[Federal Register Volume 73, Number 209 (Tuesday, October 28, 2008)]
[Notices]
[Pages 63969-63978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25690]


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DEPARTMENT OF ENERGY

Southwestern Power Administration


Integrated System Rate Schedule Changes

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of Proposed Changes to Southwestern Power Administration 
Rate Schedules and Opportunity for Public Review and Comment.

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SUMMARY: Due to the omission of the P-06A Rate Schedule from the Notice 
of Proposed Changes to Southwestern Power Administration Rate Schedules 
and Opportunity for Public Review and Comment published on October 20, 
2008 (73 FR 62269), this notice is a resubmission to include both the 
P-06A and the NFTS-06A Rate Schedule proposals for review and comment.
    The Administrator, Southwestern Power Administration 
(Southwestern), has determined that revisions to the Real Power Losses 
provisions within existing rate schedules P-06 and NFTS-06 are 
required. Since the proposed rate schedule revisions are limited only 
to Real Power Losses, the net result of the 2006 Integrated System 
Power Repayment Studies, which was the basis for the existing rate 
schedules, will not be altered.
    Southwestern held several meetings during FY 2008 with customers to 
discuss the proposed rate schedule revisions and provide opportunity 
for input in the development of the final rate schedules. As a result 
of these informal meetings, it was determined that the revised rate 
schedule provisions can provide cost-savings and operational benefits 
to Southwestern's transmission customers and are consistent with 
Federal Energy Regulatory Commission (FERC) Order No. 888.

DATES: The consultation and comment period will begin on the date of 
publication of this Federal Register notice and will end November 28, 
2008.

FOR FURTHER INFORMATION CONTACT: Mr. James K. McDonald, Assistant 
Administrator, Office of Corporate Operations, Southwestern Power 
Administration, U.S. Department of Energy, One West Third Street, 
Tulsa, Oklahoma 74103, (918) 595-6690, [email protected].

SUPPLEMENTARY INFORMATION: The U.S. Department of Energy (DOE) was 
created by an Act of the U.S. Congress, Department of Energy 
Organization Act, Public Law 95-91, dated August 4, 1977. 
Southwestern's power marketing activities were transferred from the

[[Page 63970]]

Department of Interior to the DOE, effective October 1, 1977. 
Guidelines for preparation of power repayment studies are included in 
DOE Order No. RA 6120.2 entitled Power Marketing Administration 
Financial Reporting. Procedures for Public Participation in Power and 
Transmission Rate Adjustments of the Power Marketing Administrations 
are found at Title 10, part 903, Subpart A of the Code of Federal 
Regulations (10 CFR 903). Procedures for the confirmation and approval 
of rates for the Federal Power Marketing Administrations are found at 
Title 18, part 300, Subpart L of the Code of Federal Regulations (18 
CFR 300).
    Southwestern markets power from 24 multi-purpose reservoir 
projects, with hydroelectric power facilities constructed and operated 
by the U.S. Army Corps of Engineers. These projects are located in the 
states of Arkansas, Missouri, Oklahoma, and Texas. Southwestern's 
marketing area includes these states plus Kansas and Louisiana. The 
costs associated with the hydropower facilities of 22 of the 24 
projects are repaid via revenues received under the Integrated System 
rates, as are Southwestern's transmission facilities that consist of 
1,380 miles of high-voltage transmission lines, 24 substations, and 46 
microwave and VHF radio sites. Costs associated with the Robert D. 
Willis and Sam Rayburn Dams, two projects that are isolated 
hydraulically, electrically, and financially from the Integrated System 
are repaid by separate rate schedules.

Current and Proposed Real Power Losses Provisions

    The current P-06 and NFTS-06 rate schedules determine the annual 
rate for real power losses based upon the average of Southwestern's 
actual costs for the purchase of energy to replace real power losses 
during the previous Fiscal Year (October through September), as 
reflected in Southwestern's financial records. Customers have the 
option to either purchase losses from Southwestern or elect, on an 
annual basis, to self-provide their respective loss energy subject to 
certain conditions. Customers who purchase loss energy from 
Southwestern are assessed a monthly charge equal to the product of 
Southwestern's then-effective rate for Real Power Losses and a quantity 
of energy equal to four (4) percent of the total non-Federal energy 
transmitted by Southwestern on behalf of each such customer during that 
month.
    Beginning January 1, 2009, Southwestern is proposing to implement 
revised real power loss provisions, as specified in Southwestern's 
proposed P-06A and NFTS-06A rate schedules, which will require that all 
real power losses associated with deliveries of non-Federal energy 
transmitted by Southwestern must be scheduled and delivered (self-
supplied) to Southwestern by customers during the second month after 
such real power losses were incurred by Southwestern. Southwestern will 
determine the amount of real power losses associated with non-Federal 
energy transmitted on behalf of each customer in the same manner 
specified in the previous P-06 and NFTS-06 rate schedules and provide a 
written schedule setting forth the delivery rate and total quantity of 
real power loss energy to be delivered back to Southwestern. Should a 
customer fail to return the total quantity of real power loss energy to 
Southwestern, according to the schedule provided during the month in 
which such loss energy is due, the customer will be invoiced and 
obligated to purchase, at the rate stipulated in the P-06A and NFTS-06A 
rate schedules, the quantity of loss energy the customer failed to 
return to Southwestern.

P-06 and NFTS-06 Rate Schedule Revisions

    In developing the revised real power losses rate schedule 
provisions, the titles of the P-06 and NFTS-06 rate schedules were 
changed to P-06A and NFTS-06A respectively to reflect the fact that 
revisions have been made. In addition to replacing the section entitled 
``Rates for Real Power Losses'' within each rate schedule, minor 
corrections and modifications were incorporated to clarify and update 
any sections of the rate schedules containing references to real power 
losses. Redlined versions of rate schedules P-06 and NFTS-06, which 
show revisions proposed by rate schedules P-06A and NFTS-06A, will be 
made available upon request. To request a copy, please contact Scott 
Carpenter ([email protected]) at 918-595-6694 or Stephanie 
Bradley ([email protected]) at 918-595-6676. Southwestern will 
implement the revised P-06A and NFTS-06A rate schedule language and 
provisions upon the Deputy Secretary's interim approval.
    The Administrator has determined that written comments will provide 
adequate opportunity for public participation in the rate schedule 
revision process. Therefore, an opportunity is presented for interested 
parties to submit written comments on the proposed rate schedule 
changes. Written comments are due on or before November 28, 2008. 
Written comments should be submitted to Mr. James K. McDonald, 
Assistant Administrator, Office of Corporate Operations, Southwestern 
Power Administration, U.S. Department of Energy, One West Third Street, 
Tulsa, Oklahoma 74103, (918) 595-6690, [email protected].
    Following review and consideration of written comments, the 
Administrator will finalize and submit the proposed rate schedules to 
the Deputy Secretary of Energy for confirmation and approval on an 
interim basis, and subsequently to the FERC for confirmation and 
approval on a final basis. The FERC will allow the public an 
opportunity to provide written comments on the proposed rate schedule 
change before making a final decision.

