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[Federal Register Volume 76, Number 184 (Thursday, September 22, 2011)]
[Notices]
[Pages 58790-58803]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24224]

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DEPARTMENT OF ENERGY

Notice of Interim Approval

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of interim approval for Southeastern Power 
Administration Cumberland System.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved, on an 
interim basis, Rate Schedules CBR-1-H, CSI-1-H, CEK-1-H, CM-1-H, CC-1-
I, CK-1-H, CTV-1-H, CTVI-1-A, and Replacement-3. The rates were 
approved on an interim basis through September 30, 2013. The new rates 
take effect on October 1, 2011, and are subject to confirmation and 
approval on a final basis by the Federal Energy Regulatory Commission 
(Commission).

DATES: Approval of the rate schedules on an interim basis is effective 
October 1, 2011, through September 30, 2013.

FOR FURTHER INFORMATION CONTACT: Virgil G. Hobbs, III, Assistant 
Administrator, Finance & Marketing, Southeastern Power Administration, 
Department of Energy, 1166 Athens Tech Road, Elberton, Georgia 30635-
6711, (706) 213-3800.

SUPPLEMENTARY INFORMATION: On May 6, 2009, the Commission confirmed and 
approved on a final basis Wholesale Power Rate Schedules CBR-1-G, CSI-
1-G, CEK-1-G, CM-1-G, CC-1-H, CK-1-G, and CTV-1-G for the period from 
October 1, 2008, to September 30, 2013 (127 FERC ] 62,115). Rate 
Schedule CTVI-1 was approved by the Administrator, Southeastern Power 
Administration, for a period ending September 30, 2013.
    The power marketing policy provides peaking capacity, along with 
1500 hours of energy with each kilowatt of capacity, to customers 
outside the Tennessee Valley Authority (TVA) transmission system. Due 
to restrictions on the operations of the Wolf Creek and Center Hill 
Projects imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dam, Southeastern has not been 
able to provide peaking capacity to these customers. An interim 
operating plan for the Cumberland System provides these customers with 
energy that does not include capacity.
    A current repayment study using present rates shows that revenues 
will not be adequate to meet repayment criteria. A revised study with a 
revenue requirement increase of $9,570,000, or about eighteen percent, 
shows that these rates will be adequate to meet repayment criteria. 
Because the estimated annual energy delivered to the customers has been 
reduced, the rate increase under the interim operating plan is about 40 
percent.
    The rate schedules have been developed to cover the differing 
marketing arrangements in the Cumberland System under normal operation 
conditions. The Rate Schedules CBR-1-H, CSI-1-H, and

[[Page 58791]]

CM-1-H, include rates for customers who receive 1500 kilowatt-hours of 
energy annually for each kilowatt of capacity. The transmission and 
scheduling arrangements under each of these rate schedules are 
different. Rate Schedule CEK-1-H is for East Kentucky Power 
Cooperative, which receives a fixed quantity of energy annually from 
projects connected to the TVA transmission system plus the output of 
the Laurel Project. Rate Schedule CK-1-H is for customers in Kentucky 
who receive 1800 kilowatt-hours of energy annually for each kilowatt of 
capacity. Rate Schedule CC-1-I is for customers on the Carolina Power & 
Light Western Division, (or Progress Energy Carolinas Western 
Division).
    Rate Schedule CTV-1-H is for TVA and TVPPA. Rate Schedule CTVI-1-A 
is for customers inside the TVA system who choose a power supplier 
other than TVA.

    Dated: September 12, 2011.
Daniel B. Poneman,
Deputy Secretary.?>

DEPARTMENT OF ENERGY

Deputy Secretary

[Rate Order No. SEPA-55]
In the Matter of: Southeastern Power Administration Cumberland System 
Rates; Order Confirming and Approving Power Rates on an Interim Basis
    Pursuant to Sections 302(a) and 301(b) of the Department of Energy 
Organization Act, Public Law 95-91, the functions of the Secretary of 
the Interior and the Federal Power Commission under Section 5 of the 
Flood Control Act of 1944, 16 U.S.C. 825s, relating to the Southeastern 
Power Administration (Southeastern or SEPA) were transferred to and 
vested in the Secretary of Energy. DOE Delegation Order No. 00-037.00, 
issued on December 6, 2001, granted the Deputy Secretary authority to 
confirm, approve, and place into effect Southeastern's rates on an 
interim basis. This rate order is issued by the Deputy Secretary 
pursuant to this delegation.

Background

    On May 9, 2009, the Commission issued an order approving Rate 
Schedules CBR-1-G, CSI-1-G, CEK-1-G, CM-1-G, CC-1-H, CK-1-G, and CTV-1-
G on a final basis for the sale of power from the Cumberland System 
(127 FERC ] 62,115). The Administrator of Southeastern Power 
Administration approved Rate Schedule CTVI-1 for a period ending 
September 30, 2013.
    The power marketing policy provides peaking capacity, along with 
1500 hours of energy with each kilowatt of capacity, to customers 
outside the Tennessee Valley Authority (TVA) transmission system. Due 
to restrictions on the operations of the Wolf Creek and Center Hill 
Projects imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dam, Southeastern has not been 
able to provide peaking capacity to these customers. An interim 
operating plan for the Cumberland System provides these customers with 
energy that does not include capacity.

Public Notice and Comment

    Notice of a proposed rate adjustment was published in the Federal 
Register March 7, 2011 (76 FR 12354). The notice advised interested 
parties of a public information and comment forum to be held in 
Nashville, Tennessee on May 3, 2011. By notice published in the Federal 
Register May 20, 2011 (76 FR 29235), Southeastern extended the comment 
period to July 1, 2011. Written comments were received from six sources 
pursuant to this notice.
    The comments have been condensed into the following seven major 
categories:

1. Replacement costs.
2. Average energy estimate/energy true-up.
3. Corps Operation and Maintenance (O&M).
4. Forced payments/repayment study method.
5. Energy shaping.
6. Dam safety.
7. SEPA Rates versus Market Cost of Power.

Southeastern's response follows each comment.

