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Bonneville Power Proposes 9.6 Percent Rate Increase in 2013 by Staff Lebanon Express, November 14, 2012

The Bonneville Power Administration proposed a 9.6 percent average wholesale power rate increase, according to a press release.

The increase was proposed to compensate for reduced revenue expectations from surplus power sales and to continue funding needed investments in the Federal Columbia River Power System.

BPA is also proposing a 13 percent increase in its transmission rates because of continued efforts to maintain system reliability and meet increasing demands for transmission in the Pacific Northwest.

If adopted, it would be the first transmission rate increase in eight years.

The rate proposal will be considered during a public rate setting process in the coming months, culminating in a July 2013 decision on final rates to take effect Oct. 1, 2013.

Local utilities ultimately determine the retail impact of BPA rates on individual businesses and residents.

Power rates

Cost levels are not established in the rate case. Instead, before issuing today's initial rate proposals, BPA conducted a public process called the Integrated Program Review.

The report projects power program cost increases that account for about 4 percent of the proposed wholesale power rate increase.

Reduced net revenue from market purchases and sales adds about 8 percent to the proposed rate increase.

Another 1.6 percent increase is due to a variety of non-IPR cost increases.

The proposed wholesale power rate would affect Northwest consumer-owned utilities including public utility districts, tribal utilities, cooperatives, municipalities and federal entities.

Transmission rates

A number of factors are leading to increased spending and the proposed transmission rates.

Construction of new lines and replacements to maintain reliability and facilitate the integration of renewable resources, such as wind, accounts for approximately 7 percent of the proposed transmission rate.

Increased mandatory compliance requirements and additional cyber and physical security requirements and other operational and maintenance expenses account for approximately 6 percent of the proposed transmission rate.

BPA's rate also has built-in flexibility to recover any additional costs that may be needed to keep the system reliable as the wind fleet increases.

Oversupply rates

BPA has been actively pursuing new tools and strategies to manage the occasional seasonal oversupply of electricity that comes from large concentrations of renewable generation.

BPA is proposing to collect 50 percent of the oversupply costs from its power customers and 50 percent from the generators.

BPA is a nonprofit federal agency that markets renewable hydropower from federal Columbia River dams, operates three-quarters of high-voltage transmission lines in the Northwest.