2010-3344. Proposed Rate Adjustment for Kerr-Philpott System

AGENCY:

Southeastern Power Administration (Southeastern), DOE.

ACTION:

Notice of public hearing and opportunities for review and comment.

SUMMARY:

Southeastern proposes to replace existing schedules of rates and charges applicable for the sale of power from the Kerr-Philpott System effective for a five-year period from October 1, 2010, to September 30, 2015. Additionally, opportunities will be available for interested persons to review the present rates, the proposed rates and supporting studies, to participate in a public forum, and to submit written comments. Southeastern will evaluate all comments received in this process.

DATES:

Written comments are due on or before May 24, 2010. A public information and comment forum will be held in Raleigh, North Carolina, at 10 a.m. on March 30, 2010. Persons desiring to speak at the forum should notify Southeastern at least seven (7) days before the forum is scheduled so that a list of forum participants can be prepared. Others present at the forum may speak if time permits. Persons desiring to attend the forum should notify Southeastern at least seven (7) days before the forum is scheduled. Unless Southeastern has been notified by the close of business on March 23, 2010, that at least one person intends to be present at the forum, the forum may be canceled with no further notice.

ADDRESSES:

Written comments should be submitted to: Kenneth E. Legg, Administrator, Southeastern Power Administration, Department of Energy, Elberton, GA 30635. The public comment forum will meet at the Marriott-Raleigh Crabtree Valley, 4500 Marriott Drive, Raleigh, NC 27612, phone [phone].

FOR FURTHER INFORMATION CONTACT:

Leon Jourolmon, Assistant Administrator, Finance and Marketing, Southeastern Power Administration, Department of Energy, 1166 Athens Tech Road, Elberton, GA 30635-6711, [phone].

SUPPLEMENTARY INFORMATION:

The Federal Energy Regulatory Commission (FERC), by order issued December 8, 2006,117 FERC ¶ 62,220, confirmed and approved Rate Schedules VA-1-A, VA-2-A, VA-3-A, VA-4-A, CP&L-1-A, CP&L-2-A, CP&L-3-A, CP&L-4-A, AP-1-A, AP-2-A, AP-3-A, AP-4-A, NC-1-A, Replacement-2, and VANC-1 for the period October 1, 2006, to September 30, 2011. A repayment study prepared in January of 2010 showed that existing rates are not adequate to recover all costs required by present repayment criteria. Due to the projected shortfall a revised repayment study was prepared with a revenue increase of $3,723,000 in Fiscal Year 2011 and all future years. The revised repayment plan shows that all costs will be repaid within their service life. Therefore, Southeastern is proposing to revise the existing rates to generate this additional revenue. The increase is primarily due to a severe drought. The rate adjustment is an increase of about 20 percent.

Proposed Unit Rates

Under the proposed rates, the capacity charge will increase from the current $2.98 per kilowatt per month to $3.91 per kilowatt per month. The energy charge will increase from the current 11.90 mills per kilowatt-hour to 15.66 mills per kilowatt-hour. In addition, Southeastern proposes to continue a Tandem Transmission rate, which is designed to recover the cost of transmitting power from a project to the border of another transmitting system. This rate is to be a formulary pass-through rate based on the charges by transmission facilitators and is estimated to be $2.14 per kilowatt per month.

In addition to these proposed rate adjustments, Southeastern is proposing to continue a true-up based on the costs that are transferred to plant in service in the preceding fiscal year to cover the costs associated with this rehabilitation. The John H. Kerr Project is currently undergoing rehabilitation, and a true-up adjustment is incorporated in the current rates. For each increase of $1,000,000 to plant in service, an increase of $0.013 per kilowatt per month will be added to the capacity charge, and 0.052 mills per kilowatt-hour will be added to the energy charge.

Southeastern is proposing the following rate schedules to be effective for the period from October 1, 2010, to September 30, 2015. The capacity charge and energy charge will be the same for all rate schedules. These rate schedules are necessary to accommodate the transmission and scheduling arrangements that are available in the Kerr-Philpott System.

