Open Access Transmission Service Tariff

DEPARTMENT OF ENERGY

Southwestern Power Administration

Open Access Transmission Service Tariff

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of final tariff.

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SUMMARY: The Southwestern Power Administration (Southwestern) is

adopting this final Open Access Transmission Service Tariff (Final

Tariff) in accordance with the Federal Energy Regulatory Commission

(FERC) Orders 888 and 888-A, to the extent consistent with laws and

regulations applicable to Southwestern's activities.

DATES: The Final Tariff will become effective February 5, 1998. The

Final Tariff will remain in effect until superseded.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Procedures

II. Background

III. Comments Raised During the Development of this Final Tariff

IV. Summary of Significant Changes from the Southwestern's Proposed

Tariff

V. Coordination with Adoption of Open Access Transmission Rates

I. Procedures

Southwestern will submit the Final Tariff to the FERC under a non-

jurisdictional docket and will request a declaratory order that this

Final Tariff meets FERC comparability standards as forth in FERC Order

Nos. 888 and 888-A. Southwestern will make necessary changes, if any,

in response to the FERC declaratory order and will publish the revised

Final Tariff in the Federal Register.

II. Background

Southwestern Power Administration (Southwestern) was created by

Secretarial Order No. 1865, dated August 31, 1943, as an agency of the

Department of the Interior, to carry out the power marketing

responsibilities assigned to the Secretary of the Interior by Executive

Order 9366, dated July 30, 1943, and Executive Order 9373, dated August

30, 1943. Section 5 of the Flood Control Act of December 22, 1944 (58

Stat. 887, 890; 16 U.S.C. 825s) broadened the power marketing

responsibilities of the Secretary of the Interior by placing in him the

responsibility for marketing the electric power and energy generated at

reservoir projects built by and under the control of the Department of

the Army. The U.S. Department of Energy was created by an Act of the

U.S. Congress under the Department of Energy Organization Act, Public

Law 95-91, dated August 4, 1977. Pursuant to Sections 302(a) and 301(b)

of such Act, the functions of the Secretary of the Interior and the

Federal Power Commission under Section 5 of the Flood Control Act of

1944 which relate to Southwestern were transferred to and vested in the

Secretary of Energy effective October 1, 1977.

Under the said Section 5, Southwestern is enjoined to market power

and energy generated at U.S. Army Corps of Engineers dams with

preference to public bodies and cooperatives, in such manner as to

encourage the most widespread use of the resource, at the lowest

possible rates to consumers consistent with sound business principles.

The hydroelectric projects from which Southwestern currently markets

power and energy are located in the States of Arkansas, Missouri,

Oklahoma, and Texas. Southwestern is a partial requirements supplier by

the nature of its hydroelectric power resource to 93 municipal,

cooperative, and military electric systems in the States of Arkansas,

Kansas, Louisiana, Missouri, Oklahoma, and Texas. Southwestern is not a

public utility under Sections 205 and 206 of the Federal Power Act.

Southwestern is a transmitting utility subject to Section 211 of the

Federal Power Act as amended by the Energy Policy Act of 1992.

The Federal Energy Regulatory Commission (FERC) issued a Notice of

Proposed Rulemaking (NOPR) for Open Access Transmission Service,

published at 60 FR 17662, on April 7, 1995. On October 4, 1995, the

Secretary, Department of Energy (DOE), adopted a ``Power Marketing

Administration Open Transmission Access Policy'' (DOE Policy) in which

the Secretary states that DOE supports the spirit and intent of the

NOPR and directs the Power Marketing Administrations to prepare tariffs

which conform to the principles set forth in the FERC's final rule.

FERC issued its final rule, Order No. 888, published at 61 FR 21540, on

May 10, 1996, and followed with supplementary Order No. 888-A,

published at 62 FR 12273, on March 14, 1997.

Southwestern began its formal process of developing this Final

Tariff when it issued a Notice of Proposed Tariff published at 62 FR

50307 on September 25, 1997 (proposed Tariff). Southwestern's Final

Tariff is based on the suggested open access transmission tariff

published as Appendix B to FERC Order No. 888-A (pro forma tariff). On

October 9, 1997, Southwestern held a public information meeting at its

Tulsa, Oklahoma offices. The formal comment period for the proposed

Tariff lasted 45 days. Comments received during this formal period were

considered in the development of the Final Tariff. Southwestern will

submit the Final Tariff to FERC under a non-jurisdictional docket and

request a declaratory order from FERC that the Final Tariff meets or

exceeds the FERC comparability standards set forth in FERC Orders No.

888 and 888-A.

The transmission facilities which Southwestern owns and operates

are committed to the delivery of Federal hydroelectric capacity and

energy under

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the terms and conditions of electric service contracts which implement

Southwestern's statutory obligations to market Federal power.

Fulfillment of such obligations is complementary with the provisions of

the Final Tariff. Transmission service provided by Southwestern under

the Final Tariff is available for the transmission capacity in

Southwestern's system in excess of that required by Southwestern for

the integration of its resources for the long-term reliable delivery of

Federal power allocated to customers under contract to Southwestern.

Nothing in the Final Tariff alters, amends, or abridges the statutory

or contractual obligations of Southwestern to market and deliver

Federal power resources and to repay the Nation's investment in the

generation and transmission facilities from which Southwestern markets

hydropower and energy.

Southwestern has prepared this Final Tariff and service agreements

to provide transmission service comparable to that required of public

utilities by FERC Orders No. 888 and 888-A, and to implement those

Orders consistent with DOE Policy. Southwestern intends to provide Firm

and Non-Firm Point-to-Point Transmission Service and Network

Integration Transmission Service under the terms and conditions of the

Final Tariff. The Final Tariff does not include any rates or charges

for services, as Southwestern's rates are developed under a separate

public process pursuant to applicable Federal law and regulations.

However, Southwestern's rate schedule for non-Federal transmission

service has been developed in coordination with the provisions of the

pro forma Tariff and conforms in all respects to the Final Tariff.

Service agreements which incorporate the Final Tariff will also include

Southwestern's rate schedule for non-Federal transmission service.

Based on a reasonable level of risk, Southwestern has historically

marketed the maximum practical power from its resources, leaving little

or no flexibility for provision of additional power services. Changes

in water conditions frequently affect the ability of hydroelectric

projects to meet obligations on a short-term basis. The unique

characteristics of the hydro resource and its inherent limitations due

to changing water conditions may limit Southwestern's ability to

provide generation-related services such as ancillary services and

redispatching under the Final Tariff.

III. Comments Raised During the Development of This Final Tariff

The formal public comment period produced a number of comments

about the proposed Tariff. The following discussion highlights the more

significant comments and Southwestern's responses.

Comment. Commentors expressed concern that Southwestern did not

specify power loss factors and rates in the proposed Tariff.

Response. Southwestern chose not to duplicate matters in the Tariff

which are covered in its rate schedules. The rate schedules are

developed under a separate process dictated by Federal regulations

which includes a significant public participation process. Four percent

losses, based on a recent loss study, are included in the proposed rate

schedules which are expected to go into effect January 1, 1998.

Comment. Commentors were concerned about Southwestern's statement

in the proposed Tariff that Network Service may not be provided. A

commentor finds Attachments F, G, and H, having to do with Network

Service, inadequate.

Response. Southwestern has determined that Network Integration

Transmission Service will be provided, and is addressed in its proposed

rate schedule for non-Federal transmission service. Southwestern is

publishing a network service agreement in Attachment F to the Final

Tariff. Attachment G, on the Network Operating Agreement, has not been

changed from the proposed Tariff because Southwestern expects that, in

the event that network service is requested, the operating agreements

will be unique to each arrangement and will be individually negotiated.

Attachment H does not specify Southwestern's annual revenue

requirement, but refers to Southwestern's rate schedule for non-Federal

transmission service which has that information. This reference is

consistent with Southwestern's decision to place all matters related

directly to rates in the rate schedules rather than in the Final

Tariff.

Comment. Commentors objected to the changes Southwestern proposes

to make in the pro forma tariff provisions related to stranded costs

(Sections 26 and 34.5) and related to payment for direct assignment

facilities, ancillary services, and study costs (Section 34). The

objection was that citing applicable Federal law and regulations as the

guidance for such actions is more vague than the original language

which cites FERC Order No. 888 and FERC policy, respectively, as the

guidance for such recovery.

Response. Southwestern originally made the changes to the proposed

Tariff because Southwestern is not under the jurisdiction of the FERC.

However, upon a closer reading of these sections, Southwestern has

determined that acknowledging the guidance of the FERC in these matters

does not impair Southwestern's non-jurisdictional status. Accordingly,

Southwestern has returned, in part, to the pro forma tariff language in

Sections 26 and 34.5. In Section 34, Southwestern changed the phrase

``Federal policy'' in the proposed Tariff to ``Federal practice'' in

the Final Tariff, which effectively makes the cited guideline more

limited and specific.

Comment. A commentor was concerned that Southwestern has not

deleted language in some sections, such as 20.2 and 21.2, which may

suggest that the FERC has jurisdiction over Southwestern greater than

it does indeed have. The commentor requested additional deletions in

these and other sections or recommended that references to FERC policy

or rules be amended to refer instead to Federal laws, regulations, and

policies.

Response. The DOE Policy issued October 4, 1995, directs

Southwestern to offer transmission service in a manner comparable to

the FERC's final rule on open access transmission service ``to the

extent not otherwise prohibited by law.'' Upon examination,

Southwestern judges that the specific recommended changes are not

necessary to preserve Southwestern's non-jurisdictional status, so the

suggested changes were not incorporated into the Final Tariff.

Comment. A commentor objects to any provisions which would permit

Southwestern to provide service without an executed agreement.

Response. Southwestern prefers to provide service only when an

executed Service Agreement exists, and intends to avoid providing

service without the protection of an executed agreement if at all

possible. However, in the present utility environment, Southwestern

believes it must be able to initiate transmission service without an

executed agreement, if necessary. Accordingly, Southwestern did not

change the provisions of its proposed Tariff which address this matter.

Comment. A commentor made several suggestions for additions to the

pro forma tariff language which would state, in various forms, that

Southwestern is limited to actions which are consistent with its

authorities granted under Federal law, regulations, or policies.

Response. Southwestern is indeed limited in its actions due to its

status as

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a Federal agency. However, in all but one of the cases where such

additions were suggested, Southwestern determined that necessary

limitations were implicit in the pro forma tariff language and did not

require an explicit statement. While such additions could be proper,

Southwestern has adhered to the principle of avoiding making changes,

either of omission or addition, to the pro forma tariff language unless

such changes are necessary to preserve Southwestern's authorities and

obligations under Federal law, regulations, and policies. Except for an

addition to Section 13.5, the proposed changes were not considered

necessary for such preservation.

Comment. Commentors found the language in Attachment J stating that

Federal Customers are considered to be the equivalent to Native Load

Customers insufficient to protect the rights of Federal power

customers. One commentor recommended that Southwestern insert a

``binding provision'' in the body of the Final Tariff to the effect

that the Tariff applies only to transmission capacity in excess of the

requirements of Southwestern's primary mission. Others suggested that

the pro forma tariff definition of Native Load Customer be amended to

reflect Southwestern's statutory obligations to market and deliver

Federal power and energy, or recommended other changes to Attachment J.

Response. Southwestern edited Attachment J to strengthen and

clarify its authority and obligations and inserted the new language as

a Preamble to the Final Tariff. Southwestern removed the language which

stated that its Federal power customers are the equivalent of Native

Load Customers, and did not alter the pro forma tariff definition the

Final Tariff. Placing this language in the body of the Final Tariff

should alleviate the concerns of the commentor.

Comment. One commentor objects to the process in Section 7.3 for

customers who are in default due to non-payment of bills. The commentor

believes that Southwestern's proposed language is inferior to the pro

forma tariff language because it does not provide the same level of

recourse as the pro forma tariff.

Response. Southwestern believes that its provision for handling

customer defaults is appropriate, as referring disputes to the FERC

(pro forma tariff provision) is not consistent with Southwestern's non-

jurisdictional status. Southwestern believes that a specific reference

to the disputes resolution procedures of the Final Tariff is

unnecessary in this Section.

Comment. A commentor requests that Southwestern amend Section 9 of

the proposed Tariff to preserve customers' rights to participate in any

public process to amend the Tariff.

Response. Southwestern is committed to providing a public process

for any future changes it may make to the Final Tariff in accordance

with the Administrative Procedures Act. However, Southwestern does not

consider the Tariff itself as an appropriate place to state this

commitment. In addition, FERC's normal filing processes provide for

intervention by any interested party, which gives customers an

additional opportunity for input into the process.

Comment. A commentor made extensive comments on Southwestern's

intent to require in advance any funds needed for studies or

construction. The concerns were two-fold. First was a recommendation

that Southwestern include language in construction contracts to

delineate ownership rights for any facilities which use a customer's

advance funds, including circumstances where such facilities are not

completed. Secondly, the customer objected to Southwestern's deleting

all references in the pro forma tariff language to the return of

deposits with interest.

Response. Under the pro forma tariff, all studies and construction

are provided for under separately negotiated agreements between the

Transmission Provider and the Transmission Customer. Southwestern has

long had a practice of addressing ownership of facilities in its

construction agreements, and will continue to do so. While this matter

is not directly related to the tariff, per se, Southwestern will

endeavor to take these comments into account during any future

negotiations for study and construction agreements.

It has never been Southwestern's practice to pay interest on funds

deposited in advance for facilities studies or construction,

principally because Southwestern has no way of accruing interest on

such funds, which are directly deposited into the U.S. Treasury. If

interest were to be paid on refunded amounts, the expense would

necessarily become part of the rate base and would therefore be borne

by all customers. Therefore, Southwestern will continue to delete

language in the pro forma tariff which would require Southwestern to

pay interest on refunded amounts.

Comment. Commentors objected to Southwestern's proposal to replace

the pro forma tariff's provisions for a deposit which could be returned

with interest with a nonrefundable processing fee. The primary concern

seemed to be that the fee, which was not specified in the proposed

Tariff, might be unduly burdensome.

Response. Southwestern specifies the amounts of such fees in its

Final Tariff, based on estimated staff costs for evaluating a customer

request. Southwestern believes that the specified fees are reasonable

and should not be unduly burdensome to potential customers of these

services.

Comment. One commentor is concerned that Southwestern may wish to

charge an agency fee if Southwestern has to purchase some ancillary

services. Another commentor was concerned that Southwestern's

hydroelectric resources might be compromised by providing generation-

related ancillary services at all, and suggests that Southwestern

confine itself to brokering such ancillary services, rather than to

providing them directly. Still another suggested that further

limitations on the provision of ancillary service be inserted into the

Final Tariff, and objects to an implication that Southwestern would set

the level of some ancillary services unilaterally in service

agreements.

Response. The Final Tariff provides that, in the event that

Southwestern purchases ancillary services on behalf of a customer, the

costs are passed through to the customer. Southwestern has no intent to

charge an agency fee or other markup. Southwestern believes that the

limitations on its ability to use Federal power resources to provide

ancillary services are sufficiently set forth in its revisions to

Section 3. Language in Schedules 1 through 6 which previously indicated

that the level of some ancillary services would be set in the service

agreement has been removed. Southwestern believes that brokering

ancillary services, except when hydropower resources are severely

limited, is not a practical way to provide such services.

Comment. A commentor pointed out that the provision in Section 13.8

for submitting schedules for firm transmission service by 10:00 a.m. of

the previous day is not consistent with regional practice.

Response. Southwestern agrees, and has changed the references to

10:00 a.m. to 2:00 p.m.

Comment. A commentor was concerned about the requirement that

Energy Imbalances be corrected within 30 days and recommended a longer

period before the Transmission Customer is assessed a charge for such

service.

Response. Southwestern does not foresee this issue being a problem

based on historical interactions with those of

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its customers which are located within Southwestern's Control Area,

which are the only customers to whom this ancillary service would

apply. Again, Southwestern desires to avoid making changes to the pro

forma tariff where possible.

Comment. A commentor requests that Southwestern state for the

record that it ``intends to abide by its existing contracts, including

rates set forth in those contracts.''

