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Bonneville Announces Rate Increases by this October by Staff Cheney Free Press, July 23, 2009

Bonneville Power Administration announced numerous rate changes that are expected to take effect Oct. 1, 2009.

Rates for customers that buy power and transmission will increase on average by 6 percent. Transmission rates will stay the same. Power rates will increase by an average of 7 percent. This is the first power rate increase since 2002 and it's driven by both rising costs and decreasing surplus revenues.

Power customers will also receive $163 million in returned overcharges due to a 2007 U.S. Ninth Circuit Court decision. Financial benefits for residential and small farm consumers of investor-owned utilities, which are based on BPA's power rates as well as other factors, will be $173 million.

BPA's relatively new rate for wind integration services has been reduced substantially from the initial proposal, due primarily to efforts from the wind power industry to improve their operational practices.

The new rates cover the agency's fiscal years 2010-2011. Under the rates, the average priority firm rate for wholesale power is $28.77 per megawatt hour. That compares to the previous rate of $26.90 per megawatt hour.

"Nobody wants a rate increase, and we have worked very hard to keep the increase as low as possible," BPA Administrator Steve Wright said. "We tightened our belt and worked with stakeholders to keep the increase to a minimum, while honoring our commitments to fish, wildlife and maintaining system reliability."

The primary causes of rising costs are actions to improve safety and reliability of the Columbia Generating Station nuclear plant and actions to protect threatened and endangered salmon. BPA does not own or operate the nuclear plant, located in Hanford, Wash., but markets the power produced by the plant.

The power rate increase is down from the initial proposal of 9.4 percent in February, and it is considerably lower than the potential 15 to 20 percent increase that looked likely in early April. At that time, BPA's financial picture had deteriorated significantly due to below average water and the poor economy.

Once the threat of a higher rate increase became clear, BPA identified more than $100 million in cost reductions through a public cost review process. These cost reductions, combined with an innovative agreement with the U.S. Treasury Department to provide an expanded line of credit, allowed the power rate increase to be brought back down to 7 percent.