[Federal Register Volume 69, Number 226 (Wednesday, November 24, 2004)]
[Notices]
[Pages 68334-68339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26039]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Southwestern Power Administration


Integrated System Power Rates

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of rate order.

-----------------------------------------------------------------------

SUMMARY: Pursuant to Delegation Order Nos. 00-037.00, effective 
December 6, 2001, and 00-001-00A, effective September 17, 2002, the 
Deputy Secretary has approved and placed into effect on an interim 
basis Rate Order No. SWPA-51, which increases the power rates for the 
Integrated System pursuant to the following Integrated System Rate 
Schedules:

Rate Schedule P-04, Wholesale Rates for Hydro Peaking Power
Rate Schedule NFTS-04, Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service
Rate Schedule EE-04, Wholesale Rate for Excess Energy

    The rate schedules supersede the existing rate schedules shown 
below:

Rate Schedule P-02, Wholesale Rates for Hydro Peaking Power--
(superseded by P-04)
Rate Schedule NFTS-02, Wholesale Rates for Non-Federal
Transmission/Interconnection Facilities Service-- (superseded by NFTS-
04)
Rate Schedule EE-02, Wholesale Rate for Excess Energy--(superseded by 
EE-04)

    The effective period for the rate schedules specified in Rate Order 
No. SWPA-51 is January 1, 2005, through September 30, 2008.

FOR FURTHER INFORMATION CONTACT: Forrest E. Reeves, Assistant 
Administrator, Office of Corporate Operations, Southwestern Power 
Administration, Department of Energy, One West Third Street, Tulsa, 
Oklahoma 74103, (918) 595-6696, <a href="/cdn-cgi/l/email-protection#3b5c5e555e15495e5e4d5e487b484c4b5a155c544d"><span class="__cf_email__" data-cfemail="fb9c9e959ed5899e9e8d9e88bb888c8b9ad59c948d">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Southwestern Power Administration's 
(Southwestern) Administrator has determined, based on the 2004 
Integrated System Current Power Repayment Study, that existing rates 
will not satisfy cost recovery criteria specified in Department of 
Energy Order No. RA 6120.2 and Section 5 of the Flood Control Act of 
1944. The finalized 2004 Integrated System Power Repayment Studies 
(PRSs), indicate that an increase in annual revenue of $8,576,164, or 
7.5 percent, beginning January 1, 2005, will satisfy cost recovery 
criteria for the Integrated System projects. The proposed

[[Page 68335]]

Integrated System rate schedules would increase annual revenues from 
$114,973,800 to $123,549,964, primarily to recover increased 
expenditures in operations and maintenance (O&M) and investment. In 
addition, the PRS indicates the need for an annual increase of $737,300 
in revenues received through the Purchased Power Adder to recover 
increased purchased energy costs. This rate proposal also includes a 
provision to continue the Administrator's Discretionary Purchased Power 
Adder Adjustment, to adjust the purchased power adder annually, of up 
to $0.0011 per kilowatthour as necessary, at his/her discretion, under 
a formula-type rate, with notification to the FERC.
    The Administrator has followed Title 10, Part 903 Subpart A, of the 
Code of Federal Regulations, ``Procedures for Public Participation in 
Power and Transmission Rate Adjustments and Extensions'' in connection 
with the proposed rate schedule. On June 4, 2004, Southwestern 
published notice in the Federal Register, 69 FR 31608, of a 90-day 
comment period, together with a Public Information Forum and a Public 
Comment Form, to provide an opportunity for customers and other 
interested members of the public to review and comment on a proposed 
rate increase for the Integrated System. Both public forums were 
canceled since no one expressed an intention to participate. Written 
comments were accepted through September 2, 2005. Three comments were 
received and are addressed in this rate proposal.
    Information regarding this rate proposal, including studies and 
other supporting material, is available for public review and comment 
in the offices of Southwestern Power Administration, Suite 1400, One 
West Third Street, Tulsa, Oklahoma 74103.
    Following review of Southwestern's proposal within the Department 
of Energy, I approved, Rate Order No. SWPA-51, on an interim basis 
through September 30, 2008, which increases the existing Integrated 
System annual revenue requirement to $123,549,964 per year for the 
period January 1, 2005, through September 30, 2008.

