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BPA Announces $1 Billion Annual Payment to U.S. Treasury by CBB Staff Columbia Basin Bulletin - October 15, 2004

Despite the fifth below average water year in a row, the Bonneville Power Administration paid the U.S. Treasury $1.053 billion for fiscal year 2004, just ended Sept. 30.

This is a full annual payment, with interest, on the U.S. taxpayer investment in the Federal Columbia River Power System (FCRPS), which includes the federal hydropower dams and transmission system.

"It is particularly gratifying to announce our Treasury payment within weeks of announcing a reduction in wholesale power rates," said BPA Administrator Steve Wright. "It means that a stringent cost management program at BPA is paying off and that we are regaining the stability we had prior to the West Coast energy crisis."

The Treasury payment included $592 million in principal and $420 million in interest. BPA also paid $41 million in other obligations, including $30.9 million to assure that ratepayers, not taxpayers, fully fund post retirement benefit programs for FCRPS employees.

The $592 million principal payment includes $346 million in early retirement of Treasury debt (principal repaid earlier than planned) as part of BPA's debt optimization program. Under that program, BPA is refinancing a portion of its nonfederal debt at lower interest rates while retiring a portion of its higher interest federal debt. Of the $346 million prepayment, $141 million was applied to power debt and $205 million to transmission debt. The respective power and transmission rates will recover the costs associated with the new nonfederal debt.

The Treasury payment also includes $130 million in credits to BPA for non-hydro costs Congress has assigned to taxpayers to repay. The largest of these are fish credits of $83.5 million for fish costs assigned to the non-hydro benefits of the federal dams that had been paid by BPA. These multi-purpose dams exist for flood control, irrigation, recreation and other uses, as well as hydropower production.

Not included in the Treasury payment are operation and maintenance expenses for U.S. Army Corps of Engineers, Bureau of Reclamation and U.S. Fish and Wildlife Service projects directly funded by BPA. This direct funding came to $216 million this year.

On September 16, BPA announced it would lower its wholesale power rates 7.5 percent effective Oct. 1. While this puts over $120 million back into the Northwest economy, it may not translate into similar rate reductions at retail utilities because of many variables, including how much power local utilities buy from BPA, the type of product they buy and many other utility-specific factors such as cash reserves.