68334 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

the Commission’s Rules of Practice and 

Procedure (18 CFR 385.211 and 

385.214). Protests will be considered by 

the Commission in determining the 

appropriate action to be taken, but will 

not serve to make protestants parties to 

the proceeding. 

Any person wishing to become a party 

must file a notice of intervention or 

motion to intervene, as appropriate. 

Such notices, motions, or protests must 

be filed in accordance with the 

provisions of Section 154.210 of the 

Commission’s regulations (18 CFR 

154.210). Anyone filing an intervention 

or protest must serve a copy of that 

document on the Applicant. Anyone 

filing an intervention or protest on or 

before the intervention or protest date 

need not serve motions to intervene or 

protests on persons other than the 

Applicant. 

The Commission encourages 

electronic submission of protests and 

interventions in lieu of paper using the 

‘‘eFiling’’ link at http://www.ferc.gov. 

Persons unable to file electronically 

should submit an original and 14 copies 

of the protest or intervention to the 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426. 

This filing is accessible on-line at 

http://www.ferc.gov, using the 

‘‘eLibrary’’ link and is available for 

review in the Commission’s Public 

Reference Room in Washington, DC. 

There is an ‘‘eSubscription’’ link on the 

Web site that enables subscribers to 

receive email notification when a 

document is added to a subscribed 

docket(s). For assistance with any FERC 

Online service, please email 

FERCOnlineSupport@ferc.gov, or call 

(866) 208–3676 (toll free). For TTY, call 

(202) 502–8659.

Magalie R. Salas, 

Secretary.

[FR Doc. E4–3328 Filed 11–23–04; 8:45 am] 

BILLING CODE 6717–01–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory 

Commission 

[Docket No. RP96–312–144] 

Tennessee Gas Pipeline Company; 

Notice of Negotiated Rate 

November 18, 2004. 

Take notice that on November 15, 

2004, Tennessee Pipeline Company 

(Tennessee) tendered for filing a 

negotiated rate arrangement between 

Tennessee and Coral Energy Resources, 

L.P. (Coral). 

Tennessee requests that the negotiated 

rate arrangement between Tennessee 

and Coral become effective on December 

1, 2004, if the Commission issues an 

order on or before November 19, 2004, 

otherwise, Tennessee requests that the 

negotiated rate arrangement become 

effective on January 1, 2005. 

Any person desiring to intervene or to 

protest this filing must file in 

accordance with Rules 211 and 214 of 

the Commission’s Rules of Practice and 

Procedure (18 CFR 385.211 and 

385.214). Protests will be considered by 

the Commission in determining the 

appropriate action to be taken, but will 

not serve to make protestants parties to 

the proceeding. Any person wishing to 

become a party must file a notice of 

intervention or motion to intervene, as 

appropriate. Such notices, motions, or 

protests must be filed in accordance 

with the provisions of Section 154.210 

of the Commission’s regulations (18 CFR 

154.210). Anyone filing an intervention 

or protest must serve a copy of that 

document on the Applicant. Anyone 

filing an intervention or protest on or 

before the intervention or protest date 

need not serve motions to intervene or 

protests on persons other than the 

Applicant. 

The Commission encourages 

electronic submission of protests and 

interventions in lieu of paper using the 

‘‘eFiling’’ link at http://www.ferc.gov. 

Persons unable to file electronically 

should submit an original and 14 copies 

of the protest or intervention to the 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426. 

This filing is accessible on-line at 

http://www.ferc.gov, using the 

‘‘eLibrary’’ link and is available for 

review in the Commission’s Public 

Reference Room in Washington, DC. 

There is an ‘‘eSubscription’’ link on the 

web site that enables subscribers to 

receive e-mail notification when a 

document is added to a subscribed 

docket(s). For assistance with any FERC 

Online service, please email 

FERCOnlineSupport@ferc.gov, or call 

(866) 208–3676 (toll free). For TTY, call 

(202) 502–8659.

