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BPA Scales Back Wholesale Power Rate Increase from 15% to 5% by Bill Virgin Seattle Post-Intelligencer, June 17, 2003

The Bonneville Power Administration, which had warned it might have to raise wholesale power rates by 15 percent later this year, said yesterday it has trimmed that increase to 5 percent.

The three-year rate boost would take effect Oct. 1. How much it affects individual consumers and businesses depends on how much their utility buys from the BPA and under what type of contract.

The federal power marketing agency, which supplies about 45 percent of the electricity consumed in the Northwest, said it needed to raise rates because of a dry winter and lower-than-expected revenue from sales of surplus power on the open market. Without an increase, it said it would be left with a sizable gap between revenue and expenses and might have trouble making its debt payments to the federal Treasury to cover the cost of the Columbia-Snake dam system.

But the BPA has been under fire from nearly all quarters since its February proposal of the 15 percent rate boost. Utilities that buy power from the BPA, business executives and labor leaders said a rate increase of that size would be punishing for an ailing economy already hurt by large rate increases imposed two years ago; it would be particularly hard, they said, on what's left of the aluminum industry in the Northwest.

Tribes and environmental, fish and conservation groups, meanwhile, criticized BPA plans to cut spending on programs to restore salmon runs or encourage energy efficiency.

Snohomish County Public Utility District Commissioner Dave Aldrich said in a statement he was disappointed the BPA hadn't eliminated the rate increase entirely. "BPA Administrator Steve Wright had the tools to avoid any rate increase, but the administrator didn't utilize the tools available," he said.

The BPA said it was able to trim its rate increase because of much improved water conditions; heavy rain and snow in March and April means it has more surplus power to sell. Higher spot market prices are also increasing revenue.

Bonneville also said it cut expenses by terminating a high-priced supply contract with Enron, refinancing debt at lower interest rates and trimming internal spending.

The proposed increase could be cut more if a legal dispute involving payments the BPA makes to investor-owned utilities such as Puget Sound Energy is resolved; those payments have been challenged by publicly owned electric utilities.

Bonneville said it will make a final review of the October increase in August, and will continue adjusting rates every six months. It also said it has agreed to make refunds to its customer utilities if revenue continues increasing to the point that it is more than the agency needs.