The Western Area Power Administration has approved a single set of formula rates for four major transmission projects located in WAPA’s Desert Southwest region. Through the One Transmission Rate initiative, or OTR, DSW has consolidated the transmission rates of the Parker-Davis Project, Intertie Project, Central Arizona Project and ED5-Palo Verde Hub Project. The new formula rates are designed to combine the revenue requirement of each project and calculate a single rate for transmission service each year.
Through a Federal Register notice, WAPA published the new, combined formula rate schedules that will become effective for customers Jan. 1, 2024. WAPA has also submitted the rates to the Federal Energy Regulatory Commission for confirmation and approval on a final basis.
According to WAPA, the benefits of combining the rates of four transmission projects include:
- Allowing more efficient scheduling and use of DSW’s transmission system.
- Eliminating rate pancaking – or paying multiple charges by one entity to move electric power across multiple transmission projects.
- Providing rate stability for transmission service.
- Reducing administrative costs for DSW to manage four different transmission rates.
- Preparing for organized markets that may benefit from the geographic reach of DSW’s system.
“With strong customer support and participation through a rigorous public engagement process, we have been exploring the possibility of combining DSW’s rates for more than four years, and today this coordinated effort came to fruition,” said Administrator and CEO Tracey A. LeBeau. “The OTR initiative represents one way that WAPA keeps pace with the evolving energy industry while enhancing the value of our transmission projects and gleaning benefits for customers through collaboration and partnership.”
In February 2023, based on analysis and stakeholder feedback, WAPA initiated a public process to propose placing the OTR into effect, and by June 30, WAPA issued a Federal Register notice that began the formal public comment process for the proposed formula rates. In August, WAPA held two public information meetings to engage customers and stakeholders and gather comments. The consultation and comment period concluded in late September.
Throughout the consultation process, participants discussed many issues including transmission scheduling, pancaking, prepayment, billing, funding, tariff alignment, rate design and rate calculations.
Repayment of project investment will continue at the individual transmission project level, and the projects will remain financially independent. Revenue for each project will be based on its percentage of the total revenue requirement.
During this time of change, WAPA remains proactive and collaborative, finding and implementing efficient and cost-effective solutions that preserve the value of hydropower, protect WAPA’s transmission system and spur successful public-private partnerships with customers.
