[Federal Register Volume 76, Number 1 (Monday, January 3, 2011)]
[Notices]
[Pages 127-142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33108]


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DEPARTMENT OF ENERGY

Western Area Power Administration


The Central Valley Project, the California-Oregon Transmission 
Project, the Pacific Alternating Current Intertie, and Path 15 
Transmission--Rate Order No. WAPA-156

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Power, Transmission, and Ancillary Services 
Rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
new and revised formula rates and information for the following: 
Western power, the Central Valley Project (CVP) transmission, the 
California-Oregon Transmission Project (COTP) transmission, the Pacific 
Alternating Current Intertie (PACI) transmission, ancillary services, 
custom product power, and information on Path 15 transmission upgrade. 
In addition to these existing rates for services, Western also is 
proposing to implement two new rates and services: Unreserved Use 
Penalties and Generator Imbalance Services (GI).

[[Page 128]]

    Western is not proposing any changes to its existing formula rate 
methodologies. The proposed rates will provide sufficient revenue to 
pay all annual costs including interest expense, investments, and aid 
to irrigation within the allowable time periods. Western's rate 
brochure providing detailed information on the proposed formula rates 
will be available January 11, 2011, to all interested parties upon 
request.
    The current rates for existing services expire on September 30, 
2011.\1\ If approved, the proposed rates would become effective on 
October 1, 2011, and remain in effect through September 30, 2016, or 
until superseded by another rate schedule. Publication of this Federal 
Register notice begins the formal process for the proposed rate 
adjustments.
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    \1\ See Rate Order No. WAPA-139, 73 FR 48381 (August 19, 2008).

DATES: The consultation and comment period will begin on the date of 
publication of the Federal Register notice and will end April 4, 2011. 
Western will present a detailed explanation of the proposed rates at a 
public information forum. The public information forum date is: January 
25, 2011, 1 p.m. Pacific Standard Time, Folsom, CA.
    Western will accept written comments anytime during the 
consultation and comment period. In addition, Western will accept oral 
and written comments at a public comment forum. The public comment 
forum date is: March 1, 2011, 1 p.m. Pacific Standard Time, Folsom, CA.

ADDRESSES: Send written comments to Mr. Thomas R. Boyko, Regional 
Manager, or Mr. Charles J. Faust, Rates Manager, Sierra Nevada Customer 
Service Region, Western Area Power Administration, 114 Parkshore Drive, 
Folsom, CA 95630-4710, or e-mail comments to <a href="/cdn-cgi/l/email-protection#6d3e233f402b345c5f3f0c19082e0c1e082d1a0c1d0c430a021b"><span class="__cf_email__" data-cfemail="9ccfd2ceb1dac5adaecefde8f9dffdeff9dcebfdecfdb2fbf3ea">[email protected]</span></a>.
    Western will accept written comments anytime during the 
consultation and comment period. Western will post comments it receives 
on Western's Web site at http://www.wapa.gov/sn/marketing/rates/ratesprocess/formalProcess/index.asp. Western must receive written 
comments by the end of the consultation and comment period to ensure 
consideration.
    Western will host both the public information and public comment 
forums at: Lake Natoma Inn, 702 Gold Lake Drive, Folsom, CA 95630-2559, 
telephone number (916) 351-1500.

FOR FURTHER INFORMATION CONTACT: Mr. Charles J. Faust, Rates Manager, 
Sierra Nevada Customer Service Region, Western Area Power 
Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, telephone 
(916) 353-4468, or e-mail <a href="/cdn-cgi/l/email-protection#7f2c312d5239264e4d2d1e0b1a3c1e0c1a3f081e0f1e51181009"><span class="__cf_email__" data-cfemail="f3a0bda1deb5aac2c1a1928796b0928096b384928392dd949c85">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This Federal Register notice initiates the 
formal public process to replace the Federal Energy Regulatory 
Commission's (FERC) approved rate schedules effective beginning January 
1, 2005, ending September 30, 2011.
    The following discussion provides an overview of the proposed 
formula rates and components, including a rate comparison, rate 
recovery, and applicability. Western held 14 public Informal Rate 
meetings beginning June 2008 through April 2010. Based on stakeholders' 
comments and Western's analysis, Western is not proposing any changes 
to existing rate methodologies. Western proposes adding new rate 
schedules for unreserved use penalties and generator imbalance 
services. Western will continue to operate as a Sub-Balancing Authority 
(SBA) under contract with the Sacramento Municipal Utility District, 
who operates the Host Balancing Authority (HBA).
    Prior to the start of each fiscal year (FY), Western will calculate 
and publish an annual Power Revenue Requirement (PRR) to determine the 
total cost of power to be allocated to preference customers. For 
example, by October 1, 2011, Western will publish the PRR for FY 2012, 
which begins October 1, 2011, and ends September 30, 2012. As part of 
the rate development, Western prepares a Power Repayment Study (PRS) 
each FY to determine if revenue will be sufficient to repay, within the 
required time periods, all costs assigned to the commercial power 
function. Repayment criteria are based on legislation and applicable 
policies, including DOE Order RA 6120.2. Generally, the PRR includes 
operation and maintenance (O&M) expenses, purchased power for Project 
Use and First Preference (FP) customers' loads, interest and other 
expenses (including any other statutorily-required costs or charges), 
investment repayment, and the Washoe Project annual PRR that remains 
after project use loads are met. Revenues from project use, 
transmission, ancillary services, and other services are offset against 
expenses in the PRR; and the remainder is collected from Base Resource 
(BR) and FP customers. The PRR is reviewed during March of each year; 
and if such review results in a change of $5 million or more, the PRR 
is adjusted for the remaining 6-month period. The PRR is an estimate of 
revenues and costs including investment and repayment projections from 
the PRS. Any deviation from estimate to actual will increase or 
decrease annual project repayment. Project repayment is measured over 
the long term to ensure repayment is met and to maintain rate 
stability.
    The PRR is allocated to Western's preference customers, namely, FP 
customers based on their FP percentages, and the remaining amount to BR 
customers based on their BR allocation, adjusted for programs, such as, 
hourly exchange. The Trinity River Division Act of 1955 (69 Stat. 719) 
and the Flood Control Act of 1962 (76 Stat. 1173, 1191-1192) accorded 
first preference to CVP power to customers in Trinity, Tuolumne, and 
Calaveras Counties. A BR customer, under the 2004 Marketing Plan, is an 
entity that has executed a BR contract and is allocated a percentage of 
the BR.
    In order for Western to meet the load requirements, beyond 
delivered BR, for Full Load Service (FLS) customers and Variable 
Resource (VR) customers, Western may make supplemental power (SP) 
purchases, pursuant to the Custom Product Power (CPP) rate schedule. 
FLS and VR customers who contract with Western for such service will 
pay all SP costs. FLS customers pay a portfolio management charge 
pursuant to their contract, whereas VR customers pay a scheduling 
charge pursuant to the proposed rate schedule.
    At least annually, Western will publish the CVP transmission rates 
for point-to-point and network integration transmission service, the 
seasonal COTP and PACI transmission rates, and CVP regulation and 
frequency response service rates. Western prepares a detailed cost-of-
service study to determine the costs, by project, that support the 
transfer capability of each transmission system and the costs that 
support the generation capability of the CVP system. Generally, the 
costs allocated through the cost-of-service study for the transmission 
systems include O&M, interest, and depreciation expenses. Western's 
costs for scheduling, system control and dispatch service associated 
with CVP, COTP, and PACI transmission service are included and 
recovered through the respective transmission system's RR. Third-party 
transmission service costs are passed through directly to each 
requesting customer.
    Spinning and supplemental reserves are charged the price consistent 
with the California Independent System Operator's (CAISO) market price 
plus all costs incurred for the sale of these reserves. Customers who 
have a

[[Page 129]]

contractual obligation to provide spinning and supplemental reserves 
and do not fulfill their obligation will be assessed a penalty equal to 
the greater of Western's actual cost or 150 percent of the market 
price. Similarly, for Energy Imbalance (EI) service, customers outside 
of their contractual bandwidth (under delivery) will pay the greater of 
150 percent of the market price or Western's actual cost. Given 
Western's EI customers are and will continue to operate under existing 
agreements, Western will continue its existing rate methodology for EI. 
During the applicable rate period, Western will review FERC Order No. 
890 pro forma approach, as well as Western's existing settlements and 
billing processes and will reconsider a transition to FERC's pro forma 
tariff methodology during Western's next rate process or earlier if 
deemed appropriate.
    Finally, based on the requirements under FERC's Order No. 890, 
Western proposes adding two new rate schedules to be effective during 
the new rate period: Unreserved Use Penalties and GI. Western proposes 
the Unreserved Use Penalties be assessed at 150 percent of the 
effective point-to-point transmission rate when transmission service is 
used and not reserved or when used in excess of reservation. Western 
proposes the GI rate use the same tiered methodology as Western's 
existing and proposed EI service rate and any subsequent changes. Note, 
currently Western has no customers subject to this proposed GI rate.