    Dated: November 16, 2004.
Kyle E. McSlarrow,
Deputy Secretary.

Order Confirming, Approving and Placing Increased Power Rate Schedules 
in effect on an Interim Basis

    Pursuant to Sections 302(a) and 301(b) 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 Southwestern 
Power Administration (Southwestern) were transferred to and vested in 
the Secretary of Energy. By Delegation Order No. 0204-108, effective 
December 14, 1983, the Secretary of Energy delegated to the 
Administrator of Southwestern the authority to develop power and 
transmission rates, delegated to the Deputy Secretary of the Department 
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 (FERC) the authority to confirm and approve on a 
final basis or to disapprove rates developed by the Administrator under 
the delegation. Delegation Order No. 0204-108, as amended, was 
rescinded and subsequently replaced by Delegation Orders 00-037.00 
(December 6, 2001) and 00-001-00A (September 17, 2002). The Deputy 
Secretary issued this rate order pursuant to said delegations.

Background

    FERC confirmation and approval of the following Integrated System 
(System) rate schedules was provided in FERC Docket No. EF02-4011-000 
issued October 22, 2003, for the period October 1, 2002, through 
September 30, 2006:

Rate Schedule P-02, Wholesale Rates for Hydro Peaking Power--
(superseded by P-04)
Rate Schedule NFTS-02, Wholesale Rates for Non-Federal Transmission/
Interconnection Facilities Service--(superseded by NFTS-04)
Rate Schedule EE-02, Wholesale Rate for Excess Energy--(superseded by 
EE-04)

    Southwestern Power Administration's (Southwestern), Current Power 
Repayment Study (PRS) indicates that the existing rates will not 
satisfy present financial criteria regarding repayment of investment 
within a 50-year period due to cost adjustments to reflect the final 
cost allocation approval for the Harry S. Truman Project plus 
increasing operation and maintenance expenditures and investment for 
both the U.S. Army Corps of Engineers (Corps) and Southwestern. The 
revised PRS indicates that an increase in annual revenues of $8,576,164 
is necessary beginning January 1, 2005, to accomplish repayment in the 
required number of years. Accordingly, Southwestern has prepared 
proposed rate schedules based on the additional revenue requirement and 
the 2004 Rate Design Study.
    Informal meetings were held in April and May 2004 with customer 
representatives to review the repayment and rate design processes and 
present the basis for an approximately 8 percent annual revenue 
increase. In May 2004, Southwestern prepared a proposed 2004 PRS for 
the Integrated System.
    Title 10, Part 903, Subpart A of the Code of Federal Regulations, 
``Procedures for Public Participation in Power and Transmission Rate 
Adjustment,'' has been followed in connection with the proposed rate 
adjustments. More specifically, opportunities for public review and 
comment on proposed System power rates during a 90-day period were 
announced by notice published in the Federal Register June 4, 2004, (69 
FR 31608). A Public Information Forum was scheduled for June 29, 2004, 
in Tulsa, Oklahoma, and a Public Comment Forum was scheduled for July 
27, 2004, also in Tulsa. Both were canceled since no one expressed an 
intention to attend. Written comments were due by September 2, 2004. 
Southwestern mailed copies of the proposed May 2004 PRS and Rate Design 
Studies to customers and interested parties that requested the data, 
for review and comment during the formal period of public 
participation.
    Following conclusion of the comment period on September 2, 2004, 
comments presented during the formal public participation process were 
reviewed. Once all comments were carefully evaluated and responded to, 
the 2004 PRS and Rate Design Studies were completed. Changes were made 
to the 2004 PRS to reflect final audited financial data for FY 2003 and 
to reflect refinements in cost estimates. The studies were finalized in 
September 2004. The Administrator decided to submit the rate proposal 
for interim approval and implementation. The comments resulting from 
the public participation process and responses, as developed by 
Southwestern's staff, are contained in this Rate Order.

