[Federal Register Volume 71, Number 6 (Tuesday, January 10, 2006)]
[Notices]
[Pages 1533-1538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-110]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Central Arizona Project--Rate Order No. WAPA-124

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of order concerning transmission service rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-124 and Rate Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2, 
placing transmission rates from the Central Arizona Project (CAP) of 
the Western Area Power Administration (Western) into effect on an 
interim basis. The provisional rates will be in effect until the 
Federal Energy Regulatory Commission (Commission) confirms, approves, 
and places them into effect on a final basis or until they are replaced 
by other rates. The provisional rates will provide sufficient revenue 
to pay all annual costs, including interest expense, and repayment of 
power investment, within the allowable periods.

DATES: Rate Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2 will be placed 
into effect on an interim basis on the first day of the first full 
billing period beginning on or after January 1, 2006, and will be in 
effect until the Commission confirms, approves, and places the rate 
schedules in effect on a final basis through December 31, 2010, or 
until the rate schedules are superseded.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) 605-7348, 
e-mail [email protected], or Mr. Jack D. Murray, Rates Team Lead, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 605-2442, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved Rate 
Schedules CAP-FT1, CAP-NFT1, and CAP-NITS1 for transmission service on 
December 11, 2000 (Rate Order No. WAPA-88, 65 FR 77368, December 11, 
2000). The Commission confirmed and approved the rate schedules on July 
31, 2001, in FERC Docket No. EF01-5111-000. The existing rate schedules 
CAP-FT1, CAP-NFT1, and CAP-NITS1 are effective from January 1, 2001, 
through December 31, 2005.
    The existing rate schedules are being superseded by rate schedules 
CAP-FT2, CAP-NFT2, and CAP-NITS2. The provisional formula rates for 
point-to-point transmission service and Network Integration 
Transmission Service (NITS) on the CAP 115kV and 230-kV transmission 
lines are based on the calculation of a revenue requirement that 
recovers the CAP 115kV and 230-kV transmission lines costs for 
facilities associated with providing transmission service and the non-
facilities costs allocated to transmission service. These rate formulas 
include costs for scheduling, system control, and dispatch service. The 
provisional rates for point-to-point transmission service on the CAP 
115-kV/230-kV transmission system are determined by combining the 
average annual amortization costs with the average annual operations 
and maintenance costs, and dividing them by the average annual contract 
rate of delivery for the 5-year period FY 2006-FY 2010.
    The revised formula rates reflect a 2.87-percent decrease for 2006 
when compared to the existing CAP transmission rates, which expire 
December 31, 2005. The decrease in the firm point-to-point rate is the 
result of increased transmission reservations combined with relatively 
stable expenses since the approval of Rate Order WAPA-88. 
Implementation of the revised formula rates will result in a firm 
transmission service rate of $9.55 per kilowattyear for 2006.
    NITS allows a transmission customer to integrate, plan, 
economically dispatch, and regulate its network resources to serve its 
native load in a way comparable to how a transmission provider uses its 
own transmission system to service its native load customers. The 
monthly charge methodology for NITS on the CAP 115-kV and 230-kV 
transmission lines is the product of the transmission customer's load-
ratio share times one-twelfth of the annual transmission revenue 
requirement. The customer's load-ratio share is calculated on a rolling 
12-month basis. The customer's load-ratio share is equal to that 
customer's hourly load coincident with the CAP 115-kV and 230-kV 
transmission lines monthly transmission system peak divided by the 
resultant value of the CAP 115-kV and 230-kV transmission lines monthly

[[Page 1534]]

transmission system peak minus the CAP 115-kV and 230-kV transmission 
lines coincident peak for all firm point-to-point transmission service 
plus the CAP 115-kV and 230-kV transmission lines firm point-to-point 
transmission service reservations.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to Western's Administrator, (2) the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to the Deputy Secretary of Energy, and (3) the authority to confirm, 
approve, and place into effect on a final basis, to remand or to 
disapprove such rates to the Commission. Existing DOE procedures for 
public participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985.
    Under Delegation Order Nos. 00-037.00 and 00-001.00B, and in 
compliance with 10 CFR part 903, and 18 CFR part 300, I hereby confirm, 
approve, and place Rate Order No. WAPA-124, the proposed formula rate 
for CAP transmission, into effect on an interim basis. The new Rate 
Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2, will be promptly submitted 
to the Commission for confirmation and approval on a final basis.