    Dated: October 21, 2008.
Jon C. Worthington,
Administrator.

United States Department of Energy Southwestern Power Administration

Rate Schedule NFTS-06A\1\ Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service
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    \1\ Supersedes Rate Schedule NFTS-06.
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Effective

    During the period January 1, 2009, through September 30, 2010, 
in accordance with Federal Energy Regulatory Commission order issued 
------------, Docket No. ------------.

Available

    In the region where Southwestern Power Administration 
(Southwestern) owns and operates high-voltage transmission lines and 
related facilities, and/or has contractual rights to such 
transmission facilities owned by others (System of Southwestern).

Applicable

    To Customers which have executed Service Agreements with 
Southwestern for the transmission of non-Federal power and energy 
over the System of Southwestern or for its use for interconnections. 
Southwestern will provide services over those portions of the System 
of Southwestern in which the Administrator, Southwestern, in his or 
her sole judgment, has determined that uncommitted transmission and 
transformation capacities in the System of Southwestern are and will 
be available in excess of the capacities required to market Federal 
power and energy pursuant to Section 5 of the Flood Control Act of 
1944 (58 Stat. 887,890; 16 U.S.C. 825s).

Character and Conditions of Service

    Service will be provided as 3-phase, alternating current, at 
approximately 60 Hertz, and at the voltage level of the point(s) 
specified by Service Agreement or Transmission Service Transaction.

[[Page 63971]]

Definitions of Terms

    A Customer is the entity which is utilizing and/or purchasing 
services from Southwestern pursuant to this rate schedule.
    A ``Service Agreement'' is a contract executed between a 
Customer and Southwestern for the transmission of non-Federal power 
and energy over the System of Southwestern or for interconnections. 
Service Agreements include:
    ``Firm Transmission Service Agreements'' that provide for 
reserved transmission capacity on a firm basis, for a particular 
point-to-point delivery path.
    ``Non-Firm Transmission Service Agreements'' that provide for 
the Customer to request transmission service on a non-firm basis.
    ``Network Transmission Service Agreements'' that provide for the 
Customer to request firm transmission service for the delivery of 
capacity and energy from the Customer's network resources to the 
Customer's network load, for a period of one year or more.
    ``Interconnection Agreements'' that provide for the use of the 
System of Southwestern and recognize the exchange of mutual benefits 
for such use or provide for application of a charge for 
Interconnection Facilities Service.
    A ``Service Request'' is made under a Transmission Service 
Agreement through the Southwest Power Pool, Inc. (SPP) Open Access 
Same-Time Information System (OASIS) for reservation of transmission 
capacity over a particular point-to-point delivery path for a 
particular period. When a Service Request is approved by SPP, it 
becomes a ``Transmission Service Transaction.'' The Customer must 
submit hourly schedules for actual service in addition to the 
Service Request.
    ``Firm Point-to-Point Transmission Service'' is transmission 
service reserved on a firm basis between specific points of receipt 
and delivery pursuant to either a Firm Transmission Agreement or to 
a Transmission Service Transaction. ``Non-Firm Point-to-Point 
Transmission Service'' is transmission service reserved on a non-
firm basis for specific points of receipt and delivery pursuant to a 
Transmission Service Transaction. ``Network Integration Transmission 
Service'' is transmission service provided under Part III of 
Southwestern's Open Access Transmission Service Tariff which 
provides the Customer with firm transmission service for the 
delivery of capacity and energy from the Customer's resources to the 
Customer's load.
    ``Secondary Transmission Service'' is associated with Firm 
Point-to-Point Transmission Service and Network Integration 
Transmission Service. For Firm Point-to-Point Transmission Service, 
it consists of transmission service provided on an as-available, 
non-firm basis, scheduled within the limits of a particular capacity 
reservation for transmission service, and scheduled from points of 
receipt, or to points of delivery, other than those designated in a 
Long-Term Firm Transmission Agreement or a Transmission Service 
Transaction for Firm Point-to-Point Transmission Service. For 
Network Integration Transmission Service, Secondary Transmission 
Service consists of transmission service provided on an as-
available, non-firm basis, from resources other than the Network 
Resources designated in a Network Transmission Service Agreement, to 
meet the Customer's Network Load. The charges for Secondary 
Transmission Service, other than Ancillary Services, are included in 
the applicable capacity charges for Firm Point-to-Point Transmission 
Service and Network Integration Transmission Service.
    The ``Demand Period'' used to determine a maximum integrated 
rate of delivery for the purposes of power accounting is the 60-
minute period which begins with the change of hour. The term ``Peak 
Demand'' means the highest rate of delivery, in kilowatts, for any 
Demand Period during a particular month, at any particular point of 
delivery or interconnection.
    For the purposes of this rate schedule, the term ``Point of 
Delivery'' is used to mean either a single physical point to which 
electric power and energy are delivered from the System of 
Southwestern, or a specified set of delivery points which together 
form a single, electrically integrated load. Peak Demand for such 
set of points is computed as the coincidental highest rate of 
delivery among the specified points rather than as the sum of peak 
demands for each individual physical point.
    ``Ancillary Services'' are those services necessary to support 
the transmission of capacity and energy from resources to loads 
while maintaining reliable operation of the System of Southwestern 
in accordance with good utility practice. Ancillary Services 
include:
    ``Scheduling, System Control, and Dispatch Service'' is provided 
by Southwestern as Control Area operator and is in regard to 
interchange and load-match scheduling and related system control and 
dispatch functions.
    ``Reactive Supply and Voltage Control from Generation Sources 
Service'' is provided at transmission facilities in the System of 
Southwestern to produce or absorb reactive power and to maintain 
transmission voltages within specific limits.
    ``Regulation and Frequency Response Service'' is the continuous 
balancing of generation and interchange resources accomplished by 
raising or lowering the output of on-line generation as necessary to 
follow the moment-by-moment changes in load and to maintain 
frequency within a Control Area.
    ``Spinning Operating Reserve Service'' maintains generating 
units on-line, but loaded at less than maximum output, which may be 
used to service load immediately when disturbance conditions are 
experienced due to a sudden loss of generation or load.
    ``Supplemental Operating Reserve Service'' provides an 
additional amount of operating reserve sufficient to reduce Area 
Control Error to zero within 10 minutes following loss of generating 
capacity which would result from the most severe single contingency.
    ``Energy Imbalance Service'' corrects for differences over a 
period of time between schedules and actual hourly deliveries of 
energy to a load.
    ``Interconnection Facilities Service'' provides for the use of 
the System of Southwestern to deliver energy and/or provide system 
support at an interconnection.

Rates for Firm Point-to-Point Transmission Service

                                 Capacity Charges for Firm Transmission Service
----------------------------------------------------------------------------------------------------------------
                                              10/1/2006-9/30/2008                    10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
Monthly............................  $0.90 per kilowatt of transmission     $0.95 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a longer term          accordance with a longer term
                                      agreement.                             agreement.
Weekly.............................  $0.225 per kilowatt of transmission    $0.238 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.0409 per kilowatt of transmission   $0.0432 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one day of service.                    one day of service.
----------------------------------------------------------------------------------------------------------------

Service Associated With Capacity Charges for Firm Point-to-Point 
Transmission Service

    The capacity charge for firm transmission service includes 
Secondary Transmission Service, but does not include charges for 
Ancillary Services associated with actual schedules.