Response. Southwestern will indeed abide by its existing contracts.

However, all such contracts provide that rates may be changed, as

needed, in conformity with Southwestern's rate process, which is

subject to Federal regulations and which is driven by Southwestern's

legal requirement to recover its costs and to repay the Nation for its

investment in the generation and transmission facilities from which

Southwestern markets Federal power and energy. Existing contracts

provide for terms and conditions of service, but specify that rates for

services under such contracts change when Southwestern's rates change.

Such customers have the right to terminate these contracts if they find

changed rates unsatisfactory.

Comment. A commentor expressed concern that Southwestern's decision

to not publish its standard contracts as part of the proposed Tariff

could lead to inequity for future transmission customers.

Response. Southwestern is publishing its standard Service

Agreements in the Final Tariff.

Comment. Commentors found Attachments C and D to the Tariff, on

Southwestern's methodology for assessing Available Transfer Capability

(ATC) or for doing System Impact Studies, respectively, inadequate.

Response. Southwestern changed its Attachment C to cite the

specific Southwest Power Pool (SPP) methodology for assessing ATC.

Southwestern's ATC is computed as part of the SPP, from data supplied

by Southwestern, and is not an independent Southwestern process. As

this methodology is lengthy and is publicly available, Southwestern

sees no reason to include it in greater detail in the Final Tariff.

Southwestern amends Attachment D to indicate that Southwestern is in

the process of developing and standardizing its criteria for evaluating

facilities. The new standards, when available, may be requested by any

current or potential customer.

Comment. Commentors expressed a concern about the rate calculation

process, and expressed a desire for Southwestern to develop an

``adjustment method'' for correcting over- or under-collection of

revenues for transmission services.

Response The process of rate design and calculation is not

pertinent to the Tariff. All rates for non-Federal transmission

service, and the process of their development, are handled under a

separate regulatory process. Southwestern's annual Power Repayment

Study automatically factors in any over- or under-collection of

revenues and makes necessary adjustments to the rates as warranted.

IV. Summary of Significant Changes from the Southwestern's Proposed

Tariff

Attachment J, ``Authorities and Obligations,'' of the proposed

Tariff was deleted in the Final Tariff, and an edited portion of the

original text was inserted as the Preamble to the Final Tariff.

The language added by Southwestern to the pro forma tariff in

Section 3, ``Ancillary Services'' was edited for clarity.

Southwestern amended Section 7, ``Billing and Payment,'' of the

proposed Tariff by changing the due date for invoices (7.1), by

clarifying the section (7.3) on customer default, and by adding two new

sections (7.4 and 7.5) on billing to the body of the Final Tariff, from

these provisions' previous position in the proposed service agreements.

These changes place all language on billing in one section and change

the due date provision to conform to Southwestern's invoicing practice.

Southwestern restored Section 10.1, ``Force Majeure,'' to the

language of the pro forma tariff.

Southwestern amended Section 12, ``Dispute Resolution Procedures,

by restoring most of the last sentence in 12.1 of the pro forma tariff

language, adding a new subsection, ``External Dispute Resolution

Procedures,'' and renumbering the old Section 12.2 to 12.3.

Southwestern added the phrase, ``and subject to the Transmission

Provider's authority under Federal law to complete the expansion or

upgrade'' to the end of the first sentence in Section 13.5,

``Transmission Customer Obligations for Facility Additions or

Redispatch Costs.''

Southwestern changed the scheduling deadline in Section 13.8,

``Scheduling of Firm Point-to-Point Transmission Service,'' from 10:00

a.m. to 2:00 p.m.

Southwestern changed the language in Sections 15.7 and 28.5, ``Real

Power Losses,'' from referring to service agreements for loss factors

and rates, to referring to Southwestern's rate schedules.

Southwestern changed the mailing address given in Section 17.1,

``Application,'' from Southwestern's post office box address to its

street address, to reflect a decision to phase out the post office box

address in the future.

Sections 17.3, ``Processing Fee,'' and 29.2, ``Application

Procedures,'' were amended to insert specific application processing

fees.

Sections 19.4 and 32.4, ``Facilities Study Procedures,'' were

edited to correct minor inconsistencies in language related to payment

of funds.

Section 24.3, ``Power Factor,'' was edited to reflect the fact that

Southwestern's power factor requirements are stated in its rate

schedules rather than in service agreements.

Section 25, ``Compensation for Transmission Service,'' was edited

to reflect the fact that the rates for service under the Final Tariff

are in Southwestern's rate schedule rather than in the Schedules 7 and

8 attached to the Final Tariff.

Sections 26 and 34.5, ``Stranded Cost Recovery,'' were changed by

restoring part of the original pro forma tariff language.

Section 34, ``Rates and Charges,'' was edited to change the phrase

``Federal policy'' to ``Federal practice.''

Schedules 1 through 8 were simplified and restored more nearly to

the pro forma tariff.

Southwestern deleted its Attachments A, B, and F of the proposed

Tariff, and replaced them with standard service agreements for long-

term firm transmission service, for short-term firm and non-firm

transmission service, and for network integration transmission service,

respectively.

Minor editing in Attachments C and D provide additional clarity and

specificity.

A list of transmission customers was added to Attachment E.

Attachment H was edited to remove language in the proposed Tariff

and to refer to Southwestern's rate schedule for transmission service

as the source for Southwestern's annual revenue requirement in regard

to network integration transmission service.

V. Coordination With Adoption of Open Access Transmission Rates

Southwestern's rate process, which is distinct from the rate

process used by public utilities, includes mandatory public

participation procedures, as described in 10 CFR 903. Additionally,

Southwestern's rates are reviewed by the FERC under different

parameters

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than those used for review of public utility rates.

Southwestern is presently in the process of filing new rates and

rate schedules, and expects to implement such new rates on January 1,

1998. The proposed rates for transmission service are structured in

accordance with the Final Tariff. The new rate schedules will be

attached to service agreements executed under the Tariff.

Review Under Executive Order 12866

Southwestern has an exemption from centralized regulatory review

under Executive Order 12866; accordingly, no clearance of this notice

by the Office of Management and Budget (OMB) is required.

Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires

Federal agencies to perform a regulatory flexibility analysis if a

proposed regulation is likely to have a significant economic impact on

a substantial number of small entities. Pursuant to the execution of

this Federal Register notice, the Administrator, Southwestern,

certifies that no significant economic impact on a substantial number

of small entities will occur.

A redline/strikeout comparison of Southwestern's Final Tariff to

the FERC pro forma tariff is available on the Internet at http://

www.swpa.gov.

Dated: December 18, 1997.

Michael A. Deihl,

Administrator.

Open Access Transmission Service Tariff

Table of Contents

Preamble: Authorities and Obligations

Part I. Common Service Provisions

1 Definitions

1.1 Ancillary Services.

1.2 Annual Transmission Costs.

1.3 Application.

1.4 Commission.

1.5 Completed Application.

1.6 Control Area.

1.7 Curtailment.

1.8 Delivering Party.

1.9 Designated Agent.

1.10 Direct Assignment Facilities.

1.11 Eligible Customer.

1.12 Facilities Study.

1.13 Firm Point-To-Point Transmission Service.

1.14 Good Utility Practice.

1.15 Interruption.

1.16 Load Ratio Share.

1.17 Load Shedding.

1.18 Long-Term Firm Point-To-Point Transmission Service.

1.19 Native Load Customers.

1.20 Network Customer.

1.21 Network Integration Transmission Service.

1.22 Network Load.

1.23 Network Operating Agreement.

1.24 Network Operating Committee.

1.25 Network Resource.

1.26 Network Upgrades.

1.27 Non-Firm Point-To-Point Transmission Service.

1.28 Open Access Same-Time Information System (OASIS).

1.29 Part I.

1.30 Part II.

1.31 Part III.

1.32 Parties

1.33 Point(s) of Delivery

1.34 Point(s) of Receipt

1.35 Point-To-Point Transmission Service.

1.36 Power Purchaser.

1.37 Receiving Party.

1.38 Regional Transmission Group (RTG).

1.39 Reserved Capacity.

1.40 Service Agreement.

1.41 Service Commencement Date.

1.42 Short-Term Firm Point-To-Point Transmission Service.

1.43 System Impact Study.

1.44 Third-Party Sale.

1.45 Transmission Customer.

1.46 Transmission Provider.

1.47 Transmission Provider's Monthly Transmission System Peak.

1.48 Transmission Service.

1.49 Transmission System:

2 26Initial Allocation and Renewal Procedures

2.1 Initial Allocation of Available Transmission Capability.

2.2 Reservation Priority For Existing Firm Service Customers.

3 Ancillary Services

3.1 Scheduling, System Control and Dispatch Service.

3.2 Reactive Supply and Voltage Control from Generation Sources

Service.

3.3 Regulation and Frequency Response Service.

3.4 Energy Imbalance Service.

3.5 Operating Reserve--Spinning Reserve Service.

3.6 Operating Reserve--Supplemental Reserve Service.

4 Open Access Same-Time Information System (OASIS)

5 Local Furnishing Bonds

5.1 Transmission Providers That Own Facilities Financed by

Local Furnishing Bonds.

5.2 Alternative Procedures for Requesting Transmission Service.

6 Reciprocity

7 Billing and Payment

7.1 Billing Procedures.

7.2 Interest on Unpaid Balances.

7.3 Customer Default.

7.4 Payment Processes.

7.5 Net Billing

8 Accounting for the Transmission Provider's Use of the Tariff

8.1 Transmission Revenues.

8.2 Study Costs and Revenues.

9 Regulatory Filings

10 Force Majeure and Indemnification

10.1 Force Majeure.

10.2 Indemnification.

11 Creditworthiness

12 Dispute Resolution Procedures

12.1 Internal Dispute Resolution Procedures.

12.2 External Dispute Resolution Procedures.

12.3 Administrative Disputes Resolution Act.

12.4 Rights Under The Federal Power Act.

Part II. Point-to-Point Transmission Service

Preamble

13 Nature of Firm Point-To-Point Transmission Service

13.1 Term.

13.2 Reservation Priority.

13.3 Use of Firm Transmission Service by the Transmission

Provider.

13.4 Service Agreements.

13.5 Transmission Customer Obligations for Facility Additions

or Redispatch Costs.

13.6 Curtailment of Firm Transmission Service.

13.7 Classification of Firm Transmission Service.

13.8 Scheduling of Firm Point-To-Point Transmission Service.

14 Nature of Non-Firm Point-To-Point Transmission Service

14.1 Term.

14.2 Reservation Priority.

14.3 Use of Non-Firm Point-To-Point Transmission Service by the

Transmission Provider.

14.4 Service Agreements.

14.5 Classification of Non-Firm Point-To-Point Transmission

Service.

14.6 Scheduling of Non-Firm Point-To-Point Transmission

Service.

14.7 Curtailment or Interruption of Service.

15 Service Availability

15.1 General Conditions.

15.2 Determination of Available Transmission Capability.

15.3 Initiating Service in the Absence of an Executed Service

Agreement.

15.4 Obligation to Provide Transmission Service that Requires

Expansion or Modification of the Transmission System.

15.5 Deferral of Service.

15.6 Other Transmission Service Schedules.

15.7 Real Power Losses.

16 Transmission Customer Responsibilities

16.1 Conditions Required of Transmission Customers.

16.2 Transmission Customer Responsibility for Third-Party

Arrangements.

17 Procedures for Arranging Firm Point-To-Point Transmission

Service

17.1 Application.

17.2 Completed Application.

17.3 Processing Fee.

17.4 Notice of Deficient Application.

17.5 Response to a Completed Application.

17.6 Execution of a Service Agreement.

17.7 Extensions for Commencement of Service.

18 Procedures for Arranging Non-Firm Point-To-Point Transmission

Service

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18.1 Application.

18.2 Completed Application.

18.3 Reservation of Non-Firm Point-To-Point Transmission

Service.

18.4 Determination of Available Transmission Capability.

19 Additional Study Procedures For Firm Point-To-Point Transmission

Service Requests

19.1 Notice of Need for System Impact Study.

19.2 System Impact Study Agreement and Compensation.

19.3 System Impact Study Procedures.

19.4 Facilities Study Procedures.

19.5 Facilities Study Modifications.

19.6 Due Diligence in Completing New Facilities.

19.7 Partial Interim Service.

19.8 Expedited Procedures for New Facilities.

20 Procedures if The Transmission Provider is Unable to Complete

New Transmission Facilities for Firm Point-To-Point Transmission

Service

20.1 Delays in Construction of New Facilities.

20.2 Alternatives to the Original Facility Additions.

20.3 Refund Obligation for Unfinished Facility Additions.

21 Provisions Relating to Transmission Construction and Services on

the Systems of Other Utilities

21.1 Responsibility for Third-Party System Additions.

21.2 Coordination of Third-Party System Additions.

22 Changes in Service Specifications

22.1 Modifications On a Non-Firm Basis.

22.2 Modifications On a Firm Basis.

23 Sale or Assignment of Transmission Service

23.1 Procedures for Assignment or Transfer of Service.

23.2 Limitations on Assignment or Transfer of Service.

23.3 Information on Assignment or Transfer of Service.

24 Metering and Power Factor Correction at Receipt and Delivery

Point(s)

24.1 Transmission Customer Obligations.

24.2 Transmission Provider Access to Metering Data.

24.3 Power Factor.

25 Compensation for Transmission Service

26 Stranded Cost Recovery

27 Compensation for New Facilities and Redispatch Costs

Part III. Network Integation Transmission Service

Preamble

28 Nature of Network Integration Transmission Service

28.1 Scope of Service.

28.2 Transmission Provider Responsibilities.

28.3 Network Integration Transmission Service.

28.4 Secondary Service.

28.5 Real Power Losses.

28.6 Restrictions on Use of Service.

29 Initiating Service

29.1 Condition Precedent for Receiving Service.

29.2 Application Procedures.

29.3 Technical Arrangements to be Completed Prior to

Commencement of Service.

29.4 Network Customer Facilities.

29.5 This section is intentionally left blank.

30 Network Resources

30.1 Designation of Network Resources.

30.2 Designation of New Network Resources.

30.3 Termination of Network Resources.

30.4 Operation of Network Resources.

30.5 Network Customer Redispatch Obligation.

30.6 Transmission Arrangements for Network Resources Not

Physically Interconnected With The Transmission Provider.

30.7 Limitation on Designation of Network Resources.

30.8 Use of Interface Capacity by the Network Customer.

30.9 Network Customer Owned Transmission Facilities.

31 Designation of Network Load

31.1 Network Load.

31.2 New Network Loads Connected With the Transmission

Provider.

31.3 Network Load Not Physically Interconnected with the

Transmission Provider.

31.4 New Interconnection Points.

31.5 Changes in Service Requests.

31.6 Annual Load and Resource Information Updates.

32 Additional Study Procedures For Network Integration

TransmissionService Requests

32.1 Notice of Need for System Impact Study.

32.2 System Impact Study Agreement and Compensation.

32.3 System Impact Study Procedures.

32.4 Facilities Study Procedures.

33 Load Shedding and Curtailments

33.1 Procedures.

33.2 Transmission Constraints.

33.3 Cost Responsibility for Relieving Transmission

Constraints.

33.4 Curtailments of Scheduled Deliveries.

33.5 Allocation of Curtailments.

33.6 Load Shedding.

33.7 System Reliability.

34 Rates and Charges

34.1 Monthly Demand Charge.

34.2 Determination of Network Customer's Monthly Network Load.

34.3 Determination of Transmission Provider's Monthly

Transmission System Load.