Discussion

General

    The existing rate schedules developed in the 2002 Integrated System 
PRS were the basis for revenue determination in the September 2004 
Integrated System Current PRS. The Current PRS indicates that existing 
rates are insufficient to produce the annual revenues necessary to 
accomplish repayment of the capital investment as required by Section 5 
of

[[Page 68336]]

the Flood Control Act of 1944 and Department of Energy (DOE) Order No. 
RA 6120.2.
    A Revised PRS was prepared based on $8,576,164 of additional annual 
revenue beginning January 1, 2005, to satisfy repayment criteria.
    In Southwestern's 2004 Rate Proposal, two noteworthy issues are 
described in detail. The issues are: (1) the final approval of the 
Harry S. Truman (Truman) project cost allocation, and (2) the rate 
design procedures for implementing the revenue increase.

Harry S. Truman Final Cost Allocation

    The final approval of the Truman cost allocation was issued by the 
Corps on May 3, 2003. Estimates for the cost allocation adjustments are 
included in this PRS. The Corps will make adjustments to Operation and 
Maintenance Expenses, Interest and Investment to reflect the change in 
joint-use percentages. The Corps has indicated that adjustments will be 
made to the Corps' FY 2004 power reports and reflected on their FY 2004 
financial statements, which will be reviewed and certified by the 
auditors. The adjustments will then be included in the historical 
actual data in the 2005 PRS.

Change to Rate Design Procedures

    Several customers requested Southwestern to consider assigning the 
revenue increase to the peaking energy rate in lieu of the capacity 
rate. This alternative was requested to help some customers pass on the 
increased costs from Southwestern as a fuel cost adjustment to their 
customers without the need for a formal rate increase. Southwestern 
presented proposed alternative rate designs that might meet the 
customers' needs, while at the same time meeting Southwestern's 
repayment requirements together with the most recent rate design 
process. The customers that attended a meeting at which Southwestern 
made this presentation reached a consensus that they would prefer that 
Southwestern submit the rate design incorporating the changes in the 
energy rate in the proposed rate filing. The change in the rate design 
resulted in little, if any, impact on customers as compared with the 
most recent rate design process.
    Rates were designed to recover the additional revenue requirements. 
The monthly demand charge for the sale of Federal hydroelectric power 
has increased. The energy charge was separated into a peaking energy 
charge and a supplemental energy charge, both of which reflected 
increases over the current base energy rate. The transformation charge, 
though paid by a few customers having 69 kV and below deliveries, has 
increased and affects revenues as well. In addition, transmission 
charges for non-Federal, firm service have increased. The increases to 
both transformation and transmission charges are due to including 
projected additions and replacements to Southwestern's aging 
transmission facilities since the last rate change.
    In accordance with FERC's Order No. 888, Southwestern will continue 
charging separately for five ancillary services and offering network 
transmission service.
    In accordance with FERC's Order No. 888, Southwestern will continue 
charging separately for five ancillary services and offering network 
transmission service. Southwestern's rate design has separated the five 
ancillary services for all transmission service. Two ancillary 
services, Scheduling, System Control and Dispatch Service together with 
Reactive and Voltage Support Service, are required for every 
transmission transaction. These charges are also a part of the capacity 
rate for Federal power. This is consistent with Southwestern's long-
standing practice of charging for the sale and delivery of Federal 
power in its Federal demand charge. The three remaining ancillary 
services will be made available to any transmission user within 
Southwestern's control area, including Federal power customers. The 
rate schedules for Peaking Power and Non-Federal Transmission Service 
reflect these charges. Network transmission service is provided to 
those, also within Southwestern's control area, who request the 
service, but for non-Federal deliveries only, and who contracted with 
Southwestern for this service prior to the Southwest Power Pool 
offering Network Service. The rate for and application of this service 
are identified in the Non-Federal Transmission/ Interconnection 
Facilities Service Rate Schedule, NFTS-04.
    With respect to the Purchased Power Adder (Adder), Southwestern is 
proposing, as in all previous proposals beginning with the 1983 
implementation of the purchased power rate component, that the Adder be 
set equal to the current average long-term purchased power rate 
requirement. As shown in the Rate Design Study, the amount is 
determined by dividing the estimated total average direct purchased 
power costs by Southwestern's total annual contractual 1200-hour 
peaking energy commitments to the customers (exclusive of contract 
support arrangements). In this rate proposal, the resulting Adder is 
$0.0028 per kWh of peaking energy. The total revenue created through 
application of this Adder would enable Southwestern to cover its 
average annual purchased power costs.