Application of Capacity Charges for Firm Point-to-Point Transmission 
Service

    Capacity charges for firm transmission service are applied to 
quantities reserved by contract under a Firm Transmission Agreement 
or in accordance with a Transmission Service Transaction.
    Customers, unless otherwise specified by contract, will be 
charged on the greatest of (1) the Peak Demand at any particular 
point of delivery during a particular month, rounded up to the 
nearest whole megawatt, or (2) the highest Peak Demand recorded at 
such point of delivery during any of the previous 11

[[Page 63972]]

months, rounded up to the nearest whole megawatt, or (3) the 
capacity reserved by contract; which amount shall be considered such 
Customer's reserved capacity. Secondary Transmission Service for 
such Customers shall be limited during any month to the most recent 
Peak Demand on which a particular Customer is billed or to the 
capacity reserved by contract, whichever is greater.

Rates for Non-Firm Point-to-Point Transmission Service

Capacity Charges for Non-Firm Transmission Service

    Monthly: 80 percent of the firm monthly charge of transmission 
capacity reserved in increments of one month of service.
    Weekly: 80 percent of the firm monthly charge divided by 4 of 
transmission capacity reserved in increments of one week of service.
    Daily: 80 percent of the firm monthly charge divided by 22 of 
transmission capacity reserved in increments of one day of service.
    Hourly: 80 percent of the firm monthly charge divided by 352 of 
transmission capacity reserved in increments of one hour of service.

Application of Charges for Non-Firm Point-to-Point Transmission Service

    Capacity charges for Non-Firm Transmission Service are applied 
to quantities reserved under a Transmission Service Transaction, and 
do not include charges for Ancillary Services.

Rates for Network Integration Transmission Service

----------------------------------------------------------------------------------------------------------------
              10/1/2006-9/30/2008                                      10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
                           Annual Revenue Requirement for Network Integration Service
----------------------------------------------------------------------------------------------------------------
$9,155,900.....................................  $9,431,500.
----------------------------------------------------------------------------------------------------------------
                           Monthly Revenue Requirement for Network Integration Service
----------------------------------------------------------------------------------------------------------------
$762,992.......................................  $785,958.
----------------------------------------------------------------------------------------------------------------
                             Net Capacity Available for Network Integration Service
----------------------------------------------------------------------------------------------------------------
845,000 kilowatts..............................  828,000 kilowatts.
----------------------------------------------------------------------------------------------------------------
                          Capacity Charge for Network Integration Transmission Service
----------------------------------------------------------------------------------------------------------------
$0.90 per kilowatt of Network Load ($762,992/    $0.95 per kilowatt of Network Load ($785,958/828,000
 845,000 kilowatts).                              kilowatts).
----------------------------------------------------------------------------------------------------------------

Application of Charge for Network Integration Transmission Service

    Network Integration Transmission Service is available only for 
deliveries of non-Federal power and energy, and is applied to the 
Customer utilizing such service exclusive of any deliveries of 
Federal power and energy. The capacity on which charges for any 
particular Customer utilizing this service is determined on the 
greatest of (1) the Peak Demand at any particular point of delivery 
during a particular month, rounded up to the nearest whole megawatt, 
or (2) the highest Peak Demand recorded at such point of delivery 
during any of the previous 11 months, rounded up to the nearest 
whole megawatt.
    For those Customers taking Network Integration Transmission 
Service who are also taking delivery of Federal Power and Energy, 
the Peak Demand shall be determined by subtracting the energy 
scheduled for delivery of Federal Power and Energy for any hour from 
the metered demand for such hour.
    Secondary transmission Service for such Customers shall be 
limited during any month to the most recent Peak Demand on which a 
particular Customer is billed. Charges for Ancillary Services shall 
also be assessed.

Real Power Losses

    Customers are required to self-provide all Real Power Losses for 
non-Federal energy transmitted by Southwestern on behalf of such 
Customers under the provisions detailed below.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted by Southwestern. The 
Customer's Monthly Real Power Losses are computed each month on a 
megawatthour basis as follows:

ML = .04 x NFE

with the factors defined as follows:

ML = The total monthly loss energy, rounded to the nearest 
megawatthour, to be scheduled by a Customer for receipt by 
Southwestern for Real Power Losses associated with non-Federal 
energy transmitted on behalf of such Customer; and
NFE = The amount of non-Federal energy that was transmitted by 
Southwestern on behalf of a Customer during a particular month.

    The Customer must schedule or cause to be scheduled to 
Southwestern, Real Power Losses for which it is responsible subject 
to the following conditions:
    (1) The Customer shall schedule and deliver real power losses 
back to Southwestern during the second month after they were 
incurred by Southwestern in the transmission of the Customer's non-
Federal power and energy over the System of Southwestern.
    (2) On or before the twentieth day of each month, Southwestern 
shall determine the amount of non-Federal loss energy it provided on 
behalf of the Customer during the previous month and provide a 
written schedule to the Customer setting forth hour-by-hour the 
quantities of non-Federal energy to be delivered to Southwestern as 
losses during the next month.
    (3) Real Power Losses not delivered to Southwestern by the 
Customer, according to the schedule provided, during the month in 
which such losses are due shall be billed by Southwestern to the 
Customer to adjust the end-of-month loss energy balance to 0 
megawatthours and the Customer shall be obliged to purchase such 
energy at the following rates:

------------------------------------------------------------------------
                                                             Rate per
              Months associated with charge                kilowatthour
------------------------------------------------------------------------
March, April, May, October, November, December..........           $0.15
January, February, June, July, August, September........            0.30
------------------------------------------------------------------------

    (6) Real Power Losses delivered to Southwestern by the Customer 
in excess of the losses due during the month shall be purchased by 
Southwestern from the Customer at a rate per megawatthour equal to 
Southwestern's rate per megawatthour for Supplemental Peaking 
Energy, as set forth in Southwestern's then-effective Rate Schedule 
for hydro peaking power to adjust such hourly end-of-month loss 
energy balance to 0 megawatthours.

Monthly Capacity Charges for Transformation Service

    A charge of $0.30 per kilowatt will be assessed for capacity 
used to deliver energy at any point of delivery at which 
Southwestern provides transformation for deliveries at voltages of 
69 kilovolts or less from higher voltage facilities.

[[Page 63973]]

Application of Capacity Charges for Transformation Service

    For any particular month, charges for transformation service 
will be assessed on the greater of (1) that month's actual Peak 
Demand, or (2) the highest Peak Demand recorded during the previous 
11 months. For the purpose of this rate schedule, the Peak Demand 
will be based on all deliveries, of both Federal and non-Federal 
energy, from the System of Southwestern, at such point during such 
month.