Information on Path 15 Transmission Upgrade

    The Path 15 Transmission Upgrade was completed in 2005. Western has 
turned over the operational control of Western's Path 15 Upgrade to the 
CAISO. Western maintains the lines and is compensated by Atlantic Path 
15, LLC for the Operation and Maintenance work costs. The CAISO charges 
for use on the Path 15 Upgrade as part of its rates. Western does not 
charge a separate rate for Path 15. Western collects revenues from the 
CAISO under its agreements with the CAISO. Under Amendment No. 48, the 
CAISO remits to Western, wheeling, congestion, and Congestion Revenue 
Rights revenues associated with Western's rights on the Path 15 
transmission.\2\
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    \2\ Amendment No. 48 amended CAISO's tariff to provide 
congestion revenues, wheeling revenues, and firm transmission rights 
auction revenues to entities other than CAISO's Participating 
Transmission Owners, if any such entities fund transmission facility 
upgrades on the CAISO grid. See Federal Energy Regulatory Commission 
Docket No. ER03-407-000.
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Proposed Rate Schedules and Discussion

Proposed Rate Schedule Cv-F13 (Supersedes CV-F12)

Schedule of Rates for Base Resource and First Preference Power
    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by the Sierra Nevada 
Customer Service Region (SNR).
    Applicable: To the BR and FP power customers.
    Character and Conditions of Service: Alternating current, 60 hertz, 
three-phase, delivered and metered at the voltages and points 
established by contract. This service includes the CVP transmission (to 
include reactive supply and voltage control from Federal generation 
sources needed to support the transmission service), spinning reserve 
service, and supplemental reserve service.
    Power Revenue Requirement: Western will develop the PRR prior to 
the start of each FY. The PRR will be divided into two 6-month periods, 
October through March and April through September. A monthly PRR will 
be calculated by dividing each 6-month PRR by six. The PRR for the 
April-through-September period will be reviewed in March of each year. 
The review will analyze financial data from the October-through-
February period, to the extent information is available, as well as 
forecasted data for the March-through-September period. If there is a 
change of $5 million or more, the PRR for the April-through-September 
period will be recalculated. The PRR is allocated to FP and BR 
customers based on the formula rates.

 Example of Power Revenue Requirement Allocation to First Preference and
                              Base Resource
------------------------------------------------------------------------
           Component                     Formula            Allocation
------------------------------------------------------------------------
Annual PRR.....................  .......................     $70,000,000
FP Customer Allocation (Total    $70,000,000 x 5%.......       3,500,000
 FP % = 5%).
Remaining PRR Allocated to BR..  $70,000,000-$3,500,000.      66,500,000
------------------------------------------------------------------------
Note: This example is intended to show the PRR allocation to the
  customer groups and is not adjusted for billing or midyear
  adjustments.

    First Preference Power Formula Rate: The annual FP customer 
allocation is equal to the annual PRR multiplied by the relevant FP 
percentage.
    Component 1:
    [GRAPHIC] [TIFF OMITTED] TN03JA11.024
    

Where:

FP Customer Load = An FP customer's forecasted annual load in 
megawatthours (MWh).
Gen = The forecasted annual CVP and Washoe generation (MWh).
Power Purchases = Power purchases for project use and FP loads 
(MWh).
Project Use = The forecasted annual project use loads (MWh).
MRR = Monthly Power Revenue Requirement.

    Western will develop the FP customer percentage prior to the start 
of each FY. During March of each FY, each FP customer's percentage will 
be reviewed. If, as a result of the review, there is a change in the FP 
customer's percentage of more than one-half of one percent, the 
percentage will be revised for the April-through-September period.
    The percentages in the table below are the maximum percentages for 
each FP customer that will be effective to the MRR during the rate 
period October 1, 2011, through September 30, 2016. The maximum 
percentages were determined based on a critically dry year where there 
are hydrologic conditions that result in low CVP generation and, 
consequently, low levels of BR. An FP

[[Page 130]]

percentage cannot exceed the maximum except in instances where 
individual FP customer percentages increase due to load growth. If 
these maximum percentages are used for determining the FP customer's 
charges for more than 1 year, Western will evaluate their percentage 
from the formula rate versus the maximum percentage and make 
adjustments as appropriate.

   First Preference's Actual Maximum Percentages Effective Rate Period
------------------------------------------------------------------------
                                                Maximum FP customer's
               FP customers                   percentage applied to the
                                                       MRR (%)
------------------------------------------------------------------------
Sierra Conservation Center................                          1.58
Calaveras Public Power Agency.............                          3.81
Trinity Public Utilities District.........                         11.99
Tuolumne Public Power Agency..............                          3.16
                                           -----------------------------
    Total.................................                         20.54
------------------------------------------------------------------------

Below is a sample calculation for an FP customer monthly charge for 
power.

      Example--First Preference Monthly Customer Charge Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Numerator:
  FP Customer Load--MWh.................................          10,000
Denominator:
  Washoe Generation--MWh................................           2,500
  CVP Generation--MWh...................................       3,700,000
  Project Use Load--MWh.................................     (1,200,000)
  Project Use Purchase--MWh.............................          47,000
Calculated Percentage:
  FP Customer Percentage................................           0.39%
Monthly Power Revenue Requirement (MRR).................      $3,333,333
FP Customer Monthly Charge = (FP % x MRR)...............         $13,000
------------------------------------------------------------------------

    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    BR Formula Rate: The annual BR allocation is equal to the annual 
PRR less the annual FP customer allocation.
    Component 1:

BR Customer Allocation = (BR RR x BR %)

Where:

BR RR = BR Monthly Revenue Requirement (RR)
BR % = BR percentage for each customer as indicated in the BR 
contract after adjustments for programs, such as hourly exchange, if 
applicable.

    After the FP customers' share of the annual PRR has been 
determined, the remainder of the annual PRR is recovered from the BR 
customers. The BR RR will be collected in two 6-month periods. For 
October through March, 25 percent of the BR RR will be collected. For 
April through September, 75 percent of the BR RR will be collected.
    A BR RR is calculated by dividing the BR 6-month RR by six. The 
revenues from the sale of surplus BR will be applied to the annual BR 
RR for the following FY.
    An example of a reallocation program is the Hourly Exchange (HE) 
Program. BR customers pay for exchange energy, hourly or seasonally, by 
adjusting the BR percentage that is applied to the BR RR. Adjustments 
to a customer's BR percentage for seasonal exchanges will be reflected 
in the customer's BR contract.
    An illustration of the adjustment to a customer's BR percentage for 
HE energy is shown in the example below.

                                       Example of Base Resource Percentage Adjustments for Hourly Exchange Energy
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             BR % from    Hourly BR = 30   Customer's BR     Customers     BR delivered
                       BR customer                           contract           MWh           > load       receiving HE   (adj'd for HE)   Revised BR %
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Customer A..............................................              20               6               3               0               3            10.0
Customer B..............................................              10               3               0               1               4            13.3
Customer C..............................................              70              21               0               2              23            76.7
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................             100              30               3               3              30           100.0
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    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed

[[Page 131]]

through directly to the relevant customer in the same manner Western is 
charged or credited, the charges or credits will be passed through 
using Component 1 of the formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: Billing for BR and FP power will occur monthly using the 
respective formula rate.
    Adjustment for Losses: Losses will be accounted for under this rate 
schedule as stated in the service agreement.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the RR under this rate schedule will be evaluated on a case-
by-case basis to determine the appropriate treatment for repayment and 
cash flow management.