    Dated: December 23, 2005.
Clay Sell,
Deputy Secretary.

DEPARTMENT OF ENERGY

Deputy Secretary

[Rate Order No. WAPA-124]

In the Matter of: Western Area Power Administration Rate Adjustment for 
the Central Arizona Project. Order Confirming, Approving, and Placing 
the Central Arizona Project Transmission Service Rates Into Effect on 
an Interim Basis

    This rate was established in accordance with section 302 of the 
Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This 
Act transferred to and vested in the Secretary of Energy the power 
marketing functions of the Secretary of the Department of the 
Interior and the Bureau of Reclamation under the Reclamation Act of 
1902 (ch. 1093, 32 Stat. 388), as amended and supplemented by 
subsequent laws, particularly section 9(c) of the Reclamation 
Project Act of 1939 (43 U.S.C. 485h(c)), and other Acts that 
specifically apply to the project involved.
    By Delegation Order No. 00-037.00, effective December 6, 2001, 
the Secretary of Energy delegated: (1) The authority to develop 
power and transmission rates to Western's Administrator, (2) the 
authority to confirm, approve, and place such rates into effect on 
an interim basis to the Deputy Secretary of Energy, and (3) the 
authority to confirm, approve, and place into effect on a final 
basis, to remand or to disapprove such rates to the Commission. 
Existing DOE procedures for public participation in power rate 
adjustments (10 CFR part 903) were published on September 18, 1985.

Acronyms and Definitions

    As used in this rate order, the following acronyms and 
definitions apply:
    Administrator: The Administrator of the Western Area Power 
Administration (Western).
    BATO: Balancing Authority and Transmission Operations area. 
Formerly referred to as a Control Area.
    Capacity: The electric capability of a generator, transformer, 
transmission circuit, or other equipment. It is expressed in kW.
    CAP: Central Arizona Project, one of three related water 
development projects that make up the Colorado River Basin Project.
    Commission: Federal Energy Regulatory Commission.
    CROD: Contract rate of delivery. The maximum amount of capacity 
made available to a customer for a period specified under a contract 
or service agreement.
    Customer: An entity with a contract [BF8] or service agreement 
that is receiving service from Western's Desert Southwest Region.
    CY: Calendar year; January 1 through December 31.
    DOE: United States Department of Energy.
    DOE Order RA 6120.2: An order dealing with power marketing 
administration financial reporting and ratemaking procedures.
    Energy: Measured in terms of the work it is capable of doing 
over a period of time. It is expressed in kilowatthours.
    FERC: The Commission (to be used when referencing Commission 
Orders).
    Firm: A type of product and/or service available at the time 
requested by the customer.
    Formula Rates: A rate which is based upon a formula calculated 
yearly.
    FY: Fiscal year; October 1 to September 30.
    kV: Kilovolt--the electrical unit of measure of electric 
potential that equals 1,000 volts.
    kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
    kWmonth: Kilowattmonth--the electrical unit of the monthly 
amount of capacity.
    kWh: Kilowatthour--the electrical unit of energy that equals 
1,000 watts in 1 hour.
    mill: A monetary denomination of the United States that equals 
one tenth of a cent or one thousandth of a dollar.
    NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, 
et seq.).
    NITS: Network Integration Transmission Service.
    Non-firm: A type of product and/or service not always available 
at the time requested by the customer.
    O&M: Operation and Maintenance.
    Power: Capacity and energy.
    Reclamation: United States Department of the Interior, Bureau of 
Reclamation.
    Revenue Requirement: The revenue required to recover annual 
expenses (such as O&M, transmission service expenses, interest, 
deferred expenses) and repayment of Federal investments, and other 
assigned costs.
    SCADA: Supervisory Control and Data Acquisition.
    WALC: Western Area Lower Colorado BATO, operated by Desert 
Southwest Region.
    Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    The new interim rates will take effect on the first day of the 
first full billing period beginning on or after January 1, 2006, and 
will remain in effect until December 31, 2010, pending approval by 
the Commission on a final basis.