Rates for Ancillary Services

                  Capacity Charges for Ancillary Services Associated With Transmission Services
----------------------------------------------------------------------------------------------------------------
                                              10/1/2006-9/30/2008                    10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
                              (a) Scheduling, System Control, and Dispatch Service
----------------------------------------------------------------------------------------------------------------
 
Monthly............................  $0.06 per kilowatt of transmission     $0.06 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a Long-Term Firm       accordance with a Long-Term Firm
                                      Transmission Agreement or Network      Transmission Agreement or Network
                                      Transmission Service Agreement.        Transmission Service Agreement.
Weekly.............................  $0.015 per kilowatt of transmission    $0.015 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.0027 per kilowatt of transmission   $0.0027 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one day of service.                    one day of service.
Hourly.............................  $0.00017 per kilowatt of energy        $0.00017 per kilowatt of energy
                                      delivered as non-firm transmission     delivered as non-firm transmission
                                      service.                               service.
----------------------------------------------------------------------------------------------------------------
                     (b) Reactive Supply and Voltage Control From Generation Sources Service
----------------------------------------------------------------------------------------------------------------
Monthly............................  $0.03 per kilowatt of transmission     $0.04 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a Long-Term Firm       accordance with a Long-Term Firm
                                      Transmission Agreement or Network      Transmission Agreement or Network
                                      Transmission Service Agreement.        Transmission Service Agreement.
Weekly.............................  $0.008 per kilowatt of transmission    $0.010 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.0014 per kilowatt of transmission   $0.0018 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one day of service.                    one day of service.
Hourly.............................  $0.00009 per kilowatt of energy        $0.00011 per kilowatt of energy
                                      delivered as non-firm transmission     delivered as non-firm transmission
                                      service.                               service.
----------------------------------------------------------------------------------------------------------------
                                  (c) Regulation and Frequency Response Service
----------------------------------------------------------------------------------------------------------------
Monthly............................  $0.08 per kilowatt of transmission     $0.09 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a Long-Term Firm       accordance with a Long-Term Firm
                                      Transmission Agreement or Network      Transmission Agreement or Network
                                      Transmission Service Agreement.        Transmission Service Agreement.
Weekly.............................  $0.020 per kilowatt of transmission    $0.023 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.0036 per kilowatt of transmission   $0.0041 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one day of service.                    one day of service.
Hourly.............................  $0.00023 per kilowatt of energy        $0.00026 per kilowatt of energy
                                      delivered as non-firm transmission     delivered as non-firm transmission
                                      service.                               service.
----------------------------------------------------------------------------------------------------------------
                                     (d) Spinning Operating Reserve Service
----------------------------------------------------------------------------------------------------------------
Monthly............................  $0.0079 per kilowatt of transmission   $0.0092 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a Long-Term Firm       accordance with a Long-Term Firm
                                      Transmission Agreement or Network      Transmission Agreement or Network
                                      Transmission Service Agreement.        Transmission Service Agreement.
Weekly.............................  $0.00198 per kilowatt of transmission  $0.0023 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.00036 per kilowatt of transmission  $0.00042 per kilowatt of
                                      capacity reserved in increments of     transmission capacity reserved in
                                      one day of service.                    increments of one day of service.
Hourly:............................  $0.00002 per kilowatt of energy        $0.00003 per kilowatt of energy
                                      delivered as non-firm transmission     delivered as non-firm transmission
                                      service.                               service.
----------------------------------------------------------------------------------------------------------------
                                   (e) Supplemental Operating Reserve Service
----------------------------------------------------------------------------------------------------------------
Monthly............................  $0.0079 per kilowatt of transmission   $0.0092 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one month of service or invoiced in    one month of service or invoiced in
                                      accordance with a Long-Term Firm       accordance with a Long-Term Firm
                                      Transmission Agreement or Network      Transmission Agreement or Network
                                      Transmission Service Agreement.        Transmission Service Agreement.
Weekly.............................  $0.00198 per kilowatt of transmission  $0.0023 per kilowatt of transmission
                                      capacity reserved in increments of     capacity reserved in increments of
                                      one week of service.                   one week of service.
Daily..............................  $0.00036 per kilowatt of transmission  $0.00042 per kilowatt of
                                      capacity reserved in increments of     transmission capacity reserved in
                                      one day of service.                    increments of one day of service.
Hourly.............................  $0.00002 per kilowatt of energy        $0.00003 per kilowatt of energy
                                      delivered as non-firm transmission     delivered as non-firm transmission
                                      service.                               service.
----------------------------------------------------------------------------------------------------------------


[[Page 63974]]

    (f) Energy Imbalance Service: $0.0 per kilowatt for all periods 
of reservation.

Availability of Ancillary Services

    Ancillary Services (a) and (b) are available for all 
transmission services in and from the System of Southwestern and 
shall be provided by Southwestern. Ancillary Services (c) and (f) 
listed above are available only for deliveries of power and energy 
serving load within Southwestern's Control Area and shall be 
provided by Southwestern, unless, subject to Southwestern's 
approval, they are provided by others. Ancillary Services (d) and 
(e) are available only for deliveries of power and energy generated 
by resources located within Southwestern's Control Area and shall be 
provided by Southwestern, unless, subject to Southwestern's 
approval, they are provided by others.

Application of Ancillary Services Charges

    Charges for all Ancillary Services are applied to the reserved 
or network transmission service taken by the Customer in accordance 
with the rates listed above when such services are provided by 
Southwestern.
    The charges for Ancillary Services are considered to include 
Ancillary Services for any Secondary Transmission Service, except in 
cases where Ancillary Services (c) through (f) are applicable to a 
Secondary Transmission Service transaction, but are not applicable 
to the firm capacity reservation under which Secondary Transmission 
Service is provided. When charges for Ancillary Services are 
applicable to Secondary Transmission Service, the charge for the 
Ancillary Service shall be the hourly rate applied to all energy 
transmitted utilizing the Secondary Transmission Service.

Provision of Ancillary Services by Others

    Customers for which Ancillary Services (c) through (f) are made 
available as specified above must inform Southwestern by written 
notice of the Ancillary Services which they do not intend to take 
and purchase from Southwestern, and their election to provide all or 
part of such Ancillary Services from their own resources or a third 
party.
    Subject to Southwestern's approval of the ability of such 
resources or third parties to meet Southwestern's technical 
requirements for provision of such Ancillary Services, the customer 
may change the Ancillary Services which it takes from Southwestern 
and/or from other sources at the beginning of any month upon the 
greater of 60 days written notice or upon the completion of any 
necessary equipment modifications necessary to accommodate such 
change. Such notice requirements also apply to requests for 
Southwestern to provide Ancillary Services when such services are 
available as specified above.

