[Federal Register Volume 76, Number 177 (Tuesday, September 13, 2011)]
[Notices]
[Pages 56409-56412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23356]


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DEPARTMENT OF ENERGY


Notice of Interim Approval

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of rate order.

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SUMMARY: The Deputy Secretary of the Department of Energy confirmed and 
approved, on an interim basis, Rate Schedules JW-1-J and JW-2-F. The 
rates were approved on an interim basis up to September 19, 2016, and 
are subject to confirmation and approval by the Federal Energy 
Regulatory Commission (Commission) on a final basis.

DATES: Approval of rates on an interim basis is effective September 20, 
2011.

FOR FURTHER INFORMATION CONTACT: Virgil G. Hobbs III, Assistant 
Administrator, Finance and Marketing, Southeastern Power 
Administration, Department of Energy, 1166 Athens Tech Road, Elberton, 
Georgia 30635-6711, (706) 213-3800. Relevant documents and transcripts 
are available for inspection.

SUPPLEMENTARY INFORMATION: The Commission, by Order issued April 15, 
2010, in Docket No. EF09-3031-000, confirmed and approved Wholesale 
Power Rate Schedules JW-1-I and JW-2-F. Rate schedule JW-1-J replaces 
rate schedule JW-1-I and rate schedule JW-2-F is extended up to 
September 19, 2016.

    Dated: September 2, 2011.
Daniel B. Poneman,
Deputy Secretary.

Department of Energy

Deputy Secretary

Rate Order No. SEPA-54
In the Matter of: Southeastern Power Administration--Jim Woodruff 
Project Power Rates

Order Confirming and Approving Power Rates on an Interim Basis

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

Background

    Power from the Jim Woodruff Project is presently sold under 
Wholesale Power Rate Schedules JW-1-I and JW-2-F. These rate schedules 
were approved by the Commission on April 15, 2010, for a period ending 
September 19, 2014 (131 FERC ]62,044).

Public Notice and Comment

    Southeastern prepared a Power Repayment Study, dated January 2011, 
showing revenues at current rates were adequate to meet repayment 
criteria. However, the Jim Woodruff preference customers asked 
Southeastern to revise the rates to include a pass-through of purchased 
power expenses. The proposed capacity and energy charge reduction to 
the preference customers will be completely recovered through this 
separate, pass-through charge to the affected customers. This rate 
structure revision will result in no net loss of revenue and will fully 
meet system repayment criteria. On February 17, 2011, by Federal 
Register notice (76 FR 9349), Southeastern proposed a rate adjustment. 
The notice also announced a Public Information and Comment Forum to be 
held March 29, 2011, in Tallahassee, Florida. Three parties asked 
questions at the forum. Responses to the questions are part of the 
written record of the forum, and a transcript of the forum is available 
at Southeastern Power Administration (see FOR FURTHER INFORMATION 
CONTACT section). The transcript of the forum is part of the record to 
be filed with the Commission and will be available on the Commission's 
Web site at http://www.ferc.gov. Written comments were accepted on or 
before May 18, 2011. Written comments were received from one source the 
Southeastern Federal Power Customers.

Staff Review of Comments

    Written comments received from the Southeastern Federal Power 
Customers are summarized below. Southeastern's response follows each 
comment.
    Comment 1: The Jim Woodruff preference customers support the 
revised rate design SEPA has prepared.
    Response 1: The rate schedules Southeastern will propose to the 
Deputy Secretary will include the pass-through of purchased power 
expenses as discussed with the preference customers.
    Comment 2: While the preference customers of the Jim Woodruff 
support the overall rate structure, including the new pass through 
mechanism for purchased power expenses, they have concerns regarding 
the assumptions for the Operations and Maintenance (``O&M'') expenses. 
In materials provided by SEPA on April 25th, the Corps 2011 projections 
revealed projected expenses for joint activities not specific to a 
single business function had increased by more than three hundred 
percent for each year until 2015. While preference customers throughout 
the Southeast have long questioned the practices of the U.S. Army Corps 
of Engineers (``Corps'') in assigning various costs of the Corps 
program to this ``catch-all'' account, there appears to be no basis for 
a three hundred percent increase in joint use costs.
    Response 2: From fiscal year 2009 to fiscal year 2010, Joint O&M 
allocated to power increased from $664,000 to $1,653,000, primarily as 
a result of improvement projects funded by the American Recovery and 
Reinvestment Act. The estimated Joint O&M allocated to power included 
in the repayment study used to support the proposed rates, set forth 
below, are similar to the

