The Bonneville Power Administration (BPA) has announced it will not increase average wholesale base power rates for the 2020-2021 rate period. The average transmission rate will increase by 3.6% for the two-year rate period that begins October 1.
The decision keeps the BPA’s average wholesale base power cost at $35.62 per megawatt-hour. BPA’s strategic objective is to keep program costs at or below the rate of inflation through 2028. The flattening base power rate is primarily a factor of reductions in final projected program costs for fiscal years 2020 and 2021 of $66 million per year.
“Through collaboration with our customers and partners throughout the region, we have worked hard to bend the cost curve and keep base power rates flat,” said BPA Administrator Elliot Mainzer. “It is also important to note, however, that there is an increasing likelihood of the Financial Reserves Policy surcharge being triggered in November. We want to signal this to our customers because it is consistent with our commitment to transparency and financial discipline.”
The reserves policy is designed to enable BPA to maintain at least 60 days cash-on-hand for both its power and transmission business lines. If triggered, and at this time that appears likely, it can result in up to $30 million per year. BPA projects that would increase power rates by 1.5% for the 2-year period. That is still below the rate of inflation.
The weighted average increase for transmission rates of 3.6% was set through a settlement of transmission and ancillary services rates as part of an effort by BPA to reach agreement with customers on terms and conditions of a new transmission tariff. In the absence of the settlement, the transmission rate increase was initially estimated to be 9.5%. The new tariff’s terms and conditions are foundational for the achievement of BPA’s strategic objective to operate a highly responsive and modernized transmission business.
The new rates will now go to the Federal Energy Regulatory Commission for approval. That process usually takes several months to a year, but BPA can apply the rates beginning October 1, once it receives interim approval.
Local utilities ultimately determine the impact of BPA rates on individual businesses and residents.
Among the utilities purchasing wholesale power from BPA are Idaho Falls Power, Fall River Electric, Lower Valley Energy, and Raft River. Other private utilities also benefit to smaller degree from the federal agency’s low-cost, primarily renewable energy base.