34.4 Redispatch Charge.

34.5 Stranded Cost Recovery.

35 Operating Arrangements

35.1 Operation under The Network Operating Agreement.

35.2 Network Operating Agreement.

35.3 Network Operating Committee.

Schedule 1

Scheduling, System Control and Dispatch Service

Schedule 2

Reactive Supply and Voltage Control from Generation Sources

Service

Schedule 3

Regulation and Frequency Response Service

Schedule 4

Energy Imbalance Service

Schedule 5

Operating Reserve--Spinning Reserve Service

Schedule 6

Operating Reserve--Supplemental Reserve Service

Schedule 7

Long-Term Firm and Short-Term Firm Point-to-Point Transmission

Service

Schedule 8

Non-Firm Point-to-Point Transmission Service

Attachment A

Form of Service Agreement For Firm Point-to-Point Transmission

Service

Attachment B

Form of Service Agreement For Non-Firm Point-to-Point

Transmission Service

Attachment C

Methodology to Assess Available Transmission Capability

Attachment D

Methodology for Completing a System Impact Study

Attachment E

Index of Point-to-Point Transmission Service Customers

Attachment F

Form of Service Agreement For Network Integration Transmission

Service

Attachment G

Network Operating Agreement

Attachment H

Annual Transmission Revenue Requirement For Network Integration

Transmission Service

Attachment I

Index of Network Integration Transmission Service Customers

Open Access Transmission Service Tariff

Preamble: Authorities and Obligations

Southwestern Power Administration (Southwestern) was created by

Secretarial Order No. 1865, dated August 31, 1943, as an agency of the

Department of the Interior, to carry out the power marketing

responsibilities assigned to the Secretary of the Interior by Executive

Orders 9366, dated July 30, 1943, and 9373, dated August 30, 1943.

Section 5 of the Flood Control Act of December 22, 1944 (58 Stat. 887,

890; 16 U.S.C. 825s) broadened the power marketing responsibilities of

the Secretary of the Interior by placing in him the responsibility for

marketing the electric power and energy generated at reservoir projects

built by and under the control of the Department of the Army. Under

Public Law 95-456 (92 Stat. 1230; 16 U.S.C. 825s-3), Southwestern

became part of the Department of Energy pursuant to Section 302 of the

Department of Energy Organization Act (91 Stat. 578; 42 U.S.C. 7152) in

1977.

Pursuant to the Flood Control Act of 1944, Southwestern markets

[[Page 489]]

hydroelectric power and energy which is generated at U.S. Army Corps of

Engineers (Corps) Dams in excess of project needs ``to encourage the

most widespread use thereof at the lowest possible rates to consumers

consistent with sound business principles * * *. Preference in the sale

of such power and energy shall be given to public bodies and

cooperatives.'' Further, ``only such transmission lines and related

facilities as may be necessary in order to make the power and energy

generated at such projects available in wholesale quantities for sale *

* *'' may be constructed or acquired to fulfill this mission.

Southwestern markets power and associated energy from Corps

hydroelectric generation projects in the States of Arkansas, Missouri,

Oklahoma, and Texas, primarily to customers which have received formal

allocations of specified quantities of Federal power and associated

energy (Federal Power Customers) in those states as well as in the

States of Kansas and Louisiana. By statute, Southwestern's Transmission

System was constructed to enable the integration of Southwestern's

hydroelectric power resources to satisfy Southwestern's contractual

obligations to its Federal Power customers. Southwestern sells

transmission service from federally owned or controlled facilities only

to the extent that transmission capacity is available in excess of that

necessary to reliably deliver Federal power.

Southwestern is not a jurisdictional public utility under Sections

205 and 206 of the Federal Power Act and is not specifically subject to

the requirements of the Federal Energy Regulatory Commission's (FERC)

Final Orders Nos. 888 and 888-A. However, Southwestern is a

transmitting utility subject to Section 211 of the Federal Power Act as

amended by the Energy Policy Act of 1992. Southwestern is also subject

to the reciprocity provisions of FERC Order Nos. 888 and 888-A.

Additionally, the Department of Energy has issued a Power Marketing

Administration Open Access Transmission Policy that supports the intent

of the FERC Final Rule in Order No. 888. Southwestern submits this

version of the FERC's Open Access Transmission Tariff (Tariff) as

comparable to the pro forma tariff published in FERC Order No. 888-A

with the proviso that nothing in this Tariff alters, amends, or

abridges the statutory or contractual obligations of Southwestern to

market and deliver Federal power resources and to repay the Federal

investment in the facilities from which Southwestern markets such

resources.

Part I. Common Service Provisions

1 Definitions

1.1 Ancillary Services: Those services that are necessary to

support the transmission of capacity and energy from resources to loads

while maintaining reliable operation of the Transmission Provider's

Transmission System in accordance with Good Utility Practice.

1.2 Annual Transmission Costs: The total annual cost of the

Transmission System for purposes of Network Integration Transmission

Service shall be the amount specified in Attachment H until amended by

the Transmission Provider or modified by the Commission, pursuant to

Federal law.

1.3 Application: A request by an Eligible Customer for

transmission service pursuant to the provisions of the Tariff.

1.4 Commission: The Federal Energy Regulatory Commission.

1.5 Completed Application: An Application that satisfies all of

the information and other requirements of the Tariff, including any

required application processing fee.

1.6 Control Area: An electric power system or combination of

electric power systems to which a common automatic generation control

scheme is applied in order to:

(1) Match, at all times, the power output of the generators within

the electric power system(s) and capacity and energy purchased from

entities outside the electric power system(s), with the load within the

electric power system(s);

(2) Maintain scheduled interchange with other Control Areas, within

the limits of Good Utility Practice;

(3) Maintain the frequency of the electric power system(s) within

reasonable limits in accordance with Good Utility Practice; and

(4) Provide sufficient generating capacity to maintain operating

reserves in accordance with Good Utility Practice.

1.7 Curtailment: A reduction in firm or non-firm transmission

service in response to a transmission capacity shortage as a result of

system reliability conditions.

1.8 Delivering Party: The entity supplying capacity and energy to

be transmitted at Point(s) of Receipt.

1.9 Designated Agent: Any entity that performs actions or

functions on behalf of the Transmission Provider, an Eligible Customer,

or the Transmission Customer required under the Tariff.

1.10 Direct Assignment Facilities: Facilities or portions of

facilities that are constructed by the Transmission Provider for the

sole use/benefit of a particular Transmission Customer requesting

service under the Tariff. Direct Assignment Facilities shall be

specified in the Service Agreement that governs service to the

Transmission Customer.

1.11 Eligible Customer: (i) Any electric utility (including the

Transmission Provider and any power marketer), Federal power marketing

agency, or any person generating electric energy for sale for resale is

an Eligible Customer under the Tariff. Electric energy sold or produced

by such entity may be electric energy produced in the United States,

Canada or Mexico. However, with respect to transmission service that

the Commission is prohibited from ordering by Section 212(h) of the

Federal Power Act, such entity is eligible only if the service is

provided pursuant to a state requirement that the Transmission Provider

offer the unbundled transmission service, or pursuant to a voluntary

offer of such service by the Transmission Provider. (ii) Any retail

customer taking unbundled transmission service pursuant to a state

requirement that the Transmission Provider offer the transmission

service, or pursuant to a voluntary offer of such service by the

Transmission Provider is an Eligible Customer under the Tariff.

1.12 Facilities Study: An engineering study conducted by the

Transmission Provider to determine the required modifications to the

Transmission Provider's Transmission System, including the cost and

scheduled completion date for such modifications, that will be required

to provide the requested transmission service.

1.13 Firm Point-To-Point Transmission Service: Transmission

Service under this Tariff that is reserved and/or scheduled between

specified Points of Receipt and Delivery pursuant to Part II of this

Tariff.

1.14 Good Utility Practice: Any of the practices, methods and acts

engaged in or approved by a significant portion of the electric utility

industry during the relevant time period, or any of the practices,

methods and acts which, in the exercise of reasonable judgment in light

of the facts known at the time the decision was made, could have been

expected to accomplish the desired result at a reasonable cost

consistent with good business practices, reliability, safety and

expedition. Good Utility Practice is not intended to be limited to the

optimum practice, method, or act to the exclusion of all others, but

rather to be acceptable practices, methods, or acts generally accepted

in the region.

[[Page 490]]

1.15 Interruption: A reduction in non-firm transmission service

due to economic reasons pursuant to Section 14.7.

1.16 Load Ratio Share: Ratio of a Transmission Customer's Network

Load to the Transmission Provider's total load computed in accordance

with Sections 34.2 and 34.3 of the Network Integration Transmission

Service under Part III of the Tariff and calculated on a rolling twelve

month basis.

1.17 Load Shedding: The systematic reduction of system demand by

temporarily decreasing load in response to transmission system or area

capacity shortages, system instability, or voltage control

considerations under Part III of the Tariff.

1.18 Long-Term Firm Point-To-Point Transmission Service: Firm

Point-To-Point Transmission Service under Part II of the Tariff with a

term of one year or more.

1.19 Native Load Customers: The wholesale and retail power

customers of the Transmission Provider on whose behalf the Transmission

Provider, by statute, franchise, regulatory requirement, or contract,

has undertaken an obligation to construct and operate the Transmission

Provider's system to meet the reliable electric needs of such

customers.

1.20 Network Customer: An entity receiving transmission service

pursuant to the terms of the Transmission Provider's Network

Integration Transmission Service under Part III of the Tariff.

1.21 Network Integration Transmission Service: The transmission

service provided under Part III of the Tariff.

1.22 Network Load: The load that a Network Customer designates for

Network Integration Transmission Service under Part III of the Tariff.

The Network Customer's Network Load shall include all load served by

the output of any Network Resources designated by the Network Customer.

A Network Customer may elect to designate less than its total load as

Network Load but may not designate only part of the load at a discrete

Point of Delivery. Where an Eligible Customer has elected not to

designate a particular load at discrete points of delivery as Network

Load, the Eligible Customer is responsible for making separate

arrangements under Part II of the Tariff for any Point-To-Point

Transmission Service that may be necessary for such non-designated

load.

1.23 Network Operating Agreement: An executed agreement that

contains the terms and conditions under which the Network Customer

shall operate its facilities and the technical and operational matters

associated with the implementation of Network Integration Transmission

Service under Part III of the Tariff.

1.24 Network Operating Committee: A group made up of

representatives from the Network Customer(s) and the Transmission

Provider established to coordinate operating criteria and other

technical considerations required for implementation of Network

Integration Transmission Service under Part III of this Tariff.

1.25 Network Resource: Any designated generating resource owned,

purchased, or leased by a Network Customer under the Network

Integration Transmission Service Tariff. Network Resources do not

include any resource, or any portion thereof, that is committed for

sale to third parties or otherwise cannot be called upon to meet the

Network Customer's Network Load on a non-interruptible basis.

1.26 Network Upgrades: Modifications or additions to transmission-

related facilities that are integrated with and support the

Transmission Provider's overall Transmission System for the general

benefit of all users of such Transmission System.

1.27 Non-Firm Point-To-Point Transmission Service: Point-To-Point

Transmission Service under the Tariff that is reserved and scheduled on

an as-available basis and is subject to Curtailment or Interruption as

set forth in Section 14.7 under Part II of the Tariff. Non-Firm Point-

To-Point Transmission Service is available on a stand-alone basis for

periods ranging from one hour to one month.

1.28 Open Access Same-Time Information System (OASIS): The

information system and standards of conduct contained in Part 37 of the

Commission's regulations and all additional requirements implemented by

subsequent Commission orders dealing with OASIS.

1.29 Part I: Tariff Definitions and Common Service Provisions

contained in Sections 2 through 12.

1.30 Part II: Tariff Sections 13 through 27 pertaining to Point-

To-Point Transmission Service in conjunction with the applicable Common

Service Provisions of Part I and appropriate Schedules and Attachments.

1.31 Part III: Tariff Sections 28 through 35 pertaining to Network

Integration Transmission Service in conjunction with the applicable

Common Service Provisions of Part I and appropriate Schedules and

Attachments.

1.32 Parties: The Transmission Provider and the Transmission

Customer receiving service under the Tariff.

1.33 Point(s) of Delivery: Point(s) on the Transmission Provider's

Transmission System where capacity and energy transmitted by the

Transmission Provider will be made available to the Receiving Party

under Part II of the Tariff. The Point(s) of Delivery shall be

specified in the Service Agreement for Long-Term Firm Point-to-Point

Transmission Service.

1.34 Point(s) of Receipt: Point(s) of interconnection on the

Transmission Provider's Transmission System where capacity and energy

will be made available to the Transmission Provider by the Delivering

Party under Part II of the Tariff. The Point(s) of Receipt shall be

specified in the Service Agreement for Long-Term Firm Point-to-Point

Transmission Service.

1.35 Point-To-Point Transmission Service: The reservation and

transmission of capacity and energy on either a firm or non-firm basis

from the Point(s) of Receipt to the Point(s) of Delivery under Part II

of the Tariff.

1.36 Power Purchaser: The entity that is purchasing the capacity

and energy to be transmitted under the Tariff.

1.37 Receiving Party: The entity receiving the capacity and energy

transmitted by the Transmission Provider to Point(s) of Delivery.

1.38 Regional Transmission Group (RTG): A voluntary organization

of transmission owners, transmission users and other entities approved

by the Commission to efficiently coordinate transmission planning (and

expansion), operation and use on a regional (and interregional) basis.

1.39 Reserved Capacity: The maximum amount of capacity and energy

that the Transmission Provider agrees to transmit for the Transmission

Customer over the Transmission Provider's Transmission System between

the Point(s) of Receipt and the Point(s) of Delivery under Part II of

the Tariff. Reserved Capacity shall be expressed in terms of whole

megawatts on a sixty (60) minute interval (commencing on the clock

hour) basis.

1.40 Service Agreement: The initial agreement and any amendments

or supplements thereto entered into by the Transmission Customer and

the Transmission Provider for service under the Tariff.

1.41 Service Commencement Date: The date the Transmission Provider

begins to provide service pursuant to the terms of an executed Service

Agreement, or the date the Transmission Provider begins to provide

service in

[[Page 491]]

accordance with Section 15.3 or Section 29.1 under the Tariff.

1.42 Short-Term Firm Point-To-Point Transmission Service: Firm

Point-To-Point Transmission Service under Part II of the Tariff with a

term of less than one year.

1.43 System Impact Study: An assessment by the Transmission

Provider of (i) the adequacy of the Transmission System to accommodate

a request for either Firm Point-To-Point Transmission Service or

Network Integration Transmission Service and (ii) whether any

additional costs may be incurred in order to provide transmission

service.

1.44 Third-Party Sale: Any sale for resale in interstate commerce

to a Power Purchaser that is not designated as part of Network Load

under the Network Integration Transmission Service.

1.45 Transmission Customer: Any Eligible Customer (or its

Designated Agent) that (i) executes a Service Agreement or (ii)

requests in writing that the Transmission Provider provide transmission

service without a Service Agreement, pursuant to Section 15.3 or 29.1

of the Tariff. This term is used in the Part I Common Service

Provisions to include customers receiving transmission service under

Part II and Part III of this Tariff.

1.46 Transmission Provider: Southwestern Power Administration,

which owns, controls, or operates the facilities used for the

transmission of electric energy in interstate commerce and provides

transmission service under the Tariff.

1.47 Transmission Provider's Monthly Transmission System Peak: The

maximum firm usage of the Transmission Provider's Transmission System

in a calendar month.

1.48 Transmission Service: Point-To-Point Transmission Service

provided under Part II of the Tariff on a firm and non-firm basis.

1.49 Transmission System: The facilities owned, controlled or

operated by the Transmission Provider that are used to provide

transmission service under Part II and Part III of the Tariff.

2 Initial Allocation and Renewal Procedures

2.1 Initial Allocation of Available Transmission Capability: For

purposes of determining whether existing capability on the Transmission

Provider's Transmission System is adequate to accommodate a request for

firm service under this Tariff, all Completed Applications for new firm

transmission service received during the initial sixty (60) day period

commencing with the effective date of the Tariff will be deemed to have

been filed simultaneously. A lottery system conducted by an independent

party shall be used to assign priorities for Completed Applications

filed simultaneously. All Completed Applications for firm transmission

service received after the initial sixty (60) day period shall be

assigned a priority pursuant to Section 13.2.