Limitations on Energy Imbalance Service

    Energy Imbalance Service is authorized for use only within a 
bandwidth of  1.5 percent of the actual requirements of 
the load at a particular point of delivery, for any hour, compared 
to the resources scheduled to meet such load during such hour. 
Deviations which are greater than  1.5 percent, but 
which are less than  2,000 kilowatts, are considered to 
be within the authorized bandwidth. Deviations outside the 
authorized bandwidth are subject to a Capacity Overrun Penalty.
    Energy delivered or received within the authorized bandwidth for 
this service is accounted for as an inadvertent flow and will be 
netted against flows in the future. The inadvertent flow in any 
given hour will only be offset with the flows in the corresponding 
hour of a day in the same category. The two categories of days are 
weekdays and weekend days/North American Electric Reliability 
Council holidays. This process will result in a separate inadvertent 
accumulation for each hour of the two categories of days. The hourly 
accumulations in the current month will be added to the hourly 
inadvertent balances from the previous month, resulting in a month-
end balance for each hour.
    The Customer is required to adjust the scheduling of resources 
in such a way as to reduce the accumulation towards zero. It is 
recognized that the inadvertent hourly flows can be both negative 
and positive, and that offsetting flows should deter a significant 
accumulation of inadvertent. In the event any hourly month-end 
balance exceeds 12 MWHs, the excess will be subject to the 
Application of Capacity Overrun Penalty or the Unauthorized Use of 
Energy Imbalance Service by Overscheduling of Resources provisions, 
depending on the direction of the accumulation.

Application of Capacity Overrun Penalty

    Customers, who receive deliveries within Southwestern's Control 
Area, are obligated to provide resources sufficient to meet their 
loads. Such obligation is not related to the amount of transmission 
capacity that such Customers may have reserved for transmission 
service to a particular load. Customers whose resources are 
scheduled by Southwestern are not subject to this provision. In the 
event that a Customer under schedules its resources to meet its 
load, resulting in a difference between resources and actual metered 
load (adjusted for transformer losses as applicable) outside the 
authorized bandwidth for Energy Imbalance Service for any hour, then 
such Customer is subject to the following penalty:

Capacity Overrun Penalty

    For each hour during which energy flows outside the authorized 
bandwidth, the Customer will be obliged to purchase such energy at 
the following rates:

------------------------------------------------------------------------
                                                             Rate per
              Months associated with charge                  kilowatt
------------------------------------------------------------------------
March, April, May, October, November, December..........           $0.15
January, February, June, July, August, September........            0.30
------------------------------------------------------------------------

Unauthorized Use of Energy Imbalance Service by Overscheduling of 
Resources

    In the event that a Customer schedules greater resources than 
are needed to meet its load, such that energy flows at rates beyond 
the authorized bandwidth for the use of Energy Imbalance Service, 
Southwestern retains such energy at no cost to Southwestern and with 
no obligation to return such energy. Customers whose resources are 
scheduled by Southwestern are not subject to this provision.

Application of Charge for Interconnection Facilities Service

    Any Customer that requests an interconnection from Southwestern 
which, in Southwestern's sole judgment and at its sole option, does 
not provide commensurate benefits or compensation to Southwestern 
for the use of its facilities shall be assessed a capacity charge 
for Interconnection Facilities Service. For any month, charges for 
Interconnection Facilities Service shall be assessed on the greater 
of (1) that month's actual Peak Demand, or (2) the highest Peak 
Demand recorded during the previous eleven months, as metered at the 
interconnection. The use of Interconnection Facilities Service will 
be subject to power factor provisions as specified in this rate 
schedule. The interconnection customer shall also schedule and 
deliver Real Power Losses pursuant to the provisions of this Rate 
Schedule based on metered flow through the interconnection where 
Interconnection Facilities Services is assessed.

Rate for Interconnection Facilities Service

    The monthly capacity charge for Interconnection Facilities 
Service:

------------------------------------------------------------------------
         10/1/2006-9/30/2008                  10/1/2008-9/30/2010
------------------------------------------------------------------------
$0.90 per kilowatt...................  $0.95 per kilowatt.
------------------------------------------------------------------------

Requirements Related to Power Factor

    Any Customer served from facilities owned by or available by 
contract to Southwestern will be required to maintain a power factor 
of not less than 95 percent and will be subject to the following 
provisions.

Determination of Power Factor

    The power factor will be determined for all Demand Periods and 
shall be calculated under the formula:
[GRAPHIC] [TIFF OMITTED] TN28OC08.001

with the factors defined as follows:

PF = the power factor for any Demand Period of the month.
kWh = the total quantity of energy which is delivered during such 
Demand Period to the point of delivery or interconnection.
rkVAh = the total quantity of reactive kilovolt-ampere-hours (kvars) 
delivered during such Demand Period to the point of delivery or 
interconnection.

Power Factor Penalty and Assessment

    The Customer shall be assessed a penalty for all Demand Periods 
of a month where the power factor is less than 95 percent lagging. 
For any Demand Period during a particular month such penalty shall 
be in accordance with the following formula:

C = D x (.95-LPF) x $0.10

with the factors defined as follows:

C = The charge in dollars to be assessed for

[[Page 63975]]

any particular Demand Period of such month that the Determination of 
Power Factor ``PF'' is calculated to be less than 95 percent 
lagging.
D = The Customer's demand in kilowatts at the point of delivery for 
such Demand Period in which a low power factor was calculated.
LPF = The lagging power factor, if any, determined by the formula 
``PF'' for such Demand Period.

If C is negative, then C = zero (0).

Application of Power Factor Penalty

    The Power Factor Penalty is applicable to radial 
interconnections with the System of Southwestern. The total Power 
Factor Penalty for any month shall be the sum of all charges ``C'' 
for all Demand Periods of such month. No penalty is assessed for 
leading power factor. Southwestern, in its sole judgment and at its 
sole option, may determine whether power factor calculations should 
be applied to a single physical point of delivery or to multiple 
physical points of delivery where a Customer has a single, 
electrically integrated load served through multiple points or 
interconnections. The general criteria for such decision shall be 
that, given the configuration of the Customer's and Southwestern's 
systems, Southwestern will determine, in its sole judgment and at 
its sole option, whether the power factor calculation more 
accurately assesses the detrimental impact on Southwestern's system 
when the above formula is calculated for a single physical point of 
delivery or for a combination of physical points or for an 
interconnection as specified by an Interconnection Agreement.
    Southwestern, at its sole option, may reduce or waive power 
factor penalties when, in Southwestern's sole judgment, low power 
factor conditions were not detrimental to the System of Southwestern 
due to particular loading and voltage conditions at the time the 
power factor dropped below 95 percent lagging.

United States Department of Energy Southwestern Power Administration

Rate Schedule P-06A \1\ Wholesale Rates for Hydro Peaking Power
---------------------------------------------------------------------------

    \1\ Supersedes Rate Schedule P-06.
---------------------------------------------------------------------------

Effective

    During the period January 1, 2009, through September 30, 2010, 
in accordance with Rate Order No. SWPA-59 issued by the Deputy 
Secretary of Energy on --------.

Available

    In the marketing area of Southwestern Power Administration 
(Southwestern), described generally as the States of Arkansas, 
Kansas, Louisiana, Missouri, Oklahoma, and Texas.

Applicable

    To wholesale Customers which have contractual rights from 
Southwestern to purchase Hydro Peaking Power and associated energy 
(Peaking Energy and Supplemental Peaking Energy).

Character and Conditions of Service

    Three-phase, alternating current, delivered at approximately 60 
Hertz, at the nominal voltage(s), at the points of delivery, and in 
such quantities as are specified by contract.

