Schedules shall remain in effect on an interim basis 
through September 30, 2008, unless such period is extended or until the 
FERC confirms and approves them or substitutes Rate Schedules on a 
final basis.

    Dated: September 26, 2003
Kyle E. McSlarrow,
Deputy Secretary.

Wholesale Power Rate Schedule CBR-1-E

    Availability: This rate schedule shall be available to Big Rivers 
Electric Corporation and includes the City of Henderson, Kentucky, 
(hereinafter called the Customer).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 13,800 volts and 161,000 volts to the transmission system 
of Big Rivers Electric Corporation.
    Points of Delivery: Capacity and energy delivered to the Customer 
will be delivered at points of interconnection of the Customer at the 
Barkley Project Switchyard, at a delivery point in the vicinity of the 
Paradise steam plant and at such other points of delivery as may 
hereafter be agreed upon by the Government and TVA.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $3.373 per kilowatt/month of total contract demand.
Energy Charge: None.

    Energy to be Furnished by the Government: The Government shall make 
available each contract year to the customer from the Projects through 
the customer's interconnections with TVA and the customer will schedule 
and accept an allocation of 1,500 kilowatt-hours of energy delivered at 
the TVA border for each kilowatt of contract demand. A contract year is 
defined as the 12 months beginning July 1 and ending at midnight June 
30 of the following calendar year. The energy made available for a 
contract year shall be scheduled monthly such that the maximum amount 
scheduled in any month shall not exceed 240 hours per kilowatt of the 
customer's contract demand and the minimum amount scheduled in any 
month shall not be less than 60 hours per kilowatt of the customer's 
contract demand. The customer may request and the Government may 
approve energy scheduled for a month greater than 240 hours per 
kilowatt of the customer's contract demand; provided, that the combined 
schedule of all Southeastern customers outside TVA and served by TVA 
does not exceed 240 hours per kilowatt of the total contract demands of 
these customers.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.
    Conditions of Service: The customer shall at its own expense 
provide, install, and maintain on its side of each delivery point the 
equipment necessary to protect and control its own system. In so doing, 
the installation, adjustment, and setting of all such control and 
protective equipment at or near the point of delivery shall be 
coordinated with that which is installed by and at the expense of TVA 
on its side of the delivery point.
    Service Interruption: When delivery of capacity is interrupted or 
reduced due to conditions on the Administrator's system beyond his 
control, the Administrator will continue to make available the portion 
of his declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN08OC03.009

Wholesale Power Rate Schedule CSI-1-E

    Availability: This rate schedule shall be available to Southern 
Illinois Power Cooperative (hereinafter the Customer).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 13,800 volts and 161,000 volts to the transmission system 
of Big Rivers Electric Corporation.
    Points of Delivery: Capacity and energy delivered to the Customer 
will be

[[Page 58079]]

delivered at points of interconnection of the Customer at the Barkley 
Project Switchyard, at a delivery point in the vicinity of the Paradise 
steam plant and at such other points of delivery as may hereafter be 
agreed upon by the Government and TVA.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $3.373 per kilowatt/month of total contract demand
Energy Charge: None

    Energy to be Furnished by the Government: The Government shall make 
available each contract year to the customer from the Projects through 
the customer's interconnections with TVA and the customer will schedule 
and accept an allocation of 1,500 kilowatt-hours of energy delivered at 
the TVA border for each kilowatt of contract demand. A contract year is 
defined as the 12 months beginning July 1 and ending at midnight June 
30 of the following calendar year. The energy made available for a 
contract year shall be scheduled monthly such that the maximum amount 
scheduled in any month shall not exceed 240 hours per kilowatt of the 
customer's contract demand and the minimum amount scheduled in any 
month shall not be less than 60 hours per kilowatt of the customer's 
contract demand. The customer may request and the Government may 
approve energy scheduled for a month greater than 240 hours per 
kilowatt of the customer's contract demand; provided, that the combined 
schedule of all Southeastern customers outside TVA and served by TVA 
does not exceed 240 hours per kilowatt of the total contract demands of 
these customers.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.
    Service Interruption: When delivery of capacity is interrupted or 
reduced due to conditions on the Administrator's system beyond his 
control, the Administrator will continue to make available the portion 
of his declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN08OC03.010