[[Page 56410]]

Joint O&M amounts from fiscal year 2009:

2011........$627,731
2012........$646,458
2013........$665,746
2014........$685,614
2015........$685,614
2016........$685,614

These estimates have been used to develop the proposed rate schedules. 
Any variance of the actual costs incurred from these estimates will 
impact the repayment of the federal investment and will be accounted 
for in the next rate adjustment. Repayment is the residual of all 
variances. The expenses reported by the Corps are reviewed annually by 
Southeastern and are made available to the customers through the O&M 
Committee of the SeFPC.
    Comment 3: The full extent of SeFPC's O&M Committee is important to 
note here because of statements that SEPA has made in the past when 
questions have been raised regarding the amount of O&M in a rate. On 
more than one occasion, SEPA has stated that questions regarding the 
level of O&M in a rate should be addressed in the meeting of the O&M 
committee, thereby indicating the SeFPC's O&M committee has a quasi 
administrative review of the Corps operations. The record needs to be 
corrected and set clear on this point.
    Response 3: The activities of the O&M Committee of the SeFPC, in 
which both Southeastern and the Corps participate, provides customers 
an opportunity to review the Corps O&M Expenses. Participation in the 
O&M Committee does not require participants to sign off on the Corps' 
projections or the actual costs incurred. Adjustments to the program 
are often made as a result of questions raised at the meetings.
    Questions regarding the level of Corps O&M in a rate may be raised 
at any time. If the questions are raised to Southeastern, Southeastern 
will usually forward the questions to the Corps for a response. The 
Corps provides representatives who participate and answer questions in 
the meetings of the O&M Committee. The SeFPC's O&M committee does not 
conduct any administrative review of the Corps operations.
    Comment 4: The Corps has no authority to set the rates charged to 
the preference customers. This responsibility is solely vested with the 
Administrator pursuant to Section 5 of the Flood Control Act of 1944. 
Thus, when there is a question regarding the amount of O&M to be 
included in a proposed rate, the preference customers appropriately 
raise concerns with SEPA.
    However, SEPA does have a relationship with the Corps as defined in 
a Memorandum of Understanding setting forth the responsibilities 
between the two agencies. Moreover, the Administrator has the 
responsibility under the Flood Control Act of 1944 to set the rates. 
Therefore, in the context of a rate increase which involves questions 
regarding O&M, the Administrator has the final say and all questions 
regarding the ultimate level of O&M recovery are appropriately resolved 
by SEPA rather than the SeFPC O&M committee.
    Response 4: There is a Memorandum of Understanding between the 
South Atlantic Division of the U.S. Army Corps of Engineers and the 
Administrator of Southeastern Power Administration (MOU) established 
June 20, 1991. The MOU is available at Southeastern Power 
Administration (See FOR FURTHER INFORMATION CONTACT Section). This MOU 
recognizes the respective roles these two federal entities play in the 
Southeastern Federal Power Program.
    Section 4 (c.) of the MOU states, ``It is recognized that the 
preference customers of the Southeastern Federal Power Program have an 
interest in the maintenance, operation and maintenance expense, and 
funding. It is the intent of the parties to develop a relationship of 
mutual respect and trust between the parties and the preference 
customers to resolve controversial issues through discussion rather 
than confrontation. The parties, therefore, agree to meet as needed 
with the customers, or their designated representatives, to discuss 
maintenance, expense and funding procedures.''
    The MOU also provides that the Corps will provide Southeastern with 
summarized financial statements and the statements will be audited 
periodically by an independent auditing firm.
    Section 5 of the Flood Control Act of 1944 states, ``Rate schedules 
shall be drawn having regard to the recovery (upon the basis of the 
application of such rate schedules to the capacity of the electric 
facilities of the projects) of the cost of producing and transmitting 
such electric energy, including the amortization of the capital 
investment allocated to power over a reasonable period of years.''
    The Corps does not submit its budget to Southeastern, and 
Southeastern has no authority over the Corps' spending of Congressional 
appropriations. Southeastern is legally responsible for the recovery of 
costs properly allocated to the power function. While the Administrator 
is responsible for formulating rate schedules for the recovery of these 
costs, the rate schedules are required to be submitted to the Deputy 
Secretary of the Department of Energy for interim approval and to the 
Federal Energy Regulatory Commission for final approval.
    The O&M Committee of the SeFPC also has no authority over the Corps 
O&M expense.

