To establish a policy, which describes and explains rate fixing and the administration of the rates imposed. Rates shall be designed to provide the member-consumers electrical services at the lowest possible cost consistent with sound business practices.
A.The Board of Directors derives their authority to fix and establish rates from the membership via the bylaws of the Cooperative. In addition, the articles of incorporation and the laws of this state grant to the Board of Directors the power to manage the business of the Cooperative. Such management necessarily includes ratemaking because without control of the primary source of revenues, the Cooperative's continued existence is not assured. The Board of Directors' duty is first to the Cooperative and each director represents all classes of member-consumers in the rate making process.
B.The goal of rate making for the Board of Directors is the fair apportionment of the costs of furnishing such services to its various classes of member-consumers. Each class shall be cost recovery efficient as to the services provided to that class. Capital credits are assigned on the basis of patronage, and unless each class bears its own costs and expenses, payments in excess of such costs and expenses (capital credits) will not truly reflect the patron's capital contribution.
C.Classification of member-consumers shall be made upon actual different, and distinct conditions and circumstances and the cost of furnishing services. Where a substantial number of member-consumers share readily identifiable and common circumstances and conditions within the Cooperative system such member-consumers shall constitute and be treated as a class. Facts that produce a substantial inequality of conditions or change of circumstances of the electrical member-consumers shall justify a reasonable commensurate inequality in rates.
D.It is hereby recognized that it is impossible to accurately break down the cost of furnishing services to each individual member-consumer, and therefore, no member-consumer shall be entitled to be considered individually and separately for rate purposes. Cost of service and rate analysis need not proceed beyond the established classification.
E.Discrimination between or among member-consumers of the same class is prohibited unless (1) there exist an actual difference in the situation of such member-consumers and (2) the cost of furnishing services thereto justifies different treatment. Examples of such permissible discrimination include, but are not limited to; member-consumers with a delinquent payment history, member-consumers not previously metered, member-consumers with newly constructed facilities where substantial cost recovery is required during the early years of availability, and member-consumers with idle services for which the fixed costs are different from those services actually used.
Discrimination on the basis of race, color, religion, national origin, sex, age, or handicap is absolutely prohibited.
F.Cost of service studies and rate analysis shall be performed as frequently as deemed appropriate by the Board of Directors to maintain fair and equitable rates.
G.The Cooperative and its Board of Directors shall abide by the mandatory provisions of
H.Facility or minimum charges, whether monthly, seasonal, or annual, shall at least cover those fixed costs (as defined by relevant
I.Denomination of a rate schedule and reference thereto in any contract or agreement between a member-consumer and the Cooperative shall not control. Rather, where a particular rate schedule is specified or incorporated by reference, any subsequently adopted rate schedule for that class of member-consumers shall apply until again revised by the Board of Directors. In short, substance shall control over form and every contract or agreement between a member-consumer and the Cooperative assumes rates will vary from time to time depending on the cost of the services furnished or made available.
J.The Board of Directors may discontinue services to any class of member-consumers that consistently demonstrates an inability or unwillingness to bear its own share of the cost of providing such services. No class of member-consumers shall subsidize or support another class of member-consumers that cannot or will not carry its own burden. In short, that class of member-consumers which benefits from the availability of a service shall pay for such services.
K.Reasonableness of rates shall be determined by reference to cost recovery efficiency and not by the economic circumstances of the individual member-consumer(s).
L.Margins derived from rates shall at all times meet the requirements of the Cooperative's existing mortgages or other instruments of indebtedness. Rates that jeopardize sufficient margins are hereby deemed "unreasonable" and shall be rectified forthwith by action of the Board of Directors.
M.Rates shall, generally, be structured upon either (1) service and energy charges or (2) a kilowatt demand and energy rate basis and shall encourage usage, tempered by conservation and load management concerns.
The foregoing policy shall be subject to the Public Utility Regulatory Power Act of 1978, and acts amendatory thereto, and the Federal Energy Regulatory Commission.
The General Manager is responsible for administering this policy and for recommending to the Board any changes deemed desirable.
EFFECTIVE DATE: February 22, 2001
DATE ADOPTED: February 22, 2001
DATE REVIEWED: December 18, 2008
DATE REVIEWED: December 20, 2012
DATE REVIEWED: November 19, 2014
Chris Hofer, Secretary