[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Notices]
[Pages 30451-30452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12888]


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DEPARTMENT OF ENERGY

Southeastern Power Administration


Cumberland System of Projects

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of proposed rates, public forum, and opportunities for 
public review and comment.

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SUMMARY: Southeastern Power Administration (Southeastern) proposes to 
revise existing schedules of rates and charges applicable to the sale 
of power from the Cumberland System of Projects effective for a one-
year period, October 1, 2015, through September 30, 2016. Interested 
persons may review the rates and supporting studies and submit written 
comments. Southeastern will evaluate all comments received in this 
process.

DATES: Written comments are due on or before August 26, 2015. A public 
information and comment forum will be held at 2:00 p.m., on June 30, 
2015. Persons desiring to attend the forum should notify Southeastern 
at least seven (7) days before the scheduled forum date. Persons 
desiring to speak at the forum should notify Southeastern at least 
three (3) days before the scheduled forum date, so that a list of forum 
participants can be prepared. Others may speak if time permits.

ADDRESSES: The forum will be held at: The Inn at Opryland, 2401 Music 
Valley Drive, Nashville, TN 37214-1002. Written comments should be 
submitted to: Administrator, Southeastern Power Administration, 
Department of Energy, 1166 Athens Tech Road, Elberton, GA 30635-6711.

FOR FURTHER INFORMATION CONTACT: Virgil G. Hobbs III, Southeastern 
Power Administration, Department of Energy, 1166 Athens Tech Road, 
Elberton, GA 30635-6711, (706) 213-3800.

SUPPLEMENTARY INFORMATION: 
    Background of Existing Rates: The existing schedules of rates and 
charges applicable to the sale of power from the Cumberland System of 
Projects are effective through September 30, 2015. On December 22, 
2011, the Federal Energy Regulatory Commission (FERC) confirmed and 
approved on a final basis, Wholesale Power Rate Schedules CBR-1-H, CSI-
1-H, CEK-1-H, CM-1-H, CC-1-I, CK-1-H, CTV-1-H, CTVI-1-A, and 
Replacement-3 applicable to Cumberland System of Projects power for a 
period ending September 30, 2013 (137 FERC ] 62,249). On July 10, 2013, 
the Deputy Secretary approved an extension of the rate schedules to 
September 30, 2015 (78 FR 42764).
    Operational Impact of Dam Safety Issues: In February 2007, the U.S. 
Army Corps of Engineers (Corps) lowered pool levels at the Wolf Creek 
and Center Hill Projects to reduce the risk of imminent failure of the 
dams due to seepage issues. At that time the Corps also began the 
process of mitigating the seepage issues at the Wolf Creek and Center 
Hill Projects. Under normal pool levels, the marketing policy for the 
Cumberland System provides peaking capacity, along with 1500 or 1800 
hours of energy annually with each kilowatt of capacity, to customers 
outside the Tennessee Valley Authority (TVA) transmission system. All 
remaining energy is scheduled by TVA for the benefit of customers 
inside the TVA system. As a consequence of lowered pool levels due to 
dam repairs, Southeastern was not able to provide peaking capacity and 
firm energy to the outside customers due to operational restrictions. 
Southeastern implemented an Interim Operating Plan for the Cumberland 
System to provide these customers with energy that did not include 
capacity.
    In March 2014, the Corps lifted operating restrictions on the Wolf 
Creek Project. The operating restrictions on the Center Hill Project 
remain in effect. As a consequence, Southeastern implemented a Revised 
Interim Operating Plan that provides reduced capacity and schedulable 
energy to the outside customers.

[[Page 30452]]

