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<br />March 1998 <br /> <br />Western Area Power Administration <br /> <br />3-5 <br /> <br /> <br />Policy Issues and Assumptions <br /> <br />Section 3 <br /> <br />I <br /> <br />, <br /> <br />3.3.1.1 TRANSMISSION OF LONG-TERM FIRM-PURCHASE COMMITMENTS <br /> <br />Western will reserve transmission rights equivalent to the CROD on the CRSP <br />transmission system to serve its long-term finn-power customers. Western will deliver <br />long-term finn power to its customers at the same delivery points as the hydroelectric <br />power currently delivered. Some deliveries from remote locations will be subject to <br />available transmission capacity and possible additional cost, depending on the location of <br />the source of the power. Transmission service needed by an SLCNIP customer for <br />delivery of any resource in excess of the customer's CROD may be provided by Western <br />subject to available transmission capacity and according to the terms and conditions of the <br />appropriate tariff. <br /> <br />, <br />I <br /> <br />3.3.1.2 CURRENT TRANSMISSION CONSTRAINTS <br /> <br />J <br /> <br />The transmission system surrounding GCD is limited in east to west and in north to south <br />power flows. Two primary factors are responsible for this situation: (i) as Southern <br />California experienced a. population boom, many Southern Californian utilities opted to <br />purchase lower cost coal power from the Arizona and New Mexico region instead of <br />constructing higher-cost, local gas-fired generation; and (ii) Phoenix, a major metropolitan <br />area of more than 2 million, is south of GCD. <br /> <br />Much of the region's generation is located in the coal-rich, Four Corners region, the area <br />where.Utah, Colorado, New Mexico, and Arizona meet. Although a part of this power is <br />transmitted to the north, the majority flows either West. into the Los Angeles Basin via the <br />Las Vegas area, or South to the Phoenix area and beyond to San Diego or Los Angeles. <br />This situation affects Western directly through power flow limitations on Western's east- <br />west Shiprock-Glen Canyon 230 kV line, and on Western's north-south Shiprock-Western <br />Colorado path. <br /> <br />Current transmission constraints will be used to evaluate replacement resources. A benefit <br />or cost may be associated with resource location, depending on whether the replacement <br />resource relieves or adds to the existing constraints. <br /> <br />~ <br /> <br />3.3.1.3 SRP EXCHANGE AGREEMENT <br /> <br />The Salt River Project Agricultural Improvement and Power District (SRP) entered into an <br />exchange agreement with Reclamation on June 26, 1962, which was subsequently <br />amended and reformed in 1974 (SRP Exchange Agreement). The initial term of the <br />agreement extends through May 2014. Western later assumed the contractual obligations <br />for the agreement in 1979. The concept for the agreement arose from Reclamation's need <br />to tranSmit power from GCD to its customer loads north and east of GCD in Utah, <br />Colorado, New Mexico, and Wyoming, and SRP's desire to build additional generating <br />capacity near sources of inexpensive coal to serve its customer loads south ofGCD. <br />