Category 1: Replacement Costs

    Comment: SEPA should remove opportunity projects from projected 
replacements. In future studies, only those opportunity projects that 
are approved by the Project Coordinating Committee (PCC) for funding 
through the Long-Term Memorandum of Agreement (MOA) will be included in 
capitalized investments. It is premature to include opportunity 
projects in the current study.
    Comment: SEPA should consider revising the cost for the 20-year 
rehabilitation plan so that renewals are completed over a 30-year 
period of time. To account for the differences between proposed and 
actual capital expenditures, a true-up mechanism for capital expenses 
could be implemented.
    Comment: SEPA rates must be based on a realistic estimate of 
replacement costs actually expected to be incurred.
    Response: Southeastern is required to include estimates of 
replacements and additions in the repayment study to support the 
proposed rate schedules. As a result of the comments received, 
Southeastern has removed the opportunity projects from the plan of 
replacements. Southeastern expects future replacements and 
rehabilitation of the Cumberland Projects will be accomplished through 
customer funding. Because the customers are expected to control 
customer funding, they are not expected to fund the opportunity 
projects through the rate adjustments established in this document.
    The proposed rate schedules are to be effective for a two-year 
period, from October 1, 2011 to September 30, 2013. Any true-up 
mechanism incorporated into the proposed rate schedules would be 
implemented beyond the term of the proposed rate schedules. As such, 
the proposed rate schedules do not include a true-up mechanism.
    The rehabilitation plan for the Cumberland System is expected to be 
implemented over twenty years. It is possible that the implementation 
of the plan may extend to thirty years. However, the proposed rate 
schedules have been developed with the present twenty-year plan of 
implementation, as Southeastern considers this the best estimate 
currently available.

Category 2: Average Energy Estimate/Energy True-Up

    Comment: SEPA should consider revising the energy sales starting in 
the year 2014 to 3,000,000 hours to account for an improved generation 
due to head improvements once Wolf Creek and Center Hill project lake 
levels return to normal.
    Comment: Annual energy sales for 2009 and 2010 were 2,654,328 MWh 
and 2,706,215 MWh respectively. In addition, the Tennessee Valley 
Authority (TVA) prepared an independent estimate of 2,707,500 MWh for 
energy sales in 2012 and 2013. SEPA's projected energy sales of 
2,538,434 MWh are below actual energy sales for 2009 and 2010 and are 
below TVA's estimate. We recommend SEPA utilize TVA's estimated energy 
sales of 2,707,500 MWh for 2012-14.
    Comment: SEPA should not base the proposed rate adjustment on an 
arbitrarily determined annual system generation amount.
    Response: Based on the comments received from the customers in the 
Cumberland System, Southeastern has revised the energy estimate used in 
the repayment study. Based on the continued Interim operations due to 
the ongoing work at Wolf Creek and Center Hill, Southeastern does not 
use normal system generation for the term of the Interim Operating Plan 
and the development of rates under the Interim

[[Page 58792]]

Operating Plan. Southeastern revised the proposed rate under the 
interim Operating Plan to include the energy estimate determined in 
TVA's energy model. The primary difference between the estimates was 
that the period of record used by TVA is 24 years longer than the 
period of record used by Southeastern. This additional data allows for 
multiple year of additional river basin hydrology to be considered when 
analyzing system operations and in the determination of statistical 
average generation for the system. Both the TVA model and 
Southeastern's records are comprised of actual project generation 
averaged over the respective periods of record. The TVA model also 
includes reductions at Wolf Creek and Center Hill.

Category 3: Corps O&M Costs

    Comment: Corps O&M expenses included in the repayment study should 
be verified in a detailed accounting.
    Comment: SEPA should conduct a more intensive study and analysis of 
the Corps' request for increased revenues, and engage in collaboration 
with the Corps to make further introspective study and analysis of the 
scope and need of the Corps' request. SEPA and the Corps through a 
collaborative effort can help ameliorate the extreme impact of SEPA's 
proposed rate increase by both using more aggressive cost controls and 
applying the correct accounting procedures to capital expenditures as 
capital assets, thus amortizing those over the life of the cost-
effective improvements to the Corps' facilities. This approach is used 
in private sector accounting principles for capital additions.
    Comment: SEPA should reexamine Corps operation and maintenance 
(``O&M'') cost because these costs are projected to be higher than a 
realistic forecast would indicate.
    Response: Southeastern recognizes that the customers have an 
interest in the maintenance and operation expenses and funding of the 
Cumberland Projects. Southeastern shares the customers concern over the 
estimated Corps O&M expense included in the repayment study to support 
the proposed rate schedules. The estimates used to develop the current 
rate schedules in the Cumberland System were about 33 percent lower 
than the actual costs incurred. The estimates used to develop the 
proposed rate schedules were provided to Southeastern and the customers 
in April of 2010. Any variance of the actual costs incurred from these 
estimates will impact repayment of the federal investment and will be 
accounted for in the next rate adjustment. Southeastern will work in 
collaboration with the Corps, the customers, and the O&M Committee to 
ensure that operation and maintenance is properly funded and charged 
consistent with generally accepted accounting principles.

