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BPA Customers Pay It Forward by Staff BPA Journal, January 2013

Four BPA customers will provide nearly $350 million in electricity prepayments that BPA will use to fund capital investments at the Northwest's 31 federal hydroelectric dams. The customers' prepayments will be reflected as credits in their monthly power bills through 2028. The funds will be used primarily to refurbish aging federal hydropower facilities in the Pacific Northwest, such as Grand Coulee Dam.

Through the 2012 Power Prepayment Program, BPA provided customers the opportunity to bid on blocks of power worth $50,000 per month. Acceptance of these prepayment offers is the product of two years of collaboration between BPA and its power customers. After presenting the concept to its customers, BPA and a regional team of representatives from its customer utilities worked to design the program.

BPA accepted offers at $6.8 million for each of the51 blocks. In exchange for each block, BPA will provide a prepayment credit of $50,000 per month, which will be reflected on each participating customer's bill.

The transaction results in a 4.26 percent return for participants, which is slightly higher than the 3.63 percent 30-year rate BPA would otherwise use to make hydro improvements through U.S. Treasury borrowing. BPA's ability to borrow from the Treasury is limited by statute.

BPA's forecast for capital spending includes $1 billion a year or slightly more through 2016. If BPA were to use only its Treasury borrowing authority to fund its capital activities, the agency forecasts it could exhaust that low-cost source of funding as early as 2017. The Pre- payment Program, as well as other potential financing mechanisms BPA is exploring or using to optimize use of Treasury borrowing authority, is outlined in the agency's draft 10-year access to capital strategy at www.bpa.gov/Finance/FinancialPublicProcesses/Pages/ Access-to-Capital.aspx.

Prepayment Program [Regionwide]
Four BPA customers will provide nearly $350 million in electricity prepayments that BPA will use to fund capital investments at the Northwest's 31 federal hydroelectric dams. Through the 2012 Power Prepayment Program, BPA provided customers the opportunity to bid on blocks of power worth $50,000 per month. BPA accepted offers at $6.8 million for each of the 51 blocks. In exchange for each block, BPA will provide a prepayment credit of $50,000 per month, which will be reflected on each participating customer's bills through FY 2028. The selected customers will provide funds to BPA in April 2013. For information, go to www.bpa.gov/goto/powerprepay.