2.2 Reservation Priority For Existing Firm Service Customers:

Existing firm service customers (wholesale requirements and

transmission-only, with a contract term of one-year or more), have the

right to continue to take transmission service from the Transmission

Provider when the contract expires, rolls over or is renewed. This

transmission reservation priority is independent of whether the

existing customer continues to purchase capacity and energy from the

Transmission Provider or elects to purchase capacity and energy from

another supplier. If at the end of the contract term, the Transmission

Provider's Transmission System cannot accommodate all of the requests

for transmission service, the existing firm service customer must agree

to accept a contract term at least equal to a competing request by any

new Eligible Customer and to pay the current rate for such service.

This transmission reservation priority for existing firm service

customers is an ongoing right that may be exercised at the end of all

firm contract terms of one-year or longer.

3 Ancillary Services

Ancillary Services are needed with transmission service to maintain

reliability within and among the Control Areas affected by the

transmission service. The Transmission Provider is required to provide

(or offer to arrange with the local Control Area operator as discussed

below), and the Transmission Customer is required to purchase, the

following Ancillary Services (i) Scheduling, System Control and

Dispatch, and (ii) Reactive Supply and Voltage Control from Generation

Sources.

The Transmission Provider is required to offer to provide (or offer

to arrange with the local Control Area operator as discussed below) the

following Ancillary Services only to the Transmission Customer serving

load within the Transmission Provider's Control Area (i) Regulation and

Frequency Response, (ii) Energy Imbalance, (iii) Operating Reserve--

Spinning, and (iv) Operating Reserve--Supplemental. The Transmission

Customer serving load within the Transmission Provider's Control Area

is required to acquire these Ancillary Services, whether from the

Transmission Provider, from a third party, or by self-supply. The

Transmission Customer may not decline the Transmission Provider's offer

of Ancillary Services unless it demonstrates that it has acquired the

Ancillary Services from another source. However, when sufficient

Federal generation is not available to provide the required Ancillary

Services, the Transmission Provider will offer to make every effort to

purchase Ancillary Services from others, as available. The costs of

such purchases on behalf of a Transmission Customer will be passed

directly through to that Transmission Customer. The Transmission

Customer must list in its Application which Ancillary Services it will

purchase from the Transmission Provider.

If the Transmission Provider is a utility providing transmission

service, but is not a Control Area operator, it may be unable to

provide some or all of the Ancillary Services. In this case, the

Transmission Provider can fulfill its obligation to provide Ancillary

Services by acting as the Transmission Customer's agent to secure these

Ancillary Services from the Control Area operator. The Transmission

Customer may elect to (i) have the Transmission Provider act as its

agent, (ii) secure the Ancillary Services directly from the Control

Area operator, or (iii) secure the Ancillary Services (discussed in

Schedules 3, 4, 5, and 6) from a third party or by self-supply when

technically feasible.

The Transmission Provider shall specify the rate treatment and all

related terms and conditions in the event of an unauthorized use of

Ancillary Services by the Transmission Customer.

The specific Ancillary Services, prices and/or compensation methods

are described on the Schedules that are attached to and made a part of

the Tariff. Three principal requirements apply to discounts for

Ancillary Services provided by the Transmission Provider in conjunction

with its provision of transmission service as follows: (1) Any offer of

a discount made by the Transmission Provider must be announced to all

Eligible Customers solely by posting on the OASIS, (2) any customer-

initiated requests for discounts (including requests for use by one's

wholesale merchant or an affiliate's use) must occur solely by posting

on the OASIS, and (3) once a discount is negotiated, details must be

immediately posted on the OASIS. A discount agreed upon for an

Ancillary Service must be offered for

[[Page 492]]

the same period to all Eligible Customers on the Transmission

Provider's system. Sections 3.1 through 3.6 below list the six

Ancillary Services.

3.1 Scheduling, System Control and Dispatch Service: The rates

and/or methodology are described in Schedule 1.

3.2 Reactive Supply and Voltage Control from Generation Sources

Service: The rates and/or methodology are described in Schedule 2.

3.3 Regulation and Frequency Response Service: Where applicable

the rates and/or methodology are described in Schedule 3.

3.4 Energy Imbalance Service: Where applicable the rates and/or

methodology are described in Schedule 4.

3.5 Operating Reserve--Spinning Reserve Service: Where applicable

the rates and/or methodology are described in Schedule 5.

3.6 Operating Reserve--Supplemental Reserve Service: Where

applicable the rates and/or methodology are described in Schedule 6.

4 Open Access Same-Time Information System (OASIS)

Terms and conditions regarding Open Access Same-Time Information

System and standards of conduct are set forth in 18 CFR 37 of the

Commission's regulations (Open Access Same-Time Information System and

Standards of Conduct for Public Utilities). In the event available

transmission capability as posted on the OASIS is insufficient to

accommodate a request for firm transmission service, additional studies

may be required as provided by this Tariff pursuant to Sections 19 and

32.

5 Local Furnishing Bonds

5.1 Transmission Providers That Own Facilities Financed by Local

Furnishing Bonds: This provision is applicable only to Transmission

Providers that have financed facilities for the local furnishing of

electric energy with tax-exempt bonds, as described in Section 142(f)

of the Internal Revenue Code (``local furnishing bonds'').

Notwithstanding any other provision of this Tariff, the Transmission

Provider shall not be required to provide transmission service to any

Eligible Customer pursuant to this Tariff if the provision of such

transmission service would jeopardize the tax-exempt status of any

local furnishing bond(s) used to finance the Transmission Provider's

facilities that would be used in providing such transmission service.

5.2 Alternative Procedures for Requesting Transmission Service:

(i) If the Transmission Provider determines that the provision of

transmission service requested by an Eligible Customer would jeopardize

the tax-exempt status of any local furnishing bond(s) used to finance

its facilities that would be used in providing such transmission

service, it shall advise the Eligible Customer within thirty (30) days

of receipt of the Completed Application.

(ii) If the Eligible Customer thereafter renews its request for the

same transmission service referred to in (I) by tendering an

application under Section 211 of the Federal Power Act, the

Transmission Provider, within ten (10) days of receiving a copy of the

Section 211 application, will waive its rights to a request for service

under Section 213(a) of the Federal Power Act and to the issuance of a

proposed order under Section 212(c) of the Federal Power Act. The

Commission, upon receipt of the Transmission Provider's waiver of its

rights to a request for service under Section 213(a) of the Federal

Power Act and to the issuance of a proposed order under Section 212(c)

of the Federal Power Act, shall issue an order under Section 211 of the

Federal Power Act. Upon issuance of the order under Section 211 of the

Federal Power Act, the Transmission Provider shall be required to

provide the requested transmission service in accordance with the terms

and conditions of this Tariff.

6 Reciprocity

A Transmission Customer receiving transmission service under this

Tariff agrees to provide comparable transmission service that it is

capable of providing to the Transmission Provider on similar terms and

conditions over facilities used for the transmission of electric energy

owned, controlled or operated by the Transmission Customer and over

facilities used for the transmission of electric energy owned,

controlled or operated by the Transmission Customer's corporate

affiliates. A Transmission Customer that is a member of a power pool or

Regional Transmission Group also agrees to provide comparable

transmission service to the members of such power pool and Regional

Transmission Group on similar terms and conditions over facilities used

for the transmission of electric energy owned, controlled or operated

by the Transmission Customer and over facilities used for the

transmission of electric energy owned, controlled or operated by the

Transmission Customer's corporate affiliates.

This reciprocity requirement applies not only to the Transmission

Customer that obtains transmission service under the Tariff, but also

to all parties to a transaction that involves the use of transmission

service under the Tariff, including the power seller, buyer and any

intermediary, such as a power marketer. This reciprocity requirement

also applies to any Eligible Customer that owns, controls or operates

transmission facilities that uses an intermediary, such as a power

marketer, to request transmission service under the Tariff. If the

Transmission Customer does not own, control or operate transmission

facilities, it must include in its Application a sworn statement of one

of its duly authorized officers or other representatives that the

purpose of its Application is not to assist an Eligible Customer to

avoid the requirements of this provision.

7 Billing and Payment

7.1 Billing Procedure: Within a reasonable time after the first

day of each month, the Transmission Provider shall submit an invoice to

the Transmission Customer for the charges for all services furnished

under the Tariff during the preceding month. The invoice shall be paid

by the Transmission Customer within twenty (20) days of receipt. All

payments shall be made in immediately available funds payable to the

Transmission Provider, or by wire transfer to a bank named by the

Transmission Provider.

7.2 Interest on Unpaid Balances: Interest on any unpaid amounts

(including amounts placed in escrow) shall be calculated in accordance

with the methodology specified for interest on refunds in the

Commission's regulations at 18 CFR 35.19a(a)(2)(iii). Interest on

delinquent amounts shall be calculated from the due date of the bill to

the date of payment. When payments are made by mail, bills shall be

considered as having been paid on the date of receipt by the

Transmission Provider.

7.3 Customer Default: In the event the Transmission Customer

fails, for any reason other than a billing dispute as described below,

to make payment to the Transmission Provider on or before the due date

as described above, and such failure of payment is not corrected within

thirty (30) calendar days after the Transmission Provider notifies the

Transmission Customer to cure such failure, a default by the

Transmission Customer shall be deemed to exist. Within the same 30

calendar days after notice of failure to make payment, the Transmission

Customer shall have the right of appeal to the Administrator,

Southwestern Power Administration. The Transmission Provider shall

[[Page 493]]

continue service until the Administrator makes a determination on the

Transmission Customer's appeal. Service may be terminated without

further notice if Transmission Customer's appeal is denied. In the

event of a billing dispute between the Transmission Provider and the

Transmission Customer, the Transmission Provider will continue to

provide service under the Service Agreement as long as the Transmission

Customer (i) continues to make all payments not in dispute, and (ii)

pays into an independent escrow account the portion of the invoice in

dispute, pending resolution of such dispute. If the Transmission

Customer fails to meet these two requirements for continuation of

service, then the Transmission Provider may provide notice to the

Transmission Customer of its intention to suspend service in sixty (60)

days, in accordance with Commission policy.

7.4 Payment Process: Payment of amounts due to the Transmission

Provider may be made through electronic funds transfer (EFT) or may be

submitted as checks and mailed to:

Southwestern Power Administration

P.O. Box 845994

Dallas, Texas 75284-5994

EFT payments shall conform to the Transmission Provider's protocols

for electronic transfer of funds in effect at the time of the payment.

The designation of the address where payment is to be submitted may be

changed by the Transmission Provider upon 30 days' written notice to

the Transmission Customer. The Parties shall exchange such reports and

information as either Party requires for billing purposes.

7.5 Net Billing: By agreement of the Parties, payments due the

Transmission Provider by the Transmission Customer may be offset

against payments due the Transmission Customer by the Transmission

Provider for the sale or exchange of electric power, energy, and other

services. For services included in net billing procedures, payments due

the Transmission Customer in any month shall be offset against payments

due the Transmission Provider in such month, and the resulting net

balance shall be paid by the Transmission Customer when the balance

exists in favor of the Transmission Provider, and shall be applied

against future payments due the Transmission Provider when the balance

exists in favor of the Transmission Customer. Net billing procedures

shall not be used for any amounts which the Transmission Provider

determines, in its sole judgment, to be in dispute.

8 Accounting for the Transmission Provider's Use of the Tariff

The Transmission Provider shall record the following amounts, as

outlined below.

8.1 Transmission Revenues: Include in a separate operating revenue

account or subaccount the revenues it receives from Transmission

Service when making Third-Party Sales under Part II of the Tariff.

8.2 Study Costs and Revenues: Include in a separate transmission

operating expense account or subaccount, costs properly chargeable to

expense that are incurred to perform any System Impact Studies or

Facilities Studies which the Transmission Provider conducts to

determine if it must construct new transmission facilities or upgrades

necessary for its own uses, including making Third-Party Sales under

the Tariff; and include in a separate operating revenue account or

subaccount the revenues received for System Impact Studies or

Facilities Studies performed when such amounts are separately stated

and identified in the Transmission Customer's billing under the Tariff.

9 Regulatory Filings

Nothing contained in the Tariff or any Service Agreement shall be

construed as affecting in any way the ability of any Party receiving

service under the Tariff to exercise its rights under the Federal Power

Act and pursuant to the Commission's rules and regulations promulgated

thereunder.

10 Force Majeure and Indemnification

10.1 Force Majeure: An event of Force Majeure means any act of

God, labor disturbance, act of the public enemy, war, insurrection,

riot, fire, storm or flood, explosion, breakage or accident to

machinery or equipment, any Curtailment, order, regulation or

restriction imposed by governmental military or lawfully established

civilian authorities, or any other cause beyond a Party's control. A

Force Majeure event does not include an act of negligence or

intentional wrongdoing. Neither the Transmission Provider nor the

Transmission Customer will be considered in default as to any

obligation under this Tariff if prevented from fulfilling the

obligation due to an event of Force Majeure. However, a Party whose

performance under this Tariff is hindered by an event of Force Majeure

shall make all reasonable efforts to perform its obligations under this

Tariff.

10.2 Indemnification: The Transmission Customer shall at all times

indemnify, defend, and save the Transmission Provider harmless from,

any and all damages, losses, claims, including claims and actions

relating to injury to or death of any person or damage to property,

demands, suits, recoveries, costs and expenses, court costs, attorney

fees, and all other obligations by or to third parties, arising out of

or resulting from the Transmission Provider's performance of its

obligations under this Tariff on behalf of the Transmission Customer,

except in cases of negligence or intentional wrongdoing by the

Transmission Provider. The liability of the Transmission Provider shall

be determined in accordance with the provisions of the Federal Tort

Claims Act, as amended.

11 Creditworthiness

For the purpose of determining the ability of the Transmission

Customer to meet its obligations related to service hereunder, the

Transmission Provider may require reasonable credit review procedures.

This review shall be made in accordance with standard commercial

practices. In addition, the Transmission Provider may require the

Transmission Customer to provide and maintain in effect during the term

of the Service Agreement, an unconditional and irrevocable letter of

credit as security to meet its responsibilities and obligations under

the Tariff, or an alternative form of security proposed by the

Transmission Customer and acceptable to the Transmission Provider and

consistent with commercial practices established by the Uniform

Commercial Code that protects the Transmission Provider against the

risk of non-payment.

12 Dispute Resolution Procedures

12.1 Internal Dispute Resolution Procedures: Any dispute between a

Transmission Customer and the Transmission Provider involving

transmission service under the Tariff shall be referred to a designated

senior representative of the Transmission Provider and a senior

representative of the Transmission Customer for resolution on an

informal basis as promptly as practicable. In the event the designated

representatives are unable to resolve the dispute within thirty (30)

days (or such other period as the Parties may agree upon) by mutual

agreement, such dispute may be resolved in accordance with the

procedures set forth below.

12.2 External Dispute Resolution Procedures: Any complaint arising

concerning implementation of this Tariff shall be resolved as follows:

[[Page 494]]

(A) Through a dispute resolution process, pursuant to the terms of

a regional transmission association governing agreement of which both

Parties are members; or

(B) If both Parties are not members of the same regional

transmission association, through a dispute resolution process agreed

to by the Parties, or through a transmission complaint filed with the

Commission, to the extent the Commission has jurisdiction over such

dispute.

12.3 Alternative Disputes Resolution Act: Any dispute regarding

service provided under the Service Agreement will be resolved in a

manner consistent with the Administrative Disputes Resolution Act, as

amended, subject to statutory and regulatory limits on the Transmission

Provider's authority to submit disputes to arbitration.

12.4 Rights Under The Federal Power Act: Nothing in this section

shall restrict the rights of any party to file a Complaint with the

Commission under relevant provisions of the Federal Power Act.

Part II. Point-to-Point Transmission Service

Preamble

The Transmission Provider will provide Firm and Non-Firm Point-To-

Point Transmission Service pursuant to the applicable terms and

conditions of this Tariff. Point-To-Point Transmission Service is for

the receipt of capacity and energy at designated Point(s) of Receipt

and the transmission of such capacity and energy to designated Point(s)

of Delivery.

13 Nature of Firm Point-To-Point Transmission Service

13.1 Term: The minimum term of Firm Point-To-Point Transmission

Service shall be one day and the maximum term shall be specified in the

Service Agreement.