Comments and Responses

    The Southwestern Power Administration (Southwestern) responded to 
numerous questions to which responses were provided during the public 
participation period which are included in the background information. 
In addition, Southwestern received comments from three entities during 
the public participation process. Those comments and Southwestern's 
responses are summarized into five general areas of concern, and are as 
follows:

Control Costs

Comments

    Southwestern and the Corps should schedule future needed work so as 
not to cause a rate increase by doing all the work in the same fiscal 
year. The commenter suggests that the big projects be leveled out over 
time to achieve this end.

Response

    Southwestern agrees with the commenter and will make every effort 
to assure that its forecasts of future needed work represent what 
Southwestern will be able to achieve in a particular year. Southwestern 
has coordinated future Corps activities with a joint Corps/
Southwestern/Customer Group to assure that the Corps levels out its 
large projects, if practical, and includes in each year's projections 
no more than what it believes it will be able to accomplish in that 
year. Balancing the need to ensure that the hydroelectric facilities 
are in good serviceable condition and the cost of keeping those 
facilities in that condition is an on-going concern continually 
monitored by the two agencies. Southwestern supports performance of 
large maintenance efforts in phases where feasible. Further, by the 
nature of the power repayment study process, large project costs 
incurred in any year (except the last year of the Cost Evaluation 
Period (CEP)) would have little effect on the need for a rate increase. 
Southwestern is careful to avoid incorporating such cost variations in 
the last year of the CEP.

Unfunded Retirement, Health, and Life Insurance Benefits

Comments

    One commenter acknowledges that inclusion of ``unfunded'' Civil 
Service

[[Page 68337]]

Retirement System (CSRS)/Health/Life Insurance Benefits as a cost in 
Southwestern's rates was raised in Southwestern's 2002 rate case before 
the FERC. However, the commenter states that they will continue to 
raise this issue until all federal agencies that are self-supporting 
pay for these future funding shortfalls in the same manner as the Power 
Marketing Administrations. Another commenter does not oppose the 
inclusion of ``unfunded'' CSRS costs in the rates, but believes that 
Southwestern should: (1) Properly account for the additional interest 
effects of the revenues collected for future retirements; (2) credit 
Southwestern's balance to be repaid with compounded interest from the 
collected funds; and (3) not repay investments without consideration of 
customer deposits.