    Repayment Study: Existing rate schedules are predicated upon an 
August 2011 repayment study and other supporting data contained in FERC 
docket number EF11-13-000. The annual revenue requirement in this study 
is $59,600,000. An updated repayment study, dated January 2015, 
indicates rates are not adequate to recover cost increases that have 
been identified and therefore do not meet repayment criteria. The 
additional costs are due to numerous factors. Corps Operation & 
Maintenance expenses have exceeded estimates and current rate schedules 
did not include costs associated with the dam safety repairs of the 
Wolf Creek and Center Hill Projects. The dam repair costs, after the 
application of the Dam Safety Act (Water Resources Development Act of 
1986 section 1203), are a combined $83,200,000. The Corps has also 
provided Southeastern with an updated plan of major replacements for 
the Cumberland System with the total cost of these planned replacements 
at $868,000,000. Also, TVA notified Southeastern on March 5, 2015 they 
will charge $1,009,850 per month for delivery of capacity and energy to 
the outside TVA customers. A revised repayment study demonstrates that 
a revenue increase to $78,500,000 per year will meet repayment 
criteria. The increase in the annual revenue requirement is $18,900,000 
per year, or about 32 percent.
    Applicability of the Dam Safety Act: Under section 1203 of the 
Water Resources Development Act of 1986, otherwise known as the Dam 
Safety Act, Congress capped the percentage of dam repair costs that may 
be assigned to project purposes (such as hydropower) at 15 percent. 
This cap applies to dam modification costs, ``the cause of which 
results from new hydrologic or seismic data or changes in the state-of-
the-art design or construction criteria deemed necessary for safety 
purposes''. 33 U.S.C. 467n(a). When applicable, the Dam Safety Act 
requires that dam safety repair costs be recovered within thirty years 
of completion of the work. If the Dam Safety Act is not applied, 100 
percent of all costs are assigned to project purposes for cost recovery 
but the thirty-year cost recovery requirement does not attach.
    Southeastern continues to discuss, analyze and seek guidance on the 
issue from other relevant agencies.
    Proposed Rates: Southeastern is proposing three rate scenarios per 
rate schedule. All of the rate scenarios have an annual revenue 
requirement of $78,500,000. This annual revenue requirement was 
calculated using the lower bound of possible costs associated with the 
Wolf Creek and Center Hill Dam repairs: 15 percent assigned to project 
purposes and recovered within thirty years of completion, an amount 
that may be adjusted upward pending final determination of the Dam 
Safety Act's applicability.
    The first rate scenario includes the rates necessary to recover 
costs under the Revised Interim Operating Plan. Under this scenario, 
the capacity rate at the TVA border is $2.28 per kilowatt per month and 
the energy charge is 14.79 mills per kilowatt-hour. The outside 
customers would pay their portion of the transmission credit provided 
TVA for delivery of capacity and energy to neighboring system 
interconnection points, as agreed by contract between Southeastern and 
TVA. This rate would remain in effect under the Revised Interim 
Operating Plan.
    The second rate scenario would recover cost from capacity and 
energy. The revenue requirement under this alternative would be 
$78,500,000 per year. This scenario would be in effect if Southeastern 
changes the Revised Interim Operating Plan.
    The third rate scenario is based on the original Cumberland 
Marketing Policy. All costs are recovered from capacity and excess 
energy. The rates under this alternative would be as follows:

Cumberland System Rates

Third Scenario--Return to Original Marketing Policy

Inside TVA Preference Customers
Capacity and Base Energy: $3.733 per kW/Month
Additional Energy: 13.914 mills per kWh
Transmission: Pass-through
Outside TVA Preference Customers
(Excluding Customers served through Carolina Power & Light Company or 
East Kentucky Power Cooperative)
Capacity and Base Energy: $3.733 per kW/Month
Additional Energy: 13.914 mills per kWh
Transmission: Monthly TVA Transmission Charge divided by 545,000
Customers Served Through Carolina Power & Light Company
Capacity and Base Energy: $4.249 per kW/Month
TVA Transmission: TVA rate at border as computed above, adjusted for 
DEP delivery.
DEP Transmission: $1.546 per kW/Month
(As of 2/1/2015 and provided for illustrative purposes)
East Kentucky Power Cooperative:
Capacity: $1.994 per kW/Month
Energy: 13.914 mills per kWh
    These rates would go into effect once the Corps lifts the 
restrictions on the operation of the Wolf Creek and Center Hill 
Projects and the Revised Interim Operating Plan and Southeastern 
returns to normal operations.
    The referenced repayment studies are available for examination at 
1166 Athens Tech Road, Elberton, Georgia 30635-6711. The Proposed Rate 
Schedules CBR-1-I, CSI-1-I, CEK-1-I, CM-1-I, CC-1-J, CK-1-I, CTV-1-I, 
CTVI-1-B, and Replacement-3 are also available.

    Dated: May 20, 2015.
Kenneth E. Legg,
Administrator.
[FR Doc. 2015-12888 Filed 5-27-15; 8:45 am]
BILLING CODE 6450-01-P