13.2 Reservation Priority: Long-Term Firm Point-To-Point

Transmission Service shall be available on a first-come, first-served

basis i.e., in the chronological sequence in which each Transmission

Customer reserved service. Reservations for Short-Term Firm Point-To-

Point Transmission Service will be conditional based upon the length of

the requested transaction. If the Transmission System becomes

oversubscribed, requests for longer term service may preempt requests

for shorter term service up to the following deadlines; one day before

the commencement of daily service, one week before the commencement of

weekly service, and one month before the commencement of monthly

service. Before the conditional reservation deadline, if available

transmission capability is insufficient to satisfy all Applications, an

Eligible Customer with a reservation for shorter term service has the

right of first refusal to match any longer term reservation before

losing its reservation priority. A longer term competing request for

Short-Term Firm Point-To-Point Transmission Service will be granted if

the Eligible Customer with the right of first refusal does not agree to

match the competing request within 24 hours (or earlier if necessary to

comply with the scheduling deadlines provided in Section 13.8) from

being notified by the Transmission Provider of a longer-term competing

request for Short-Term Firm Point-To-Point Transmission Service. After

the conditional reservation deadline, service will commence pursuant to

the terms of Part II of the Tariff. Firm Point-To-Point Transmission

Service will always have a reservation priority over Non-Firm Point-To-

Point Transmission Service under the Tariff. All Long-Term Firm Point-

To-Point Transmission Service will have equal reservation priority with

Native Load Customers and Network Customers. Reservation priorities for

existing firm service customers are provided in Section 2.2.

13.3 Use of Firm Transmission Service by the Transmission

Provider: The Transmission Provider will be subject to the rates, terms

and conditions of Part II of the Tariff when making Third-Party Sales

under agreements executed on or after March 9, 1998. The Transmission

Provider will maintain separate accounting, pursuant to Section 8, for

any use of the Point-To-Point Transmission Service to make Third-Party

Sales.

13.4 Service Agreements: The Transmission Provider shall offer a

standard form Firm Point-To-Point Transmission Service Agreement

(Attachment A) to an Eligible Customer when it submits a Completed

Application for Long-Term Firm Point-To-Point Transmission Service. The

Transmission Provider shall offer a standard form Firm Point-to-Point

Transmission Service Agreement (Attachment B) to an Eligible Customer

when it first submits a Completed Application for Short-Term Firm

Point-To-Point Transmission Service pursuant to the Tariff.

13.5 Transmission Customer Obligations for Facility Additions or

Redispatch Costs: In cases where the Transmission Provider determines

that the Transmission System is not capable of providing Firm Point-To-

Point Transmission Service without (1) degrading or impairing the

reliability of service to Native Load Customers, Network Customers, and

other Transmission Customers taking Firm Point-To-Point Transmission

Service, or (2) interfering with the Transmission Provider's ability to

meet prior firm contractual commitments to others, the Transmission

Provider will be obligated to expand or upgrade its Transmission System

pursuant to the terms of Section 15.4, and subject to the Transmission

Provider's authority under Federal law to complete the expansion or

upgrade. The Transmission Customer must agree to compensate the

Transmission Provider in advance for any necessary transmission

facility additions pursuant to the terms of Section 27. To the extent

the Transmission Provider can relieve any system constraint more

economically by redispatching the Transmission Provider's resources

than through constructing Network Upgrades, it shall do so, provided

that the Eligible Customer agrees to compensate the Transmission

Provider pursuant to the terms of Section 27. Any redispatch, Network

Upgrade or Direct Assignment Facilities costs to be charged to the

Transmission Customer on an incremental basis under the Tariff will be

specified in the Service Agreement or a separate agreement, as

appropriate, prior to initiating service.

13.6 Curtailment of Firm Transmission Service: In the event that a

Curtailment on the Transmission Provider's Transmission System, or a

portion thereof, is required to maintain reliable operation of such

system, Curtailments will be made on a non-discriminatory basis to the

transaction(s) that effectively relieve the constraint. If multiple

transactions require Curtailment, to the extent practicable and

consistent with Good Utility Practice, the Transmission Provider will

curtail service to Network Customers and Transmission Customers taking

Firm Point-To-Point Transmission Service on a basis comparable to the

curtailment of service to the Transmission Provider's Native Load

Customers. All Curtailments will be made on a non-discriminatory basis;

however, Non-Firm Point-To-Point Transmission Service shall be

subordinate to Firm Transmission Service. When the Transmission

Provider determines that an electrical emergency exists on its

Transmission System and implements emergency procedures to Curtail Firm

Transmission Service, the Transmission Customer shall make the required

reductions upon request of the Transmission Provider. However, the

[[Page 495]]

Transmission Provider reserves the right to Curtail, in whole or in

part, any Firm Transmission Service provided under the Tariff when, in

the Transmission Provider's sole discretion, an emergency or other

unforeseen condition impairs or degrades the reliability of its

Transmission System. The Transmission Provider will notify all affected

Transmission Customers in a timely manner of any scheduled

Curtailments.

13.7 Classification of Firm Transmission Service: (a) The

Transmission Customer taking Firm Point-To-Point Transmission Service

may (1) change its Receipt and Delivery Points to obtain service on a

non-firm basis consistent with the terms of Section 22.1 or (2) request

a modification of the Points of Receipt or Delivery on a firm basis

pursuant to the terms of Section 22.2.

(b) The Transmission Customer may purchase transmission service to

make sales of capacity and energy from multiple generating units that

are on the Transmission Provider's Transmission System. For such a

purchase of transmission service, the resources will be designated as

multiple Points of Receipt, unless the multiple generating units are at

the same generating plant in which case the units would be treated as a

single Point of Receipt.

(c) The Transmission Provider shall provide firm deliveries of

capacity and energy from the Point(s) of Receipt to the Point(s) of

Delivery. Each Point of Receipt at which firm transmission capacity is

reserved by the Transmission Customer shall be set forth in the Firm

Point-To-Point Service Agreement for Long-Term Firm Transmission

Service along with a corresponding capacity reservation associated with

each Point of Receipt. Points of Receipt and corresponding capacity

reservations shall be as mutually agreed upon by the Parties for Short-

Term Firm Transmission. Each Point of Delivery at which firm

transmission capacity is reserved by the Transmission Customer shall be

set forth in the Firm Point-To-Point Service Agreement for Long-Term

Firm Transmission Service along with a corresponding capacity

reservation associated with each Point of Delivery. Points of Delivery

and corresponding capacity reservations shall be as mutually agreed

upon by the Parties for Short-Term Firm Transmission. The greater of

either (1) the sum of the capacity reservations at the Point(s) of

Receipt, or (2) the sum of the capacity reservations at the Point(s) of

Delivery shall be the Transmission Customer's Reserved Capacity. The

Transmission Customer will be billed for its Reserved Capacity under

the terms of Schedule 7. The Transmission Customer may not exceed its

firm capacity reserved at each Point of Receipt and each Point of

Delivery except as otherwise specified in Section 22. The Transmission

Provider shall specify the rate treatment and all related terms and

conditions applicable in the event that a Transmission Customer,

(including Third-Party Sales by the Transmission Provider) exceeds its

firm reserved capacity at any Point of Receipt or Point of Delivery.

13.8 Scheduling of Firm Point-To-Point Transmission Service:

Schedules for the Transmission Customer's Firm Point-To-Point

Transmission Service must be submitted to the Transmission Provider no

later than 2:00 p.m. of the day prior to commencement of such service.

Schedules submitted after 2:00 p.m. will be accommodated, if

practicable. Hour-to-hour schedules of any capacity and energy that is

to be delivered must be stated in increments of 1,000 kW per hour.

Transmission Customers within the Transmission Provider's service area

with multiple requests for Transmission Service at a Point of Receipt,

each of which is under 1,000 kW per hour, may consolidate their service

requests at a common point of receipt into units of 1,000 kW per hour

for scheduling and billing purposes.

Scheduling changes will be permitted up to twenty (20) minutes

before the start of the next clock hour provided that the Delivering

Party and Receiving Party also agree to the schedule modification. The

Transmission Provider will furnish to the Delivering Party's system

operator, hour-to-hour schedules equal to those furnished by the

Receiving Party (unless reduced for losses) and shall deliver the

capacity and energy provided by such schedules. Should the Transmission

Customer, Delivering Party or Receiving Party revise or terminate any

schedule, such party shall immediately notify the Transmission

Provider, and the Transmission Provider shall have the right to adjust

accordingly the schedule for capacity and energy to be received and to

be delivered.

14 Nature of Non-Firm Point-To-Point Transmission Service

14.1 Term: Non-Firm Point-To-Point Transmission Service will be

available for periods ranging from one (1) hour to one (1) month.

However, a Purchaser of Non-Firm Point-To-Point Transmission Service

will be entitled to reserve a sequential term of service (such as a

sequential monthly term without having to wait for the initial term to

expire before requesting another monthly term) so that the total time

period for which the reservation applies is greater than one month,

subject to the requirements of Section 18.3.

14.2 Reservation Priority: Non-Firm Point-To-Point Transmission

Service shall be available from transmission capability in excess of

that needed for reliable service to Native Load Customers, Network

Customers, and other Transmission Customers taking Long-Term and Short-

Term Firm Point-To-Point Transmission Service. A higher priority will

be assigned to reservations with a longer duration of service. In the

event the Transmission System is constrained, competing requests of

equal duration will be prioritized based on the highest price offered

by the Eligible Customer for the Transmission Service. Eligible

Customers that have already reserved shorter term service have the

right of first refusal to match any longer term reservation before

being preempted. A longer term competing request for Non-Firm Point-To-

Point Transmission Service will be granted if the Eligible Customer

with the right of first refusal does not agree to match the competing

request: (a) Immediately for hourly Non-Firm Point-To-Point

Transmission Service after notification by the Transmission Provider;

and, (b) within 24 hours (or earlier if necessary to comply with the

scheduling deadlines provided in Section 14.6) for Non-Firm Point-To-

Point Transmission Service other than hourly transactions after

notification by the Transmission Provider. Transmission service for

Network Customers from resources other than designated Network

Resources will have a higher priority than any Non-Firm Point-To-Point

Transmission Service. Non-Firm Point-To-Point Transmission Service over

secondary Point(s) of Receipt and Point(s) of Delivery will have the

lowest reservation priority under the Tariff.

14.3 Use of Non-Firm Point-To-Point Transmission Service by the

Transmission Provider: The Transmission Provider will be subject to the

rates, terms and conditions of Part II of the Tariff when making Third-

Party Sales under agreements executed on or after March 9, 1998. The

Transmission Provider will maintain separate accounting, pursuant to

Section 8, for any use of Non-Firm Point-To-Point Transmission Service

to make Third-Party Sales.

14.4 Service Agreements: The Transmission Provider shall offer a

standard form Non-Firm Point-To-Point Transmission Service Agreement

(Attachment B) to an Eligible Customer when it first submits a

Completed

[[Page 496]]

Application for Non-Firm Point-To-Point Transmission Service pursuant

to the Tariff.

14.5 Classification of Non-Firm Point-To-Point Transmission

Service: Non-Firm Point-To-Point Transmission Service shall be offered

under terms and conditions contained in Part II of the Tariff. The

Transmission Provider undertakes no obligation under the Tariff to plan

its Transmission System in order to have sufficient capacity for Non-

Firm Point-To-Point Transmission Service. Parties requesting Non-Firm

Point-To-Point Transmission Service for the transmission of firm power

do so with the full realization that such service is subject to

availability and to Curtailment or Interruption under the terms of the

Tariff. The Transmission Provider shall specify the rate treatment and

all related terms and conditions applicable in the event that a

Transmission Customer (including Third-Party Sales by the Transmission

Provider) exceeds its non-firm capacity reservation. Non-Firm Point-To-

Point Transmission Service shall include transmission of energy on an

hourly basis and transmission of scheduled short-term capacity and

energy on a daily, weekly or monthly basis, but not to exceed one

month's reservation for any one Application under Schedule 8.

14.6 Scheduling of Non-Firm Point-To-Point Transmission Service:

Schedules for Non-Firm Point-To-Point Transmission Service must be

submitted to the Transmission Provider no later than 2:00 p.m. of the

day prior to commencement of such service. Schedules submitted after

2:00 p.m. will be accommodated, if practicable. Hour-to-hour schedules

of energy that are to be delivered must be stated in increments of

1,000 kW per hour. Transmission Customers within the Transmission

Provider's service area with multiple requests for Transmission Service

at a Point of Receipt, each of which is under 1,000 kW per hour, may

consolidate their schedules at a common Point of Receipt into units of

1,000 kW per hour. Scheduling changes will be permitted up to twenty

(20) minutes before the start of the next clock hour provided that the

Delivering Party and Receiving Party also agree to the schedule

modification. The Transmission Provider will furnish to the Delivering

Party's system operator, hour-to-hour schedules equal to those

furnished by the Receiving Party (unless reduced for losses) and shall

deliver the capacity and energy provided by such schedules. Should the

Transmission Customer, Delivering Party or Receiving Party revise or

terminate any schedule, such party shall immediately notify the

Transmission Provider, and the Transmission Provider shall have the

right to adjust accordingly the schedule for capacity and energy to be

received and to be delivered.

14.7 Curtailment or Interruption of Service: The Transmission

Provider reserves the right to Curtail, in whole or in part, Non-Firm

Point-To-Point Transmission Service provided under the Tariff for

reliability reasons when an emergency or other unforeseen condition

threatens to impair or degrade the reliability of its Transmission

System. The Transmission Provider reserves the right to Interrupt, in

whole or in part, Non-Firm Point-To-Point Transmission Service provided

under the Tariff for economic reasons in order to accommodate (1) a

request for Firm Transmission Service, (2) a request for Non-Firm

Point-To-Point Transmission Service of greater duration, (3) a request

for Non-Firm Point-To-Point Transmission Service of equal duration with

a higher price, or (4) transmission service for Network Customers from

non-designated resources. The Transmission Provider also will

discontinue or reduce service to the Transmission Customer to the

extent that deliveries for transmission are discontinued or reduced at

the Point(s) of Receipt. Where required, Curtailments or Interruptions

will be made on a non-discriminatory basis to the transaction(s) that

effectively relieve the constraint; however, Non-Firm Point-To-Point

Transmission Service shall be subordinate to Firm Transmission Service.

If multiple transactions require Curtailment or Interruption, to the

extent practicable and consistent with Good Utility Practice,

Curtailments or Interruptions will be made to transactions of the

shortest term (e.g., hourly non-firm transactions will be Curtailed or

Interrupted before daily non-firm transactions and daily non-firm

transactions will be Curtailed or Interrupted before weekly non-firm

transactions). Transmission service for Network Customers from

resources other than designated Network Resources will have a higher

priority than any Non-Firm Point-To-Point Transmission Service under

the Tariff. Non-Firm Point-To-Point Transmission Service over secondary

Point(s) of Receipt and Point(s) of Delivery will have a lower priority

than any Non-Firm Point-To-Point Transmission Service under the Tariff.

The Transmission Provider will provide advance notice of Curtailment or

Interruption where such notice can be provided consistent with Good

Utility Practice.

15 Service Availability

15.1 General Conditions: The Transmission Provider will provide

Firm and Non-Firm Point-To-Point Transmission Service over, on or

across its Transmission System to any Transmission Customer that has

met the requirements of Section 16.

15.2 Determination of Available Transmission Capability: A

description of the Transmission Provider's specific methodology for

assessing available transmission capability posted on the Transmission

Provider's OASIS (Section 4) is contained in Attachment C of the

Tariff. In the event sufficient transmission capability may not exist

to accommodate a service request, the Transmission Provider will

respond by performing a System Impact Study.