Wholesale Power Rate Schedule CEK-1-E

    Availability: This rate schedule shall be available to East 
Kentucky Power Cooperative (hereinafter called the Customer).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and power available from the Laurel 
Project and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 161,000 volts to the transmission systems of the Customer.
    Points of Delivery: The points of delivery will be the 161,000 volt 
bus of the Wolf Creek Power Plant and the 161,000 volt bus of the 
Laurel Project. Other points of delivery may be as agreed upon.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $2.232 per kilowatt/month of total contract demand
Energy Charge: 9.13 mills per kilowatt-hour
    Energy to be Furnished by the Government: The Government shall make 
available each contract year to the customer from the Projects through 
the customer's interconnections with TVA and the customer will schedule 
and accept an allocation of 1,500 kilowatt-hours of energy delivered at 
the TVA border for each kilowatt of contract demand plus 369 kilowatt-
hours of energy delivered for each kilowatt of contract demand to 
supplement energy available at the Laurel Project. A contract year is 
defined as the 12 months beginning July 1 and ending at midnight June 
30 of the following calendar year. The energy made available for a 
contract year shall be scheduled monthly such that the maximum amount 
scheduled in any month shall not exceed 240 hours per kilowatt of the 
customer's contract demand and the minimum amount scheduled in any 
month shall not be less than 60 hours per kilowatt of the customer's 
contract demand. The customer may request and the Government may 
approve energy scheduled for a month greater than 240 hours per 
kilowatt of the customer's contract demand; provided, that the combined 
schedule of all Southeastern customers outside TVA and served by TVA 
does not exceed 240 hours per kilowatt of the total contract demands of 
these customers.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.
    Conditions of Service: The customer shall at its own expense 
provide, install, and maintain on its side of each delivery point the 
equipment necessary to protect and control its own system. In so doing, 
the installation, adjustment and setting of all such control and 
protective equipment at or near the point of delivery shall be 
coordinated with that which is installed by and at the expense of TVA 
on its side of the delivery point.
    Service Interruption: When delivery of capacity is interrupted or 
reduced due to conditions on the Administrator's system beyond his 
control, the Administrator will continue to make available the portion 
of his declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:

[[Page 58080]]

[GRAPHIC] [TIFF OMITTED] TN08OC03.011

Wholesale Power Rate Schedule CM-1-E

    Availability: This rate schedule shall be available to the South 
Mississippi Electric Power Association, Municipal Energy Agency of 
Mississippi, and Mississippi Delta Energy Agency (hereinafter called 
the Customers).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 161,000 volts to the transmission systems of Mississippi 
Power and Light.
    Points of Delivery: The points of delivery will be at 
interconnection points of the Tennessee Valley Authority system and the 
Mississippi Power and Light system. Other points of delivery may be as 
agreed upon.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $3.373 per kilowatt/month of total contract demand
Energy Charge: None

    Energy to be Furnished by the Government: The Government shall make 
available each contract year to the Customer from the Projects through 
the Customer's interconnections with TVA and the Customer will schedule 
and accept an allocation of 1,500 kilowatt-hours of energy delivered at 
the TVA border for each kilowatt of contract demand. A contract year is 
defined as the 12 months beginning July 1 and ending at midnight June 
30 of the following calendar year. The energy made available for a 
contract year shall be scheduled monthly such that the maximum amount 
scheduled in any month shall not exceed 240 hours per kilowatt of the 
Customer's contract demand and the minimum amount scheduled in any 
month shall not be less than 60 hours per kilowatt of the Customer's 
contract demand. The Customer may request and the Government may 
approve energy scheduled for a month greater than 240 hours per 
kilowatt of the Customer's contract demand; provided, that the combined 
schedule of all Southeastern Customers outside TVA and served by TVA 
does not exceed 240 hours per kilowatt of the total contract demands of 
these Customers.
    In the event that any portion of the capacity allocated to the 
Customers is not initially delivered to the Customers as of the 
beginning of a full contract year, the 1500 kilowatt hours shall be 
reduced 1/12 for each month of that year prior to initial delivery of 
such capacity.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective on 
the last day of each calendar month.
    Service Interruption: When delivery of capacity is interrupted or 
reduced due to conditions on the Administrator's system beyond his 
control, the Administrator will continue to make available the portion 
of his declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN08OC03.012

Wholesale Power Rate Schedule CC-1-F

    Availability: This rate schedule shall be available to public 
bodies and cooperatives served through the facilities of Carolina Power 
& Light Company, Western Division (hereinafter called the Customers).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 161,000 volts to the transmission system of Carolina Power 
& Light Company, Western Division.
    Points of Delivery: The points of delivery will be at 
interconnecting points of the Tennessee Valley Authority system and the 
Carolina Power & Light Company, Western Division system. Other points 
of delivery may be as agreed upon.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $3.839 per kilowatt/month of total contract demand
Energy Charge: None
CP&L Transmission Charge: $1.2493 per kilowatt/month of total contract 
demand

    The CP&L transmission rate is subject to annual adjustment on April 
1 of each year and will be computed subject to the formula in Appendix 
A attached to the Government--Carolina Power & Light Company contract.
    Energy to be Furnished by the Government: The Government will sell 
to the customer and the customer will purchase from the Government 
energy each billing month equivalent to a percentage specified by 
contract of the energy made available to Carolina Power & Light Company 
(less six percent (6%) losses). The Customer's contract demand and 
accompanying

[[Page 58081]]

energy allocation will be divided pro rata among its individual 
delivery points served from the Carolina Power & Light Company's, 
Western Division transmission system.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.