Rate Comparison

    Comparison of the existing to the proposed RR results in a change 
in costs and not a rate methodology change. The 0.86 percent PRR 
increase is due to an inflationary change to O&M, as well as increased 
interest expense. Those costs are offset by increased transmission 
revenue due to the anticipated completion of assets supporting the 
transmission function. The table below compares the existing RRs (FY 
2011) to the estimated RRs (FY 2012) under the proposed formula rates.

    Comparison of Existing to Proposed Power Revenue Requirement, and Allocation to First Preference and Base
                                               Resource Customers
----------------------------------------------------------------------------------------------------------------
                                                                                  Estimated RRs for
                                                                                     the proposed
                           Service                                Existing RRs       formula rate      Percent
                                                                                    (effective FY     change (%)
                                                                                        2012)
----------------------------------------------------------------------------------------------------------------
PRR..........................................................        $75,751,929        $76,401,847         0.86
FP RR........................................................          3,636,093          3,644,368         0.02
BR RR........................................................         72,115,836         72,757,479         0.89
----------------------------------------------------------------------------------------------------------------

    The table below compares the FP percentages as well as their 
maximum percentages for the two periods.

          First Preference Percentage Comparison, and Actual Maximum Percentages Effective Rate Period
----------------------------------------------------------------------------------------------------------------
                                                          FP percentages               Maximum FP customer's
                                                 --------------------------------  percentage applied to the MRR
                  FP Customers                                                   -------------------------------
                                                   Existing (%)    Estimated (%)   Existing (%)    Estimated (%)
----------------------------------------------------------------------------------------------------------------
Sierra Conservation Center......................            0.37            0.37            1.39            1.58
Calaveras Public Power Agency...................            0.90            0.90            3.49            3.81
Trinity Public Utilities District...............            2.80            2.80            9.21           11.99
Tuolumne Public Power Agency....................            0.73            0.70            3.42            3.16
                                                 ---------------------------------------------------------------
    Total.......................................            4.80            4.76           17.51           20.54
----------------------------------------------------------------------------------------------------------------

    The change in FP percentages is due to changes in generation and FP 
customer loads not a rate methodology change. The increase in FP 
maximum percentage is due to a collective increase in FP customer loads 
not a rate methodology change.
    During the effective rate period, if deemed appropriate, Western 
will reevaluate the FP maximum percentage based on new data.

Rate Recovery and Application

    The formula rates for CVP FP power and BR power are based on a PRR 
that recovers: (1) O&M expense allocated to power; (2) CVP network 
transmission; (3) annual investment and replacement repayment; (4) aid-
to-irrigation costs; (5) interest expense; (6) power purchases for 
firming BR; (7) Washoe project annual costs after project use loads are 
met; (8) other miscellaneous expenses allocated to power, such as, 
settlements, California-Oregon Intertie (COI) path operator costs, 
etc.; (9) the pass through of FERC's or other regulatory body's 
accepted or approved charges or credits; (10) the pass through of the 
HBA's charges or credits; (11) any other statutorily-required costs or 
charges; and (12) any other costs associated with BR or FP power 
service including uncollectible debt.
    Expenses are offset by revenues from project use energy, 
transmission revenue, ancillary service revenue, scheduling 
coordinator, portfolio management and VR charge administrative fees, 
all pass through revenue, and any other miscellaneous revenue.
    The PRR will be allocated first to FP customers based on their 
percentages, subject to the maximum cap, then the remaining amount to 
BR customers based on their BR allocation percentages, adjusted for 
programs, such as, HE if applicable.
    The BR RR will be collected in two, 6-month periods: 25 percent for 
October through March and 75 percent for April through September. 
However, the FP RR is not subject to the 25/75 percent split; and it 
will be collected evenly over a 12-month period.
    The formula rates will be effective at the beginning of each FY and 
reviewed in March of each year. If the March mid-year review reflects a 
change of $5 million or more, the annual PRR will be revised. The FP 
percentages are also reviewed at mid-year. If the mid-year

[[Page 132]]

review reflects a change to a FP customer's percentage of more than one 
half of one percent, that customer's percentage will be revised for the 
remainder of the FY.
    The formula rates apply to CVP BR and FP power customers. The 
estimated rates are subject to change prior to the rates taking effect. 
The rates will be finalized by Western on or before October 1, 2011.

Proposed Formula Rate for Custom Product Power and Effective Rate for 
Variable Resource Schedules

Rate Schedule CPP-2 (Supersedes CPP-1)

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers that contract with Western for CPP.
    To VR customers requesting scheduling for this service. VR 
customers will pay a scheduling charge to recover Western's cost for 
scheduling VR CPP service.
    Character and Conditions of Service: Alternating current, 60 hertz, 
three-phase, delivered and metered at the voltages and points 
established by contract.
    Formula Rate: The formula rate for CPP includes three components:
    Component 1: The customer will pay all costs incurred in the 
provision of CPP. These costs will be passed through to the customer. 
The methodology used to calculate the amount of the pass through will 
be based on the type of funding used to purchase the CPP. The CPP 
includes, but is not limited to, SP and BR firming power. If in the 
event customer advance funding is used to purchase CPP, then allocation 
of surplus CPP sales will be determined based on customer's account 
status.
    If the CPP is funded through appropriations, Federal reimbursable, 
or use of receipts authority, the cost of the CPP is passed through to 
the customer(s) for whom Western has made the purchase. The CPP funded 
through appropriations, Federal reimbursable, or use of receipts 
authority that is surplus to the load requirements of the customer(s) 
will be sold. Proceeds from the sale of surplus CPP funded through use 
of receipts, Federal reimbursable, or appropriations authority will be 
applied to the CPP purchase cost for the customer(s) to the extent 
possible. If the cost of the CPP is fully recovered and proceeds remain 
from the sale of surplus CPP, the remaining proceeds will be used to 
reduce the PRR.
    The table below illustrates the pass through of the CPP costs to 
each customer and the treatment of proceeds from the sale of surplus 
CPP funded through appropriations, Federal reimbursable, or use of 
receipts authority. As shown below, Customers A, B, and C are 
responsible for paying the full costs of the CPP purchase made by 
Western (total CPP RR is $780). The CPP RR of $780 is reduced by the 
sale of 1 MWh at $45, which reduces the CPP RR to $735. Therefore, the 
reduced CPP RR of $735 is prorated to each customer based on the amount 
of CPP purchased on their behalf.

      Example Custom Product Power Cost Recovery With Proceeds From Sales of Surplus Custom Product Power Use of Receipts, Federal Reimbursable, or
                                                                Appropriations Authority
                                         [If Western made a CPP purchase of 13 MW for the hour @ $60/MWh = $780]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Proceeds from
                                                           CPP purchased  CPP USED (MWh)     CPP Costs      Surplus CPP     excess CPP     CPP customer
                                                               (MWh)                                           sold            sales          charges
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer A..............................................               5               5  ..............               0  ..............            $283
Customer B..............................................               4               4  ..............               0  ..............             226
Customer C..............................................               4               3  ..............               1  ..............             226
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total...............................................              13              12            $780               1             $45             735
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
1. Western sold 1 MWh of CPP at $45/MWh = $45.
2. Proceeds from the sale of surplus CPP reduce the CPP Costs prorated based on the amount of CPP purchased.

    Effective October 1, 2011, Western will charge $38.22 per schedule 
per day to cover its administrative costs for procuring and scheduling 
CPP if the customer has not contracted with Western for this type of 
service through other agreements. If the actual number of schedules for 
the month is not available, Western will estimate the number of 
schedules for the month and apply the $38.22 per schedule charge to the 
estimated number of schedules.
    The table below depicts the VR customers charge per schedule for 
the effective rate period.

                                                 Variable Resource Customers Effective Rate Per Schedule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 FY                                        2012             2013             2014             2015             2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
VR Charge Per Schedule.............................................          $38.22           $39.36           $40.54           $41.76           $43.01
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant

[[Page 133]]

customer in the same manner Western is charged or credited to the 
extent possible. If the HBA's costs or credits cannot be passed through 
to the relevant customer in the same manner Western is charged or 
credited, the charges or credits will be passed through using Component 
1 of the formula rate.
    Billing: Billing for CPP and VR customers' scheduling charge occurs 
monthly using the formula rate.
    Adjustments for Losses: All losses incurred for delivery of CPP 
under this rate schedule shall be the responsibility of the customer 
that has contracted for this service.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the RR under this rate schedule will be evaluated on a case-
by-case basis to determine the appropriate treatment for repayment and 
cash flow management.

