Bonneville Proposes Electricity Rate Bump
by Michael Jamison
The Missoulian, February 13, 2009
KALISPELL - The region's largest supplier of affordable hydropower announced Wednesday it likely will increase wholesale electricity rates for the first time in six years.
Customers of Bonneville Power Administration would absorb an estimated 7 percent to 8 percent increase, beginning Oct. 1 of this year.
"We are striving to balance the need for a reliable and forward-looking electric power system that can promote and sustain economic growth, while trying to keep rates as low as possible," said BPA administrator Steve Wright. The rate increase is just a proposal, he said, and will go through public review before a final decision in July.
Bonneville markets more than one-third of the electricity consumed in the Pacific Northwest, selling power produced at 31 federal dams and one nuclear plant. The electricity is sold to more than 140 regional utility companies in Montana, Idaho, Washington and Oregon.
According to Wright, four factors conspired to drive his push for rate increases.
First, operating costs at the system's lone nuclear plant have increased, as BPA works to improve safety, reliability and performance at the aging plant.
Also, more money is going to protect the region's salmon, a species whose survival has been threatened by the federal hydroelectric dams.
Third, the general economic downturn has hurt surplus power sales, a problem compounded by yet another year of low water conditions. Nine of the last 10 years have seen below average water, he said, which limits the amount of surplus hydropower BPA can sell.
(Surplus power sales often contribute up to a quarter of BPA's total power revenues, heavily subsidizing local rates.)
And finally, Wright said, the costs of operating and maintaining the hydropower system have simply increased over time.
Wright said the latest rate proposal also reflects a recognized need to invest in the region's future power infrastructure. He expects capital investment not only in the existing hydropower system, but also in the Columbia Generating Station nuclear plant and in fish mitigation programs.
"The investments we are making in infrastructure and the environment will create jobs in the region," Wright said, adding that BPA is at the same time taking steps to contain future rate increases.
Starting in March, he said, BPA begins a review of all agency costs, and will use the coming rate discussions to solicit ideas for savings, particularly in the arena of wind power projects.
"We're making great progress," Wright said, "and the Northwest has become a national leader in wind integration."
Wright also stressed that transmission rates are not expected to increase, and those combined costs - generation and transmission, when adjusted for inflation - remain slightly lower than they were 20 years ago.
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