Wholesale Power Rate Schedule CK-1-E

    Availability: This rate schedule shall be available to public 
bodies served through the facilities of Kentucky Utilities Company, 
(hereinafter called the Customers.)
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy available from the Dale Hollow, Center Hill, Wolf 
Creek, Cheatham, Old Hickory, Barkley, J. Percy Priest and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of sixty hertz. The power shall be delivered at nominal 
voltages of 161,000 volts to the transmission systems of Kentucky 
Utilities Company.
    Points of Delivery: The points of delivery will be at 
interconnecting points between the Tennessee Valley Authority system 
and the Kentucky Utilities Company system. Other points of delivery may 
be as agreed upon.
    Monthly Rate: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand charge: $3.373 per kilowatt/month of total contract demand
Energy Charge: None
Additional Energy Charge: 9.13 mills per kilowatt-hour

    Energy to be Furnished by the Government: The Government shall make 
available each contract year to the Customer from the Projects and the 
Customer will accept an allocation of 1,500 kilowatt-hours of energy 
for each kilowatt of contract demand. A contract year is defined as the 
12 months beginning July 1 and ending at midnight June 30 of the 
following calendar year. The energy made available for a contract year 
shall be scheduled monthly such that the maximum amount scheduled in 
any month shall not exceed 240 hours per kilowatt of the Customer's 
contract demand and the minimum amount scheduled in any month shall not 
be less than 60 hours per kilowatt of the Customer's contract demand. 
The Customer may request and the Government may approve energy 
scheduled for a month greater than 240 hours per kilowatt of the 
Customer's contract demand; provided, that the combined schedule of all 
Southeastern Customers outside TVA and served by TVA does not exceed 
240 hours per kilowatt of the total contract demands of these 
Customers.In the event that any portion of the capacity allocated to 
the Customers is not initially delivered to the Customers as of the 
beginning of a full contract year, the 1500 kilowatt hours shall be 
reduced 1/12 for each month of that year prior to initial delivery of 
such capacity.
    For billing purposes, each kilowatt of capacity will include 1500 
kilowatt-hours energy per year. Customers will pay for additional 
energy at the additional energy rate.
    Billing Month: The billing month for power sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective on 
the last day of each calendar month.

Wholesale Power Rate Schedule CTV-1-E

    Availability: This rate schedule shall be available to the 
Tennessee Valley Authority (hereinafter called TVA).
    Applicability: This rate schedule shall be applicable to electric 
capacity and energy generated at the Dale Hollow, Center Hill, Wolf 
Creek, Old Hickory, Cheatham, Barkley, J. Percy Priest, and Cordell 
Hull Projects (all of such projects being hereafter called collectively 
the ``Cumberland Projects'') and the Laurel Project sold under 
agreement between the Department of Energy and TVA.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a frequency of 
approximately 60 Hertz at the outgoing terminals of the Cumberland 
Projects' switchyards.
    Monthly Rates: The monthly rate for capacity and energy sold under 
this rate schedule shall be:

Demand Charge: $1.907 per kilowatt/month of total demand as determined 
by the agreement between the Department of Energy and TVA.
Energy Charge: None
Additional Energy Charge: 9.13 mills per kilowatt-hour

