2007 Wholesale Power Rate Case Initial Proposal : Section 7(b)(2) Rate Test Study.
Section 7(b)(2) of the Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act), 16 U.S.C. {section} 839e(b)(2), directs the Bonneville Power Administration (BPA) to conduct, after July 1, 1985, a comparison of the projected rates to be charged its preference and Federal agency customers for their firm power requirements, over the rate test period plus the ensuing four years, with the costs of power (hereafter called rates) to those customers for the same time period if certain assumptions are made. The effect of this rate test is to protect BPA's preference and Federal agency customers wholesale firm power rates from certain specified costs resulting from provisions of the Northwest Power Act. The rate test can result in a reallocation of costs from the general requirements loads of preference and Federal agency customers to other BPA loads. The rate test involves the projection and comparison of two sets of wholesale power rates for the general requirements loads of BPA's public body, cooperative, and Federal agency customers (7(b)(2) Customers). The two sets of rates are: (1) a set for the test period and the ensuing four years assuming that section 7(b)(2) is not in effect (known as Program Case rates); and (2) a set for the same period taking into account the five assumptions listed in section 7(b)(2), (known as 7(b)(2) Case rates). Certain specified costs allocated pursuant to section 7(g) of the Northwest Power Act are subtracted from the Program Case rates. Next, each nominal rate is discounted to the beginning of the test period of the relevant rate case. The discounted Program Case rates are averaged, as are the 7(b)(2) Case rates. Both averages are rounded to the nearest tenth of a mill for comparison. If the average Program Case rate is greater than the average 7(b)(2) Case rate, the rate test triggers. The difference between the average Program Case rate and the average 7(b)(2) Case rate determines the amount to be reallocated from the 7(b)(2) Customers to other BPA loads in the rate proposal test period.