15.3 Initiating Service in the Absence of an Executed Service

Agreement: If the Transmission Provider and the Transmission Customer

requesting Firm or Non-Firm Point-To-Point Transmission Service cannot

agree on all the terms and conditions of the Point-To-Point Service

Agreement, the Transmission Provider shall commence providing

Transmission Service subject to the Transmission Customer agreeing to

(i) compensate the Transmission Provider at the existing rate placed in

effect pursuant to Federal law, regulations, and policies, and (ii)

comply with the terms and conditions of the Tariff including paying the

appropriate processing fees in accordance with the terms of Section

17.3. If the Transmission Customer cannot accept all of the terms and

conditions of the offered Service Agreement, the Transmission Customer

may request resolution of the unacceptable terms and conditions under

Section 12, Dispute Resolution Procedures, of the Tariff. Any changes

resulting from the dispute resolution procedures will be effective upon

the date of initial service.

15.4 Obligation to Provide Transmission Service that Requires

Expansion or Modification of the Transmission System: If the

Transmission Provider determines that it cannot accommodate a Completed

Application for Firm Point-To-Point Transmission Service because of

insufficient capability on its Transmission System, the Transmission

Provider will use due diligence to expand or modify its Transmission

System to provide the requested Firm Transmission Service, provided the

Transmission Customer agrees to compensate the Transmission Provider in

advance for such costs pursuant to the terms of Section 27. The

[[Page 497]]

Transmission Provider will conform to Good Utility Practice in

determining the need for new facilities and in the design and

construction of such facilities. The obligation applies only to those

facilities that the Transmission Provider has the right to expand or

modify.

15.5 Deferral of Service: The Transmission Provider may defer

providing service until it completes construction of new transmission

facilities or upgrades needed to provide Firm Point-To-Point

Transmission Service whenever the Transmission Provider determines that

providing the requested service would, without such new facilities or

upgrades, impair or degrade reliability to any existing firm services.

15.6 Other Transmission Service Schedules: Eligible Customers

receiving transmission service under other agreements on file with the

Commission may continue to receive transmission service under those

agreements until such time as those agreements may be modified by the

Commission.

15.7 Real Power Losses: Real Power Losses are associated with all

transmission service. The Transmission Provider is not obligated to

provide Real Power Losses. The Transmission Customer is responsible for

replacing losses associated with all transmission service as calculated

by the Transmission Provider. The applicable Real Power Loss factors

are specified in the Transmission Provider's rate schedule for

transmission service, and may be adjusted, from time to time, in

accordance with the results of periodic studies.

16 Transmission Customer Responsibilities

16.1 Conditions Required of Transmission Customers: Point-To-Point

Transmission Service shall be provided by the Transmission Provider

only if the following conditions are satisfied by the Transmission

Customer:

a. The Transmission Customer has pending a Completed Application

for service;

b. The Transmission Customer meets the creditworthiness criteria

set forth in Section 11;

c. The Transmission Customer will have arrangements in place for

any other transmission service necessary to effect the delivery from

the generating source to the Transmission Provider prior to the time

service under Part II of the Tariff commences;

d. The Transmission Customer agrees to pay for any facilities

constructed and chargeable to such Transmission Customer under Part II

of the Tariff, whether or not the Transmission Customer takes service

for the full term of its reservation; and

e. The Transmission Customer has executed a Point-To-Point Service

Agreement or has agreed to receive service pursuant to Section 15.3.

16.2 Transmission Customer Responsibility for Third-Party

Arrangements: Any scheduling arrangements that may be required by other

electric systems shall be the responsibility of the Transmission

Customer requesting service. The Transmission Customer shall provide,

unless waived by the Transmission Provider, notification to the

Transmission Provider identifying such systems and authorizing them to

schedule the capacity and energy to be transmitted by the Transmission

Provider pursuant to Part II of the Tariff on behalf of the Receiving

Party at the Point of Delivery or the Delivering Party at the Point of

Receipt. However, the Transmission Provider will undertake reasonable

efforts to assist the Transmission Customer in making such

arrangements, including, without limitation, providing any information

or data required by such other electric system pursuant to Good Utility

Practice.

17 Procedures for Arranging Firm Point-To-Point Transmission Service

17.1 Application: A request for Firm Point-To-Point Transmission

Service for periods of one year or longer must contain a written

Application to Administrator, Southwestern Power Administration, One

West Third Street, Suite 1400, Tulsa, Oklahoma 74103, at least sixty

(60) days in advance of the calendar month in which service is to

commence. The Transmission Provider will consider requests for such

firm service on shorter notice when feasible. Requests for firm service

for periods of less than one year shall be subject to expedited

procedures that shall be negotiated between the Parties within the time

constraints provided in Section 17.5. All Firm Point-To-Point

Transmission Service requests should be submitted by entering the

information listed below on the Transmission Provider's OASIS. Prior to

implementation of the Transmission Provider's OASIS, a Completed

Application may be submitted by (i) transmitting the required

information to the Transmission Provider by telefax, or (ii) providing

the information by telephone over the Transmission Provider's time-

recorded telephone line. Each of these methods will provide a time-

stamped record for establishing the priority of the Application.

17.2Completed Application: A Completed Application shall provide

all of the information included in 18 CFR 2.20 including but not

limited to the following:

(i) The identity, address, telephone number and facsimile number of

the entity requesting service;

(ii) A statement that the entity requesting service is, or will be

upon commencement of service, an Eligible Customer under the Tariff;

(iii) The location of the Point(s) of Receipt and Point(s) of

Delivery and the identities of the Delivering Parties and the Receiving

Parties;

(iv) The location of the generating facility(ies) supplying the

capacity and energy and the location of the load ultimately served by

the capacity and energy transmitted. The Transmission Provider will

treat this information as confidential except to the extent that

disclosure of this information is required by the Tariff, by Federal

law, by regulatory or judicial order, for reliability purposes pursuant

to Good Utility Practice or pursuant to RTG transmission information

sharing agreements. The Transmission Provider shall treat this

information consistent with the standards of conduct contained in Part

37 of the Commission's regulations;

(v) A description of the supply characteristics of the capacity and

energy to be delivered;

(vi) An estimate of the capacity and energy expected to be

delivered to the Receiving Party;

(vii) The Service Commencement Date and the term of the requested

Transmission Service; and

(viii) The transmission capacity requested for each Point of

Receipt and each Point of Delivery on the Transmission Provider's

Transmission System; customers may combine their requests for service

in order to satisfy the minimum transmission capacity requirement.

The Transmission Provider shall treat this information consistent

with the standards of conduct contained in Part 37 of the Commission's

regulations.

17.3 Processing Fee: A Completed Application for Firm Point-To-

Point Transmission Service also shall include a nonrefundable

processing fee of $300 for all requests for Firm Transmission Service

of one year or longer. This fee does not apply to costs to complete

System Impact Studies or Facility Studies or to add new facilities.

17.4 Notice of Deficient Application: If an Application fails to

meet the requirements of the Tariff, the Transmission Provider shall

notify the entity requesting service within fifteen

[[Page 498]]

(15) days of receipt of the reasons for such failure. The Transmission

Provider will attempt to remedy minor deficiencies in the Application

through informal communications with the Eligible Customer. If such

efforts are unsuccessful, the Transmission Provider shall return the

Application. Upon receipt of a new or revised Application that fully

complies with the requirements of Part II of the Tariff, the Eligible

Customer shall be assigned a new priority consistent with the date of

the new or revised Application.

17.5 Response to a Completed Application: Following receipt of a

Completed Application for Firm Point-To-Point Transmission Service, the

Transmission Provider shall make a determination of available

transmission capability as required in Section 15.2. The Transmission

Provider shall notify the Eligible Customer as soon as practicable, but

not later than thirty (30) days after the date of receipt of a

Completed Application either (i) if it will be able to provide service

without performing a System Impact Study or (ii) if such a study is

needed to evaluate the impact of the Application pursuant to Section

19.1. Responses by the Transmission Provider must be made as soon as

practicable to all completed applications (including applications by

its own merchant function) and the timing of such responses must be

made on a non-discriminatory basis.

17.6 Execution of a Service Agreement: Whenever the Transmission

Provider determines that a System Impact Study is not required and that

the service can be provided, it shall notify the Eligible Customer as

soon as practicable but no later than thirty (30) days after receipt of

the Completed Application. Where a System Impact Study is required, the

provisions of Section 19 will govern the execution of a Service

Agreement. Failure of an Eligible Customer to execute and return the

Service Agreement or request service without an executed service

agreement pursuant to Section 15.3 within fifteen (15) days after it is

tendered by the Transmission Provider will be deemed a withdrawal and

termination of the Application. Nothing herein limits the right of an

Eligible Customer to file another Application after such withdrawal and

termination.

17.7 Extensions for Commencement of Service: The Transmission

Customer can obtain up to five (5) one-year extensions for the

commencement of service. The Transmission Customer may postpone service

by paying a non-refundable annual reservation fee equal to one-month's

charge for Firm Transmission Service for each year or fraction thereof.

If during any extension for the commencement of service an Eligible

Customer submits a Completed Application for Firm Transmission Service,

and such request can be satisfied only by releasing all or part of the

Transmission Customer's Reserved Capacity, the original Reserved

Capacity will be released unless the following condition is satisfied.

Within thirty (30) days, the original Transmission Customer agrees to

pay the Firm Point-To-Point transmission rate for its Reserved Capacity

concurrent with the new Service Commencement Date. In the event the

Transmission Customer elects to release the Reserved Capacity, the

reservation fees or portions thereof previously paid will be forfeited.

18 Procedures for Arranging Non-Firm Point-To-Point Transmission

Service

18.1 Application: Eligible Customers seeking Non-Firm Point-To-

Point Transmission Service must submit a Completed Application to the

Transmission Provider. Applications should be submitted by entering the

information listed below on the Transmission Provider's OASIS. Prior to

implementation of the Transmission Provider's OASIS, a Completed

Application may be submitted by (i) transmitting the required

information to the Transmission Provider by telefax, or (ii) providing

the information by telephone over the Transmission Provider's time-

recorded telephone line. Each of these methods will provide a time-

stamped record for establishing the service priority of the

Application.

18.2 Completed Application: A Completed Application shall provide

all of the information included in 18 CFR 2.20 including but not

limited to the following:

(i) The identity, address, telephone number and facsimile number of

the entity requesting service;

(ii) A statement that the entity requesting service is, or will be

upon commencement of service, an Eligible Customer under the Tariff;

(iii) The Point(s) of Receipt and the Point(s) of Delivery;

(iv) The maximum amount of capacity requested at each Point of

Receipt and Point of Delivery; and

(v) The proposed dates and hours for initiating and terminating

transmission service hereunder.

In addition to the information specified above, when required to

properly evaluate system conditions, the Transmission Provider also may

ask the Transmission Customer to provide the following:

(vi) The electrical location of the initial source of the power to

be transmitted pursuant to the Transmission Customer's request for

service;

(vii) The electrical location of the ultimate load.

The Transmission Provider will treat this information in (vi) and

(vii) as confidential at the request of the Transmission Customer

except to the extent that disclosure of this information is required by

this Tariff, by Federal law, by regulatory or judicial order, for

reliability purposes pursuant to Good Utility Practice, or pursuant to

RTG transmission information sharing agreements. The Transmission

Provider shall treat this information consistent with the standards of

conduct contained in Part 37 of the Commission's regulations.

18.3 Reservation of Non-Firm Point-To-Point Transmission Service:

Requests for monthly service shall be submitted no earlier than sixty

(60) days before service is to commence; requests for weekly service

shall be submitted no earlier than fourteen (14) days before service is

to commence; requests for daily service shall be submitted no earlier

than two (2) days before service is to commence; and requests for

hourly service shall be submitted no earlier than noon the day before

service is to commence. Requests for service received later than 2:00

p.m. prior to the day service is scheduled to commence will be

accommodated if practicable.

18.4 Determination of Available Transmission Capability: Following

receipt of a tendered schedule the Transmission Provider will make a

determination on a non-discriminatory basis of available transmission

capability pursuant to Section 15.2. Such determination shall be made

as soon as reasonably practicable after receipt, but not later than the

following time periods for the following terms of service: (i) thirty

(30) minutes for hourly service, (ii) thirty (30) minutes for daily

service, (iii) four (4) hours for weekly service, and (iv) two (2) days

for monthly service.

19 Additional Study Procedures for Firm Point-to-Point Transmission

Service Requests

19.1 Notice of Need for System Impact Study: After receiving a

request for service, the Transmission Provider shall determine on a

non-discriminatory basis whether a System Impact Study is needed. A

description of the Transmission Provider's methodology for completing a

System Impact Study is provided in Attachment D. If the Transmission

Provider determines that a System Impact Study is necessary to

accommodate the requested service, it

[[Page 499]]

shall so inform the Eligible Customer, as soon as practicable. In such

cases, the Transmission Provider shall within thirty (30) days of

receipt of a Completed Application, tender a System Impact Study

Agreement pursuant to which the Eligible Customer shall agree to

advance funds to the Transmission Provider for performing the required

System Impact Study. For a service request to remain a Completed

Application, the Eligible Customer shall execute the System Impact

Study Agreement and return it to the Transmission Provider within

fifteen (15) days. If the Eligible Customer elects not to execute the

System Impact Study Agreement, its application shall be deemed

withdrawn.

19.2 System Impact Study Agreement and Compensation: (i) The

System Impact Study Agreement will clearly specify the Transmission

Provider's estimate of the actual cost, and time for completion of the

System Impact Study. The charge will not exceed the actual cost of the

study. In performing the System Impact Study, the Transmission Provider

shall rely, to the extent reasonably practicable, on existing

transmission planning studies. The Eligible Customer will not be

assessed a charge for such existing studies; however, the Eligible

Customer will be responsible for charges associated with any

modifications to existing planning studies that are reasonably

necessary to evaluate the impact of the Eligible Customer's request for

service on the Transmission System.

(ii) If, in response to multiple Eligible Customers requesting

service in relation to the same competitive solicitation, a single

System Impact Study is sufficient for the Transmission Provider to

accommodate the requests for service, the costs of that study shall be

pro-rated among the Eligible Customers.

(iii) For System Impact Studies that the Transmission Provider

conducts on its own behalf, the Transmission Provider shall record the

cost of the System Impact Studies pursuant to Section 8.

19.3 System Impact Study Procedures: Upon receipt of an executed

System Impact Study Agreement, the Transmission Provider will use due

diligence to complete the required System Impact Study within a sixty

(60) day period. The System Impact Study shall identify any system

constraints and redispatch options, additional Direct Assignment

Facilities or Network Upgrades required to provide the requested

service. In the event that the Transmission Provider is unable to

complete the required System Impact Study within such time period, it

shall so notify the Eligible Customer and provide an estimated

completion date along with an explanation of the reasons why additional

time is required to complete the required studies. A copy of the

completed System Impact Study and related work papers shall be made

available to the Eligible Customer. The Transmission Provider will use

the same due diligence in completing the System Impact Study for an

Eligible Customer as it uses when completing studies for itself. The

Transmission Provider shall notify the Eligible Customer immediately

upon completion of the System Impact Study if the Transmission System

will be adequate to accommodate all or part of a request for service or

that no costs are likely to be incurred for new transmission facilities

or upgrades. In order for a request to remain a Completed Application,

within fifteen (15) days of completion of the System Impact Study the

Eligible Customer must execute a Service Agreement or request service

without an executed Service Agreement pursuant to Section 15.3, or the

Application shall be deemed terminated and withdrawn.

19.4 Facilities Study Procedures. If a System Impact Study

indicates that additions or upgrades to the Transmission System are

needed to supply the Eligible Customer's service request, the

Transmission Provider, within thirty (30) days of the completion of the

System Impact Study, shall tender to the Eligible Customer a Facilities

Study Agreement pursuant to which the Eligible Customer shall agree to

advance funds to the Transmission Provider for performing the required

Facilities Study. For a service request to remain a Completed

Application, the Eligible Customer shall execute the Facilities Study

Agreement and return it to the Transmission Provider within fifteen

(15) days. If the Eligible Customer elects not to execute the

Facilities Study Agreement, its application shall be deemed withdrawn.