    Energy to be Made Available: The Department of Energy shall 
determine the energy that is available from the projects for 
declaration in the billing month.
    To meet the energy requirements of the Department of Energy's 
customers outside the TVA area (hereinafter called Other Customers), 
768,000 megawatt-hours of net energy shall be available annually 
(including 36,900 megawatt-hours of annual net energy to supplement 
energy available at Laurel Project). The energy requirement of the 
Other Customers shall be available annually, divided monthly such that 
the maximum available in any month shall not exceed 240 hours per 
kilowatt of total Other Customers contract demand, and the minimum 
amount available in any month shall not be less than 60 hours per 
kilowatt of total Other Customers demand.
    In the event that any portion of the capacity allocated to Other 
Customers is not initially delivered to the Other Customers as of the 
beginning of a full contract year, (July through June), the 1500 hours, 
plus any such additional energy required as discussed above, shall be 
reduced \1/12\ for each month of that year prior to initial delivery of 
such capacity.
    The energy scheduled by TVA for use within the TVA System in any 
billing month shall be the total energy delivered to TVA less (1) an 
adjustment for fast or slow meters, if any, (2) an adjustment for 
Barkley-Kentucky Canal of 15,000 megawatt-hours of energy each month 
which is delivered to TVA under the agreement from the Cumberland 
Projects without charge to TVA, (3) the energy scheduled by the 
Department of Energy in said month for the Other Customers plus losses 
of two (2) percent, and (4) station service energy furnished by TVA.
    Each kilowatt of capacity will include 1500 kilowatt-hours of 
energy per year, which is defined as base energy. Energy received in 
excess of 1500 kilowatt-hours per kilowatt will be subject to an 
additional energy charge identified in the monthly rates section of 
this rate schedule.
    Billing Month: The billing month for capacity and energy sold under 
this schedule shall end at 2400 hours CDT or CST, whichever is 
currently effective, on the last day of each calendar month.
    Contract Year: For purposes of this rate schedule, a contract year 
shall be as in Section 13.1 of the Southeastern Power Administration--
Tennessee Valley Authority Contract.
    Service Interruption: When delivery of capacity to TVA is 
interrupted or reduced due to conditions on the Department of Energy's 
system that are beyond its control, the Department of Energy will 
continue to make available the portion of its declaration of energy 
that can be generated with the capacity available.
    For such interruption or reduction (exclusive of any restrictions 
provided

[[Page 58082]]

in the agreement) due to conditions on the Department of Energy's 
system which have not been arranged for and agreed to in advance, the 
demand charge for scheduled capacity made available to TVA will be 
reduced as to the kilowatts of such scheduled capacity which have been 
so interrupted or reduced for each day in accordance with the following 
formula:
[GRAPHIC] [TIFF OMITTED] TN08OC03.013

    Power Factor: TVA shall take capacity and energy from the 
Department of Energy at such power factor as will best serve TVA's 
system from time to time; provided, that TVA shall not impose a power 
factor of less than .85 lagging on the Department of Energy's 
facilities which requires operation contrary to good operating practice 
or results in overload or impairment of such facilities.

Wholesale Power Rate Schedule SJ-1-B

    Availability: This rate schedule shall be available to Monongahela 
Power Company for energy from the Stonewall Jackson Project 
(hereinafter called the Project).
    Applicability: This rate schedule shall be applicable to energy 
made available by the Government from the Project and sold in wholesale 
quantities.
    Character of Service: The electric capacity and energy supplied 
hereunder will be three-phase alternating current at a nominal 
frequency of 60 cycles per second delivered at the delivery points of 
the customer.
    Monthly Rate: The monthly rate for energy made available or 
delivered under this rate schedule shall be the lower of:
    (a) The energy equivalent rate of Cumberland Rate Schedule CC-1-F, 
which is 38.1 mills per kwh, or;
    (b) The sum, as reasonably determined by Monongahela Power Company 
(Buyer), of (1) and (2) below calculated for each period as to which 
the determination is being made, (normally monthly) based on costs and 
net generation of Buyer and other regulated subsidiaries of Allegheny 
Power System, Inc. to produce energy from: Ft. Martin Units Nos. 1 and 
2, Hatfield Ferry Units Nos. 1, 2, and 3, Harrison Units Nos. 1, 2, 3, 
and Pleasants Units Nos. 1 and 2.
    (1) The accrued expense in FERC Account 501 (fuel expense) or such 
appropriate similar account as the FERC may from time to time establish 
for fuel expense for steam power generation, divided by the actual net 
generation in kilowatt-hours, exclusive of plan use, plus
    (2) One-half of the accrued expenses in FERC Accounts 510-514 
(maintenance expense), inclusive, of such other appropriate similar 
accounts as FERC may from time to time establish for maintenance 
expense for steam power generation, divided by the actual net 
generation in kilowatt-hours, exclusive of plant use.
    Energy Made Available: Project energy generated by the District at 
the Project except energy use in the production of such energy or 
utilized by the District for its operations at the location of the 
project.
    Billing Month: Buyer shall read the metering devices within three 
business days of the end of each calendar month and will render payment 
within 15 days of such reading.
    Conditions of Service: The customer shall at its own expense 
provide, install, and maintain on its side of each delivery point the 
equipment necessary to protect and control its own system. In so doing, 
the installation, adjustment, and setting of all such control and 
protective equipment at or near the point of delivery shall be 
coordinated with that which is installed by and at the expense of the 
Monongahela Power Company on its side of the delivery point.

[FR Doc. 03-25501 Filed 10-7-03; 8:45 am]
BILLING CODE 6450-01-P