Category 4: Forced Payments/Repayment Study Method

    Comment: Following sound business principles would dictate that a 
revenue requirement for the last two years of a 50-year repayment study 
should not be driven by pinch points in years 49 and 50 of the study.
    Comment: SEPA should consider spreading out forced payments for the 
Barkley and Cordell Hull projects over multiple years to reduce the 
required payments of these two projects in the years 2016 and 2024 
respectively.
    Comment: SEPA should revisit its ratemaking methodology to reflect 
a more common practice of meeting future revenue requirements through a 
series of rate adjustments versus a one-time rate adjustment for the 
entire study period.
    Comment: Utilizing a series of rate adjustments will more 
accurately reflect the change in river operations that will occur after 
force majeure conditions are lifted in 2014 or 2015.
    Comment: Instead of a single rate adjustment to meet a 50-year 
study period, three rate adjustments should be made to meet increasing 
revenue requirements in future years.
    Comment: Forced payments for Barkley and Cordell Hull should be 
added to the repayment study if they will result in lower rates for 
2012 and 2013 (e.g. two years of forced payments prior to the Barkley 
required payment in 2016, and five years of forced payments prior to 
the Cordell Hull required payment in 2024).
    Response: The methodology the power marketing administrations are 
required to use is set forth in DOE Order RA 6120.2. It describes, 
among other things, the highest interest first method of amortization. 
Section 8c.(3) of the Order describes the priority of revenue 
application.
    The power marketing administrations adopted highest interest 
bearing first amortization method because it resulted in the lowest 
possible rates. Under this method, annual revenues are applied first to 
operating expenses and interest. Remaining revenues are then applied 
first to any deferred or unpaid annual expense, and then to the Federal 
investment. To the extent possible, while still complying with the 
repayment periods established for each increment of investment, 
amortization is accomplished by application to the highest interest-
bearing investment first. Southeastern is not required to make any 
payments until the year that an investment is due for repayment. 
Southeastern includes early, or ``forced,'' payments in a repayment 
study to override the normal priority of repayment and to comply with 
the repayment period for the investment.
    Revising the schedule of forced payments as the customers have 
requested would result in a slight, though not material, increase in 
the revenue requirement than the proposed rate schedules were designed 
to recover. This is caused by the increase in expensed interest from 
the later payment of high interest rate investment.
    Section 7 b. of DOE Order RA6120.2 defines the ``Cost Evaluation 
Period'' for the repayment study. The Cost Evaluation Period is the 
period of time during which estimates of future costs and revenues may 
be modified to reflect changing conditions. For these proposed rate 
schedules, the cost evaluation period is two years, fiscal year 2012 
and fiscal year 2013. Any changes to the rates or estimates outside the 
cost evaluation period, as commenters have requested, are not permitted 
under DOE Order RA6120.2.

Category 5: Energy Shaping

    Comment: While this is not expected to change over the next two 
years, the affected Customers would encourage SEPA to take steps to 
work with the Corps to encourage ``shaping'' of the available resource 
to provide delivery at times when energy markets recognize higher 
demand. This step alone would increase the value of the energy-only 
resource that is currently available from the Cumberland River basin 
Corps projects.
    Comment: SEPA should press the Corps for increased coordination of 
stream flow water management and run-of-river energy scheduling to 
provide more on-peak energy and less off-peak energy to the extent 
possible.
    Response: Because of the loss of storage operations at the Wolf 
Creek and Center Hill Projects Southeastern is unable to provide 
peaking operations for the Cumberland Projects. This is expected to 
continue until the rehabilitation work is complete and the reservoirs 
have refilled. Southeastern will work with the Corps to provide more 
on-peak energy and less off-peak energy to the extent feasible.

Category 6: Dam Safety

    Comment: The customers want to express their concern that the 
seepage

[[Page 58793]]

repair costs for Wolf Creek and Center Hill as currently classified 
would present another rate hurdle.
    Comment: Proper classification of costs for dam safety repairs at 
Wolf Creek and Center Hill is a significant concern for SEPA hydropower 
customers. Currently, combined costs for these two projects are 
expected to be over $850 million, and, if not properly classified under 
provisions of the Dam Safety Act, will result in a significant rate 
increase for hydropower. This creates a significant concern that SEPA 
rates may become non-competitive with other energy resources available 
to SEPA's customers. Indeed, the proposed rates are already 
uneconomical at times over the next two-year time period. To protect 
the viability of the federal power program, SEPA should fully exercise 
its authority under the Flood Control Act of 1944 to develop the lowest 
possible rates to consumers consistent with sound business principles.
    Comment: With the projected recovery of the investment needed to 
complete the projects in the Master Plan and potential inclusion of the 
costs related to the dam safety repairs at the Wolf Creek and Center 
Hill Projects, the affected customers recognize that the cost of the 
SEPA resource may soon become uneconomical.
    Comment: The expenditures for repairs at the Wolf Creek and Center 
Hill Dam Projects should be classified as a dam safety project and 
therefore subject to reimbursement rates in accordance with the Dam 
Safety Act (Section 1203 of the WRDA 1986) rather than as maintenance 
costs.
    Response: The rehabilitation work at the Wolf Creek and Center Hill 
Projects is currently expected to be complete in fiscal year 2014, 
which is beyond the two-year term of these proposed rate schedules. The 
cost associated with this rehabilitation work is not included with this 
rate adjustment.
    Southeastern expects to receive from the Corps reports on the cost 
of the rehabilitation work that the Corps has determined should be 
allocated to power for cost recovery. After Southeastern has received 
these reports, Southeastern will develop proposed rate schedules to 
recover the costs.

Category 7: SEPA Rates Versus Market Cost of Power

    Comment: If SEPA is seeking to recover from the additional funds 
required to pay for the dam safety repairs, the cost of power will 
likely exceed prevailing market rates. If this occurs, there's some 
speculation that some customers will relinquish their SEPA allocations. 
In light of this potential scenario, has SEPA performed any modeling to 
calculate how costs will be recovered if the customer base continues to 
shrink?
    Comment: In the instance that the eventual rate does exceed market 
rates, is there anything that would prevent SEPA from considering the 
option of exercising its authority under the Flood Control Act to 
ensure that the rates remain the lowest possible consistent with sound 
business principles?
    Response: The provisions of section 5 of the Flood Control Act of 
1944 require that Southeastern's ``Rate Schedules shall be drawn having 
regard to the recovery (upon the basis of the application of such rate 
schedules to the capacity of the electric facilities of the projects) 
of the cost of producing and transmitting such electric energy, 
including the amortization of the capital investment allocated to power 
over a reasonable period of years.'' As such, Southeastern is required 
to develop and propose rate schedules that recover the cost. If such 
rates prove to be above market, Southeastern will make a determination 
of the appropriate steps necessary to market the power and meet its 
repayment obligation.

Discussion

System Repayment

    An examination of Southeastern's revised system power repayment 
study, prepared in July, 2011, for the Cumberland System, shows that 
with the proposed rates, all system power costs are paid within the 50-
year repayment period required by existing law and DOE Order RA 6120.2. 
The Administrator of Southeastern has certified that the rates are 
consistent with applicable law and that they are the lowest possible 
rates to customers consistent with sound business principles.