Rate Comparison

    Effective October 1, 2011, the CPP cost recovery is not changing 
from the existing methodology and remains 100 percent pass through 
under this rate schedule.
    Under the proposed formula rate, Component 1, the VR customer's 
scheduling charge is adjusted to $38.22 per schedule. This is a 23-
percent increase from the January 1, 2005, VR customer's charge of 
$31.07 per schedule. This increase is based on a percentage change in 
O&M from the 2005 rate case through FY 2010. The FY 2013 VR customer's 
charge increases 3 percent each year through FY 2016 to reflect 
inflationary increases. The rate increase is due to inflationary costs 
not a rate methodology change.

Rate Recovery and Application

    The CPP cost recovery methodology is not changing and remains 100 
percent pass through under this rate schedule. The formula rate for CPP 
applies to power supplied by Western to meet a customer's load. The VR 
customer charge is to recover Western's cost for scheduling VR 
customer's CPP service.

Proposed Formula Rate for CVP Transmission

Proposed Rate Schedule CV-T3 (Supersedes CV-T2)

Central Valley Project; Schedule of Rate for Firm and Non-Firm Point-
to-Point Transmission Service
    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving CVP firm and/or non-firm point-
to-point transmission service.
    Character and Conditions of Service
    Transmission service for three-phase, alternating current at 60 
hertz, delivered and metered at the voltages and points of delivery or 
receipt, adjusted for losses, and delivered to points of delivery. This 
service includes scheduling and system control and dispatch service 
needed to support the transmission service.
    Formula Rate: The formula rate for CVP firm and non-firm point-to-
point transmission includes three components:
    Component 1:
    [GRAPHIC] [TIFF OMITTED] TN03JA11.025
    

Where:

CVP TRR = Transmission Revenue Requirement (TRR) is the cost 
associated with facilities that support the transfer capability of 
the CVP transmission system excluding generation facilities and 
radial lines.
TTc = The Total Transmission Capacity is the total transmission 
capacity under long-term contract between Western and other parties.
NITSc = The Network Integration Transmission Service Capacity is the 
12-month average coincident peaks of Network Integrated Transmission 
Service (NITS) customers at the time of the monthly CVP transmission 
system peak. For rate design purposes, Western's use of the 
transmission system to meet its statutory obligations is treated as 
NITS.

    Western may revise the rate from Component 1 based on either of the 
following conditions: (1) Updated financial data available in March of 
each year; or (2) a change in the numerator or denominator that results 
in a rate change of at least $0.05 per kilowatt month (kWmonth). Rate 
change notifications will be posted on Western's Open Access Same-Time 
Information System (OASIS).
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: The formula rate above applies to the maximum amount of 
capacity reserved for periods ranging from 1 hour to 1 month, payable 
whether used or not. Billing will occur monthly.
    Adjustment for Losses: Losses incurred for service under this rate 
schedule will be accounted for as agreed to by the parties in 
accordance with the service agreements.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the RR under this rate schedule will be evaluated on a case-
by-case basis to determine the appropriate treatment for repayment and 
cash flow management.

Rate Comparison

    Under the proposed formula rate, Component 1, the estimated firm 
and non-firm point-to-point rate effective October 1, 2011, is $1.32 
per kWmonth. This is a 22-percent increase from the October 1, 2010, 
CVP firm and non-firm point-to-point rate of $1.08 per kWmonth. The 
rate increase is due to the anticipated completion of assets supporting 
the transmission function not a rate methodology change.

Rate Recovery and Application

    The formula rate for CVP transmission service is based on a RR that 
recovers: (1) The CVP transmission system costs for facilities 
associated with providing transmission service; (2) the non-facility 
costs allocated to transmission service; (3) costs include O&M costs, 
cost of capital or interest expense, depreciation expense, and other 
miscellaneous costs; (4) the cost for transmission scheduling, system 
control and dispatch service is included in O&M; (5) the pass through 
of FERC's or other regulatory body's accepted or approved charges or 
credits; (6) the pass through of the HBA's charges or credits; (7) any 
other statutorily-required costs or charges; and (8) any other costs 
associated with transmission service including uncollectible debt. 
Revenues from the sales of short-term, non-firm transmission will 
offset the TRR.

[[Page 134]]

Revenue from unreserved use of transmission penalties exceeding 
transmission service cost will be applied as an offset to the TRR.
    The formula rate applies to CVP firm point-to-point transmission 
service, existing CVP firm pre-Open Access Transmission Tariff (OATT) 
transmission service, and CVP non-firm transmission service. The 
estimated rates resulting from the formula rate are subject to change 
prior to the rates taking effect. The rates will be finalized by 
Western on or before October 1, 2011.

Proposed Rate Schedule CV-NWT5 (Supersedes Schedule CV-NWT4)

Proposed Formula Rate for CVP NITS

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving CVP NITS.
    Character and Conditions of Service: Transmission service for 
three-phase, alternating current at 60 hertz, delivered and metered at 
the voltages and points of delivery or receipt, adjusted for losses, 
and delivered to points of delivery. This service includes scheduling 
and system control and dispatch service needed to support the 
transmission service.
    Formula Rate: The formula rate for CVP NITS includes three 
components:
    Component 1: The NITS RR is the result of the CVP TRR less the CVP 
firm point-to-point TRR. Each NITS customer's allocation is based on 
the following formula:

NITS customer's monthly demand charge = NITS customer's load ratio 
share times one-twelfth (\1/12\) of the Annual Network TRR.

Where:

NITS customer's load ratio share = The NITS customer's usage, hourly 
or in accordance with approved policies or procedures, (including 
behind the meter generation minus the NITS customer's adjusted BR) 
coincident with the monthly CVP transmission system peak, averaged 
over a 12-month rolling period.
Annual Network TRR = The total CVP TRR, less revenues from long-term 
contracts for the CVP transmission between Western and other 
parties.

    The Annual Network TRR will be revised when the rate from Component 
1 of the CVP transmission rate under Rates Schedule CV-T3 is revised.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.

Rate Comparison

    Effective October 1, 2011, the estimated monthly NITS RR is 
$2,237,158. This rate is a 23-percent increase from the October 1, 
2010, monthly NITS RR of $1,824,170. The rate increase is due to the 
anticipated completion of assets supporting the CVP transmission 
function not a rate methodology change.
    The formula rate applies to CVP NITS. The estimated NITS monthly 
RR, resulting from the formula rate, may change prior to the rates 
taking effect based on the final CVP TRR. The NITS monthly RR will be 
finalized by Western on or before October 1, 2011.

Rate Recovery and Application

    The formula rate for CVP NITS is based on a RR that recovers: (1) 
The CVP transmission system costs for facilities associated with 
providing transmission service; (2) the non-facility costs allocated to 
transmission service; (3) costs include O&M cost, cost of capital or 
interest expense, depreciation expense, and other miscellaneous costs; 
(4) the cost for transmission scheduling, system control and dispatch; 
(5) the pass through of FERC's or other regulatory body's accepted or 
approved charges or credits; (6) the pass through of the HBA's charges 
or credits; (7) any other statutorily-required costs or charges; and 
(8) any other costs associated with transmission service including 
uncollectible debt. Revenues from the sales of short-term, non-firm 
transmission will offset the TRR. Revenue exceeding cost from 
unreserved use of transmission penalties will also be applied as an 
offset to the TRR.
    The formula rate applies to CVP NITS transmission service. The 
estimated rates resulting from the formula rate are subject to change 
prior to the rates taking effect. The rates will be finalized by 
Western on or before October 1, 2011.

