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BPA Announces 2.2 Percent Wholesale Rate Increase by Mike O'Bryant Columbia Basin Bulletin - September 5, 2003

The Bonneville Power Administration last week announced a 2.2 percent wholesale rate increase, in effect for one year beginning Oct. 1.

However, a rate reduction of 6.4 percent remains possible if the region's utilities settle legal differences by mid-September, BPA officials said.

"This wholesale rate increase is less than the 5 percent increase we projected two months ago," BPA Administrator Steve Wright noted. "Additional cost reductions and bond refinancings have helped reduce the adjustment further."

Future rate levels depend on highly uncertain market variables, including availability of hydropower in the Columbia River Basin and market prices for energy. If average conditions prevail, rates could average about 3.5 percent higher than 2003 rates through the remainder of the rate period ending Sept. 30, 2006.

This could change, however, with settlement of a lawsuit over how federal hydropower benefits are currently divided between public agency utilities and investor-owned utilities. Settlement would eliminate the need for a rate increase and reduce rates 6.4 percent in 2004. Negotiations among the utilities and BPA continue.

BPA sells wholesale power at cost to 135 retail utilities and several industries in the Pacific Northwest. Each one has unique operating costs and rates, so the effect of the wholesale increase will vary by utility.