Rate Schedule VA-1-B

Available to public bodies and cooperatives in Virginia and North Carolina to whom power may be transmitted and scheduled pursuant to contracts between the Government, Virginia Electric and Power Company (also known as Dominion Virginia Power [DVP]), and DVP's Transmission Operator, currently PJM Interconnection, LLC (PJM).

Rate Schedule VA-2-B

Available to public bodies and cooperatives in Virginia and North Carolina to whom power may be transmitted pursuant to contracts between the Government, DVP, and PJM. The customer is responsible for providing a scheduling arrangement with the Government.

Rate Schedule VA-3-B

Available to public bodies and cooperatives in Virginia and North Carolina to whom power may be scheduled pursuant to contracts between the Government, DVP, and PJM. The customer is responsible for providing a transmission arrangement.

Rate Schedule VA-4-B

Available to public bodies and cooperatives in the service area of DVP and PJM. The customer is responsible for providing a scheduling arrangement with the Government and for providing a transmission arrangement.

Rate Schedule CP&L-1-B

Available to public bodies and cooperatives in North Carolina to whom power may be transmitted and scheduled pursuant to contracts between the Government and Carolina Power & Light (also known as Progress Energy Carolinas).

Rate Schedule CP&L-2-B

Available to public bodies and cooperatives in North Carolina to whom power may be transmitted pursuant to contracts between the Government and Carolina Power & Light. The customer is responsible for providing a scheduling arrangement with the Government.

Rate Schedule CP&L-3-B

Available to public bodies and cooperatives in North Carolina to whom power may be scheduled pursuant to contracts between the Government and Carolina Power & Light. The customer is responsible for providing a transmission arrangement.

Rate Schedule CP&L-4-B

Available to public bodies and cooperatives in the service area of Carolina Power & Light. The customer is responsible for providing a scheduling arrangement with the Government and for providing a transmission arrangement.

Rate Schedule AP-1-B

Available to public bodies and cooperatives in Virginia to whom power may be transmitted and scheduled pursuant to contracts between the Government, American Electric Power Service Corporation and the American Electric Power Service Corporation's Transmission Operator, currently and the PJM Interconnection, LLC (PJM).

Rate Schedule AP-2-B

Available to public bodies and cooperatives in Virginia to whom power may be transmitted pursuant to contracts between the Government, American Electric Power Service Corporation, and PJM. The customer is responsible for providing a scheduling arrangement with the Government.

Rate Schedule AP-3-B

Available to public bodies and cooperatives in Virginia to whom power may be scheduled pursuant to contracts between the Government, American Electric Power Service Corporation, and PJM. The customer is responsible for providing a transmission arrangement.

Rate Schedule AP-4-B

Available to public bodies and cooperatives in the service area of American Electric Power Service Corporation and PJM. The customer is responsible for providing a scheduling arrangement with the Government and for providing a transmission arrangement.

Rate Schedule NC-1-B

Available to public bodies and cooperatives in Virginia and North Carolina to whom power may be transmitted pursuant to a contract between the Government and PJM and scheduled pursuant to a contract between the Government and Carolina Power & Light.

Rate Schedule Replacement-2

This rate schedule shall be applicable to the sale energy purchased to meet contract minimum energy and sold under appropriate contracts between the Government and the Customer.

The referenced repayment studies are available for examination at 1166 Athens Tech Road, Elberton, GA 30635. Proposed Rate Schedules VA-1-B, VA-2-B, VA-3-B, VA-4-B, CP&L-1-B, CP&L-2-B, CP&L-3-B, CP&L-4-B, AP-1-B, AP-2-B, AP-3-B, AP-4-B, NC-1-A, and Replacement-2 are also available.

Dated: February 10, 2010.

Kenneth E. Legg,

Administrator.