[Federal Register Volume 76, Number 44 (Monday, March 7, 2011)]
[Notices]
[Pages 12354-12355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5047]


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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 2-year 
period, October 1, 2011, through September 30, 2013. 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 June 6, 2011. A public 
information and comment forum will be held at 10 a.m., May 3, 2011. 
Persons desiring to attend the forum should notify Southeastern at 
least seven (7) days before the forum is scheduled. Persons desiring to 
speak at the forum should notify Southeastern at least three (3) days 
before the forum is scheduled, so that a list of forum participants can 
be prepared. Others may speak if time permits. If Southeastern has not 
been notified by close of business on April 26, 2011, that at least one 
person intends to be present at the forum, the forum will be canceled 
with no further notice.

ADDRESSES: The forum will be held at the Embassy Suites Nashville--at 
Vanderbilt, 1811 Broadway, Nashville, Tennessee 37203 Phone (615) 320-
8899. 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: J. W. Smith, Southeastern Power 
Administration, Department of Energy, 1166 Athens Tech Road, Elberton, 
Georgia 30635-6711, (706) 213-3800.

SUPPLEMENTARY INFORMATION: On May 6, 2009, the Federal Energy 
Regulatory Commission (FERC) confirmed and approved on a final basis, 
Wholesale Power Rate Schedules CBR-1-G, CSI-1-G, CEK-1-G, CM-1-G, CC-1-
H, CK-1-G, and CTV-1-G applicable to Cumberland System of Projects 
power for a period ending September 30, 2013 (127 FERC 62,115). On May 
17, 2010 Rate Schedule CTVI-1 was approved by the Administrator, 
Southeastern Power Administration, for a period ending September 30, 
2013.
    Discussion: The marketing policy for the Cumberland System of 
Projects provides peaking capacity, along with 1500 hours of energy 
annually with each kilowatt of capacity, to customers outside the 
Tennessee Valley Authority (TVA) transmission system. Due to 
restrictions on the operation of the Wolf Creek Project imposed by the 
U.S. Army Corps of Engineers as a precaution to prevent failure of the 
dam, Southeastern is not able to provide peaking capacity to these 
customers. Southeastern implemented an Interim Operating Plan for the 
Cumberland System to provide these customers with energy that did not 
include capacity.
    The Corps of Engineers has provided Southeastern with a plan of 
replacements for the Cumberland System. With escalation, the total cost 
of these planned replacements is $843,000,000.
    Existing rate schedules are predicated upon a July 2008 repayment 
study and other supporting data contained in FERC docket number EF08-
3022-000. The revenue requirement in this study is $50,400,000. An 
updated repayment study, dated January 2011, shows that rates are not 
adequate to meet repayment criteria. Energy delivered in the Cumberland 
System in Fiscal Years 2008, 2009, and 2010 was 73 percent of forecast. 
As a result, total revenues were about 19 percent less than forecast. 
In addition, Corps' Operation & Maintenance Expense was about 33 
percent higher than forecast.
    A revised repayment study demonstrates that a revenue increase to 
$64,600,000 per year will meet repayment criteria. The increase in the 
annual revenue requirement is $14,200,000 per year, or about 28 
percent.
    Southeastern is proposing three rate scenarios per rate schedule. 
All of the rate alternatives have a revenue requirement of $64,600,000.
    The first rate scenario includes the rates necessary to recover 
costs under the Interim Operating Plan. These rates are based on 
energy. The rate would be 20.87 mills per kilowatt-hour for all 
Cumberland energy. The customers would pay a ratable share of the

[[Page 12355]]

transmission credit the Administrator of Southeastern Power 
Administration (Administrator) provides the Tennessee Valley Authority 
(TVA) as consideration for delivering capacity and energy for the 
account of the Administrator to points of delivery of Other Customers 
or interconnection points of delivery with other electric systems for 
the benefit of Other Customers, as agreed by contract between the 
Administrator and TVA. This rate would remain in effect as long as 
Southeastern is unable to provide capacity due to the Corps' imposed 
restrictions on the operation of the Wolf Creek Project.
    The second rate scenario would recover cost from capacity and 
energy. The revenue requirement under this alternative would be 
$64,600,000 per year. This scenario would be in effect once the Corps 
raises the lake level at the Wolf Creek and Center Hill Projects. When 
the lake level rises and capacity is available, the capacity would be 
allocated to the customers.
    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: $3.148 per kW/Month
Additional Energy: 10.864 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: $4.614 per kW/Month
Additional Energy: 10.864 mills per kWh
Customers Served through Carolina Power & Light Company
Capacity and Base Energy: $5.252 per kW/Month
Transmission: $1.2959 per kW/Month
(As of 1/1/2011 and provided for illustrative purposes)
East Kentucky Power Cooperative
Capacity: $3.256 per kW/Month
Energy: 10.864 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 Interim Operating Plan becomes unnecessary.
    The referenced repayment studies are available for examination at 
1166 Athens Tech Road, Elberton, Georgia 30635-6711. The Proposed Rate 
Schedules CBR-1-H, CSI-1-H, CEK-1-H, CM-1-H, CC-1-I, CK-1-H, CTV-1-H, 
and CTVI-1-A are also available.

    Dated: February 28, 2011.
Kenneth E. Legg,
Administrator.
[FR Doc. 2011-5047 Filed 3-4-11; 8:45 am]
BILLING CODE 6450-01-P