Environmental Impact

    Southeastern has reviewed the possible environmental impacts of the 
rate adjustment under consideration and has concluded that, because the 
adjusted rates would not significantly affect the quality of the human 
environment within the meaning of the National Environmental Policy Act 
of 1969, the proposed action is not a major Federal action for which 
preparation of an Environmental Impact Statement is required.

Availability of Information

    Information regarding these rates, including studies, and other 
supporting materials, is available for public review in the offices of 
Southeastern Power Administration, 1166 Athens Tech Road, Elberton, 
Georgia 30635-6711.

Submission to the Federal Energy Regulatory Commission

    The rates hereinafter confirmed and approved on an interim basis, 
together with supporting documents, will be submitted promptly to FERC 
for confirmation and approval on a final basis.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I hereby confirm and approve on an 
interim basis, effective October 1, 2011, attached Wholesale Power Rate 
Schedules CBR-1-H, CSI-1-H, CEK-1-H, CM-1-H, CC-1-I, CK-1-H, CTV-1-H, 
CTVI-1-A, and Replacement-3. The rate schedules shall remain in effect 
on an interim basis through September 30, 2013, unless such period is 
extended or until FERC confirms and approves them or substitute rate 
schedules on a final basis.

    Dated: September 12, 2011.
Daniel B. Poneman,
Deputy Secretary.
Wholesale Power Rate Schedule CBR-1-H
    Availability:
    This rate schedule shall be available to Big Rivers Electric 
Corporation and includes the City of Henderson, Kentucky (hereinafter 
called the Customer).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 13,800 volts and 161,000 
volts to the transmission system of Big Rivers Electric Corporation.
    Points of Delivery:
    Capacity and energy delivered to the Customer will be delivered at 
points of interconnection of the Customer at the Barkley Project 
Switchyard, at a delivery point in the vicinity of the Paradise steam 
plant and at such other points of delivery as may hereafter be agreed 
upon by the Government and Tennessee Valley Authority (TVA).

[[Page 58794]]

    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective, on the last 
day of each calendar month.
    Conditions of Service:
    The customer shall at its own expense provide, install, and 
maintain on its side of each delivery point the equipment necessary to 
protect and control its own system. In so doing, the installation, 
adjustment, and setting of all such control and protective equipment at 
or near the point of delivery shall be coordinated with that which is 
installed by and at the expense of TVA on its side of the delivery 
point.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission:
    The Customer will pay a ratable percent listed below of the credit 
the Administrator of Southeastern Power Administration (Administrator) 
provides to the TVA as consideration for delivering capacity and energy 
for the account of the Administrator to points of delivery of Other 
Customers or interconnection points of delivery with other electric 
systems for the benefit of Other Customers, as agreed by contract 
between the Administrator and TVA.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Big Rivers Electric Corporation..............................     32.660
City of Henderson, Kentucky..................................      2.202
------------------------------------------------------------------------

    Energy to be Furnished by the Government:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U.S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $4.245 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    Energy to be Furnished by the Government:
    The Government shall make available each contract year to the 
customer from the Projects through the customer's interconnections with 
TVA and the customer will schedule and accept an allocation of 1500 
kilowatt-hours of energy delivered at the TVA border for each kilowatt 
of contract demand. A contract year is defined as the 12 months 
beginning July 1 and ending at midnight June 30 of the following 
calendar year. The energy made available for a contract year shall be 
scheduled monthly such that the maximum amount scheduled in any month 
shall not exceed 240 hours per kilowatt of the customer's contract 
demand and the minimum amount scheduled in any month shall not be less 
than 60 hours per kilowatt of the customer's contract demand. The 
customer may request and the Government may approve energy scheduled 
for a month greater than 240 hours per kilowatt of the customer's 
contract demand; provided, that the combined schedule of all 
Southeastern customers outside TVA and served by TVA does not exceed 
240 hours per kilowatt of the total contract demands of these 
customers.
    Service Interruption:
    When delivery of capacity is interrupted or reduced due to 
conditions on the Administrator's system beyond his control, the 
Administrator will continue to make available the portion of his 
declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN22SE11.000

[[Page 58795]]

Wholesale Power Rate Schedule CSI-1-H
    Availability:
    This rate schedule shall be available to Southern Illinois Power 
Cooperative (hereinafter the Customer).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 13,800 volts and 161,000 
volts to the transmission system of Big Rivers Electric Corporation.
    Points of Delivery:
    Capacity and energy delivered to the Customer will be delivered at 
points of interconnection of the Customer at the Barkley Project 
Switchyard, at a delivery point in the vicinity of the Paradise steam 
plant and at such other points of delivery as may hereafter be agreed 
upon by the Government and Tennessee Valley Authority (TVA).
    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective, on the last 
day of each calendar month.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission Charge:
    The Customer will pay 5.138 percent of the credit the Administrator 
of Southeastern Power Administration (Administrator) provides to the 
TVA as consideration for delivering capacity and energy for the account 
of the Administrator to points of delivery of Other Customers or 
interconnection points of delivery with other electric systems for the 
benefit of Other Customers, as agreed by contract between the 
Administrator and TVA.
    Energy to be Furnished by the Government:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U.S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $4.245 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    Energy to be Furnished by the Government:
    The Government shall make available each contract year to the 
customer from the Projects through the customer's interconnections with 
TVA and the customer will schedule and accept an allocation of 1500 
kilowatt-hours of energy delivered at the TVA border for each kilowatt 
of contract demand. A contract year is defined as the 12 months 
beginning July 1 and ending at midnight June 30 of the following 
calendar year. The energy made available for a contract year shall be 
scheduled monthly such that the maximum amount scheduled in any month 
shall not exceed 240 hours per kilowatt of the customer's contract 
demand and the minimum amount scheduled in any month shall not be less 
than 60 hours per kilowatt of the customer's contract demand. The 
customer may request and the Government may approve energy scheduled 
for a month greater than 240 hours per kilowatt of the customer's 
contract demand; provided, that the combined schedule of all 
Southeastern customers outside TVA and served by TVA does not exceed 
240 hours per kilowatt of the total contract demands of these 
customers.
    Service Interruption:
    When delivery of capacity is interrupted or reduced due to 
conditions on the Administrator's system beyond his control, the 
Administrator will continue to make available the portion of his 
declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:

[[Page 58796]]

[GRAPHIC] [TIFF OMITTED] TN22SE11.001

Wholesale Power Rate Schedule CEK-1-H

    Availability:
    This rate schedule shall be available to East Kentucky Power 
Cooperative (hereinafter called the Customer).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and power available from the Laurel 
Project and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 161,000 volts to the 
transmission systems of the Customer.
    Points of Delivery:
    The points of delivery will be the 161,000 volt bus of the Wolf 
Creek Power Plant and the 161,000 volt bus of the Laurel Project. Other 
points of delivery may be as agreed upon.
    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective, on the last 
day of each calendar month.
    Conditions of Service:
    The customer shall at its own expense provide, install, and 
maintain on its side of each delivery point the equipment necessary to 
protect and control its own system. In so doing, the installation, 
adjustment and setting of all such control and protective equipment at 
or near the point of delivery shall be coordinated with that which is 
installed by and at the expense of the Tennessee Valley Authority (TVA) 
on its side of the delivery point.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U. S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission Charge:
    The Customer will pay 31.192 percent of the credit the 
Administrator of Southeastern Power Administration (Administrator) 
provides to the TVA as consideration for delivering capacity and energy 
for the account of the Administrator to points of delivery of Other 
Customers or interconnection points of delivery with other electric 
systems for the benefit of Other Customers, as agreed by contract 
between the Administrator and TVA.
    Energy to be Furnished by the Government:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U. S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered from Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $2.950 per kilowatt/month of total contract demand.
    Energy Charge:
    10.358 mills per kilowatt-hour.
    Energy to be Furnished by the Government:
    The Government shall make available each contract year to the 
customer from the Projects through the customer's interconnections with 
TVA and the customer will schedule and accept an allocation of 1500 
kilowatt-hours of energy delivered at the TVA border for each kilowatt 
of contract demand plus 369 kilowatt-hours of energy delivered for each 
kilowatt of contract demand to supplement energy available at the 
Laurel Project. A contract year is defined as the 12 months beginning 
July 1 and ending at midnight June 30 of the following calendar year. 
The energy made available for a contract year shall be scheduled 
monthly such that the maximum amount scheduled in any month shall not 
exceed 240 hours per kilowatt of the customer's contract demand and the 
minimum amount scheduled in any month shall not be less than 60 hours 
per kilowatt of the customer's contract demand. The customer may 
request and the Government may approve energy scheduled for a month 
greater than 240 hours per kilowatt of the customer's

[[Page 58797]]

contract demand; provided, that the combined schedule of all 
Southeastern customers outside TVA and served by TVA does not exceed 
240 hours per kilowatt of the total contract demands of these 
customers.
    Service Interruption:
    When delivery of capacity is interrupted or reduced due to 
conditions on the Administrator's system beyond his control, the 
Administrator will continue to make available the portion of his 
declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN22SE11.002

Wholesale Power Rate Schedule CM-1-H
    Availability:
    This rate schedule shall be available to the South Mississippi 
Electric Power Association, Municipal Energy Agency of Mississippi, and 
Mississippi Delta Energy Agency (hereinafter called the Customers).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 161,000 volts to the 
transmission systems of Mississippi Power and Light.
    Points of Delivery
    The points of delivery will be at interconnection points of the 
Tennessee Valley Authority (TVA) system and the Mississippi Power and 
Light system. Other points of delivery may be as agreed upon.
    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective on the last day 
of each calendar month.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission Charge:
    The Customer will pay a ratable percent listed below of the credit 
the Administrator of Southeastern Power Administration (Administrator) 
provides to the TVA as consideration for delivering capacity and energy 
for the account of the Administrator to points of delivery of Other 
Customers or interconnection points of delivery with other electric 
systems for the benefit of Other Customers, as agreed by contract 
between the Administrator and TVA.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Mississippi Delta Energy Agency..............................      2.058
Municipal Energy Agency of Mississippi.......................      3.447
South Mississippi EPA........................................      9.358
------------------------------------------------------------------------

    Energy to be Furnished by the Government:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U.S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $4.245 per kilowatt/month of total contract demand.
    Energy Charge:
    None.

[[Page 58798]]

    Energy to be Furnished by the Government:
    The Government shall make available each contract year to the 
Customer from the Projects through the Customer's interconnections with 
TVA and the Customer will schedule and accept an allocation of 1500 
kilowatt-hours of energy delivered at the TVA border for each kilowatt 
of contract demand. A contract year is defined as the 12 months 
beginning July 1 and ending at midnight June 30 of the following 
calendar year. The energy made available for a contract year shall be 
scheduled monthly such that the maximum amount scheduled in any month 
shall not exceed 240 hours per kilowatt of the Customer's contract 
demand and the minimum amount scheduled in any month shall not be less 
than 60 hours per kilowatt of the Customer's contract demand. The 
Customer may request and the Government may approve energy scheduled 
for a month greater than 240 hours per kilowatt of the Customer's 
contract demand; provided, that the combined schedule of all 
Southeastern Customers outside TVA and served by TVA does not exceed 
240 hours per kilowatt of the total contract demands of these 
Customers.
    In the event that any portion of the capacity allocated to the 
Customers is not initially delivered to the Customers as of the 
beginning of a full contract year, the 1500 kilowatt hours shall be 
reduced 1/12 for each month of that year prior to initial delivery of 
such capacity.
    Service Interruption:
    When delivery of capacity is interrupted or reduced due to 
conditions on the Administrator's system beyond his control, the 
Administrator will continue to make available the portion of his 
declaration of energy that can be generated with the capacity 
available.
    For such interruption or reduction due to conditions on the 
Administrator's system which have not been arranged for and agreed to 
in advance, the demand charge for capacity made available will be 
reduced as to the kilowatts of such capacity which have been 
interrupted or reduced in accordance with the following formula:
[GRAPHIC] [TIFF OMITTED] TN22SE11.003

