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					             Desert STAR RTO
             Pricing Proposal


Committee on Regional
Electric Power Cooperation

April 18, 2001


Ed Beck
Tucson Electric Power Company
               Background

• Postage stamp pricing is not acceptable in the
  initial stages of DSTAR for several TOs due to
  cost shifts
• Simple access area concept is not acceptable
  to other TOs
• A compromise position, the Access Area
  Method (License Plate) with an adjustment to
  compensate Western for otherwise
  unrecovereable revenues was selected by
  Transmission Owners
• Based on current transmission rates
                                                   2
    Access Area Pricing Model

• Load within footprint pays access charge
  based on access area where the load resides
   – Access Area Rate times the SC’s demand at
     the time of Access Area’s monthly peak
• The Wheeling Out/Wheeling Through(WOWT)
  will be charged higher of Access Area Rate of
  exit point or average DSTAR rate
   – Charge will be mwhr rate
   – May be superceded by Seams treatment
• All loads will pay an applicable administrative
  charge
                                                    3
  Rate Changes / Congestion

• AAR will be adjusted when a PTO changes
  Annual Transmission Revenue Requirement
  (ATRR) with appropriate regulatory approval
• Congestion will be handled with Firm
  Transmission Rights (FTRs)
   – Auction
   – Auction proceeds to historical users




                                                4
        DSTAR Administrative
              Charge
• DSTAR administrative charge will consist of
  two elements:
   – Transmission Benefits Charge
      • Hourly metered Demand for Resident
        Load and the final schedule for Wheeling
   – All other DSTAR costs
      • Hourly metered Demand for Resident
        Load and the final schedule for Wheeling



                                                   5
  Transmission Benefit Charge
             (TBC)
• Western’s ATRR (as approved through
  Western’s Public process)
  – EC payments received by Western
  – Transfer payments received by Western
  – AAR * Resident Load received by Western
    from DSTAR
  – Wheeling revenues distributed to Western
  – RTR auction revenues distributed to
    Western
  – FTR auction revenues at Scheduling Points
    distributed to Western
                                                6
  – Transmission Benefit Charge
                 End State

• Transmission Owners have settled on a
  Highway / Zonal model concept for end state
   – Model details will be established in the next
     year
   – Implementation will begin 1/09 (after rate
     moratoriums)
• Components for highway are typically facilities
            used for bulk transmission
  • Zonal facilities typically are needed only for
    service within a zone (definition of zones is
       assumed to be similar to access areas)
                                                     7

				
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