Public Notice and Comment

    Western followed the Procedures for Public Participation in 
Power and Transmission Rate Adjustments and Extensions, 10 CFR part 
903, in developing these rates. The steps Western took to involve 
interested parties in the rate process were:
    1. On June 22, 2005, Western mailed a notice announcing an 
informal meeting, which was held July 12, 2005. At this informal 
meeting, Western explained the rationale for the rate adjustment, 
presented rate designs and methodologies, and answered questions.
    2. A Federal Register notice published on July 1, 2005 (70 FR 
38130), announced the proposed rates for the Central Arizona 
Project, began a public consultation and comment period, and 
announced the public information and public comment forums.
    3. On July 18, 2005, Western's Desert Southwest Region mailed 
letters to all the Central Arizona Project customers and interested 
parties transmitting the Brochure for Proposed Rates and the Federal 
Register notice published on July 1, 2005.
    4. On July 21, 2005, Western mailed data to the Central Arizona 
Project customers and interested parties, in response to customers' 
data request at the informal customer meeting.
    5. On July 22, 2005, beginning at 10 a.m., Western held a public 
information forum at the Desert Southwest Regional office in 
Phoenix, Arizona. Western provided detailed explanations of the 
proposed rates for CAP, and a list of issues that could affect the 
proposed rates. Western also answered questions, provided rate 
brochures, supporting documentation, and informational handouts.
    6. On August 22, 2005, beginning at 1 p.m., Western held a 
comment forum to give the public an opportunity to comment for the 
record. There were no comments at this forum.
    7. Western received one comment letter during the consultation 
and comment period, which ended September 29, 2005. All formally 
submitted comments have been considered in preparing this Rate 
Order.

Comments

    Written comments were received from the following organizations: 
Central Arizona Water Conservation District.

Project Description

    The CAP was authorized by passage of the Colorado River Basin 
Project Act (Act of September 30, 1968, Pub. L. 90-537, 82 Stat. 
885) for the purposes of furnishing irrigation

[[Page 1535]]

water and municipal water supplies to the water-deficient areas of 
Arizona and western New Mexico through direct diversion or exchange 
of water, conservation and development of fish and wildlife 
resources, enhancement of recreation opportunities, and for other 
purposes.
    The Secretary of the Interior was directed to construct, operate 
and maintain the CAP, consisting of the following principal works: 
(1) A system of main conduits and canals, including a main canal and 
pumping plants for diverting and carrying water; (2) water storage 
facilities and power-pumping plants; (3) aqueducts and pumping 
plants; (4) related canals, regulating facilities, hydroelectric 
power plants, and electrical transmission facilities required for 
the operation of said principal works; (5) related water 
distribution and drainage works; and (6) appurtenant works.
    The Colorado River Basin Project Act also authorized Federal 
participation with non-Federal interests for construction, 
operation, and maintenance of a thermal generating power plant 
(Navajo Generating Station or NGS) whereby the United States 
acquired the rights to plant capacity, including the delivery of 
power and energy over appurtenant transmission facilities to 
mutually agreed upon delivery points, as the Secretary of the 
Interior determines is required to provide pumping power for the 
CAP.
    When not required for the CAP, the NGS power and energy may be 
disposed of by the Secretary of the Interior for other purposes at 
such prices the Secretary determines, including its marketing in 
conjunction with the sale of power and energy from Federal power 
plants in the Colorado River system, so as to produce the greatest 
practicable amount of power and energy that can be sold at firm 
power and energy rates.
    On August 4, 1977, the Department of Energy Organization Act 
(Pub. L. 95-91, 91 Stat. 565; 42 U.S.C. 7101) was signed into law, 
establishing the DOE. Section 302(a)(3) of the Act created Western 
within DOE. Section 302(a)(1)(E) transferred the power marketing 
functions of the Bureau of Reclamation, including the construction, 
operation, and maintenance of transmission lines and attendant 
facilities to the DOE.