Discussion

System Repayment

    An examination of Southeastern's revised system power repayment 
study, prepared in July 2011, for the Jim Woodruff Project, shows the 
proposed rates will pay all system power costs within the 50-year 
repayment period required by existing law and DOE Order RA 6120.2. The 
Administrator of Southeastern has certified the rates are consistent 
with applicable law and are the lowest possible rates to preference 
customers consistent with sound business principles.

Environmental Impact

    Southeastern has reviewed the possible environmental impacts of the 
rate adjustment under consideration and has concluded the adjusted 
rates would not significantly affect the quality of the human 
environment within the meaning of the National Environmental Policy Act 
of 1969. The proposed action is not a major Federal action for which 
preparation of an Environmental Impact Statement is required.

Availability of Information

    Information regarding these rates, including studies, and other 
supporting materials, is available for public review in the offices of 
Southeastern Power Administration, 1166 Athens Tech Road, Elberton, 
Georgia 30635-6711.

Submission to the Federal Energy Regulatory Commission

    The rates hereinafter confirmed and approved on an interim basis, 
together with supporting documents, will be submitted promptly to the 
Federal Energy Regulatory Commission for confirmation and approval on a 
final basis for a period beginning September 20, 2011, and ending no 
later than September 19, 2016.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I hereby confirm and approve on an 
interim basis, effective September 20, 2011, attached Wholesale Power 
Rate Schedules JW-1-J and JW-2-F. The rate schedules shall remain in 
effect on an interim basis

[[Page 56411]]

through September 19, 2016, unless such period is extended or until the 
Federal Energy Regulatory Commission confirms and approves them or 
substitute rate schedules on a final basis.

Dated: September 2, 2011.

Daniel B. Poneman,
Deputy Secretary.

Wholesale Power Rate Schedule JW-1-J

    Availability:
    This rate schedule shall be available to public bodies and 
cooperatives served by the Progress Energy Florida and having points 
of delivery within 150 miles of the Jim Woodruff Project 
(hereinafter called the Project).
    Applicability:
    This rate schedule shall be applicable to firm power and 
accompanying energy made available by the Government from the 
Project and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be 
three-phase alternating current at a nominal frequency of 60 cycles 
per second delivered at the delivery points of the customer.
    Monthly Rate:
    The monthly rate for capacity and energy made available or 
delivered under this rate schedule shall be:
    Demand Charge:
    $10.29 per kilowatt of monthly contract demand.
    Energy Charge:
    26.51 mills per kilowatt-hour.
    Purchased Power Pass-Through:
    In addition to the capacity and energy charges, each preference 
customer will be charged for power purchased by Southeastern on 
behalf of the preference customer. This pass-through will be 
computed as follows:
    On or about the 20th of each month, Progress Energy provides 
Southeastern with the meter readings for preference customer's 
delivery points that have an allocation of capacity from 
Southeastern. Subsequently, Progress Energy provides Southeastern 
with reports of purchased power and support capacity requirements 
around the 10th of the succeeding month. Southeastern will compute 
its purchased power obligation for each delivery point monthly. 
Southeastern will compute any revenue from sales to Progress Energy 
for each delivery point monthly. Southeastern will sum the purchased 
power obligation and any revenue from sales to Progress Energy for 
each preference customer monthly. The purchased power obligation 
minus any revenue from sales to Progress Energy for each customer 
will be called the Net Purchased Power Cost. Southeastern will 
charge each customer its respective monthly Net Purchased Power Cost 
in equal portions over the next eleven billing months. This 
computation of the pass-through is to begin 11 months before the 
pass-through is implemented. The first bill prepared using this 
method is to include the computations for the previous 11 months.
    Billing Demand:
    The monthly billing demand for any billing month shall be the 
lower of (a) the Customer's contract demand or (b) the sum of the 
maximum 30-minute integrated demands for the month at each of the 
Customer's points of delivery; provided, that, if an allocation of 
contract demand to delivery points has become effective, the 30-
minute maximum integrated demand for any point of delivery shall not 
be considered to be greater than the portion of the Customer's 
contract demand allocated to that point of delivery.
    Contract Demand:
    The contract demand is the amount of capacity in kilowatts 
stated in the contract which the Government is obligated to supply 
and the Customer is entitled to receive.
    Energy Made Available:
    During any billing month in which the Government supplies all 
the Customer's capacity requirements for a particular delivery 
point, the Government will make available the total energy 
requirement of said point. When both the Government and the Progress 
Energy Florida are supplying capacity to a delivery point, each 
kilowatt of capacity supplied to such point during such month will 
be considered to be accompanied by an equal quantity of energy.
    Billing Month:
    The billing month for power sold under this schedule shall end 
at 12:00 midnight on the 20th day of each calendar month.
    Conditions of Service:
    The customer shall, at its own expense, provide, install, and 
maintain on its side of each delivery point the equipment necessary 
to protect and control its own system. In so doing, the 
installation, adjustment, and setting of all such control and 
protective equipment at or near the point of delivery shall be 
coordinated with that which is installed by and at the expense of 
the Progress Energy Florida on its side of the delivery point.
    Service Interruption:
    When energy delivered to the Customer's system for the account 
of the Government is reduced or interrupted for one hour or longer, 
and such reduction or interruption is not due to conditions on the 
Customer's system or has not been planned and agreed to in advance, 
the demand charge for the month shall be appropriately reduced.