Definitions of Terms

    ``Customer'' is the entity which is utilizing and/or purchasing 
hydroelectric power and associated energy and services from 
Southwestern pursuant to this rate schedule.
    The ``Demand Period'' used to determine maximum integrated rates 
of delivery for the purpose of power accounting is the 60-minute 
period which begins with the change of hour. The term ``peak 
demand'' means the highest rate of delivery, in kilowatts, for any 
Demand Period during a particular month, at any particular point of 
delivery.
    For the purposes of this Rate Schedule, the term ``point of 
delivery'' is used to mean either a single physical point at which 
electric power and energy are delivered from the System of 
Southwestern (defined below), or a specified set of delivery points 
which together form a single, electrically integrated load. ``Peak 
demand'' for such set of delivery points is computed as the 
coincidental highest rate of delivery among the specified points 
rather than as the sum of peak demands for each individual physical 
point of delivery.
    The term ``Peaking Contract Demand'' means the maximum rate in 
kilowatts at which Southwestern is, by contract, obligated to 
deliver Peaking Energy during any Demand Period. Unless otherwise 
provided by contract, the ``Peaking Billing Demand'' for any month 
shall be equal to the ``Peaking Contract Demand.''
    The term ``Uncontrollable Force,'' as used herein, shall mean 
any force which is not within the control of the party affected, 
including, but not limited to failure of water supply, failure of 
facilities, flood, earthquake, storm, lightning, fire, epidemic, 
war, riot, civil disturbance, labor disturbance, sabotage, or 
restraint by court of general jurisdiction, which by exercise of due 
diligence and foresight such party could not reasonably have been 
expected to avoid.
    The term ``System of Southwestern'' means the high-voltage 
transmission lines and related facilities Southwestern owns and 
operates, and/or has contractual rights to such transmission 
facilities owned by others.
    ``Ancillary Services'' are those services necessary to support 
the transmission of capacity and energy from resources to loads 
while maintaining reliable operation of the System of Southwestern 
in accordance with good utility practice. Definitions of the 
Ancillary Services are as follows:
    ``Scheduling, System Control, and Dispatch Service'' is provided 
by Southwestern as Control Area operator and is in regard to 
interchange and load-match scheduling and related system control and 
dispatch functions.
    ``Reactive Supply and Voltage Control from Generation Sources 
Service'' is provided at transmission facilities in the System of 
Southwestern to produce or absorb reactive power and to maintain 
transmission voltages within specific limits.
    ``Regulation and Frequency Response Service'' is the continuous 
balancing of generation and interchange resources accomplished by 
raising or lowering the output of on-line generation as necessary to 
follow the moment-by-moment changes in load and to maintain 
frequency within a Control Area.
    ``Spinning Operating Reserve Service'' maintains generating 
units on-line, but loaded at less than maximum output, which may be 
used to service load immediately when disturbance conditions are 
experienced due to a sudden loss of generation or load.
    ``Supplemental Operating Reserve Service'' provides an 
additional amount of operating reserve sufficient to reduce Area 
Control Error to zero within 10 minutes following loss of generating 
capacity which would result from the most severe single contingency.
    ``Energy Imbalance Service'' corrects for differences over a 
period of time between schedules and actual hourly deliveries of 
energy to a load. Energy delivered or received within the authorized 
bandwidth (defined below) for this service is accounted for as an 
inadvertent flow and is returned to the providing party by the 
receiving party in accordance with standard utility practice.

Energy Associated With Hydro Peaking Power

Peaking Energy

    1,200 kilowatthours of Peaking Energy per kilowatt of Peaking 
Contract Demand will be furnished during each contract year.

Supplemental Peaking Energy

    Supplemental Peaking Energy (in addition to Peaking Energy) will 
be furnished if and when determined by Southwestern to be available, 
and at rates of delivery which do not exceed the Customer's Peaking 
Contract Demand.

Monthly Rates for Peaking Contract Demand

                                     Capacity Charge for Hydro Peaking Power
----------------------------------------------------------------------------------------------------------------
         10/1/2006-9/30/2007              10/1/2007-9/30/2008                  10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
$3.03 per kilowatt of Peaking Billing  $3.18 per kilowatt of     $3.51 per kilowatt of Peaking Billing Demand.
 Demand.                                Peaking Billing Demand.
----------------------------------------------------------------------------------------------------------------


[[Page 63976]]

Services Associated With Capacity Charge for Hydro Peaking Power

    The capacity charge for Hydro Peaking Power includes such 
transmission services as are necessary to integrate Southwestern's 
resources in order to reliably deliver Hydro Peaking Power and 
associated energy to Customers. This capacity charge also includes 
two ancillary services charges, Scheduling, System Control and 
Dispatch Service and Reactive Supply and Voltage Control from 
Generation Sources Service.

Secondary Transmission Service Under Capacity Associated With Hydro 
Peaking Power

    Customers may utilize the capacity associated with Peaking 
Contract Demand for the transmission of non-Federal energy, on a 
non-firm, as-available basis, at no additional charge for such 
transmission service or associated Ancillary Services, under the 
following terms and conditions:
    (1) The sum of the capacity, for any hour, which is used for 
Peaking Energy, Supplemental Peaking Energy, and Secondary 
Transmission Service, may not exceed the Peaking Contract Demand;
    (2) The non-Federal energy transmitted under such secondary 
service is delivered to the Customer's point of delivery for Hydro 
Peaking Power;
    (3) The Customer commits to provide Real Power Losses associated 
with such deliveries of non-Federal energy; and
    (4) Southwestern determines that sufficient transfer capability 
exists between the point of receipt into the System of Southwestern 
of such non-Federal energy and the Customer's point of delivery for 
Hydro Peaking Power for the time period that such secondary 
transmission service is requested.

Rates for Energy Associated With Hydro Peaking Power

----------------------------------------------------------------------------------------------------------------
          10/1/2006-9/30/2007              10/1/2007-9/30/2008                  10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
                                            (a) Peaking Energy Charge
----------------------------------------------------------------------------------------------------------------
$0.0082 per kilowatthour of Peaking     $0.0082 per kilowatthour   $0.0082 per kilowatthour of Peaking Energy
 Energy delivered; plus (c).             of Peaking Energy          delivered; plus (c).
                                         delivered; plus (c).
----------------------------------------------------------------------------------------------------------------
                                         (b) Supplemental Energy Charge
----------------------------------------------------------------------------------------------------------------
$0.0055 per kilowatthour of Peaking     $0.0082 per kilowatthour   $0.0082 per kilowatthour of Peaking Energy.
 Energy.                                 of Peaking Energy.
----------------------------------------------------------------------------------------------------------------

    (c) A purchased power adder of $0.0067 per kilowatthour of 
Peaking Energy delivered, as adjusted by the Administrator, 
Southwestern, in accordance with the procedure within this rate 
schedule. This adder does not apply to:

Supplemental Peaking Energy, or
Sales to any Customer which, by contract, has assumed the obligation 
to supply energy to fulfill the minimum of 1,200 kilowatthours of 
Peaking Energy per kilowatt of Peaking Contract Demand during a 
contract year (Contract Support Arrangements).