Upon receipt of an executed Facilities Study Agreement, the

Transmission Provider will use due diligence to complete the required

Facilities Study within a sixty (60) day period. If the Transmission

Provider is unable to complete the Facilities Study in the allotted

time period, the Transmission Provider shall notify the Transmission

Customer and provide an estimate of the time needed to reach a final

determination along with an explanation of the reasons that additional

time is required to complete the study. When completed, the Facilities

Study will include a good faith estimate of (i) the cost of Direct

Assignment Facilities to be charged to the Transmission Customer, (ii)

the Transmission Customer's appropriate share of the cost of any

required Network Upgrades as determined pursuant to the provisions of

Part II of the Tariff, and (iii) the time required to complete such

construction and initiate the requested service. The Transmission

Customer shall pay the Transmission Provider, in advance, the

Transmission Customer's share of the costs of new facilities or

upgrades. The Transmission Customer shall have thirty (30) days to

execute a construction agreement and a Service Agreement and to provide

the advance payment or request service without an executed Service

Agreement pursuant to Section 15.3, and pay the Transmission Customer's

share of the costs, or the request will no longer be a Completed

Application and shall be deemed terminated and withdrawn. Any advance

payment made by the Transmission Customer which is in excess of the

costs incurred by the Transmission Provider shall be refunded.

19.5 Facilities Study Modifications. Any change in design arising

from inability to site or construct facilities as proposed will require

development of a revised good faith estimate. New good faith estimates

also will be required in the event of new statutory or regulatory

requirements that are effective before the completion of construction

or other circumstances beyond the control of the Transmission Provider

that significantly affect the final cost of new facilities or upgrades

to be charged to the Transmission Customer pursuant to the provisions

of Part II of the Tariff.

19.6 Due Diligence in Completing New Facilities. The Transmission

Provider shall use due diligence to add necessary facilities or upgrade

its Transmission System within a reasonable time. The Transmission

Provider will not upgrade its existing or planned Transmission System

in order to provide the requested Firm Point-To-Point Transmission

Service if doing so would impair system reliability or otherwise impair

or degrade existing firm service.

19.7 Partial Interim Service. If the Transmission Provider

determines that it will not have adequate transmission capability to

satisfy the full amount of a Completed Application for Firm Point-To-

Point Transmission Service, the Transmission Provider nonetheless shall

be obligated to offer and provide the portion of the requested Firm

Point-To-Point Transmission Service that can be accommodated without

addition of any

[[Page 500]]

facilities and through redispatch. However, the Transmission Provider

shall not be obligated to provide the incremental amount of requested

Firm Point-To-Point Transmission Service that requires the addition of

facilities or upgrades to the Transmission System until such facilities

or upgrades have been placed in service.

19.8 Expedited Procedures for New Facilities. In lieu of the

procedures set forth above, the Eligible Customer shall have the option

to expedite the process by requesting the Transmission Provider to

tender at one time, together with the results of required studies, an

``Expedited Service Agreement'' pursuant to which the Eligible Customer

would agree to compensate the Transmission Provider in advance for all

costs incurred pursuant to the terms of the Tariff. In order to

exercise this option, the Eligible Customer shall request in writing an

expedited Service Agreement covering all of the above-specified items

within thirty (30) days of receiving the results of the System Impact

Study identifying needed facility additions or upgrades or costs

incurred in providing the requested service. While the Transmission

Provider agrees to provide the Eligible Customer with its best estimate

of the new facility costs and other charges that may be incurred, such

estimate shall not be binding and the Eligible Customer must agree in

writing to compensate the Transmission Provider in advance for all

costs incurred pursuant to the provisions of the Tariff. The Eligible

Customer shall execute and return such an Expedited Service Agreement

within fifteen (15) days of its receipt or the Eligible Customer's

request for service will cease to be a Completed Application and will

be deemed terminated and withdrawn.

20 Procedures if the Transmission Provider is Unable to Complete New

Transmission Facilities for Firm Point-To-Point Transmission Service

20.1 Delays in Construction of New Facilities: If any event occurs

that will materially affect the time for completion of new facilities,

or the ability to complete them, the Transmission Provider shall

promptly notify the Transmission Customer. In such circumstances, the

Transmission Provider shall, within thirty (30) days of notifying the

Transmission Customer of such delays, convene a technical meeting with

the Transmission Customer to evaluate the alternatives available to the

Transmission Customer. The Transmission Provider also shall make

available to the Transmission Customer studies and work papers related

to the delay, including all information that is in the possession of

the Transmission Provider that is reasonably needed by the Transmission

Customer to evaluate any alternatives.

20.2 Alternatives to the Original Facility Additions: When the

review process of Section 20.1 determines that one or more alternatives

exist to the originally planned construction project, the Transmission

Provider shall present such alternatives for consideration by the

Transmission Customer. If, upon review of any alternatives, the

Transmission Customer desires to maintain its Completed Application

subject to construction of the alternative facilities, it may request

the Transmission Provider to submit a revised Service Agreement for

Firm Point-To-Point Transmission Service. If the alternative approach

solely involves Non-Firm Point-To-Point Transmission Service, the

Transmission Provider shall promptly tender a Service Agreement for

Non-Firm Point-To-Point Transmission Service providing for the service.

In the event the Transmission Provider concludes that no reasonable

alternative exists and the Transmission Customer disagrees, the

Transmission Customer may seek relief under the dispute resolution

procedures pursuant to Section 12 or it may refer the dispute to the

Commission for resolution.

20.3 Refund Obligation for Unfinished Facility Additions: If the

Transmission Provider and the Transmission Customer mutually agree that

no other reasonable alternatives exist and the requested service cannot

be provided out of existing capability under the conditions of Part II

of the Tariff, the obligation to provide the requested Firm Point-To-

Point Transmission Service shall terminate and any advance payment made

by the Transmission Customer that is in excess of the costs incurred by

the Transmission Provider through the time construction was suspended

shall be returned. However, the Transmission Customer shall be

responsible for all prudently incurred costs by the Transmission

Provider through the time construction was suspended.

21 Provisions Relating to Transmission Construction and Services on

the Systems of Other Utilities

21.1 Responsibility for Third-Party System Additions: The

Transmission Provider shall not be responsible for making arrangements

for any necessary engineering, permitting, and construction of

transmission or distribution facilities on the system(s) of any other

entity or for obtaining any regulatory approval for such facilities.

The Transmission Provider will undertake reasonable efforts to assist

the Transmission Customer in obtaining such arrangements, including,

without limitation, providing any information or data required by such

other electric system pursuant to Good Utility Practice.

21.2 Coordination of Third-Party System Additions: In

circumstances where the need for transmission facilities or upgrades is

identified pursuant to the provisions of Part II of the Tariff, and if

such upgrades further require the addition of transmission facilities

on other systems, the Transmission Provider shall have the right to

coordinate construction on its own system with the construction

required by others. The Transmission Provider, after consultation with

the Transmission Customer and representatives of such other systems,

may defer construction of its new transmission facilities if the new

transmission facilities on another system cannot be completed in a

timely manner. The Transmission Provider shall notify the Transmission

Customer in writing of the basis for any decision to defer construction

and the specific problems which must be resolved before it will

initiate or resume construction of new facilities.

Within sixty (60) days of receiving written notification by the

Transmission Provider of its intent to defer construction pursuant to

this section, the Transmission Customer may challenge the decision in

accordance with the dispute resolution procedures pursuant to Section

12 or it may refer the dispute to the Commission for resolution.

22 Changes in Service Specifications

22.1 Modifications On a Non-Firm Basis: The Transmission Customer

taking Firm Point-To-Point Transmission Service may request the

Transmission Provider to provide transmission service on a non-firm

basis over Receipt and Delivery Points other than those specified in

the Service Agreement (``Secondary Receipt and Delivery Points''), in

amounts not to exceed its firm capacity reservation, without incurring

an additional Non-Firm Point-To-Point Transmission Service charge or

executing a new Service Agreement, subject to the following conditions.

(a) Service provided over Secondary Receipt and Delivery Points

will be non-firm only, on an as-available basis, and will not displace

any firm or non-firm service reserved or scheduled by third-parties

under the Tariff or by the Transmission Provider on behalf of its

Native Load Customers.

[[Page 501]]

(b) The sum of all Firm and non-firm Point-To-Point Transmission

Service provided to the Transmission Customer at any time pursuant to

this section shall not exceed the Reserved Capacity in the relevant

Service Agreement under which such services are provided.

(c) The Transmission Customer shall retain its right to schedule

Firm Point-To-Point Transmission Service at the Receipt and Delivery

Points specified in the relevant Service Agreement in the amount of its

original capacity reservation.

(d) Service over Secondary Receipt and Delivery Points on a non-

firm basis shall not require the filing of an Application for Non-Firm

Point-To-Point Transmission Service under the Tariff. However, all

other requirements of Part II of the Tariff (except as to transmission

rates) shall apply to transmission service on a non-firm basis over

Secondary Receipt and Delivery Points.

22.2 Modifications on a Firm Basis: Any request by a Transmission

Customer to modify Receipt and Delivery Points on a firm basis shall be

treated as a new request for service in accordance with Section 17

hereof except that such Transmission Customer shall not be obligated to

pay any additional application processing fee if the capacity

reservation does not exceed the amount reserved in the existing Service

Agreement. While such new request is pending, the Transmission Customer

shall retain its priority for service at the existing firm Receipt and

Delivery Points specified in its Service Agreement.

23 Sale or Assignment of Transmission Service

23.1 Procedures for Assignment or Transfer of Service: Subject to

Commission approval of any necessary filings, a Transmission Customer

may sell, assign, or transfer all or a portion of its rights under its

Service Agreement, but only to another Eligible Customer (the

Assignee). The Transmission Customer that sells, assigns or transfers

its rights under its Service Agreement is hereafter referred to as the

Reseller. Compensation to the Reseller shall not exceed the higher of

(i) the original rate paid by the Reseller, (ii) the Transmission

Provider's maximum rate on file at the time of the assignment, or (iii)

the Reseller's opportunity cost capped at the Transmission Provider's

cost of expansion. If the Assignee does not request any change in the

Point(s) of Receipt or the Point(s) of Delivery, or a change in any

other term or condition set forth in the original Service Agreement,

the Assignee will receive the same services as did the Reseller and the

priority of service for the Assignee will be the same as that of the

Reseller. A Reseller should notify the Transmission Provider as soon as

possible after any assignment or transfer of service occurs but in any

event, notification must be provided prior to any provision of service

to the Assignee. The Assignee will be subject to all terms and

conditions of the Tariff. If the Assignee requests a change in service,

the reservation priority of service will be determined by the

Transmission Provider pursuant to Section 13.2.

23.2 Limitations on Assignment or Transfer of Service: If the

Assignee requests a change in the Point(s) of Receipt or Point(s) of

Delivery, or a change in any other specifications set forth in the

original Service Agreement, the Transmission Provider will consent to

such change subject to the provisions of the Tariff, provided that the

change will not impair the operation and reliability of the

Transmission Provider's generation, transmission, or distribution

systems. The Assignee shall compensate the Transmission Provider in

advance for performing any System Impact Study needed to evaluate the

capability of the Transmission System to accommodate the proposed

change and any additional costs resulting from such change. The

Reseller shall remain liable for the performance of all obligations

under the Service Agreement, except as specifically agreed to by the

Parties through an amendment to the Service Agreement.

23.3 Information on Assignment or Transfer of Service: In

accordance with Section 4, Resellers may use the Transmission

Provider's OASIS to post transmission capacity available for resale.

24 Metering and Power Factor Correction at Receipt and Delivery

Point(s)

24.1 Transmission Customer Obligations: Unless otherwise agreed,

the Transmission Customer shall be responsible for installing and

maintaining compatible metering and communications equipment to

accurately account for the capacity and energy being transmitted under

Part II of the Tariff and to communicate the information to the

Transmission Provider. Such equipment shall remain the property of the

Transmission Customer.

24.2 Transmission Provider Access to Metering Data: The

Transmission Provider shall have access to metering data, which may

reasonably be required to facilitate measurements and billing under the

Service Agreement.

24.3 Power Factor: Unless otherwise agreed, the Transmission

Customer is required to maintain a power factor within the same range

as the Transmission Provider pursuant to Good Utility Practices. The

power factor requirements are specified in the Transmission Provider's

rate schedule for transmission service.

25 Compensation for Transmission Service

Rates for Firm and Non-Firm Point-To-Point Transmission Service are

provided in the Transmission Provider's rate schedule for transmission

service which is promulgated, and may be modified, pursuant to

applicable Federal law, regulations, and policies. The Transmission

Provider shall use Part II of the Tariff to make its Third-Party Sales.

The Transmission Provider shall account for such use at the applicable

rates.

26 Stranded Cost Recovery

The Transmission Provider may seek to recover stranded costs from

the Transmission Customer pursuant to this Tariff in accordance with

the terms, conditions, and procedures set forth in FERC Order No. 888,

in a manner consistent with applicable Federal law and regulations.

27 Compensation for New Facilities and Redispatch Costs

Whenever a System Impact Study performed by the Transmission

Provider in connection with the provision of Firm Point-To-Point

Transmission Service identifies the need for new facilities, the

Transmission Customer shall be responsible for such costs to the extent

consistent with Commission policy. Whenever a System Impact Study

performed by the Transmission Provider identifies capacity constraints

that may be relieved more economically by redispatching the

Transmission Provider's resources than by building new facilities or

upgrading existing facilities to eliminate such constraints, the

Transmission Customer shall be responsible for the redispatch costs to

the extent consistent with Commission policy.

Part III. Network Integration Transmission Service

Preamble

The Transmission Provider will provide Network Integration

Transmission Service pursuant to the applicable terms and conditions

contained in the Tariff and Service Agreement. Network Integration

[[Page 502]]

Transmission Service allows the Network Customer to integrate,

economically dispatch and regulate its current and planned Network

Resources to serve its Network Load in a manner comparable to that in

which the Transmission Provider utilizes its Transmission System to

serve its Native Load Customers. Network Integration Transmission

Service also may be used by the Network Customer to deliver economy

energy purchases to its Network Load from non-designated resources on

an as-available basis without additional charge. Transmission service

for sales to non-designated loads will be provided pursuant to the

applicable terms and conditions of Part II of the Tariff.

28 Nature of Network Integration Transmission Service

28.1 Scope of Service: Network Integration Transmission Service is

a transmission service that allows Network Customers to efficiently and

economically utilize their Network Resources (as well as other non-

designated generation resources) to serve their Network Load located in

the Transmission Provider's Control Area and any additional load that

may be designated pursuant to Section 31.3 of the Tariff. The Network

Customer taking Network Integration Transmission Service must obtain or

provide Ancillary Services pursuant to Section 3.

28.2 Transmission Provider Responsibilities: The Transmission

Provider will plan, construct, operate and maintain its Transmission

System in accordance with Good Utility Practice in order to provide the

Network Customer with Network Integration Transmission Service over the

Transmission Provider's Transmission System. The Transmission Provider,

on behalf of its Native Load Customers, shall be required to designate

resources and loads in the same manner as any Network Customer under

Part III of the Tariff. This information must be consistent with the

information used by the Transmission Provider to calculate available

transmission capability. The Transmission Provider shall include the

Network Customer's Network Load in its Transmission System planning and

shall, consistent with Good Utility Practice, endeavor to construct and

place into service sufficient transmission capacity to deliver the

Network Customer's Network Resources to serve its Network Load on a

basis comparable to the Transmission Provider's delivery of its own

generating and purchased resources to its Native Load Customers. This

obligation to construct and place into service sufficient transmission

capacity to deliver the Network Customer's Network Resources to serve

its Network Load is contingent upon the availability to the

Transmission Provider of sufficient appropriations, when needed, and

the Transmission Customer's advanced funds.

28.3 Network Integration Transmission Service: The Transmission

Provider will provide firm transmission service over its Transmission

System to the Network Customer for the delivery of capacity and energy

from its designated Network Resources to service its Network Loads on a

basis that is comparable to the Transmission Provider's use of the

Transmission System to reliably serve its Native Load Customers.

28.4 Secondary Service: The Network Customer may use the

Transmission Provider's Transmission System to deliver energy to its

Network Loads from resources that have not been designated as Network

Resources. Such energy shall be transmitted, on an as-available basis,

at no additional charge. Deliveries from resources other than Network

Resources will have a higher priority than any Non-Firm Point-To-Point

Transmission Service under Part II of the Tariff.