Transmission Rate Methodology Study

    Western prepared a transmission rate methodology study to ensure 
that transmission service rates are adequate to recover the costs 
associated with providing transmission service on the CAP 115/230-kV 
transmission system. The design includes all transmission expenses 
and associated offsetting revenues.
    Western reviews the CAP rate design each year to determine if 
revenues will be sufficient to repay, within the required time, all 
costs assigned to the Central Arizona Project revenues. Repayment 
criteria are based on law, policies including DOE Order RA 6120.2, 
and authorizing legislation.
    The revised firm transmission rate for CAP firm transmission 
reflects an overall rate decrease of approximately 2.87 percent for 
2006 when compared to the existing CAP firm transmission rate in 
Rate Schedule CAP-FT1.

                          Comparison of Current and Provisional Firm Transmission Rate
----------------------------------------------------------------------------------------------------------------
                                                                      Proposed formula rates
            Type of service              Existing rates 115/230-kV    115/230-kV system 1/1/     Percent change
                                                   system                      2006
----------------------------------------------------------------------------------------------------------------
Firm Transmission Service..............  $9.83/kW/year............  $9.55/kW/year............            (2.87%)
Nonfirm Transmission Service...........  1.12 mills/kWh...........  1.09 mills/kWh...........            (2.87%)
----------------------------------------------------------------------------------------------------------------

    Western's revised rate formula will be used to calculate rates 
annually for all current and future CAP transmission service. The 
current CAP transmission rate formula became effective on January 1, 
2001. The current CAP rate under WAPA Rate Order No. 88 will expire 
December 31, 2005. The revised transmission rate formula is expected 
to be effective January 1, 2006, through December 31, 2010. These 
rate formulas include costs for scheduling, system control, and 
dispatch service.
    The methodology is an annual formula that will divide the 
average annual transmission revenue requirement by the average 
annual transmission reservations to determine the rate for firm 
point-to-point transmission service. The annual transmission revenue 
requirement includes O&M expenses, administrative and general 
expenses, investment costs, and interest expense. This revenue 
requirement is offset by any CAP transmission system revenue 
credits, such as revenue from non-firm or short-term sales, to 
determine the net revenue requirement.

Firm Point-to-Point

    Western seeks approval of the rate design formula to calculate 
the transmission rate to be applied annually. Using this formula, 
the provisional rate for firm CAP transmission service is $9.55 per 
kW-year for 2006, a 2.87-percent decrease from the existing 
transmission rate of $9.83 per kW-year, which became effective 
January 1, 2001. The decrease is due to transmission capacity 
reservations increasing more rapidly than increases in total annual 
costs. The rate formula is calculated annually, using the most 
recent 5-year projections of total expenses and revenues. If needed, 
a revised rate will become effective each January 1. The proposed 
rate formula would be effective January 1, 2006, through December 
31, 2010.
    The cost/kW-year is calculated using the following two-step 
formula:

[GRAPHIC] [TIFF OMITTED] TN10JA06.000

Where:

ARR = Annual Revenue Requirement. The costs associated with 
facilities that support the transfer capability of the CAP 
transmission system, excluding generation facilities. These costs 
include investment costs, interest expense, administrative and 
general expenses, and operation and maintenance expense. The revenue 
requirement for CAP is based on projected average costs for the 
upcoming 5-year rate-setting period.
TRC = Transmission Revenue Credits. The revenues generated by the 
CAP transmission system not related to the revenues from the sale of 
long-term firm transmission.
NARR = Net Annual Transmission Revenue Requirement. The Annual 
Revenue Requirement minus Transmission Revenue Credits.
TSTL = CAP Transmission System Total Load. The sum of the total 
average CAP transmission capacity under long-term reservation, 
including the total network integration loads at system peak for the 
upcoming 5-year rate-setting period.