Monthly Rates for Transformation Service

    Capacity Charges for Transformation Service: A charge of $0.30 
per kilowatt will be assessed for capacity used to deliver energy at 
any point of delivery at which Southwestern provides transformation 
service for deliveries at voltages of 69 kilovolts or less from 
higher voltage facilities.

Application of Capacity Charges for Transformation Service

    For any particular month, charges for transformation service 
will be assessed on the greater of (1) that month's actual peak 
demand, or (2) the highest peak demand recorded during the previous 
11 months, at any point of delivery. For the purpose of this Rate 
Schedule, the peak demand will be based on all deliveries, of both 
Federal and non-Federal energy, from the System of Southwestern, at 
such point during such month.

Rates for Ancillary Services

Capacity Charges for Ancillary Services

----------------------------------------------------------------------------------------------------------------
                                        10/1/2006-9/30/2008                   10/1/2008-9/30/2010
----------------------------------------------------------------------------------------------------------------
                                  (a) Regulation and Frequency Response Service
----------------------------------------------------------------------------------------------------------------
Monthly rate........................  $0.08 per kilowatt of    $0.09 per kilowatt of Peaking Billing Demand.
                                       Peaking Billing Demand.
----------------------------------------------------------------------------------------------------------------
                                     (b) Spinning Operating Reserve Service
----------------------------------------------------------------------------------------------------------------
Monthly rate........................  $0.0079 per kilowatt of  $0.0092 per kilowatt of Peaking Billing Demand.
                                       Peaking Billing Demand.
Daily rate..........................  $0.00036 per kilowatt    $0.00042 per kilowatt for non-Federal generation
                                       for non-Federal          inside Southwestern's control area.
                                       generation inside
                                       Southwestern's control
                                       area.
----------------------------------------------------------------------------------------------------------------
                                   (c) Supplemental Operating Reserve Service
----------------------------------------------------------------------------------------------------------------
Monthly rate........................  $0.0079 per kilowatt of  $0.0092 per kilowatt of Peaking Billing Demand.
                                       Peaking Billing Demand.
Daily rate..........................  $0.00036 per kilowatt    $0.00042 per kilowatt for non-Federal generation
                                       for non-Federal          inside Southwestern's control area.
                                       generation inside
                                       Southwestern's control
                                       area.
----------------------------------------------------------------------------------------------------------------

    (d) Energy Imbalance Service: $0.0 per kilowatt for all 
reservation periods.

Availability of Ancillary Services

    Ancillary Services (a) and (d) listed above are available only 
for deliveries of power and energy to load centers within 
Southwestern's Control Area. Ancillary Services (b) and (c) listed 
above are available only for deliveries of non-Federal power and 
energy generated by resources located within Southwestern's

[[Page 63977]]

Control Area and for deliveries of all Hydro Peaking Power and 
associated energy from and within Southwestern's Control Area. Where 
available, such Ancillary Services must be taken from Southwestern; 
unless, subject to Southwestern's approval, they are provided by 
others.

Application of Ancillary Services Charges

    For any month, the charges for Ancillary Services (a), (b), (c) 
and (d) listed above for deliveries of Hydro Peaking Power shall be 
based on the Peaking Billing Demand.
    The daily charge for Ancillary Services (b) and (c) for non-
Federal generation inside Southwestern's Control Area shall be 
applied to the greater of Southwestern's previous day's estimate of 
the peak, or the actual peak, in kilowatts, of the internal non-
Federal generation.

Provision of Ancillary Services by Others

    Customers for which Ancillary Services (a), (b), (c) and (d) are 
made available as specified above, must inform Southwestern by 
written notice of the Ancillary Services which they do not intend to 
take and purchase from Southwestern, and of their election to 
provide all or part of such Ancillary Services from their own 
resources or from a third party.
    Subject to Southwestern's approval of the ability of such 
resources or third parties to meet Southwestern's technical 
requirements for provision of such Ancillary Services, the Customer 
may change the Ancillary Services which it takes from Southwestern 
and/or from other sources at the beginning of any month upon the 
greater of 60 days notice or upon completion of any necessary 
equipment modifications necessary to accommodate such change.

Limitations on Energy Imbalance Service

    Energy Imbalance Service primarily applies to deliveries of 
power and energy which are required to satisfy a Customer's load. As 
Hydro Peaking Power and associated energy are limited by contract, 
the Energy Imbalance Service bandwidth specified in Southwestern's 
Open Access Transmission Service tariff does not apply to deliveries 
of Hydro Peaking Power, and therefore Energy Imbalance Service is 
not charged on such deliveries. Customers who consume a capacity of 
Hydro Peaking Power greater than their Peaking Contract Demand may 
be subject to a Capacity Overrun Penalty.

Application of Capacity Overrun Penalty

    Customers which have loads within Southwestern's Control Area 
are obligated by contract to provide resources, over and above the 
Hydro Peaking Power and associated energy purchased from 
Southwestern, sufficient to meet their loads. A Capacity Overrun 
Penalty shall be applied only when the formulas provided in 
Customers' contracts indicate an overrun on Hydro Peaking Power, and 
investigation determines that all resources, both firm and non-firm, 
which were available at the time of the apparent overrun were 
insufficient to meet the Customer's load.

Capacity Overrun Penalty

    For each hour during which Hydro Peaking Power was provided at a 
rate greater than that to which the Customer is entitled, the 
Customer will be charged a capacity overrun penalty at the following 
rates:

------------------------------------------------------------------------
                                                             Rate per
              Months associated with charge                  kilowatt
------------------------------------------------------------------------
March, April, May, October, November, December..........           $0.15
January, February, June, July, August, September........            0.30
------------------------------------------------------------------------

Application of Energy Overrun Penalty

    By contract, the Customer is subject to limitations on the 
maximum amounts of Peaking Energy which may be scheduled during any 
month or during any four consecutive months. When the Customer 
schedules an amount in excess of such maximum amounts for any month, 
or schedules more than 1,200 hours of Peaking Energy per kilowatt of 
Peaking Contract Demand in any contract year, such Customer is 
subject to the Energy Overrun Penalty.

Energy Overrun Penalty

    For each kilowatthour of overrun: $0.0902 per kilowatthour.

Real Power Losses

    Customers are required to self-provide all Real Power Losses for 
non-Federal energy transmitted by Southwestern on behalf of such 
Customers under the provisions detailed below.
    Real Power Losses are computed as four (4) percent of the total 
amount of non-Federal energy transmitted by Southwestern. The 
Customer's Monthly Real Power Losses are computed each month on a 
megawatthour basis as follows:

ML = .04 x NFE

with the factors defined as follows:

ML = The total monthly loss energy, rounded to the nearest 
megawatthour, to be scheduled by a Customer for receipt by 
Southwestern for Real Power Losses associated with non-Federal 
energy transmitted on behalf of such Customer; and
NFE = The amount of non-Federal energy that was transmitted by 
Southwestern on behalf of a Customer during a particular month.

