The Power Act authorizes the Council to recommend a surcharge and the Bonneville Administrator may thereafter impose such a surcharge on customers that have not implemented conservation measures that achieve energy savings comparable to those which would be obtained under the Model Conservation Standards in the plan. The Council does not recommend a surcharge to the Administrator under Section 4(f) (2) of the Act at this time.
The Council intends to continue to track regional progress toward the Plan’s MCS and will review its decision on the recommendation, should accomplishment of these goals appear to be in jeopardy. Should utilities fail to enact these standards, then Bonneville may need the ability to recover the cost of securing those savings. In this instance the Council may wish to recommend that the Administrator be granted the authority to place a surcharge on that customer’s rates to recover those costs.
Surcharge Methodology
Section 4(f)(2) of the Northwest Power Act directs the Council to include a surcharge methodology in the power plan. The surcharge must, per the Act, be no less than 10 percent and no more than 50 percent of the Administrator’s applicable rates for a customer’s load or portion of load. The surcharge is to be applied to Bonneville customers for those portions of their regional loads that are within states or political subdivisions that have not, or on customers who have not, implemented conservation measures that achieve savings of electricity comparable to those that would be obtained under the model conservation standards.
The purpose of the surcharge is twofold: 1) to recover costs imposed on the region’s electric system by failure to adopt the model conservation standards or achieve equivalent electricity savings; and 2) to provide a strong incentive to utilities and state and local jurisdictions to adopt and enforce the standards or comparable alternatives. The surcharge mechanism in the Act was intended to ensure that Bonneville’s utility customers were not shielded from paying the full marginal cost of meeting load growth.
As stated above, the Council does not recommend that the Administrator invoke the surcharge provisions of the Act at this time. However, the Act requires that the Council’s plan set forth a methodology for surcharge calculation for Bonneville’s administrator to follow.
Should the Council alter its current recommendation to authorize the Bonneville administrator to impose surcharges, the method for calculation is set out below.
Identification of Customers Subject to Surcharge
The administrator should identify those customers, states or political subdivisions that have failed to comply with the model conservation standards set forth within this chapter.
Calculation of Surcharge
The annual surcharge for non-complying customers or customers in non-complying jurisdictions is to be calculated by the Bonneville administrator as follows:
1. If the customer is purchasing firm power from Bonneville under a power sales contract and is not exchanging under a residential purchase and sales agreement, the surcharge is 10 percent of the cost to the customer of all firm power purchased from Bonneville under the power sales contract for that portion of the customer’s load in jurisdictions not implementing the model conservation standards or comparable programs.
2. If the customer is not purchasing firm power from Bonneville under a power sales contract, but is exchanging (or is deemed to be exchanging) under a residential purchase and sales agreement, the surcharge is 10 percent of the cost to the customer of the power purchased (or deemed to be purchased) from Bonneville in the exchange for that portion of the customer’s load in jurisdictions not implementing the model conservation standards or comparable programs.
If the customer is purchasing firm power from Bonneville under a power sales contract and also is exchanging (or is deemed to be exchanging) under a residential purchase and sales agreement, the surcharge is: a) 10 percent of the cost to the customer of firm power purchased under the power sales contract; plus b) 10 percent of the cost to the customer of power purchased from Bonneville in the exchange (or deemed to be purchased) multiplied by the fraction of the utility’s exchange load originally served by the utility’s own resources.
Evaluation of Alternatives and Electricity Savings
A method of determining the estimated electrical energy savings of an alternative conservation plan should be developed in consultation with the Council and included in Bonneville’s policy to implement the surcharge.