Response

    The Federal Accounting Standards Advisory Board issued Statement of 
Federal Financial Accounting Standards (SFFAS) <greek-i>5 (September 
1995) which provides guidance on how to determine and handle accounting 
treatment of these post retirement costs. In FY1998 Southwestern began 
recording values for the post retirement benefits, based on cost 
factors provided by the Office of Personnel Management (OPM). OPM 
provides, annually, cost factors for computing these unfunded post 
retirement expenses in three areas; pensions, health insurance and life 
insurance.
    OPM's actuarial calculations are based in large measure on its 
assumptions about the future. Both economic (inflation, interest rates, 
and future salary levels) and demographic (e.g., rates of retirement, 
mortality, and separation) assumptions are included in the 
calculations.
    SFFAS <greek-i>5 (paragraph 59) states, ``For pension and other 
retirement benefits, the expense is recognized at the time the 
employees' services are rendered.''
    SFFAS <greek-i>5 (paragraph 74) states, ``The Federal employer 
entity should recognize a pension expense in its financial report that 
equals the service cost. Service cost is defined as the actuarial 
present value of benefits attributed by the pension plan's benefit 
formula to services rendered by employees during an accounting period. 
The term is synonymous with normal cost.''
    Financial Accounting Standards Interpretation Number 4; Accounting 
for Pension Payments in Excess of Pension Expense: Changes in normal 
costs due to re-estimates of demographic and economic assumptions 
should be accounted for by the recording entity. The effect of the 
change should be recognized in current and future years.
    OPM takes an annual snap shot of what the normal cost would be to 
determine the uncaptured (unfunded) post retirement costs. This process 
involves a review of actuarial data for both retirees and current 
employees, with the retirement cost factor only being applied to 
current Federal employees in the CSRS retirement system. The unfunded 
amounts for health and life apply to all current employees.
    This post retirement cost is an annual cost of operations and is 
recorded as part of each agency's annual operation and maintenance 
cost. It is not an expense deferred to a future period, as Paragraph 59 
of SAFFAS <greek-i>5 clearly defines it as a current year cost. It is 
recorded as such in Southwestern's financial records.
    Southwestern agrees with the comment that it should properly 
account for the additional interest effects of the revenues collected 
and believes that we are currently doing so. As stated in the 2002 
Integrated System rate case, Southwestern's existing procedure imputes 
an interest credit at current year interest rates on all revenues 
received--which would include revenues received to repay CSRS costs. 
The effect of the interest credit carries throughout the entire 
repayment period. Likewise, annual costs, such as the unfunded costs at 
issue here, will also incur an interest charge. Regarding the issue of 
applying revenues received for CSRS expenses to Southwestern's debt, 
the application of revenues is specified by DOE Order 6120.2 (paragraph 
8c(3)) which states ``Annual revenues will be first applied to the 
following recovery of costs during the year in which they occurred: 
operation and maintenance (O&M), purchased and exchanged power, 
transmission service and other, and interest expense and any 
appropriation amortization of revenue bonds. Remaining revenues are 
available for amortization * * *'' Therefore, Southwestern applies its 
revenues received to cover the CSRS expenses (a current year cost) 
before it applies any revenue toward the amortization of the Federal 
investment.

Increased Corps O&M Expenses

Comments

    Commenters state that the Corps' expenses continue to spiral upward 
annually--unchecked and that Southwestern should obtain information 
from the Corps that would support the projected O&M expenses, not just 
rely on unexplained assurances that the O&M is justified.

Response

    Projections for Corps O&M are developed by the Corps and provided 
to Southwestern annually. The Corps makes projections of its base O&M 
costs using historical information and planning documents, and also 
includes projections for large maintenance items for each of the 
projects that they expect to complete. These projections are made in 
current year dollars and do not include inflation. Southwestern reviews 
this information, questioning the Corps where inconsistencies seem to 
occur, clarifying its understanding of the cost estimates, and 
adjusting the estimates to future year dollars based on the Gross 
Domestic Product Index to incorporate inflationary expectations.
    The Corps' base O&M expenses are largely related to salaries. 
During recent years, all Federal employees have received approximately 
a 4 percent increase in salaries annually, together with the increased 
costs of benefits incurred for these employees. These personnel costs 
are included in the base estimates for O&M. These base estimates, 
together with the large maintenance items have resulted in actual 
increased O&M costs for the Corps. Although the Corps has historically, 
in total, been fairly accurate, its projections for O&M costs for the 
past four years have been less than what was recorded as expended on 
its financial statements. The Corps has confirmed that the past few 
years' projections were based on anticipated reductions in funding, but 
realized it was underestimating and has been increasing its estimates 
to better reflect its expected expenditures. Southwestern agrees with 
the Corps that the increased estimates of O&M costs better reflect its 
expenditures. The Corps' O&M costs are not anticipated to decrease so 
long as all phases of project rehabilitations and a backlog of 
maintenance remain to be completed on the projects.
    Southwestern has no oversight authority with regard to Corps 
expenditures for O&M activities, but is responsible for repaying the 
Corps' power-related costs pursuant to the Flood Control Act of 1944. 
The Corps is responsible for managing their organization. Southwestern 
agrees that such costs should be prudently and timely incurred at 
reasonable levels consistent with sound business principles. 
Southwestern has inquired further of the Corps and has been advised 
that the Corps believes that its FY 2004 O&M estimates fairly represent