Proposed Rate Schedule COTP-T3 (Supersedes Schedule COTP-T2)

Formula Rate for COTP Point-to-Point Transmission Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving COTP firm and/or non-firm point-
to-point transmission service.
    Character and Conditions of Service: Transmission service for 
three-phase, alternating current at 60 hertz, delivered and metered at 
the voltages and points of delivery or receipt, adjusted for losses, 
and delivered to points of delivery. This service includes scheduling 
and system control and dispatch service needed to support the 
transmission service.
    Formula Rate: The formula rate for COTP firm and non-firm point-to-
point transmission service includes three components:
    Component 1:
    [GRAPHIC] [TIFF OMITTED] TN03JA11.026
    

Where:

COTP TRR = COTP Seasonal TRR (Western's costs associated with 
facilities that support the transfer capability of the COTP).
Western's COTP Seasonal Capacity =

[[Page 135]]

Western's share of COTP capacity (subject to curtailment) under the 
current COI transfer capability for the season. The three seasons 
are defined as follows: Summer--June through October; Winter--
November through March; and Spring--April through May.

    Western will update the formula rate from Component 1 for COTP firm 
and non-firm point-to-point transmission service at least 15 days 
before the start of each COI rating season. Rate change notifications 
will be posted on the OASIS Web site.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.

Rate Comparison

    A comparison of the estimated rates resulting from Component 1 of 
the proposed formula rate for COTP firm point-to-point transmission 
service to the existing COTP firm point-to-point transmission service 
rates are shown in the table below.

Table--Comparison of Existing Rates to Estimated Rates From the Proposed Formula Rate for COTP Firm and Non-Firm
                                       Point-to-Point Transmission Service
----------------------------------------------------------------------------------------------------------------
                                                                                      Estimated rates
                    Season                                Existing rates               from proposed     Percent
                                                                                        formula rate    increase
----------------------------------------------------------------------------------------------------------------
Spring.......................................  $2.74 $/MWh.........................        $2.80 $/MWh  1.02
Summer.......................................  $2.73 $/MWh.........................        $2.79 $/MWh  1.02
Winter.......................................  $2.77 $/MWh.........................        $2.83 $/MWh  1.02
----------------------------------------------------------------------------------------------------------------

    The estimated firm point-to-point COTP transmission service rate 
increased primarily due to an inflationary increase of costs not a rate 
methodology change.

Rate Recovery and Application

    The proposed formula rate for COTP firm and non-firm point-to-point 
transmission service is based on a RR that recovers: (1) The COTP 
transmission system costs for facilities associated with providing 
transmission service; (2) the non-facility costs allocated to 
transmission service; (3) the cost of scheduling system control and 
dispatch service associated with COTP transmission; (4) the pass 
through of FERC's or other regulatory body's accepted or approved 
charges or credits; (5) the pass through of the HBA's charges or 
credits; (6) any other statutorily-required costs or charges; and (7) 
any other costs associated with transmission service including 
uncollectible debt.
    The proposed firm and non-firm formula rate includes Western's cost 
for transmission scheduling, and system control and dispatch service 
associated with COTP transmission. The proposed formula rate applies to 
COTP point-to-point transmission service. The rates resulting from 
Component 1 of the proposed formula rate may be discounted for short-
term sales and revenue from COTP unreserved use penalties.
    The estimated rates resulting from the proposed formula rate are 
subject to change prior to the rates taking effect. The rates resulting 
from the proposed formula rate for the winter season will be finalized 
by Western on or before October 15, 2011.

Proposed Rate Schedule PACI-T3 (Supersedes Schedule PACI-T2)

Proposed Formula Rate for PACI Point-to-Point Transmission Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving PACI firm and/or non-firm point-
to-point transmission service.
    Character and Conditions of Service: Transmission service for 
three-phase, alternating current at 60 hertz, delivered and metered at 
the voltages and points of delivery or receipt, adjusted for losses, 
and delivered to points of delivery. This service includes scheduling 
and system control and dispatch service needed to support the 
transmission service.
    Formula Rate: The proposed formula rate for PACI firm and non-firm 
transmission includes three components:
    Component 1:
    [GRAPHIC] [TIFF OMITTED] TN03JA11.027
    

Where:

PACI TRR = PACI Seasonal TRR includes Western's costs associated 
with facilities that support the transfer capability of the PACI.
Western's PACI Seasonal Capacity = Western's share of PACI capacity 
(subject to curtailment) under the current COI transfer capability 
for the season. The three seasons are defined as follows: Summer--
June through October; Winter--November through March; and Spring--
April through May.


[[Page 136]]


    Western will update the formula rate resulting from Component 1 at 
least 15 days before the start of each COI rating season. Rate change 
notifications will be posted on the OASIS.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    The proposed formula rate for PACI non-firm transmission includes 
the same three components used in the proposed formula rate for PACI 
firm transmission.

Rate Comparison

    The estimated firm and non-firm point-to-point rates resulting from 
Component 1 of the proposed formula rate for PACI transmission service 
are shown in the example below.

Example--Comparison of Existing Rates to Estimated Rates of the Proposed Formula Rate for PACI Firm and Non-Firm
                                       Point-To-Point Transmission Service
----------------------------------------------------------------------------------------------------------------
                                                                              Estimated firm      Rate change
               Season                          Existing firm rate                  rate            (percent)
----------------------------------------------------------------------------------------------------------------
Spring..............................  $1.14 ($/MWh).......................      $1.16 ($/MWh)               1.02
Summer..............................  $1.13 ($/MWh).......................      $1.16 ($/MWh)               1.02
Winter..............................  $1.15 ($/MWh).......................      $1.17 ($/MWh)               1.02
----------------------------------------------------------------------------------------------------------------

    The estimated firm, point-to-point PACI transmission service rate 
increased slightly due to an inflationary increase of costs not a rate 
methodology change.

Rate Recovery and Application

    The proposed formula rate for PACI transmission service is based on 
a RR that recovers: (1) The PACI transmission system costs for 
facilities associated with providing transmission service; (2) the non-
facility costs allocated to transmission service; (3) the pass through 
of FERC's or other regulatory body's accepted or approved charges or 
credits; (4) the pass through of the HBA's charges or credits; (5) any 
other statutorily-required costs or charges; and (6) any other costs 
associated with transmission service including uncollectible debt.
    The proposed formula rate includes Western's cost for transmission 
scheduling, system control and dispatch service. The proposed formula 
rate applies to PACI firm and non-firm point-to-point transmission 
service. The rates resulting from Component 1 of the proposed formula 
rate may be discounted for short-term sales and revenue from PACI 
unreserved use penalties. The estimated rates resulting from the 
proposed formula rate are subject to change prior to the rates taking 
effect. The rates resulting from the proposed formula rate for the 
winter season will be finalized by Western on or before October 15, 
2011.

Proposed Rate Schedule CV-TPT7 (Supersedes CV-TPT6)

Schedule of Rate for Transmission of Western Power by Others

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To Western's power service customers who require 
transmission service by a third party to receive power sold by Western.
    Character and Conditions of Service: Transmission service for 
three-phase, alternating current at 60 hertz, delivered and metered at 
the voltages and points of delivery or receipt, adjusted for losses, 
and delivered to points as agreed to by the parties.
    Formula Rate: The proposed formula rate for transmission of 
Western's power by others includes three components.
    Component 1: When Western uses transmission facilities other than 
its own in supplying Western power and costs are incurred by Western 
for the use of such facilities, the customer will pay all costs, 
including transmission losses, incurred in the delivery of such power.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: Third-party transmission will be billed monthly under the 
formula rate.
    Adjustments for losses: All losses incurred for delivery of power 
under this rate schedule shall be the responsibility of the customer 
that received the power.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the RR under this rate schedule will be evaluated on a case-
by-case basis to

[[Page 137]]

determine the appropriate treatment for repayment and cash flow 
management.

Rate Comparison

    Effective October 1, 2011, the cost of this service is not changing 
from the existing methodology and all costs are pass through under this 
rate schedule.

Rate Recovery and Application

    These costs are fully recovered from the beneficiaries receiving 
this service, and this is not changing from the existing rate 
methodology.

Proposed Rate Schedule CV-UUP1 (New Rate Schedule)

Schedule of Rate for Unreserved Use Penalties

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To transmission customers using transmission not 
reserved or in excess of reservation.
    Character and Conditions of Service: Transmission service for 
three-phase, alternating current at 60 hertz, delivered and metered at 
the voltages and points of delivery or receipt, adjusted for losses, 
and delivered to points of delivery. This service includes scheduling 
and system control and dispatch service needed to support the 
transmission service.