Nonfirm Point-to-Point

    The proposed rate for nonfirm point-to-point CAP transmission 
service is a mills/kWh rate, based upon the current firm point-to-
point rate and may be discounted. This rate will remain in effect 
for the same period as the firm point-to-point rate and will also be 
reviewed annually. The provisional rate for CAP non-firm 
transmission service is based on the current CAP firm point-to-point 
transmission rate. The provisional rate is expressed in mills/kWh 
and is a maximum of 1.09 mills/kWh for 2006. Transmission 
availability will be posted on Western's OASIS.

Network Integration Transmission Service

    The proposed rate for network transmission is a formula 
calculation based upon the annual transmission revenue requirement. 
There are no changes to the existing network integration 
transmission service formula under Rate Schedule CAP-NITS2.
    NITS allows a transmission customer to integrate, plan, 
economically dispatch, and regulate its network resources to serve 
its native load in a way comparable to how a transmission provider 
uses its own transmission system to service its native load 
customers. The monthly charge methodology for NITS on the CAP 115-kV 
and 230-kV transmission lines is the product of the transmission 
customer's load-ratio share times one-twelfth of the annual 
transmission revenue requirement. The customer's load-ratio share is 
calculated on a rolling 12-month basis. The customer's load-ratio 
share is equal to that customer's hourly load coincident with the 
CAP 115-kV and 230-kV

[[Page 1536]]

transmission lines monthly transmission system peak divided by the 
resultant value of the CAP 115-kV and 230-kV transmission lines 
monthly transmission system peak minus the CAP 115-kV and 230-kV 
transmission lines coincident peak for all firm point-to-point 
transmission service plus the CAP 115-kV and 230-kV transmission 
lines firm point-to-point transmission service reservations.
    The proposed revenue requirement includes the costs for 
scheduling, system control, and dispatch service. The reactive 
supply and voltage control ancillary service must be purchased from 
the WALC BATO. The transmission customer may self-supply the four 
remaining ancillary services or request them from WALC. These four 
ancillary services are regulation and frequency response service, 
energy imbalance service, spinning reserve service, and supplemental 
reserve service. The rates for these ancillary services are set 
forth in Rate Schedules DSW-SD1, DSW-RS1, DSW-EI1, DSW-FR1, DSW-
SPR1, and DSW-SUR1. Western is currently engaged in a public process 
to implement new Rates Schedules for ancillary services, which are 
expected to be effective April 1, 2006.

Certification of Rates

    Western's Administrator certified that the provisional rates for 
CAP transmission service are the lowest possible rates consistent 
with sound business principles. The provisional rates were developed 
following administrative policies and applicable laws.

Basis for Rate Development

    According to Reclamation Law, Western must establish 
transmission rates sufficient to recover operation, maintenance, 
purchased power and interest expenses, and repayment of investment.
    The existing rate for CAP firm transmission under Rate Schedule 
CAP-FT1 expires December 31, 2005. Effective January 1, 2006, Rate 
Schedule CAP-FT1 will be superseded by the new rates in Rate 
Schedule CAP-FT2. The provisional rate for CAP firm point-to-point 
transmission is $9.55 per kW per year.

Statement of Revenue and Related Expenses

    The following table provides a summary of projected revenue and 
expense data for the CAP firm transmission rate through the 5-year 
provisional rate approval period.