[[Page 68338]]

the minimum expenditure level expected for the projects' O&M and that 
this level of expenditure is expected to be reflected on its financial 
statements. The Corps believes that its internal controls, accounting 
system reviews, audits and funding procedures effectively provide the 
needed level of justification, consistency and control of its O&M 
expenditures.

Isolated Projects and Bundled Rates

Comment

    One Commenter stated the belief that the customers who take power 
from Narrows, Denison and Whitney pay bundled rates, without receiving 
any benefit from Southwestern's transmission system. These customers 
pay other providers for the same services and should receive a credit 
from Southwestern for incurring the extra costs that a typical 
Southwestern customer does not pay. These customers agree with paying 
Southwestern for the services they receive, but do not believe they 
should be paying for transmission and ancillary services that they do 
not use. In addition, they believe they should receive credit for 
incurring costs that the typical Southwestern customer does not.

Response

    Southwestern's position on this issue has not changed from its 1997 
and 2002 Integrated System rate package responses. Southwestern's sales 
of Federal power and energy are based on a ``postage-stamp'' type rate, 
which is based on the financial integration of all the projects 
marketed under the Integrated System, as well as various components of 
Southwestern's transmission system. The capacity rate for all Federal 
power customers includes a transmission component and the two required 
ancillary services. The transmission component of this rate has been 
set to assure that Southwestern charges itself the same rates it 
charges for the use of the transmission system for wheeling non-Federal 
power.
    The customers who receive the total output of specific Corps 
projects that are presently electrically isolated from Southwestern's 
primary interconnected system requested, at the time of their contract 
renewal, financial integration of such projects into the Integrated 
System to receive certain benefits, including lower costs. Such 
customers receive a number of benefits from their project purchases 
that other Federal customers do not, such as overload capacity, 
condensing, greater scheduling flexibility, and an exclusion from 
paying the Purchased Power Adder because of their obligation to meet 
Southwestern's 1200 hour minimum delivery requirement. Such projects 
also include components of Southwestern's transmission system and 
switchyard facilities used to deliver power and energy from the dams, 
and the costs of such facilities are recovered under the Integrated 
System rates. Revenues from all sales within the Integrated System are 
applied toward repayment of all Federal investment for all projects, 
regardless of their electrical integration status.
    Southwestern is not required by FERC Order No. 888 or Order No. 
2000 to offer unbundled services to its customers. Section 5 of the 
Flood Control Act of 1944 sets forth the statutory requirements for the 
sale and delivery of Federal power and energy. Furthermore, based on 
DOE policy, ``each of the PMAs that own transmission facilities will 
publish generally applicable open access wholesale transmission tariffs 
and will take service itself under such tariffs. The tariffs will 
include rates, terms, and conditions, and will offer transmission 
services, including ancillary services, to all entities eligible to 
seek a transmission order under section 211 of the Federal Power Act * 
* *'' Southwestern has complied with this policy in separating its non-
Federal transmission service and to provide for ancillary services.
    There is no overriding factor that compels Southwestern to change 
its previous determination that those customers who are presently 
electrically isolated from Southwestern's primary interconnected system 
do, in fact, derive benefit from the projects themselves and the 
transmission system and related facilities, and the power rate charged 
to the customers reflects such benefits. The parties expressing these 
concerns voluntarily and knowingly entered into long-term contractual 
arrangements to receive the benefits of these projects at integrated 
system rates. Based on prior FERC orders, we believe it is 
inappropriate for the parties again to seek, through the rate 
development process, to overturn what was done by their request and for 
their benefit through mutually agreeable bilateral contracts.

