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Dear CRSP Transmission Customer:

On July 17, 1998, the Federal Energy Regulatory Commission (FERC) approved the firm and non-firm transmission rates for service on the Colorado River Storage Project (CRSP) transmission system.

Rate Schedule SP-PTP5 for firm point-to-point transmission provides for a yearly recalculation of the rate. This recalculation is accomplished by maintaining the annual revenue requirements at a constant level, and updating (1) the rate denominator (reserved capacity) based upon current contracted reservations, and (2) the net annual transmission credits also based upon unaudited FY 2001 data. This update derives revised averages that are the basis for the 2002-2003 projections. Revision of the firm point-to-point transmission rate formula under Rate Schedule SP-PTP5 results in a rate of $1.78/kW-month, effective April 1, 2002, through March 30, 2003, which is lower than the $2.14/kW-month rate currently in effect. This decrease is primarily a result of an increase in nonfirm transmission revenues and firm transmission reservations. Enclosed is a table that compares the average components of the current rate with the revised rate.

Rate Schedules SP-NW1 for network transmission service and SP-NFT4 for non-firm transmission service are based upon SP-PTP5. As stated in SP-NFT4, the non-firm point-to-point rate shall not be higher than the firm point-to-point rate. Therefore, this revised firm point-to-point rate results in a maximum non-firm transmission rate of 2.4 mills/kWh for the same period.

The firm point-to-point transmission rate is applicable to existing transmission contracts and future transmission service agreements. Please consider this letter as official notification of the effective transmission rates for all applicable transmission agreements.

As you may be aware, the CRSP MC is initiating a public rate process, which will include a revision to the firm and nonfirm transmission rates. The CRSP MC is proposing an annual fixed charge methodolgy for determining its firm and nonfirm transmission rates. Shortly, you should receive a copy of the Rate Brochure which outlines in more detail this proposal and includes information regarding the meeting dates and times.

If there are any questions regarding the recalculated rate schedules, please telephone Valerie Deppe at (801) 524-4445.

Carol A. Loftin
Rates Manager


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