Summary

    Western proposes to add a penalty rate for unreserved use of 
transmission for the CVP, COTP, and PACI in a new rate schedule, Rate 
Schedule CV-UUP1.

Penalty Rate

    The rate for Unreserved Use Penalties service is 150 percent of the 
approved transmission service rate for point-to-point transmission 
service assessed as described above, plus 100 percent of the approved 
ancillary service rates if applicable.
    Component 1: Unreserved Use Penalties service is provided when a 
transmission customer uses transmission service that it has not 
reserved or uses transmission service in excess of its reserved 
capacity. A transmission customer that has not secured reserved 
capacity or exceeds its firm or non-firm reserved capacity at any point 
of receipt or any point of delivery will be assessed Unreserved Use 
Penalties.
    The penalty charge for a transmission customer who engages in 
unreserved use is 150 percent of Western's approved transmission 
service rate for point-to-point transmission service assessed as 
follows: (1) The Unreserved Use Penalty for a single hour of unreserved 
use will be based upon the rate for daily firm point-to-point service; 
(2) the Unreserved Use Penalty for more than one assessment for a given 
duration (e.g., daily) will increase to the next longest duration 
(e.g., weekly); and (3) the Unreserved Use Penalty for multiple 
instances of unreserved use (e.g., more than 1 hour) within a day will 
be based on the rate for daily firm point-to-point service. The penalty 
charge for multiple instances of unreserved use isolated to 1 calendar 
week would result in a penalty based on the charge for weekly firm 
point-to-point service. The penalty charge for multiple instances of 
unreserved use during more than 1 week within a calendar month is based 
on the charge for monthly firm point-to-point service.
    Unreserved Use Penalties will not apply to transmission customers 
utilizing point-to-point transmission service under Western's OATT as a 
result of action taken to support reliability. Such actions include 
reserve activations or uncontrolled event response as directed by the 
responsible reliability authority such as SBA, HBA Reliability 
Coordinator, or Transmission Operator.
    A transmission customer that exceeds its firm or non-firm reserved 
capacity is required to pay for all ancillary services identified in 
Western's OATT associated with the unreserved use of transmission 
service. The transmission customer or eligible customer will pay for 
ancillary services based on the amount of transmission service it used 
but did not reserve. No penalty will be applied to the ancillary 
service charges.
    Unreserved Use Penalties collected over and above the base firm or 
non-firm point-to-point charge will be distributed to customers as a 
credit on future TRRs.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
penalty rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the penalty rate.

Rate Comparison

    This is a new rate schedule effective October 1, 2011, through 
September 30, 2016.

Rate Recovery and Applicability

    The rate recovers the cost of transmission and applies a penalty 
for such unreserved use. The revenue resulting from the penalty portion 
will be distributed as a credit to the relevant TRRs. The penalty rate 
is applicable for all unreserved use of transmission and transmission 
in excess of reservation except, as may be determined by Western, in 
emergencies or reserve sharing activations. Western will provide 
written notification 30 days in advance to its transmission customers 
prior to implementing this penalty rate and will also post a 
notification on its OASIS Web site indicating the implementation of 
Unreserved Use Penalties.

Proposed Rates for Ancillary Services

    This section includes proposed rates for the following services: 
spinning reserve, supplemental reserve, regulation and frequency 
response, EI and GI. Western's costs for providing transmission 
scheduling, system control and dispatch service, and reactive supply 
and voltage control are included in the appropriate transmission or BR 
and FP power formula rates.

Proposed Rate Schedule CV-SPR4 (Supersedes Schedule CV-SPR3)

Proposed Formula Rate for Spinning Reserve Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving spinning reserve service.
    Character and Conditions of Service: Spinning reserve service 
supplies capacity that is available immediately to take load and is 
synchronized with the power system.

[[Page 138]]

    Formula Rate: The formula rate for spinning reserve includes three 
components:
    Component 1: The formula rate for spinning reserve service is the 
price consistent with the CAISO's market plus all costs incurred as a 
result of the sale of spinning reserves such as Western's scheduling 
costs.
    For customers that have a contractual obligation to provide 
spinning reserve to Western and do not fulfill that obligation, the 
penalty for non-performance is the greater of actual cost or 150 
percent of the market price.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: The formula rate above will be applied to the amount of 
spinning reserve sold. Billing will occur monthly.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the formula rate under this rate schedule will be evaluated on 
a case-by-case basis to determine the appropriate treatment for 
repayment and cash flow management.

Rate Comparison

    Western is not proposing a change to the existing formula rate 
methodology for spinning reserve service.

Rate Recovery and Application

    The spinning reserve charge is calculated for each hour during the 
month in order to derive the total monthly charge. The proposed formula 
rate for spinning reserve service is as follows: (1) A price consistent 
with the CAISO's market price; (2) all costs incurred as a result of 
the sale of spinning reserves, such as Western's scheduling costs; (3) 
the cost of energy, capacity, or generation that supports spinning 
reserve service; (4) the pass through of FERC's or other regulatory 
body's accepted or approved charges or credits; (5) the pass through of 
the HBA's charges or credits; and (6) any other statutorily required 
costs or charges. For customers that have a contractual obligation to 
provide spinning reserve to Western and do not fulfill that obligation, 
the penalty for non-performance is the greater of actual cost or 150 
percent of the market price.
    The cost for spinning reserve required to firm CVP generation for 
the current hour and the following hour is included in the PRR. 
Spinning reserves surplus to those required to support the SBA and firm 
CVP generation may be sold. Surplus spinning reserves will be sold at 
prices consistent with the CAISO markets. Revenues from the sale of 
surplus spinning reserves will offset the PRR. The spinning reserve 
formula rate will apply to SBA customers who contract with Western to 
provide this service.

Proposed Rate Schedule CV-SUR4 (Supersedes Schedule CV-SUR3)

Proposed Formula Rate for Supplemental Reserve Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving supplemental reserve service.
    Character and Conditions of Service: Supplemental reserve service 
supplies capacity that is available within the first 10 minutes to take 
load and is synchronized with the power system.
    Formula Rate: The formula rate for supplemental reserve service 
includes three components:
    Component 1: The formula rate for supplemental reserve service is 
the price consistent with the CAISO's market plus all costs incurred as 
a result of the sale of supplemental reserves, such as Western's 
scheduling costs.
    For customers that have a contractual obligation to provide 
supplemental reserve service to Western and do not fulfill that 
obligation, the penalty for non-performance is the greater of actual 
cost or 150 percent of the market price.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: The formula rate above will be applied to the amount of 
supplemental reserve service sold. Billing will occur monthly.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the formula rate under this rate schedule will be evaluated on 
a case-by-case basis to determine the appropriate treatment for 
repayment and cash flow management.

Rate Comparison

    Western is not proposing a change to the existing formula rate 
methodology for supplemental reserve service.

Rate Recovery and Application

    The formula rate for supplemental reserve service is as follows: 
(1) A price consistent with the CAISO's market price; (2) all costs 
incurred as a result of the sale of supplemental reserve service, such 
as Western's scheduling costs; (3) the cost of energy, capacity, or 
generation that supports supplemental reserve service; (4) the pass 
through of the HBA's charges or credits; (5) the pass through of FERC's 
or other regulatory body's accepted or approved charges or credits; and 
(6) any other statutorily required costs or charges.
    For customers that have a contractual obligation to provide 
supplemental reserve to Western and do not fulfill that obligation, the 
penalty for non-

[[Page 139]]

performance is equal to the greater of actual cost of generation or 150 
percent of the market price.
    The cost for supplemental reserves required to firm CVP generation 
for the current hour and the following hour is included in the PRR. 
Supplemental reserve service surplus to those required to support the 
SBA and firm CVP generation may be sold. Surplus supplemental reserves 
will be sold at prices consistent with the CAISO markets. Revenues from 
the sale of supplemental reserves will offset the PRR. The supplemental 
reserve formula rate will apply to SBA customers who contract with 
Western to provide this service.