                   CAP Firm Transmission.--Comparison of 5-Year Rate Period (FY 2006-FY 2010)
                                          [Total revenues and expenses]
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                                                         Existing formula   Proposed formula
                                                               rate               rate            Difference
----------------------------------------------------------------------------------------------------------------
Total Revenues........................................        $34,429,675        $40,103,745         $5,674,070
Revenue Distribution
Expenses:
    O&M (including replacements expense)..............          6,417,770         10,864,596          4,446,826
    Purchased Power and Wheeling......................                  0                  0                  0
    Interest..........................................         19,343,148         17,931,221         (1,411,927)
    Other.............................................            345,140          1,813,043          1,467,903
                                                       --------------------
        Total Expenses................................         26,106,058         30,608,860          4,502,802
                                                       ====================
Principal Payments:
    Original Project and Additions....................          8,323,302          9,484,969          1,161,667
    Replacements......................................                  0                  0                  0
                                                       --------------------
        Total Principal Payments......................          8,323,302          9,484,969          1,161,667
                                                       ====================
        Total Revenue Distribution....................         34,429,360         40,093,829          5,664,469
----------------------------------------------------------------------------------------------------------------

    The cost data reflects an increase in total costs when comparing 
the existing rates to the proposed rates. The increases in total 
costs, however, are outpaced by increases in total transmission 
reservations, resulting in a proposed rate decrease of 2.87 percent 
effective January 1, 2006.

Comments

    The comments and responses regarding the firm transmission rate, 
paraphrased for brevity when not affecting the meaning of the 
statement(s), are discussed below. Direct quotes from comment 
letters are used for clarification where necessary. The rate process 
issues discussed are, (1) Central Arizona Water Conservation 
District (CAWCD) O&M costs, (2) Western expenses to the CAP 
transmission system, and (3) capital additions and replacements.

1. CAWCD O&M Costs

    Comment: The CAWCD representative strongly supports including 
the costs identified during the public process. However, there are 
other CAP transmission system O&M costs incurred by CAWCD, in 
addition to the McCullough O&M charge, which are not reflected in 
Western's rate review.
    Response: Western has committed to continue to work with CAWCD 
to ensure that costs appropriately attributed to the CAP 115/230-kV 
transmission system will be included in the rate calculation. O&M 
expenses incurred by CAWCD to aid in maintaining the Federal 
transmission system are appropriately included in the transmission 
rate. Costs will be reviewed annually as part of the annual review 
to determine adequacy of the transmission rate.

2. Western Expenses to the CAP Transmission System

    Comment: The CAWCD representative indicated the CAP transmission 
line miles and SCADA point values that are used to allocate costs 
for transmission system studies (``STUDM'' costs) and costs for 
assets providing benefit to multiple power systems (``RENTM'' 
costs), respectively, are too high and should be adjusted.
    Response: Western has responded to CAWCD's review of the 
allocation practices and stated that adjustments will be made where 
appropriate in FY 2006. Any resulting increase or decrease in the 
revenue requirement which results in an over or under collection 
will be accounted for in the subsequent year.

3. Capital Additions and Replacements in Rate

    Comment: The CAWCD representative indicated that Western's July 
2005 rate adjustment brochure states that no capital additions or 
replacements are projected for FY 2006 through FY 2010. The customer 
believes the brochure statement to be untrue, and anticipates annual 
costs for capital additions or replacements in FY 2007 and beyond to 
average at least $500,000. Those costs should be included in the CAP 
transmission rate methodology. CAWCD encourages Western to modify 
the proposed CAP transmission rate to be charged for CY 2006 to 
include projections for new capital investments.
    Response: Western is working with CAWCD and the Bureau of 
Reclamation to ensure appropriate amortization costs for capitalized 
replacements or additions are included in the rate calculation. 
Based on reviews of available data, Western has included an estimate 
of $625,000 in replacements for the rate to be charged in CY 2006. 
In the event capitalized replacements or additions are added to 
plant-in-service in a given year, and the amortization costs 
(principal and interest) were not included in

[[Page 1537]]

the rate calculation, they will be included in the subsequent year.

