CENTRAL ARIZONA PROJECT

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CENTRAL ARIZONA PROJECT
PUBLIC INFORMATION FORUM PHOENIX, ARIZONA JULY
22, 2005
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Public Information Forum Central Arizona
Project Transmission Service Rate Process

• JULY 22, 2005
• Welcome Introduction
• Rate Activity Schedule
• Rate Methodologies
• Investments
• Operation Maintenance
• Rate Design
• Next Steps/Questions

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Rate Activity Schedule Central Arizona Project
Published Federal Register Notice July 1,
2005 Informal Customer Meeting
July 12, 2005 Public Information Forum
July 22, 2005 Public Comment Forum
August 22, 2005 Close of Comment
Period September 29, 2005 Rate
Order to Administrator October 22,
2005 Rate Order to Secretary
Administrator Approval Rates Effective
January 1, 2006
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Central Arizona Project (CAP)Brief History

• CAP Authorized by Colorado River Basin Project
  Act
• Act approved for comprehensive development of
  Colorado River water resources
• CAWCD project use beneficiary of CAP
• CAP transmission system designed/built to be
  fully integrated part of Federal system

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Central Arizona Project

• Western operates maintains CAP transmission
  lines substations
• Western markets transmission capacity in excess
  of CAP pumping loads sets rate for transmission
  service
• Existing rate of 9.83 per kW per year set in
  2001 expires 12/31/2005

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Central Arizona Project Transmission Service
Rate Process

• Firm Point-to-Point Transmission Service
• Non Firm Point-to-Point Transmission Service
• Network Integration Transmission Service (NITS)

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Rate Formulae

• Firm Point-To-Point Transmission Service
• Western seeking approval for a formula rate
• Yearly rate equal to the Annual Transmission
  Revenue Requirement (ATRR) divided by the average
  contract rate of delivery
• Based on current data, rate 8.74 per kW per
  year
• Monthly rate (charged on bills) equal to yearly
  rate divided by 12, rounded to the nearest cent
• Rate will be reviewed annually using 5 year
  evaluation period to determine adequacy

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Rate Formulae

• Nonfirm Point-To-Point Transmission Service
• Determined as a derivative of the yearly firm
  point to point transmission rate.
• Billed on an hourly basis
• Equal to yearly Firm Point to Point Transmission
  rate, divided by 8,760, divided by .60 multiplied
  by 1000 and rounded to two decimal places.
• Calculation gives current maximum rate of 1.66
  mills/kWh
• Changes in firm point to point rate will result
  in changes to the non firm rate

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Rate Formulae

• Network Integration Transmission Service (NITS)
• Difference from firm point to point customer
  pays for use at time of system peak rather than
  reserving (and paying for) a transmission path
• Formula Rate Monthly Charge Transmission
  Customers Load-Ratio Share x (Revenue
  Requirement / 12)
• Calculation of Load-Ratio Share (LRS)
• Identify system peak hour
• Determine NITS customers total delivery for peak
  hour
• Determine system load at peak hour
• Use 12 CP sum of customers network delivery
  averaged over 12 months
• LRS 12 CP divided by average system load at
  peak

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Revenue Requirements

• Capital Investment Costs
• Operation and Maintenance Costs
• Other Costs

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Transmission Capital Investment Repayment
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Operation and Maintenance Budget Projections
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Annual Average Estimated Costs for Cost
Evaluation Period FY 2006 to FY 2010
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Rate Design

• Formula Rate Net average annual costs for
  5-year cost evaluation period divided by 5-year
  average contract rate of delivery (CROD)
• Total estimated costs for 2006-2010 evaluation
  period 7,337,326.4
• CROD estimated 5-year average 839,869 kW
• Resulting rate 8.74 per kW per year
• 0.73 per kW per month
• 0.17 per kW per week
• 0.02 per kW per day

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Next Steps/Questions

• Public Comment Forum 8/22/05
• Close of Comment Period 9/29/05
• Rates Effective 1/1/06
• Questions/Comments???