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Economic and dam related articles

Power Agency sees Better Days,
Which may Help with Rates

by Associated Press
The Oregonian, April 22, 2006

PORTLAND, Ore. -- Strong surplus power sales, a favorable tax ruling and a better credit rating have improved the Bonneville Power Administration's financial picture.

The BPA projects that it may be able to cut electricity rates by 5 percent or more from what it would otherwise charge utility customers next year.

It's unclear, however, whether that would translate to lower electricity bills.

The BPA is in the midst of a rate-setting process that could raise wholesale prices from the levels of recent years.

Moreover, many utilities are still paying higher rates to non-BPA suppliers, and their retail rates do not always pass along savings in BPA wholesale prices.

Some rate savings appear likely, but a 5 percent rate cut wouldn't satisfy BPA critics, who believe the agency should be able to cut its rates by 10 percent.

The federal agency has weathered a series of bad water years compounded by the aftermath of the Western energy crisis, and it will shortly make a fiscal forecast.

"I'm at a point of feeling optimistic, but it's not in the bag," Administrator Stephen Wright said. "This is my sixth winter, and it feels better than any other, but I've also watched things go bad pretty quickly in the past."

A recent ruling by the Internal Revenue Service on bond payments will lower BPA expenses by 5 percent. The IRS decision also factored into winning the agency a better credit rating, which should reduce interest costs.

Not everything is going BPA customers' way. Spilling more water for fish passage will cut an estimated $60 million in hydropower supplies in 2006, according to the Northwest Power and Conservation Council.

The Bush administration is trying to siphon money from surplus power sales. The region's congressional delegation has resisted the move.

BPA is proposing new rates to take effect Oct. 1. Last fall, it proposed a new average wholesale rate of $30 a megawatt hour, a price that municipal utilities decried.

"Our position is that we believe BPA should get to a $27 rate, regardless of the snowpack," said Maggie Brown, of the Northwest Coalition for Affordable Power. "Between program cost savings and the IRS ruling, that's well within reach. The surplus sales should take them well below that number."

Wright said that if the assumptions in the initial rate proposal are adopted, and surplus sales remain strong, the agency could drive rates lower than the $28.50 level that is expected as a result of the IRS ruling alone.

"We're headed in a positive direction," Wright said.

Associated Press
Power Agency sees Better Days, Which may Help with Rates
The Oregonian, April 22, 2006

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