Availability of Information

    Information about this rate adjustment, including power 
repayment studies, comments, letters, memorandums, and other 
supporting material made or kept by Western to develop the 
provisional rates, is available for public review in the Desert 
Southwest Customer Service Region, Western Area Power 
Administration, 615 South 43rd Avenue, Phoenix, Arizona.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601, et seq.) 
requires Federal agencies to perform a regulatory flexibility 
analysis if a final rule is likely to have a significant economic 
impact on a substantial number of small entities and there is a 
legal requirement to issue a general notice of proposed rulemaking. 
Western has determined that this action does not require a 
regulatory flexibility analysis since it is a rulemaking of 
particular applicability involving rates or services applicable to 
public property.

Environmental Compliance

    In compliance with the NEPA 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 preparing 
an environmental assessment or an environmental impact statement.

Determination Under Executive Order 12866

    Western has an exemption from centralized regulatory review 
under Executive Order 12866; accordingly, no clearance of this 
notice by the Office of Management and Budget is required.

Small Business Regulatory Enforcement Fairness Act

    Western has determined that this rule is exempt from 
congressional notification requirements under 5 U.S.C. 801 because 
the action is a rulemaking of particular applicability relating to 
rates or services and involves matters of procedure.

Submission to the Federal Energy Regulatory Commission

    The interim rates herein confirmed, approved, and placed into 
effect, together with supporting documents, will be submitted to the 
Commission for confirmation and final approval.

Order

    In view of the foregoing and under the authority delegated to 
me, I confirm and approve on an interim basis, effective January 1, 
2006, Rate Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2 for the 
Central Arizona Project of the Western Area Power Administration. 
The rate schedules shall remain in effect on an interim basis, 
pending the Commission's confirmation and approval of them or 
substitute rates on a final basis through December 31, 2010.

    Dated: December 23, 2005.
Clay Sell,
Deputy Secretary.

Rate Schedule CAP-FT2
Supersedes Rate Schedule CAP-FT1

United States Department of Energy Western Area Power Administration

Central Arizona Project

Schedule of Rate(s) for Firm Point-to-Point CAP 115-kv/230-kv 
Transmission Service

    Effective: The first day of the first full billing period 
beginning on or after January 1, 2006, through December 31, 2010.
    Available: In the area served by the Central Arizona Project 
(CAP) 115-kV/230-kV transmission system.
    Applicable: The transmission service customers shall compensate 
the CAP where firm capacity and energy are supplied to the CAP 115-
kV/230-kV transmission system at points of interconnection with 
other systems and transmitted and delivered, less losses, to points 
of delivery on the CAP 115-kV/230-kV system specified in the 
contract or service agreement. The formula for the annual revenue 
requirement used to calculate the charges for this firm service 
under this schedule was promulgated and may be modified pursuant to 
applicable Federal laws, regulations, and policies.
    The Desert Southwest Region may modify the charges for firm 
point-to-point transmission service upon written notice to the 
transmission customer. Any change to the charges to the transmission 
customer for firm point-to-point transmission, shall be as set forth 
in a revision to this rate schedule promulgated pursuant to 
applicable Federal laws, regulations, and policies and made part of 
the applicable service contract or service agreement. DSW shall 
charge the transmission customer in accordance with the revenue 
requirements then in effect.
    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 or service agreement over the 
CAP 115-kV/230-kV transmission system.

Formula Rate for Firm Point-to-Point Transmission Service

Annual Rate = 5-Year Average Annual Revenue Requirement divided by 
the 5-Year Average Contract Rate of Delivery, rounded to the nearest 
penny.
Monthly Rate = Annual Rate divided by 12, rounded to the nearest 
penny.