Linda Mitry, 

Deputy Secretary.

[FR Doc. E4–3311 Filed 11–23–04; 8:45 am] 

BILLING CODE 6717–01–P

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, 

gene.reeves@swpa.gov.

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

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 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

68336 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

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 jointuse 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 NonFederal 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

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 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) #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 #5 (paragraph 59) states, ‘‘For 

pension and other retirement benefits, 

the expense is recognized at the time the 

employees’ services are rendered.’’

SFFAS #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 #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

68338 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

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 nonFederal 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

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 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

DEPARTMENT OF ENERGY

Southwestern Power Administration 

Sam Rayburn Dam Power Rate 

Schedules

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–52, which increases the power 

rate for the Sam Rayburn Dam Project 

(Rayburn) pursuant to the following 

Sam Rayburn Dam Rate Schedule:

Rate Schedule SRD–04, Wholesale Rates 

for Hydro Power and Energy Sold to Sam 

Rayburn Dam Electric Cooperative, Inc., 

(Contract No. DE–PM75–92SW00215)

The effective period for the rate 

schedule specified in Rate Order No. 

SWPA–52 is January 1, 2005, through 

September 30, 2008.

FOR FURTHER INFORMATION CONTACT: Mr. 

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, 

gene.reeves@swpa.gov.

SUPPLEMENTARY INFORMATION: The 

existing hydroelectric power rate for the 

Rayburn project is $2,013,024 per year. 

The rate was approved on a final basis 

by the Federal Energy Regulatory 

Commission on January 31, 2003, for the 

period October 1, 2002, through 

September 30, 2006. The 2004 Rayburn 

Power Repayment Studies indicate the 

need for an increase in the annual rate 

of $500,676, or 24.9 percent beginning 

January 1, 2005. 

The Administrator, Southwestern 

Power Administration (Southwestern) 

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’’ (Part 903) 

in connection with the proposed rate 

schedule. On July 21, 2004, 

Southwestern published notice in the 

Federal Register, 69 FR 43580, of a 90-

day comment period, together with a 

Public Information Forum and a Public 

Comment Forum, to provide an 

opportunity for customers and other 

interested members of the public to 

review and comment on a proposed rate 

increase for the Rayburn project. Both 

public forums were canceled when no 

one expressed an intention to 

participate. Written comments were 

accepted through October 19, 2004. One 

comment was received from Gillis & 

Angley, Counsellors at Law, on behalf of 

Sam Rayburn Municipal Power Agency 

and Vinton Public Power Authority, 

(organizations within Sam Rayburn Dam 

Electric Cooperative, Inc.) which stated 

that they had no objection to the 

proposed rate adjustment. 

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, One West Third Street, 

Tulsa, Oklahoma 74103. 

Following review of Southwestern’s 

proposal within the Department of 

Energy, I approved Rate Order No. 

SWPA–52, on an interim basis, which 

increases the existing Rayburn rate to 

$2,513,700, per year, for the period 

January 1, 2005, through September 30, 

2008.

Dated: November 16, 2004. 

Kyle E. McSlarrow, 

Deputy Secretary.

[Rate Order No. SWPA–52] 

Order Confirming, Approving and 

Placing Increased Power Rate Schedule 

in Effect on an Interim Basis 

Pursuant to Sections 302(a) and 

301(b) of the Department of Energy 

Organization Act, Pub. L. 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 

The Sam Rayburn Dam Project 

(Rayburn) is located on the Angelina 

River in the State of Texas in the Neches 

River Basin. Since the beginning of its 

operation in 1965, it has been marketed 

as an isolated project, under contract 

with Sam Rayburn Dam Electric 

Cooperative, Inc. (Contract No. DE–

PM75–92SW00215). 

In the FERC Docket No. EF03–4021–

000, issued January 31, 2003, for the 

period October 1, 2002, through 

September 30, 2006, the FERC 

confirmed and approved the current 

annual Sam Rayburn Dam rate of 

$2,013,024.