Wholesale Power Rate Schedule CC-1-I
    Availability:
    This rate schedule shall be available to public bodies and 
cooperatives served through the facilities of Carolina Power & Light 
Company, Western Division (hereinafter called the Customers).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 161,000 volts to the 
transmission system of Carolina Power & Light Company, Western 
Division.
    Points of Delivery:
    The points of delivery will be at interconnecting points of the 
Tennessee Valley Authority (TVA) system and the Carolina Power & Light 
Company, Western Division system. Other points of delivery may be as 
agreed upon.
    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective, on the last 
day of each calendar month.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U. S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    TVA Transmission Charge:
    The Customer will pay a ratable percent listed below of the credit 
the Administrator of Southeastern Power Administration (Administrator) 
provides to the TVA as consideration for delivering capacity and energy 
for the account of the Administrator to points of delivery of Other 
Customers or interconnection points of delivery with other electric 
systems for the benefit of Other Customers, as agreed by contract 
between the Administrator and TVA.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
French Broad EMC.............................................      1.713
Haywood EMC..................................................      0.501
Town of Waynesville..........................................      0.355
------------------------------------------------------------------------

    CP&L Transmission Charge:
    The Customer will pay a ratable percent listed below of the charge 
for transmission service furnished by Carolina Power & Light Company, 
Western Division.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
French Broad EMC.............................................     66.667
Haywood EMC..................................................     19.512
Town of Waynesville..........................................     13.821
------------------------------------------------------------------------

    Energy to be Furnished by the Government:

[[Page 58799]]

    The Government will sell to the customer and the customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to 
Carolina Power & Light Company (less applicable losses). The Customer's 
contract demand and accompanying energy allocation will be divided pro 
rata among its individual delivery points served from the Carolina 
Power & Light Company's Western Division transmission system.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $4.832 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    CP&L Transmission Charge:
    $1.3334 per kilowatt/month of total contract demand (As of July 
2011 and provided for illustrative purposes.).
    The CP&L transmission rate is subject to annual adjustment on April 
1 of each year and will be computed subject to the formula in Appendix 
A attached to the Government--Carolina Power & Light Company contract.
    Energy to be Furnished by the Government:
    The Government will sell to the customer and the customer will 
purchase from the Government energy each billing month equivalent to a 
percentage specified by contract of the energy made available to 
Carolina Power & Light Company (less six percent [6%] losses). The 
Customer's contract demand and accompanying energy allocation will be 
divided pro rata among its individual delivery points served from the 
Carolina Power & Light Company's, Western Division transmission system.
Wholesale Power Rate Schedule CK-1-H
    Availability:
    This rate schedule shall be available to public bodies served 
through the facilities of Kentucky Utilities Company, (hereinafter 
called the Customers.).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy available from the Dale Hollow, Center Hill, Wolf Creek, 
Cheatham, Old Hickory, Barkley, J. Percy Priest, and Cordell Hull 
Projects (all of such projects being hereinafter called collectively 
the ``Cumberland Projects'') and sold in wholesale quantities.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a nominal frequency of 60 hertz. The power 
shall be delivered at nominal voltages of 161,000 volts to the 
transmission systems of Kentucky Utilities Company.
    Points of Delivery:
    The points of delivery will be at interconnecting points between 
the Tennessee Valley Authority (TVA) system and the Kentucky Utilities 
Company system. Other points of delivery may be as agreed upon.
    Billing Month:
    The billing month for power sold under this schedule shall end at 
2400 hours CDT or CST, whichever is currently effective on the last day 
of each calendar month.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission Charge:
    The Customer will pay a ratable percent listed below of the credit 
the Administrator of Southeastern Power Administration (Administrator) 
provides to the TVA as consideration for delivering capacity and energy 
for the account of the Administrator to points of delivery of Other 
Customers or interconnection points of delivery with other electric 
systems for the benefit of Other Customers, as agreed by contract 
between the Administrator and TVA.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
City of Barbourville.........................................      0.404
City of Bardstown............................................      0.412
City of Bardwell.............................................      0.099
City of Benham...............................................      0.046
City of Corbin...............................................      0.477
City of Falmouth.............................................      0.108
City of Frankfort............................................      2.866
City of Madisonville.........................................      1.432
City of Nicholasville........................................      0.469
City of Owensboro............................................      4.587
City of Paris................................................      0.250
City of Providence...........................................      0.226
------------------------------------------------------------------------

    Energy to be Furnished by the Government:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U.S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement

[[Page 58800]]

under this alternative is $59,600,000, the same as the revenue 
requirement in Scenarios 1 and 3. The Rate Scenario 2 will receive 
revenues from capacity that can be scheduled and the remainder from 
energy, at charges that will be determined at the time. Under Scenario 
2, the cost of the TVA transmission credit will be passed to customers 
outside the TVA System. This rate alternative will be in effect when 
the Corps modifies operation of the Wolf Creek Project and the Center 
Hill Project to allow some of the capacity scheduled. When the lake 
level rises and capacity is available, the capacity will be allocated 
on an interim basis to the customers.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $4.245 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    Additional Energy Charge:
    10.358 mills per kilowatt-hour.
    Energy to be Furnished by the Government:
    The Government shall make available each contract year to the 
Customer from the Projects and the Customer will accept an allocation 
of 1500 kilowatt-hours of energy for each kilowatt of contract demand. 
A contract year is defined as the 12 months beginning July 1 and ending 
at midnight June 30 of the following calendar year. The energy made 
available for a contract year shall be scheduled monthly such that the 
maximum amount scheduled in any month shall not exceed 240 hours per 
kilowatt of the Customer's contract demand and the minimum amount 
scheduled in any month shall not be less than 60 hours per kilowatt of 
the Customer's contract demand. The Customer may request and the 
Government may approve energy scheduled for a month greater than 240 
hours per kilowatt of the Customer's contract demand; provided, that 
the combined schedule of all Southeastern Customers outside TVA and 
served by TVA does not exceed 240 hours per kilowatt of the total 
contract demands of these Customers.
    In the event that any portion of the capacity allocated to the 
Customers is not initially delivered to the Customers as of the 
beginning of a full contract year, the 1500 kilowatt hours shall be 
reduced \1/12\ for each month of that year prior to initial delivery of 
such capacity.
    For billing purposes, each kilowatt of capacity will include 1500 
kilowatt-hours energy per year. Customers will pay for additional 
energy at the additional energy rate.
Wholesale Power Rate Schedule CTV-1-H
    Availability:
    This rate schedule shall be available to the Tennessee Valley 
Authority (hereinafter called TVA).
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy generated at the Dale Hollow, Center Hill, Wolf Creek, Old 
Hickory, Cheatham, Barkley, J. Percy Priest, and Cordell Hull Projects 
(all of such projects being hereafter called collectively the 
``Cumberland Projects'') and the Laurel Project sold under agreement 
between the Department of Energy and TVA.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a frequency of approximately 60 hertz at 
the outgoing terminals of the Cumberland Projects' switchyards.
    Billing Month:
    The billing month for capacity and energy sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.
    Contract Year:
    For purposes of this rate schedule, a contract year shall be as in 
Section 13.1 of the Southeastern Power Administration--Tennessee Valley 
Authority Contract.
    Power Factor:
    TVA shall take capacity and energy from the Department of Energy at 
such power factor as will best serve TVA's system from time to time; 
provided, that TVA shall not impose a power factor of less than .85 
lagging on the Department of Energy's facilities which requires 
operation contrary to good operating practice or results in overload or 
impairment of such facilities.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U.S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rates:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Energy to be Made Available:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U.S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. Under 
Scenario 2, the cost of the TVA transmission credit will be passed to 
customers outside the TVA System. This rate alternative will be in 
effect when the Corps modifies operation of the Wolf Creek Project and 
the Center Hill Project to allow some of the capacity scheduled. When 
the lake level rises and capacity is available, the capacity will be 
allocated on an interim basis to the customers.

