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Central Arizona Project

Central Arizona Project. Informal Customer Meeting July 12, 2005. Agenda. Rate Review-Existing and Proposed Potential Option for Rate Design Next Steps Open Forum. Central Arizona Project (CAP) Brief History. CAP Authorized by Colorado River Basin Project Act

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Central Arizona Project

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  1. Central Arizona Project Informal Customer Meeting July 12, 2005

  2. Agenda • Rate Review-Existing and Proposed • Potential Option for Rate Design • Next Steps • Open Forum

  3. 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

  4. Central Arizona Project • Western operates & maintains transmission lines & substations that are part of CAP • Western markets transmission capacity in excess of CAP pumping loads (project use) & sets rate for transmission service • Existing rate of $9.83 per kW per year set in 2001 – expires 12/31/2005

  5. Existing Rate Design • Rate Design: Net Revenue Req/total transmission reservations • Calculation includes all reservations, including CAWCD’s system use for pumping loads • Use of this formula resulted in existing rate of $9.83 per kW per year

  6. Existing Rate Design-cont’d • Issue with existing design: CAWCD does not pay as a transmission customer • Since all reservations included in calculations, WAPA not collecting full revenue requirement from rate • Future rate proposals must ensure recovery of all costs associated with CAP transmission

  7. Proposed Rate Design • Mathematically unchanged from existing design (NRR/total reservations) • As spelled out in 7/1/05 FRN, result is a rate of $8.74 per kW per year • Lower rate result of increased reservations (denominator) and relatively stable NRR (numerator) • Details included in handout package

  8. Proposed Rate Design-cont’d • Issue Remains: calculation includes CAWCD use of transmission system for pumping loads • Proposed Resolution: CAWCD pays the equivalent of a transmission bill to serve CAP project use pumping loads • Such an arrangement would ensure all transmission related costs recovered through rate

  9. Potential Rate Design Option(“option B”) • Principle: Western must recover all CAP transmission related costs. • Option B necessary if agreement not reached for CAWCD to pay the equivalent of a transmission bill • “Option B” rate design modification necessary to ensure recovery of revenue requirement

  10. “Option B”- cont’d • Under this option CAWCD use of system removed from denominator • CAWCD pro-rata share of P&I repayment removed from numerator. CAWCD share based on CAWCD use of system as percentage of total use • Any funds received for O&M of CAP transmission system would go into calculation as “revenue credits” to reduce amount needed from rates

  11. “Option B” – cont’d • Design ensures recovery of revenue requirement • Detailed data in handouts – resulting rate using this design: $11.05 per kW per year

  12. Proposal • Regardless of rate design option, plan is to approve a formula or methodology rate • The formula would be approved for the 5-year period – actual rate may fluctuate • Allows Western to review each year to determine adequacy

  13. Next Steps • Public Information Forum scheduled for 7/22/05 at 10:00 a.m. • Public Comment Forum scheduled for 8/22/05 at 1:00 p.m. • Comment period ends 9/29/2005 • Rates effective January 1, 2006

  14. Open Forum • Questions? • Comments

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