Proposed Rate Schedule CV-RFS4 (Supersedes Schedule CV-RFS3)

Proposed Formula Rate for Regulation and Frequency Response Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving Regulation and Frequency 
Response Service (Regulation).
    Character and Conditions of Service: Regulation is necessary to 
provide for the continuous balancing of resources and interchange with 
load and for maintaining scheduled interconnection frequency at 60 
cycles per second.
    Formula Rate: The proposed formula rate for Regulation includes 
three components:
    Component 1:
    [GRAPHIC] [TIFF OMITTED] TN03JA11.028
    
    The annual RR includes: (1) The CVP generation costs associated 
with providing Regulation; and (2) the non-facility costs allocated to 
Regulation.
    The annual regulating capacity is one-half of the total regulating 
capacity bandwidths provided by Western under the interconnected 
operations agreements with SBA members.
    The penalty for nonperformance by an SBA customer who has committed 
to self-provision for their regulating capacity requirement will be the 
greater of actual costs or 150 percent of the market price.
    Western will revise the formula rate resulting from Component 1 
based on either of the following two conditions: (1) Updated financial 
data available in March of each year; or (2) a change in the numerator 
or denominator that results in a rate change of at least $0.25 per 
kWmonth.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.

Rate Comparison

    Western is not proposing a change to the existing formula rate 
methodology. The Regulation rate effective October 1, 2010, is $4.65 
per kWmonth. Based on the existing threshold for a rate change of 
$0.25, we do not expect the rate to change effective October 1, 2011.

Rate Recovery and Application

    The annual RR includes: (1) The CVP generation costs associated 
with providing Regulation; and (2) the non-facility costs allocated to 
Regulation.
    The Regulation RR will be recovered from SBA customers that have 
contracted with Western for this service. The revenues from Regulation 
service will be applied to the PRR. The estimated RR resulting from the 
proposed formula rate is subject to change prior to the rates taking 
effect. The RR will be finalized by Western on or before October 1, 
2011.

Proposed Rate Schedule CV-EID4 (Supersedes Schedule CV-EID3)

Proposed Formula Rate for Energy Imbalance Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To customers receiving EI service.
    Character and Conditions of Service: EI is provided when a 
difference occurs between the scheduled and the actual delivery of 
energy to a load within the SBA over an hour or in accordance with 
approved policies and procedures. The deviation, in MW, is the net 
scheduled amount of energy minus the net metered (actual delivered) 
amount.
    EI service uses the deviation bandwidth that is established in the 
service agreement or Interconnected Operations Agreements (IOA).
    Formula Rate: The formula rate for EI service includes three 
components:
    Component 1: EI service is applied to deviations as follows: (1) 
For deviations within the bandwidth, there will be no financial 
settlement; rather, EI will be tracked and settled with energy; (2) 
negative deviations (under delivery), outside the deviation bandwidth, 
will be charged the greater of 150 percent of market price or actual 
cost; and (3) positive deviations (over delivery), outside the 
deviation bandwidth, will be lost to the system.
    Deviations which occur as a result of actions taken to support 
reliability will be resolved in accordance with existing contractual 
requirements. Such actions include reserve activations or uncontrolled 
event responses as directed by the responsible reliability authority 
such as SBA, HBA, Reliability Coordinator, or Transmission Operator.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved

[[Page 140]]

charges or credits cannot be passed through directly to the relevant 
customer in the same manner Western is charged or credited, the charges 
or credits will be passed through using Component 1 of the formula 
rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: Billing for negative deviations outside the bandwidth will 
occur monthly.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the formula rate under this rate schedule will be evaluated on 
a case-by-case basis to determine the appropriate treatment for 
repayment and cash flow management.

Rate Comparison

    Western is not proposing a change to the existing formula rate 
methodology. Any changes to EI charges result from changes to actual 
cost or market prices.

Rate Recovery and Application

    Western is proposing to maintain its existing tier methodology for 
EI. While FERC Order No. 890 defines a three-tier methodology, it 
allows alternatives to pro forma design if the rate schedule follows 
the intent of the three principles: (1) Charges based on incremental 
cost or some multiple thereof; (2) charges must provide incentive for 
accurate scheduling; and (3) provisions address intermittent renewable 
resources (wind/solar) limited forecasting abilities by waiver of the 
most punitive penalties.
    Western's existing EI rate schedule follows the intent by: (1) 
Charges under a tiered methodology where, within the bandwidth, energy 
is exchanged, over deliveries are lost to the system, and under 
deliveries are charged the greater of 150 percent of the CAISO market 
price or Western's actual cost; (2) penalties outside the bandwidth 
also provide incentives for good scheduling practices; and (3) to the 
extent that an entity incorporates intermittent resources, Western 
proposes eliminating the 150 percent of market price factor for under 
deliveries. Western will charge the greater of market price or 
Western's actual cost.
    Given that Western's customers will be operating under existing 
agreements during the applicable rate period, Western will review FERC 
Order No. 890 pro forma approach, as well as Western's existing 
settlements and billing processes and will consider a transition to 
FERC's pro forma tariff methodology during Western's next rate process 
or earlier if deemed appropriate.
    Accordingly, for deviations outside of the bandwidth, the EI 
service charge is recovered using the greater of 150 percent of the 
market price or Western's actual cost. The actual cost is calculated 
using CVP generation RR and associated energy. Additional costs subject 
to recovery include HBA's charges or credits, FERC's or other 
regulatory body's accepted or approved charges or credits, and any 
other statutorily-required costs or charges.
    The EI service charge will be recovered from SBA customers that 
have contracted with Western for this service. The revenues from EI 
service will be applied to the PRR. Since the actual cost is calculated 
based on Western's cost of generation, it is subject to change prior to 
the effective rate period.
    Below is an example of how the EI charge is calculated using 
Component 1.

        Energy Imbalance Charge Example Calculation (Component 1)
                  [On October 1, HE 1, Customer A has:]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Scheduled Net Interchange......................................    90 MW
Actual Net Interchange.........................................   102 MW
Actual Energy in excess of Scheduled...........................    12 MW
Contractual Bandwidth..........................................     8 MW
Energy Imbalance for HE 1......................................     4 MW
------------------------------------------------------------------------

    To derive the total monthly charge for Customer A, the EI is 
calculated for each hour that it occurs during the month.
    The EI charge is based upon a comparison between the real-time 
energy pricing from the CAISO for each hour multiplied by 150 percent 
and Western's actual cost for that same hour. The higher of the two is 
applied to derive the EI charge. EI charge for October 1, HE 1, is 
calculated as follows:

----------------------------------------------------------------------------------------------------------------
          October 1, Hour Ending 1            Price          Price comparison              MW          Charge
----------------------------------------------------------------------------------------------------------------
Western's Calculated Actual Cost...........   $18.27  Actual < 150% of Market.......          N/A           N/A
Real Time CAISO price ($21.84 * 150%)          32.76  150% Market > Actual..........            4       $131.04
 applied per rate schedule.
----------------------------------------------------------------------------------------------------------------
Note: EI charge for October 1, HE 1, is calculated as follows: 4 MW * $32.76 = $131.04

    Imbalances that occur as a result of action taken by the generator, 
at Western's request, to support reliability will not be subject to 
penalties. Such actions include directives by SBA, HBA, Reliability 
Coordinators, or reserve activations and frequency correction 
initiatives.
    To the extent that an entity incorporates variable resources, 
treatment of such will be determined in the associated contract.