[[Page 58801]]

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $2.779 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    Additional Energy Charge:
    10.358 mills per kilowatt-hour.
    Energy to be Made Available:
    The Department of Energy shall determine the energy that is 
available from the projects for declaration in the billing month.
    To meet the energy requirements of the Department of Energy's 
customers outside the TVA area (hereinafter called Other Customers), 
768,000 megawatt-hours of net energy shall be available annually 
(including 36,900 megawatt-hours of annual net energy to supplement 
energy available at Laurel Project). The energy requirement of the 
Other Customers shall be available annually, divided monthly such that 
the maximum available in any month shall not exceed 240 hours per 
kilowatt of total Other Customers contract demand, and the minimum 
amount available in any month shall not be less than 60 hours per 
kilowatt of total Other Customers demand.
    In the event that any portion of the capacity allocated to Other 
Customers is not initially delivered to the Other Customers as of the 
beginning of a full contract year, (July through June), the 1500 hours, 
plus any such additional energy required as discussed above, shall be 
reduced \1/12\ for each month of that year prior to initial delivery of 
such capacity.
    The energy scheduled by TVA for use within the TVA System in any 
billing month shall be the total energy delivered to TVA less (1) An 
adjustment for fast or slow meters, if any, (2) an adjustment for 
Barkley-Kentucky Canal of 15,000 megawatt-hours of energy each month 
which is delivered to TVA under the agreement from the Cumberland 
Projects without charge to TVA, (3) the energy scheduled by the 
Department of Energy in said month for the Other Customers plus losses 
of two percent [2%], and (4) station service energy furnished by TVA.
    Each kilowatt of capacity will include 1500 kilowatt-hours of 
energy per year, which is defined as base energy. Energy received in 
excess of 1500 kilowatt-hours per kilowatt will be subject to an 
additional energy charge identified in the monthly rates section of 
this rate schedule.
    Service Interruption:
    When delivery of capacity to TVA is interrupted or reduced due to 
conditions on the Department of Energy's system that are beyond its 
control, the Department of Energy will continue to make available the 
portion of its declaration of energy that can be generated with the 
capacity available.
    For such interruption or reduction (exclusive of any restrictions 
provided in the agreement) due to conditions on the Department of 
Energy's system which have not been arranged for and agreed to in 
advance, the demand charge for scheduled capacity made available to TVA 
will be reduced as to the kilowatts of such scheduled capacity which 
have been so interrupted or reduced for each day in accordance with the 
following formula:
[GRAPHIC] [TIFF OMITTED] TN22SE11.004

Wholesale Power Rate Schedule CTVI-1-A
    Availability:
    This rate schedule shall be available to customers (hereinafter 
called the Customer) who are or were formerly in the Tennessee Valley 
Authority (hereinafter called TVA) service area.
    Applicability:
    This rate schedule shall be applicable to electric capacity and 
energy generated at the Dale Hollow, Center Hill, Wolf Creek, Old 
Hickory, Cheatham, Barkley, J. Percy Priest, and Cordell Hull Projects 
(all of such projects being hereafter called collectively the 
``Cumberland Projects'') and the Laurel Project sold under agreement 
between the Department of Energy and the Customer.
    Character of Service:
    The electric capacity and energy supplied hereunder will be three-
phase alternating current at a frequency of approximately 60 hertz at 
the outgoing terminals of the Cumberland Projects' switchyards.
    Billing Month:
    The billing month for capacity and energy sold under this schedule 
shall end at 2400 hours CDT or CST, whichever is currently effective, 
on the last day of each calendar month.
    Contract Year:
    For purposes of this rate schedule, a contract year shall be as in 
Section 13.1 of the Southeastern Power Administration--Tennessee Valley 
Authority Contract.
    Southeastern Power Administration (Southeastern) is including three 
rate alternatives. All of the rate alternatives have a revenue 
requirement of $59,600,000.

