# Presentation: 779749

## CENTRAL ARIZONA PROJECT

- PHOENIX, ARIZONA
- JULY 22, 2005

- CENTRAL ARIZONA PROJECT

## Public Information Forum

- Central Arizona Project
- Transmission Service Rate Process

- JULY 22, 2005
- Welcome Introduction
- Rate Activity Schedule
- Rate Methodologies
- Investments
- Operation & Maintenance
- Rate Design
- Next Steps/Questions

## Rate Activity Schedule

- Central Arizona Project

- Published Federal Register Notice        July 1, 2005
- Informal Customer Meeting                July 12, 2005
- Public Information Forum                   July 22, 2005
- Public Comment Forum                      August 22, 2005
- Close of Comment Period                   September 29, 2005
- Rate Order to Administrator              October 22, 2005
- Rate Order to Secretary                    Administrator Approval
- Rates Effective                                January 1, 2006

## Central Arizona Project (CAP)Brief History

- CAP Authorized by Colorado River Basin Project Act
- Act approved for comprehensive development of Colorado River water resources
- CAWCD project use beneficiary of CAP
- CAP transmission system designed/built to be fully integrated part of Federal system

## Central Arizona Project

- Western operates & maintains CAP transmission lines & substations
- Western markets transmission capacity in excess of CAP pumping loads & sets rate for transmission service
- Existing rate of $9.83 per kW per year set in 2001 – expires 12/31/2005

## Central Arizona Project

- Transmission Service Rate
- Process

-   Firm Point-to-Point Transmission Service
-   Non Firm Point-to-Point Transmission Service
-   Network Integration Transmission Service (NITS)

## Rate Formulae

- Firm Point-To-Point Transmission Service
- Western seeking approval for a formula rate
- Yearly rate equal to the Annual Transmission Revenue Requirement (ATRR) divided by the average contract rate of delivery
- Based on current data, rate = $8.74 per kW per year
- Monthly rate (charged on bills) equal to yearly rate divided by 12, rounded to the nearest cent
- Rate will be reviewed annually using 5 year evaluation period to determine adequacy

## Rate Formulae

- Nonfirm Point-To-Point Transmission Service
- Determined as a derivative of the yearly firm point to point transmission rate.
- Billed on an hourly basis
- Equal to yearly Firm Point to Point Transmission rate, divided by 8,760, divided by .60 multiplied by 1000 and rounded to two decimal places.
- Calculation gives current maximum rate of 1.66 mills/kWh
- Changes in firm point to point rate will result in changes to the non firm rate

## Rate Formulae

- Network Integration Transmission Service (NITS)
- Difference from firm point to point:  customer pays for use at time of system peak rather than reserving (and paying for) a transmission path
- Formula Rate: Monthly Charge = Transmission Customer’s Load-Ratio Share   x  (Revenue Requirement / 12)
- Calculation of Load-Ratio Share (LRS):
- Identify system peak hour
- Determine NITS customer’s total delivery for peak hour
- Determine system load at peak hour
- Use 12 CP = sum of  customers’ network delivery averaged over 12 months
- LRS = 12 CP divided by average system load at peak

## Revenue Requirements

-  Capital Investment Costs
-  Operation and Maintenance Costs
-  Other Costs

## Transmission Capital Investment Repayment

## Operation and Maintenance Budget Projections

## Annual Average Estimated  Costs

- for Cost Evaluation Period FY 2006 to FY 2010

## Rate Design

- Formula Rate – Net average annual costs for 5-year cost evaluation period divided by 5-year average contract rate of delivery (CROD)
- Total estimated costs for 2006-2010 evaluation period = $7,337,326.4
- CROD estimated 5-year average = 839,869 kW
- Resulting rate:	$8.74 per kW per year
- 				$0.73 per kW per month
- 				$0.17 per kW per week
- 				$0.02 per kW per day

## Next Steps/Questions

- Public Comment Forum 8/22/05
- Close of Comment Period 9/29/05
- Rates Effective 1/1/06
- Questions/Comments???