Wholesale Power Rate Schedule JW-2-F

    Availability:
    This rate schedule shall be available to the Florida Power 
Corporation (or Progress Energy Florida, hereinafter called the 
Company).
    Applicability:
    This rate schedule shall be applicable to electric energy 
generated at the Jim Woodruff Project (hereinafter called the 
Project) and sold to the Company in wholesale quantities.
    Points of Delivery:
    Power sold to the Company by the Government will be delivered at 
the connection of the Company's transmission system with the Project 
bus.
    Character of Service:
    Electric power delivered to the Company will be three-phase 
alternating current at a nominal frequency of 60 cycles per second.
    Monthly Rate:
    The monthly rate for energy sold under this schedule shall be 
equal to 100 percent of the calculated saving in the cost of fuel 
per kWh to the Company determined as follows:
[GRAPHIC] [TIFF OMITTED] TN13SE11.009


[Computed to the nearest $0.00001 (1/100mill) per kWh]
Where:

Fm = Company fuel cost in the current period as defined in Federal 
Power Commission Order 517 issued November 13, 1974, Docket No. R-
479.
Sm = Company sales in the current period reflecting only losses 
associated with wholesale sales for resale. Sale shall be equated to 
the sum of (a) generation, (b) purchases, (c) interchange-in, less 
(d) inter-system sales, less estimated wholesale losses (based on 
average transmission loss percentage for preceding calendar year).

    Determination of Energy Sold:
    Energy will be furnished by the Company to supply any excess of 
Project use over Project generation. Energy so supplied by the 
Company will be deducted from the actual deliveries to the Company's 
system to determine the net deliveries for energy accounting and 
billing purposes. Energy for Project use shall consist of energy 
used for station service, lock operation, switchyard, village 
lighting, and similar uses.
    The on-peak hours shall be the hours between 7:00 a.m. and 11:00 
p.m., Monday through Sunday, inclusive. Off-peak hours shall be all 
other hours.
    All energy made available to the Company shall, to the extent 
required, be classified as energy transmitted to the Government's 
preference customers served from the Company's system. All energy 
made available to the Company from the Project shall be separated on 
the basis of the metered

[[Page 56412]]

deliveries to it at the Project during on-peak and off-peak hours, 
respectively. Deliveries to preference customers of the Government 
shall be divided on the basis (with allowance for losses) of 77 
percent being considered as on-peak energy and 23 percent being off-
peak energy. Such percentages may by mutual consent be changed from 
time to time as further studies show to be appropriate. In the event 
that in classifying energy there is more than enough on-peak energy 
available to supply on-peak requirements of the Government's 
preference customers but less than enough off-peak energy available 
to supply such customers off-peak requirements, such excess on-peak 
energy may be applied to the extent necessary to meet off-peak 
requirements of such customers in lieu of purchasing deficiency 
energy to meet such off-peak requirements.
    Billing Month:
    The billing month under this schedule shall end at 12:00 
midnight on the 20th day of each calendar month.
    Power Factor:
    The purchaser and seller under this rate schedule agree that 
they will both so operate their respective systems that neither 
party will impose an undue reactive burden on the other.

[FR Doc. 2011-23356 Filed 9-12-11; 8:45 am]
BILLING CODE 6450-01-P