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BPA Chief: Revenue Down, Costs Up, Rates may Rise by Associated Press Seattle Post-Intelligencer, November 17, 2010

EUGENE, Ore. -- Falling revenue and rising costs are pushing the Bonneville Power Administration toward rate increases it has so far avoided by tapping into hefty financial reserves.

Stephen Wright, the chief of the federal power marketing agency, told utilities at a meeting in Eugene that plenty of snow and an economic recovery could ease some of the financial pressure.

"Our hair's not on fire; we're not in crisis," Wright said Monday.

But Wright said BPA system maintenance and improvement costs are up, and surplus energy sales revenue is dropping, so the agency plans to raise rates in 2011, The Register-Guard reported.

Bonneville was scheduled to file its rate request with the federal government Thursday and was expected to ask for an increase of between 6 percent and 10 percent.

Underscoring the level of uncertainty, the agency also wants permission to impose a second rate increase in 2012 if the economy stays flat, rain doesn't fall or unexpected expenses crop up.

Those rate increases will hit Lane County utilities that get much of their power from the BPA. The impacts for residential, commercial and industrial rate payers depend on the individual utilities. The Eugene Water & Electric Board, for example, has a standing policy of passing on BPA rate increases to customers.

The Emerald People's Utility District, which is working on next year's budget, has indicated it won't be raising customer rates next year.

The BPA sells power generated from 31 federal dams and a nuclear power plant to utilities in the Pacific Northwest.

Bonneville supplies the Northwest with about a third of its electricity. But the Portland-based agency has been dealing with several years of drought resulting in less power generated, increasing costs to maintain aging hydroelectric facilities, commitments to environmental restoration projects and the decline in revenue from the sale of surplus power.

The BPA is legally obligated to meet the power needs of the Pacific Northwest, and sells any excess on the open market for much more than the average $30 per megawatt hour it charges its regular customers.

In good years, such as 2007, when Bonneville had total power sales of $2.7 billion, of which about $1 billion, or 38 percent, came from surplus sales. But in fiscal year 2010, which ended Sept. 31, BPA lost $116 million.

Information from: The Register-Guard

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