Alternative Rate Design

Comment

    A commenter has stated that an alternative rate design was adopted 
by Southwestern without informed customer input.

Response

    Several customers asked Southwestern to consider assigning the 2004 
Integrated System revenue increase to the peaking energy rate in lieu 
of the capacity rate. The requested action was intended to help some 
customers pass on the increased costs from Southwestern through their 
fuel cost adjustments without having to formally increase their rates. 
Southwestern presented proposed alternative rate designs that might 
meet the customers' needs and at the same time meet Southwestern's 
repayment requirements, together with the most recent rate design 
process, at a special meeting held several weeks after the request. 
Many of the customers and a representative of the commenter were in 
attendance. The attendees reached a consensus that they would prefer 
that Southwestern submit the alternative rate design currently in the 
proposed rate filing. All customers and interested parties had a formal 
90-day public comment period in which to review the proposed rate 
filing and provide comments. Only one commenter expressed any 
opposition to the proposed rate design based on the increased costs to 
them. Several customers verbally indicated their appreciation of the 
consideration of the customer request by Southwestern.
    Because of the commenter's concern regarding increased costs to 
customers as a result of the proposed rate design, Southwestern 
reviewed the proposed rate design and determined that in separating the 
base energy rate between peaking energy and supplemental energy, some 
of the costs associated with the supplemental energy rate were 
incorrectly assigned to the peaking energy rate. As a result, the rates 
were adjusted to more accurately reflect the appropriate cost 
assignment. Southwestern then estimated the financial impacts to the 
customers and determined that the currently proposed rate design will 
meet Southwestern's repayment requirements and not cost the customers 
and, in particular, the commenter, any more than what it would have 
cost them under the previous rate design.

Other Issues

    Other issues are discussed in the Administrator's Record of 
Decision.

Availability of Information

    Information regarding this rate proposal, including studies, 
comments and other supporting material, is available for public review 
and comment in the offices of Southwestern

[[Page 68339]]

Power Administration, One West Third Street, Tulsa, OK 74101.

Administrator's Certification

    The September 2004 Revised Power Repayment Study indicates that the 
increased power rates will repay all costs of the Integrated System 
including amortization of the power investment consistent with the 
provisions of Department of Energy Order No. RA 6120.2. In accordance 
with Delegation Order No. 00-037.00, December 6, 2001, and Section 5 of 
the Flood Control Act of 1944, the Administrator has determined that 
the proposed System rates are consistent with applicable law and the 
lowest possible rates consistent with sound business principles.

Environment

    The environmental impact of the proposed System rates was evaluated 
in consideration of DOE's guidelines for implementing the procedural 
provisions of the National Environmental Policy Act and was determined 
to fall within the class of actions that are categorically excluded 
from the requirements of preparing either an Environmental Impact 
Statement or an Environmental Assessment.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me the Deputy Secretary of Energy, I hereby confirm, approve and place 
in effect on an interim basis, effective January 1, 2005, the following 
Southwestern Integrated System Rate Schedules, which shall remain in 
effect on an interim basis through September 30, 2008, or until the 
FERC confirms and approves the rates on a final basis.

    Dated: November 6, 2004.
Kyle E. McSlarrow,
Deputy Secretary.
[FR Doc. 04-26039 Filed 11-23-04; 8:45 am]
BILLING CODE 6450-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>