28.5 Real Power Losses: Real Power Losses are associated with all

transmission service. The Transmission Provider is not obligated to

provide Real Power Losses. The Network Customer is responsible for

replacing losses associated with all transmission service as calculated

by the Transmission Provider. The applicable Real Power Loss factors

are specified in the Transmission Provider's rate schedule for

transmission service, and may be adjusted, from time to time, in

accordance with the results of periodic studies.

28.6 Restrictions on Use of Service: The Network Customer shall

not use Network Integration Transmission Service for (i) sales of

capacity and energy to non-designated loads, or (ii) direct or indirect

provision of transmission service by the Network Customer to third

parties. All Network Customers taking Network Integration Transmission

Service shall use Point-To-Point Transmission Service under Part II of

the Tariff for any Third-Party Sale which requires use of the

Transmission Provider's Transmission System.

29 Initiating Service

29.1 Condition Precedent for Receiving Service: Subject to the

terms and conditions of Part III of the Tariff, the Transmission

Provider will provide Network Integration Transmission Service to any

Eligible Customer provided that (i) the Eligible Customer completes an

Application for service as provided under Part III of the Tariff, (ii)

the Eligible Customer and the Transmission Provider complete the

technical arrangements set forth in Sections 29.3 and 29.4, (iii) the

Eligible Customer executes a Service Agreement pursuant to Attachment F

for service under Part III of the Tariff or requests in writing that

the Transmission Provider provide service without an executed Service

Agreement, and (iv) the Eligible Customer executes a Network Operating

Agreement with the Transmission Provider pursuant to Attachment G. If

the Transmission Provider and the Network Customer cannot agree on all

the terms and conditions of the Network Service Agreement, the

Transmission Provider shall commence providing Network Integration

Transmission Service subject to the Network Customer's agreeing to (i)

compensate the Transmission Provider at the existing rate placed in

effect pursuant to applicable Federal law, regulations, and policies,

and (ii) comply with the terms and conditions of the Tariff, including

paying the appropriate processing fees in accordance with the terms of

Section 29.2. If the Network Customer cannot accept all of the terms

and conditions of the offered Service Agreement, the Network Customer

may request resolution of the unacceptable terms and conditions under

Section 12, Dispute Resolution Procedures, of the Tariff. Any changes

resulting from the dispute resolution procedures will be effective upon

the date of initial service.

29.2 Application Procedures: An Eligible Customer requesting

service under Part III of the Tariff must submit an Application to the

Transmission Provider as far as possible in advance of the month in

which service is to commence. Unless subject to the procedures in

Section 2, Completed Applications for Network Integration Transmission

Service will be assigned a priority according to the date and time the

Application is received, with the earliest Application receiving the

highest priority. Applications should be submitted by entering the

information listed below on the Transmission Provider's OASIS. Prior to

implementation of the Transmission Provider's OASIS, a Completed

Application may be submitted by (i) transmitting the required

information to the Transmission Provider by telefax, or (ii) providing

the information by telephone over the Transmission

[[Page 503]]

Provider's time-recorded telephone line. Each of these methods will

provide a time-stamped record for establishing the service priority of

the Application. A Completed Application for Network Integration

Transmission Service shall include a non-refundable application

processing fee of $1,200. This fee does not apply to costs to complete

System Impact Studies or Facility Studies or to add new facilities. A

Completed Application shall provide all of the information included in

18 CFR 2.20 including but not limited to the following:

(i) The identity, address, telephone number and facsimile number of

the party requesting service;

(ii) A statement that the party requesting service is, or will be

upon commencement of service, an Eligible Customer under the Tariff;

(iii) A description of the Network Load at each delivery point.

This description should separately identify and provide the Eligible

Customer's best estimate of the total loads to be served at each

transmission voltage level, and the loads to be served from each

Transmission Provider substation at the same transmission voltage

level. The description should include a ten (10) year forecast of

summer and winter load and resource requirements beginning with the

first year after the service is scheduled to commence;

(iv) The amount and location of any interruptible loads included in

the Network Load. This shall include the summer and winter capacity

requirements for each interruptible load (had such load not been

interruptible), that portion of the load subject to interruption, the

conditions under which an interruption can be implemented and any

limitations on the amount and frequency of interruptions. An Eligible

Customer should identify the amount of interruptible customer load (if

any), included in the 10 year load forecast provided in response to

(iii) above;

(v) A description of Network Resources (current and 10-year

projection), which shall include, for each Network Resource:

--Unit size and amount of capacity from that unit to be designated

as Network Resource;

--VAR capability (both leading and lagging) of all generators;

--Operating restrictions;

--Any periods of restricted operations throughout the year;

--Maintenance schedules;

--Minimum loading level of unit;

--Normal operating level of unit;

--Any must-run unit designations required for system reliability or

contract reasons;

--Approximate variable generating cost ($/MWH) for redispatch

computations;

--Arrangements governing sale and delivery of power to third

parties from generating facilities located in the Transmission Provider

Control Area, where only a portion of unit output is designated as a

Network Resource;

--Description of purchased power designated as a Network Resource

including source of supply, Control Area location, transmission

arrangements and delivery point(s) to the Transmission Provider's

Transmission System;

(vi) Description of Eligible Customer's transmission system:

--Load flow and stability data, such as real and reactive parts of

the load, lines, transformers, reactive devices and load type,

including normal and emergency ratings of all transmission equipment in

a load flow format compatible with that used by the Transmission

Provider;

--Operating restrictions needed for reliability;

--Operating guides employed by system operators;

--Contractual restrictions or committed uses of the Eligible

Customer's transmission system, other than the Eligible Customer's

Network Loads and Resources;

--Location of Network Resources described in subsection (v) above;

--10-year projection of system expansions or upgrades;

--Transmission System maps that include any proposed expansions or

upgrades;

--Thermal ratings of Eligible Customer's Control Area ties with

other Control Areas; and

(vii) Service Commencement Date and the term of the requested

Network Integration Transmission Service. The minimum term for Network

Integration Transmission Service is one year.

Unless the Parties agree to a different time frame, the

Transmission Provider must acknowledge the request within ten (10) days

of receipt. The acknowledgment must include a date by which a response,

including a Service Agreement, will be sent to the Eligible Customer.

If an Application fails to meet the requirements of this section, the

Transmission Provider shall notify the Eligible Customer requesting

service within fifteen (15) days of receipt and specify the reasons for

such failure. Wherever possible, the Transmission Provider will attempt

to remedy deficiencies in the Application through informal

communications with the Eligible Customer. If such efforts are

unsuccessful, the Transmission Provider shall return the Application

without prejudice to the Eligible Customer filing a new or revised

Application that fully complies with the requirements of this section.

The Eligible Customer will be assigned a new priority consistent with

the date of the new or revised Application. The Transmission Provider

shall treat this information consistent with the standards of conduct

contained in Part 37 of the Commission's regulations.

29.3 Technical Arrangements to be Completed Prior to Commencement

of Service: Network Integration Transmission Service shall not commence

until the Transmission Provider and the Network Customer, or a third

party, have completed installation of all equipment specified under the

Network Operating Agreement consistent with Good Utility Practice and

any additional requirements reasonably and consistently imposed to

ensure the reliable operation of the Transmission System. The

Transmission Provider shall exercise reasonable efforts, in

coordination with the Network Customer, to complete such arrangements

as soon as practicable taking into consideration the Service

Commencement Date.

29.4 Network Customer Facilities: The provision of Network

Integration Transmission Service shall be conditioned upon the Network

Customer's constructing, maintaining and operating the facilities on

its side of each delivery point or interconnection necessary to

reliably deliver capacity and energy from the Transmission Provider's

Transmission System to the Network Customer. The Network Customer shall

be solely responsible for constructing or installing all facilities on

the Network Customer's side of each such delivery point or

interconnection.

30 Network Resources

30.1 Designation of Network Resources: Network Resources shall

include all generation owned, purchased or leased by the Network

Customer designated to serve Network Load under the Tariff. Network

Resources may not include resources, or any portion thereof, that are

committed for sale to non-designated third party load or otherwise

cannot be called upon to meet the Network Customer's Network Load on a

noninterruptible basis. Any owned or purchased resources that were

serving the Network Customer's loads under firm agreements entered into

on or before the Service

[[Page 504]]

Commencement Date shall initially be designated as Network Resources

until the Network Customer terminates the designation of such

resources.

30.2 Designation of New Network Resources: The Network Customer

may designate a new Network Resource by providing the Transmission

Provider with as much advance notice as practicable. A designation of a

new Network Resource must be made by a request for modification of

service pursuant to an Application under Section 29.

30.3 Termination of Network Resources: The Network Customer may

terminate the designation of all or part of a generating resource as a

Network Resource at any time but should provide notification to the

Transmission Provider as soon as reasonably practicable.

30.4 Operation of Network Resources: The Network Customer shall

not operate its designated Network Resources located in the Network

Customer's or Transmission Provider's Control Area such that the output

of those facilities exceeds its designated Network Load, plus non-firm

sales delivered pursuant to Part II of the Tariff, plus losses. This

limitation shall not apply to changes in the operation of a

Transmission Customer's Network Resources at the request of the

Transmission Provider to respond to an emergency or other unforeseen

condition which may impair or degrade the reliability of the

Transmission System.

30.5 Network Customer Redispatch Obligation: As a condition to

receiving Network Integration Transmission Service, the Network

Customer agrees to redispatch its Network Resources as requested by the

Transmission Provider pursuant to Section 33.2. To the extent

practical, the redispatch of resources pursuant to this section shall

be on a least cost, nondiscriminatory basis between all Network

Customers, and the Transmission Provider.

30.6 Transmission Arrangements for Network Resources Not

Physically Interconnected With The Transmission Provider: The Network

Customer shall be responsible for any arrangements necessary to deliver

capacity and energy from a Network Resource not physically

interconnected with the Transmission Provider's Transmission System.

The Transmission Provider will undertake reasonable efforts to assist

the Network Customer in obtaining such arrangements, including without

limitation, providing any information or data required by such other

entity pursuant to Good Utility Practice.

30.7 Limitation on Designation of Network Resources: The Network

Customer must demonstrate that it owns or has committed to purchase

generation pursuant to an executed contract in order to designate a

generating resource as a Network Resource. Alternatively, the Network

Customer may establish that execution of a contract is contingent upon

the availability of transmission service under Part III of the Tariff.

30.8 Use of Interface Capacity by the Network Customer: There is

no limitation upon a Network Customer's use of the Transmission

Provider's Transmission System at any particular interface to integrate

the Network Customer's Network Resources (or substitute economy

purchases) with its Network Loads. However, a Network Customer's use of

the Transmission Provider's total interface capacity with other

transmission systems may not exceed the Network Customer's Load.

30.9 Network Customer Owned Transmission Facilities: The Network

Customer that owns existing transmission facilities that are integrated

with the Transmission Provider's Transmission System may be eligible to

receive consideration either through a billing credit or some other

mechanism. In order to receive such consideration the Network Customer

must demonstrate that its transmission facilities are integrated into

the plans or operations of the Transmission Provider to serve its power

and transmission customers. For facilities constructed by the Network

Customer subsequent to the Service Commencement Date under Part III of

the Tariff, the Network Customer shall receive credit where such

facilities are jointly planned and installed in coordination with the

Transmission Provider. Calculation of the credit shall be addressed in

either the Network Customer's Service Agreement or any other agreement

between the Parties.

31 Designation of Network Load

31.1 Network Load: The Network Customer must designate the

individual Network Loads on whose behalf the Transmission Provider will

provide Network Integration Transmission Service. The Network Loads

shall be specified in the Service Agreement.

31.2 New Network Loads Connected With the Transmission Provider:

The Network Customer shall provide the Transmission Provider with as

much advance notice as reasonably practicable of the designation of new

Network Load that will be added to its Transmission System. A

designation of new Network Load must be made through a modification of

service pursuant to a new Application. The Transmission Provider will

use due diligence to install any transmission facilities required to

interconnect a new Network Load designated by the Network Customer. The

costs of new facilities required to interconnect a new Network Load

shall be determined in accordance with the procedures provided in

Section 32.4 and shall be charged to the Network Customer in accordance

with Commission policies.

31.3 Network Load Not Physically Interconnected with the

Transmission Provider: This section applies to both initial designation

pursuant to Section 31.1 and the subsequent addition of new Network

Load not physically interconnected with the Transmission Provider. To

the extent that the Network Customer desires to obtain transmission

service for a load outside the Transmission Provider's Transmission

System, the Network Customer shall have the option of (1) electing to

include the entire load as Network Load for all purposes under Part III

of the Tariff and designating Network Resources in connection with such

additional Network Load, or (2) excluding that entire load from its

Network Load and purchasing Point-To-Point Transmission Service under

Part II of the Tariff. To the extent that the Network Customer gives

notice of its intent to add a new Network Load as part of its Network

Load pursuant to this section the request must be made through a

modification of service pursuant to a new Application.

31.4 New Interconnection Points: To the extent the Network

Customer desires to add a new Delivery Point or interconnection point

between the Transmission Provider's Transmission System and a Network

Load, the Network Customer shall provide the Transmission Provider with

as much advance notice as reasonably practicable.

31.5 Changes in Service Requests: Under no circumstances shall the

Network Customer's decision to cancel or delay a requested change in

Network Integration Transmission Service (e.g. the addition of a new

Network Resource or designation of a new Network Load) in any way

relieve the Network Customer of its obligation to pay the costs of

transmission facilities constructed by the Transmission Provider and

charged to the Network Customer as reflected in the Service Agreement.

However, the Transmission Provider must treat any requested change in

Network Integration Transmission Service in a non-discriminatory

manner. The Transmission Provider will have no

[[Page 505]]

obligation to refund any advance of funds expended for purposes of

providing facilities for a Network Customer. However, upon receipt of a

Network Customer's written notice of such a cancellation or delay, the

Transmission Provider will use the same reasonable efforts to mitigate

the costs and charges owed to the Transmission Provider as it would to

reduce its own costs and charges.

31.6 Annual Load and Resource Information Updates: The Network

Customer shall provide the Transmission Provider with annual updates of

Network Load and Network Resource forecasts consistent with those

included in its Application for Network Integration Transmission

Service under Part III of the Tariff. The Network Customer also shall

provide the Transmission Provider with timely written notice of

material changes in any other information provided in its Application

relating to the Network Customer's Network Load, Network Resources, its

transmission system or other aspects of its facilities or operations

affecting the Transmission Provider's ability to provide reliable

service.

32 Additional Study Procedures for Network Integration Transmission

Service Requests

32.1 Notice of Need for System Impact Study: After receiving a

request for service, the Transmission Provider shall determine on a

non-discriminatory basis whether a System Impact Study is needed. A

description of the Transmission Provider's methodology for completing a

System Impact Study is provided in Attachment D. If the Transmission

Provider determines that a System Impact Study is necessary to

accommodate the requested service, it shall so inform the Eligible

Customer, as soon as practicable. In such cases, the Transmission

Provider shall within thirty (30) days of receipt of a Completed

Application, tender a System Impact Study Agreement pursuant to which

the Eligible Customer shall agree to advance funds to the Transmission

Provider for performing the required System Impact Study. For a service

request to remain a Completed Application, the Eligible Customer shall

execute the System Impact Study Agreement and return it to the

Transmission Provider within fifteen (15) days. If the Eligible

Customer elects not to execute the System Impact Study Agreement, its

Application shall be deemed withdrawn.

32.2 System Impact Study Agreement and Compensation: (i) The

System Impact Study Agreement will clearly specify the Transmission

Provider's estimate of the actual cost, and time for completion of the

System Impact Study. The charge shall not exceed the actual cost of the

study. In performing the System Impact Study, the Transmission Provider

shall rely, to the extent reasonably practicable, on existing

transmission planning studies. The Eligible Customer will not be

assessed a charge for such existing studies; however, the Eligible

Customer will be responsible for charges associated with any

modifications to existing planning studies tha

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