Rate Scenario 1--Interim Operating Plan

    The final marketing policy for the Cumberland System was published 
in the Federal Register August 5, 1993 (58 FR 41762). The marketing 
policy for the Cumberland System of Projects provides peaking capacity, 
along with 1500 hours of energy annually with each kilowatt of 
capacity, to customers outside the TVA transmission system. Due to 
restrictions on the operation of the Wolf Creek Project and the Center 
Hill Project imposed by the U. S. Army Corps of Engineers (Corps) as a 
precaution to prevent failure of the dams, Southeastern is not able to 
provide peaking capacity to these customers. Southeastern implemented 
an Interim Operating Plan for the Cumberland System to provide these 
customers with energy that did not include capacity. The rates under 
Scenario 1 will remain in effect for the duration of the Interim 
Operating Plan.
    Monthly Rates:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    None.
    Energy Charge:
    17.69 mills per kilowatt-hour.
    Transmission Charge:
    The initial charge for transmission and Ancillary Services will be 
the

[[Page 58802]]

Customer's ratable share of the charges for transmission, distribution, 
and ancillary services paid by the Government. The charges for 
transmission and ancillary services are governed by and subject to 
refund based upon the determination in proceedings before the Federal 
Energy Regulatory Commission (FERC) or other overseeing entity 
involving the TVA's and other transmission provider's Open Access 
Transmission Tariff (OATT).
    Proceedings before FERC or other overseeing entity involving the 
OATT or the Distribution charge may result in the separation of charges 
currently included in the transmission rate. In this event, the 
Government may charge the Customer for any and all separate 
transmission, ancillary services, and distribution charges paid by the 
Government in behalf of the Customer. These charges could be recovered 
through a capacity charge or an energy charge, as determined by the 
Government.
    Energy to be Made Available:
    The Customer will receive a ratable share of the energy made 
available by the Nashville District of the U. S. Army Corps of 
Engineers.

Rate Scenario 2--Cost Recovered From Capacity and Energy

    This rate alternative will be implemented if a portion of the 
Cumberland Capacity can be scheduled, though not all the capacity in 
the published marketing policy can be scheduled. The revenue 
requirement under this alternative is $59,600,000, the same as the 
revenue requirement in Scenarios 1 and 3. The Rate Scenario 2 will 
receive revenues from capacity that can be scheduled and the remainder 
from energy, at charges that will be determined at the time. This rate 
alternative will be in effect when the Corps modifies operation of the 
Wolf Creek Project and the Center Hill Project to allow some of the 
capacity scheduled. When the lake level rises and capacity is 
available, the capacity will be allocated on an interim basis to the 
customers. The Customer will pay the same rate for capacity and energy 
as TVA. The Customer will pay their ratable share of any transmission 
charges paid in behalf of the Customer.

Rate Scenario 3--Original Cumberland Marketing Policy

    The third rate alternative will go into effect once the Corps lifts 
all restrictions on the operation of the Wolf Creek Dam and Center Hill 
Dam and Southeastern returns to operations that support the published 
marketing policy.
    Monthly Rate:
    The monthly rate for capacity and energy sold under this rate 
schedule shall be:
    Demand Charge:
    $2.779 per kilowatt/month of total contract demand.
    Energy Charge:
    None.
    Additional Energy Charge:
    10.358 mills per kilowatt-hour.
    Transmission Charge:
    The initial charge for transmission and Ancillary Services will be 
the Customer's ratable share of the charges for transmission, 
distribution, and ancillary services paid by the Government. The 
charges for transmission and ancillary services are governed by and 
subject to refund based upon the determination in proceedings before 
FERC or other overseeing entity involving the TVA's and other 
transmission provider's Open Access Transmission Tariff (OATT).
    Proceedings before FERC or other overseeing entity involving the 
OATT or the Distribution charge may result in the separation of charges 
currently included in the transmission rate. In this event, the 
Government may charge the Customer for any and all separate 
transmission, ancillary services, and distribution charges paid by the 
Government in behalf of the Customer. These charges could be recovered 
through a capacity charge or an energy charge, as determined by the 
Government.
    Energy To Be Made Available:
    The energy will be scheduled by TVA and the Customer will receive 
their ratable share, in accordance with the Government-Customer 
Contract. Energy shall be accounted for, in accordance with agreements 
with TVA.
    The Customer will receive a ratable share of their capacity, in 
accordance with the Government-Customer Contract.
    Service Interruption:
    When delivery of capacity to TVA is interrupted or reduced due to 
conditions on the Department of Energy's system that are beyond its 
control, the Department of Energy will continue to make available the 
portion of its declaration of energy that can be generated with the 
capacity available. The customer will receive a ratable share of this 
capacity.
    For such interruption or reduction (exclusive of any restrictions 
provided in the agreement) due to conditions on the Department of 
Energy's system which have not been arranged for and agreed to in 
advance, the demand charge for scheduled capacity made available to the 
Customer will be reduced as to the kilowatts of such scheduled capacity 
which have been so interrupted or reduced for each day in accordance 
with the following formula:
[GRAPHIC] [TIFF OMITTED] TN22SE11.005

Wholesale Rate Schedule Replacement-3
    Availability:
    This rate schedule shall be available to public bodies and 
cooperatives (any one of whom is hereinafter called the Customer) in 
Virginia, North Carolina, Tennessee, Georgia, Alabama, Mississippi, 
Kentucky and southern Illinois to whom power is provided pursuant to 
contracts between the Government and the customer from the Dale Hollow, 
Center Hill, Wolf Creek, Cheatham, Old Hickory, Barkley, J. Percy 
Priest, Cordell Hull, and Laurel Projects (all of such projects being 
hereinafter called collectively the ``Cumberland Projects'') .
    Applicability:
    This rate schedule shall be applicable to the sale of wholesale 
energy purchased to meet contract minimum energy sold under appropriate 
contracts between the Government and the Customer.
    Character of Service:
    The energy supplied hereunder will be delivered at the delivery 
points provided for under appropriate contracts between the Government 
and the Customer.
    Monthly Charge:
    The rate for replacement energy will be a formulary capacity charge 
based on the monthly cost to the Government to

[[Page 58803]]

purchase replacement energy necessary to support capacity in the 
Cumberland System divided by the capacity available from the Cumberland 
System, which is 950,000 kilowatts in the published power marketing 
policy. The capacity rate will be adjusted for any capacity retained by 
the Customer's transmission facilitator.
    Conditions of Service:
    The customer shall at its own expense provide, install, and 
maintain on its side of each delivery point the equipment necessary to 
protect and control its own system.

[FR Doc. 2011-24224 Filed 9-21-11; 8:45 am]
BILLING CODE 6450-01-P
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