    The Customer must schedule or cause to be scheduled to 
Southwestern, Real Power Losses for which it is responsible subject 
to the following conditions:
    (1) The Customer shall schedule and deliver real power losses 
back to Southwestern during the second month after they were 
incurred by Southwestern in the transmission of the Customer's non-
Federal power and energy over the System of Southwestern.
    (2) On or before the twentieth day of each month, Southwestern 
shall determine the amount of non-Federal loss energy it provided on 
behalf of the Customer during the previous month and provide a 
written schedule to the Customer setting forth hour-by-hour the 
quantities of non-Federal energy to be delivered to Southwestern as 
losses during the next month.
    (4) Real Power Losses not delivered to Southwestern by the 
Customer, according to the schedule provided, during the month in 
which such losses are due shall be billed by Southwestern to the 
Customer to adjust the end-of-month loss energy balance to 0 
megawatthours and the Customer shall be obliged to purchase such 
energy at the following rates:

------------------------------------------------------------------------
                                                             Rate per
              Months associated with charge                kilowatthour
------------------------------------------------------------------------
March, April, May, October, November, December..........           $0.15
January, February, June, July, August, September........            0.30
------------------------------------------------------------------------

    (5) Real Power Losses delivered to Southwestern by the Customer 
in excess of the losses due during the month shall be purchased by 
Southwestern from the Customer at a rate per megawatthour equal to 
Southwestern's rate per megawatthour for Supplemental Peaking 
Energy, as set forth in Southwestern's then-effective Rate Schedule 
for hydro peaking power to adjust such hourly end-of-month loss 
energy balance to 0 megawatthours.

Requirements Related to Power Factor

    Any Customer served from facilities owned by or available by 
contract to Southwestern will be required to maintain a power factor 
of not less than 95 percent and will be subject to the following 
provisions.

Determination of Power Factor

    The power factor will be determined for all Demand Periods and 
shall be calculated under the formula:

[GRAPHIC] [TIFF OMITTED] TN28OC08.002


with the factors defined as follows:

PF = the power factor for any Demand Period of the month.
kWh = the total quantity of energy which is delivered during such 
Demand Period to the point of delivery or interconnection.
rkVAh = the total quantity of reactive kilovolt-ampere-hours (kvars) 
delivered during such Demand Period to the point of delivery or 
interconnection.

Power Factor Penalty and Assessment

    The Customer shall be assessed a penalty for all Demand Periods 
of a month where the power factor is less than 95 percent lagging. 
For any Demand Period during a particular month such penalty shall 
be in accordance with the following formula:

C = D x (.95-LPF) x $0.10

with the factors defined as follows:

C = The charge in dollars to be assessed for any particular Demand 
Period of such month that the Determination of Power Factor ``PF'' 
is calculated to be less than 95 percent lagging.
D = The Customer's demand in kilowatts at the point of delivery for 
such Demand Period in which a low power factor was calculated.

[[Page 63978]]

LPF = The lagging power factor, if any, determined by the formula 
``PF'' for such Demand Period.

    If C is negative, then C = zero (0).

Application of Power Factor Penalty

    The Power Factor Penalty is applicable to radial 
interconnections with the System of Southwestern. The total Power 
Factor Penalty for any month shall be the sum of all charges ``C'' 
for all Demand Periods of such month. No penalty is assessed for 
leading power factor. Southwestern, in its sole judgment and at its 
sole option, may determine whether power factor calculations should 
be applied to a single physical point of delivery or to multiple 
physical points of delivery where a Customer has a single, 
electrically integrated load served through multiple points or 
interconnections. The general criteria for such decision shall be 
that, given the configuration of the Customer's and Southwestern's 
systems, Southwestern will determine, in its sole judgment and at 
its sole option, whether the power factor calculation more 
accurately assesses the detrimental impact on Southwestern's system 
when the above formula is calculated for a single physical point of 
delivery or for a combination of physical points or for an 
interconnection as specified by an Interconnection Agreement.
    Southwestern, at its sole option, may reduce or waive power 
factor penalties when, in Southwestern's sole judgment, low power 
factor conditions were not detrimental to the System of Southwestern 
due to particular loading and voltage conditions at the time the 
power factor dropped below 95 percent lagging.

Adjustment for Reduction in Service

    If, during any month, the quantity of Peaking Contract Demand of 
Southwestern's 1200 hour peaking power sales customers that is 
scheduled by the customer for delivery is reduced by Southwestern 
for a period or periods of not less than two consecutive hours by 
reason of an outage caused by either an Uncontrollable Force or by 
the installation, maintenance, replacement or malfunction of 
generation, transmission and/or related facilities on the System of 
Southwestern, or insufficient pool levels, the Customer's capacity 
charges for such month will be reduced for each such reduction in 
service by an amount computed under the formula:

R = (C x K x H) + S

with the factors defined as follows:

R = the dollar amount of reduction in the monthly total capacity 
charges for a particular reduction of not less than two consecutive 
hours during any month, except that the total amount of any such 
reduction shall not exceed the product of the Customer's capacity 
charges associated with Hydro Peaking Power times the Peaking 
Billing Demand.
C = the Customer's capacity charges associated with Hydro Peaking 
Power for the Peaking Billing Demand for such month.
K = the reduction in kilowatts in Peaking Billing Demand for a 
particular event.
H = the number of hours duration of such particular reduction.
S = the number of hours that Peaking Energy is scheduled during such 
month, but not less than 60 hours times the Peaking Contract Demand.

    Such reduction in charges shall fulfill Southwestern's 
obligation to deliver Peaking Power and Peaking Energy.

Procedure for Determining Southwestern's Net Purchased Power Adder 
Adjustment

    Not more than twice annually, the Purchased Power Adder of 
$.0067 (6.7 mills) per kilowatthour of Peaking Energy, as noted in 
this Rate Schedule, may be adjusted by the Administrator, 
Southwestern, by an amount up to a total of $.0067 (6.7 
mills) per kilowatthour per year, as calculated by the following 
formula:

ADJ = (PURCH-EST + DIF) + SALES

with the factors defined as follows:

ADJ = the dollar amount of the total adjustment, plus or minus, to 
be applied to the Net Purchased Power Adder, rounded to the nearest 
$.0001 per kilowatthour, provided that the total ADJ to be applied 
in any year shall not vary from the then-effective ADJ by more than 
$.0067 per kilowatthour;
PURCH = the actual total dollar cost of Southwestern's System Direct 
Purchases as accounted for in the financial records of the 
Southwestern Federal Power System for the period;
EST = the estimated total dollar cost ($15,064,500 per year) of 
Southwestern's System Direct Purchases used as the basis for the 
Purchased Power Adder of $.0067 per kilowatthour of Peaking Energy;
DIF = the accumulated remainder of the difference in the actual and 
estimated total dollar cost of Southwestern's System Direct 
Purchases since the effective date of the currently approved 
Purchased Power Adder set forth in this rate schedule, which 
remainder is not projected for recovery through the ADJ in any 
previous periods;
SALES = the annual Total Peaking Energy sales projected to be 
delivered (2,241,300,000 KWh per year) from the System of 
Southwestern, which total was used as the basis for the $.0067 per 
kilowatthour Purchased Power Adder.

 [FR Doc. E8-25690 Filed 10-27-08; 8:45 am]
BILLING CODE 6450-01-P