Proposed Rate Schedule CV-GID1 (New Rate Schedule)

Schedule of Rate for Generator Imbalance Service

    Effective: October 1, 2011, through September 30, 2016.
    Available: Within the marketing area served by SNR.
    Applicable: To generators receiving GI.
    Character and Conditions of Service: GI is provided when a 
difference occurs between the scheduled and actual delivery of energy 
from an eligible generation resource within the SBA, over an hour, or 
in accordance with approved policies and procedures. The deviation in 
MW is the net scheduled amount of generation minus the net metered 
output from the generator's (actual generation) amount.
    GI is subject to the deviation bandwidth to be established in the 
service agreement or IOA.
    Formula Rate: The formula rate for the GI has three components:
    Component 1: GI is applied to deviations as follows: (1) For 
deviations within the bandwidth, there will be no financial settlement; 
rather, GI will be tracked and settled with energy; (2) negative 
deviations (under delivery), outside the deviation bandwidth, will be 
charged the greater of 150 percent of market price or actual cost; and 
(3)

[[Page 141]]

positive deviations (over delivery), outside the deviation bandwidth, 
will be lost to the system.
    Deviations which occur as a result of actions taken to support 
reliability will be resolved in accordance with existing contractual 
requirements. Such actions include reserve activations or uncontrolled 
event responses as directed by the responsible reliability authority 
such as SBA, HBA, Reliability Coordinator, or Transmission Operator.
    To the extent that an entity incorporates intermittent resources, 
deviations will be charged as follows: (1) For deviations within the 
bandwidth, there will be no financial settlement; rather, GI will be 
tracked and settled with energy; (2) negative deviations (under 
delivery), outside the deviation bandwidth, will be charged the greater 
of market price or actual cost; and (3) positive deviations (over 
delivery), outside the deviation bandwidth, will be lost to the system.
    Component 2: Any charges or credits associated with the creation, 
termination, or modification to any tariff, contract, or rate schedule 
accepted or approved by FERC or other regulatory body will be passed on 
to each relevant customer. The FERC's or other regulatory body's 
accepted or approved charges or credits apply to the service to which 
this rate methodology applies. When possible, Western will pass through 
directly to the relevant customer FERC's or other regulatory body's 
accepted or approved charges or credits in the same manner Western is 
charged or credited. If FERC's or other regulatory body's accepted or 
approved charges or credits cannot be passed through directly to the 
relevant customer in the same manner Western is charged or credited, 
the charges or credits will be passed through using Component 1 of the 
formula rate.
    Component 3: Any charges or credits from the HBA applied to Western 
for providing this service will be passed through directly to the 
relevant customer in the same manner Western is charged or credited to 
the extent possible. If the HBA's costs or credits cannot be passed 
through to the relevant customer in the same manner Western is charged 
or credited, the charges or credits will be passed through using 
Component 1 of the formula rate.
    Billing: Billing for negative deviations outside the bandwidth will 
occur monthly.
    Adjustment for Audit Adjustments: Financial audit adjustments that 
apply to the formula rate under this rate schedule will be evaluated on 
a case-by-case basis to determine the appropriate treatment for 
repayment and cash flow management.

Rate Comparison

    This is a new rate schedule effective October 1, 2011, through 
September 30, 2016.

Rate Recovery and Application

    Western is proposing to adopt its existing EI methodology for GI. 
Similar to EI, FERC Order No. 890 defines a three-tier methodology for 
GI. The order allows alternatives to pro forma design if the rate 
schedule follows the intent of the three principles: (1) Charges based 
on incremental cost or some multiple thereof; (2) charges must provide 
incentive for good scheduling practice; and (3) provisions address 
intermittent renewable resources (wind/solar) to waive punitive 
penalties.
    Similar to Western's existing EI rate schedule, GI will follow the 
intent by: (1) Charges under a tiered methodology; where, within the 
bandwidth, energy is exchanged, over deliveries are lost to the system, 
and under deliveries are charged the greater of 150 percent of the 
CAISO market price or Western's actual cost; (2) penalties outside the 
bandwidth also provide incentives for good scheduling practices; and 
(3) to the extent that an entity incorporates intermittent resources, 
Western proposes eliminating the 150 percent of market price factor for 
under deliveries. Western will charge the greater of market price or 
Western's actual cost.
    Currently, Western has no existing customers under GI. Western will 
review FERC Order No. 890 pro forma approach, as well as Western's 
existing settlements and billing processes and will consider a 
transition to FERC's pro forma tariff methodology during Western's next 
rate process or earlier if deemed appropriate.
    Accordingly, for deviations outside of the bandwidth, the GI charge 
is recovered using the greater of 150 percent of the market price or 
Western's actual cost. The actual cost is calculated using CVP 
generation RR and associated energy. Additional costs subject to 
recovery include HBA's charges or credits, FERC's or other regulatory 
body's accepted or approved charges or credits, and any other 
statutorily required costs or charges.
    The GI charge will be recovered from SBA customers that have 
contracted with Western for this service. The revenues from GI will be 
applied to the PRR. Since the actual cost is calculated based on 
Western's cost of generation, it is subject to change prior to the 
effective rate period.
    Below is an example of how the GI charge is calculated using 
Component 1.

  Generation Imbalance Service Charge Example Calculation (Component 1)
                [If, on October 1, HE 1, Customer A has:]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Scheduled Net Interchange......................................   102 MW
Actual Net Interchange.........................................    90 MW
Scheduled Generation in excess of Actual Generation (under         12 MW
 delivery).....................................................
Contractual Bandwidth..........................................     8 MW
Generator Imbalance for HE 1...................................     4 MW
------------------------------------------------------------------------

    To derive the total monthly charge for Customer A, the GI is 
calculated for each hour that it occurs during the month.
    The GI charge is based upon a comparison between the real-time 
energy pricing from the CAISO for each hour multiplied by 150 percent 
and Western's actual cost for that same hour. The greater of the two is 
applied to derive the GI charge. The following table is an example of 
how Western determines the GI charge related to the GI in the table 
above:

----------------------------------------------------------------------------------------------------------------
          October 1, Hour Ending 1             Price           Price comparison              MW         Charge
----------------------------------------------------------------------------------------------------------------
Western's Calculated Actual Cost............   $18.27  Actual < 150% of Market........          N/A          N/A
Real Time CAISO price ($21.84 * 150%)           32.76  150% Market > Actual...........            4      $131.04
 applied per rate schedule.
----------------------------------------------------------------------------------------------------------------
Note: GI charge for October 1, HE 1 is calculated as follows: 4 MW * $32.76 = $131.04

    GI charges will not apply as a result of action taken to support 
reliability. Such actions include reserve activations or uncontrolled 
event response as directed by the responsible reliability authority, 
such as, SBA, HBA, Reliability Coordinator, or Transmission Operator.
    To the extent that an entity incorporates VRs, treatment of such 
will be determined in the associated contract.

[[Page 142]]

    GI and EI service charges/energy accounting will be netted within 
the hour, or in accordance with approved policies and procedures, with 
charges for both services allowable only when the imbalances for both 
are deficit rather than offsetting (note that this only applies to 
netting within the bandwidth).
    Potential Example of an Addition Presented above:
    Transmission Provider or SBA can charge customer for both GI and EI 
service in the same hour, but not if the imbalances offset each other.
    Example of Offsetting:

<bullet> For example--Customer A
    [rang][rang] GI:-10MW deficit
    [rang][rang] EI service: 5MW surplus
    [rang][rang] Customer A charged: 5MW (GI charge)

    Example of Aggravating (increasing--absolute value)

<bullet> For example--Customer B
    [rang][rang] GI Service:-10MW deficit
    [rang][rang] EI service:-10MW deficit
    [rang][rang] Customer A charged:-10MW for GI charge plus -10MW for 
EI charge

Legal Authority

    These proposed rates for COTP, PACI, CVP transmission, Western 
power, and related services are being established pursuant to the DOE 
Organization Act (42 U.S.C. 7101-7352); the Reclamation Act of 1902 
(ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent 
enactments, particularly section 9(c) of the Reclamation Project Act of 
1939 (43 U.S.C. 485(c)); and other acts that specifically apply to the 
project involved.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to Western's Administrator; (2) the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to the Deputy Secretary of Energy; and (3) the authority to confirm, 
approve, and place into effect on a final basis, to remand, or to 
disapprove such rates to FERC. Existing DOE procedures for public 
participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985 (50 FR 37835).

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents made or kept by Western for developing the proposed rates are 
available for inspection and copying at the Sierra Nevada Regional 
Office, located at 114 Parkshore Drive, Folsom, California.

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act of 1969 
(NEPA) (42 U.S.C. 4321, et seq.), the Council on Environmental Quality 
Regulations for implementing NEPA (40 CFR parts 1500-1508); and DOE 
NEPA Implementing Procedures and Guidelines (10 CFR part 1021), Western 
has determined that this action is categorically excluded from further 
NEPA analysis.

Determination Under Executive Order 12866

    Western has an exemption from centralized regulatory review under 
Executive Order 12866; accordingly, no clearance of this notice by the 
Office of Management and Budget is required.

    Dated: December 22, 2010.
Timothy J. Meeks,
Administrator.
[FR Doc. 2010-33108 Filed 12-30-10; 8:45 am]
BILLING CODE 6450-01-P


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