Calculated Rates

    For 2006, the annual firm rate calculates to $9.55 per kW year, 
and the monthly firm rate calculates to $0.80 per kW month. Based on 
updated financial and load data, recalculated rates will go into 
effect on January 1 of each year during the effective rate schedule 
period.

Adjustments

    For Reactive Power: There shall be no entitlement to transfer of 
reactive kilovolt amperes at delivery points, 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 contract or service agreement.
    Billing for Unauthorized Overruns: For each billing period in 
which there is a contract violation involving an unauthorized 
overrun of the contractual firm transmission obligations, such 
overrun shall be billed at 10 times the above rates.

Rate Schedule CAP-NFT2
Supersede Rate Schedule CAP-NFT1

United States Department of Energy Western Area Power Administration

Central Arizona Project

Schedule of Rate(s) for Nonfirm Point-to-Point CAP 115-kV/230-kV 
Transmission Service

    Effective: The first day of the first full billing period 
beginning on or after January 1, 2006, through December 31, 2010.
    Available: In the marketing area served by the Central Arizona 
Project 115-kV/230-kV transmission system.
    Applicable: The transmission service customer shall compensate 
the Central Arizona Project (CAP) for nonfirm point-to-point 
transmission service where capacity and energy are supplied to the 
CAP 115-kV/230-kV transmission system at points of interconnection 
with other systems, transmitted subject to the availability of the 
transmission capacity, and delivered less losses, to points of 
delivery on the CAP 115-kV/230-kV system specified in the contract 
or service agreement.
    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 or service agreement over the 
CAP 115-kV/230-kV transmission system.

Formula Rate for Nonfirm Point-to-Point Transmission Service

    Nonfirm Point-To-Point Transmission Service Rate: Each 
Contractor shall be billed monthly a mills per kilowatthour rate of 
scheduled or delivered kilowatthours at point of delivery, 
established by contract, payable monthly. This rate is equal to the 
CAP 115-kV/230-kV Firm Transmission dollar per kilowattyear rate 
then in effect divided by 8760, multiplied by 1,000, rounded to two 
decimal places.

Calculated Rate

    For 2006, the nonfirm rate calculates to 1.09 mills/kWh. Based 
on updated financial and load data, a recalculated rate will go into 
effect on January 1 of each year during the effective rate schedule 
period.

Adjustments

    For Reactive Power: There shall be no entitlement to transfer of 
reactive kilovolt amperes at delivery points, except when such 
transfers may be mutually agreed upon by contractor and contracting 
officer or their authorized representatives.

[[Page 1538]]

    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 contract or service agreement.

Rate Schedule CAP-NITS2
Supersedes Rate Schedule CAP-NITS1

United States Department of Energy Western Area Power Administration

Central Arizona Project

Schedule of Rate(s) for Network Integration Transmission Service

    Effective: The first day of the first full billing period 
beginning on or after January 1, 2006, through December 31, 2010.
    Applicable: The transmission customer shall compensate the CAP 
each month for Network Integration Transmission Service (NITS) 
pursuant to the applicable Network Integration Transmission Service 
Agreement and annual revenue requirement referred to below. The 
formula for the annual revenue requirement used to calculate the 
charges for this service under this schedule was promulgated and may 
be modified pursuant to applicable Federal laws, regulations, and 
policies.
    The Desert Southwest Region (DSW) may modify the charges for 
NITS upon written notice to the transmission customer. DSW shall 
charge the transmission customer in accordance with the revenue 
requirement then in effect.

Formula Rate

Monthly Charge = Transmission Customer's Load-Ratio Share x (Revenue 
Requirement/12)

Calculated Rate

    The NITS rate is calculated using a projected annual revenue 
requirement. Based on updated financial and load data, a 
recalculated revenue requirement will go into effect on January 1 of 
each year during the effective rate schedule period.

[FR Doc. E6-110 Filed 1-9-06; 8:45 am]
BILLING CODE 6450-01-P