BPA Plans to Cut Rates by 3 Percentby Patricia R. McCoy
Capital Press, July 21, 2006
The Bonneville Power Administration expects to cut wholesale power rates by 3 percent below current rates, or 10 percent lower than the draft rates proposed eight months ago for 2007.
Extraordinary collaboration among the federal utility's customers and others is a key factor in the rate decrease, BPA administrator Steve Wright said.
Two innovative financial arrangements that arose out of a collaborative effort, stringent cost management and better-than-expected surplus power sales due largely to the normal water year all contributed to the lowered rates, he said.
Several rate case design issues were also settled earlier this spring, Wright said.
BPA conducted an extensive consultation process with stakeholders over the past 18 months, looking at its cost structure for 2007 through 2009. The process captured an estimated rate period savings of $122 million per year, the administrator said.
Any adjustments for the final 2007 rates are expected to be minimal, barring an unexpected event, Wright said. Such changes will be announced in September after the results of BPA's third-quarter review are in.
The wholesale power rate decrease does not apply equally to all BPA customers. About 10 percent of BPA sales go to customers with fixed-price contracts for the past five years. Those customers will see a rate increase as those contracts expire and they begin to pay the same rates as other BPA customers, he said.
BPA also released a comprehensive proposal July 13 aimed at defining its electrical power supply role in the Pacific Northwest after 2011, when its current power sales contracts expire.
The proposal results from five years of discussions with the agency's wholesale power customers, constituents and other stakeholders. It defines how BPA intends to sell its lowest cost power.
The goal is to avoid another West Coast energy crisis, Wright said.
"This is extremely important because the region's ability to grow its economy will either be facilitated or restricted by the ability of the region's utilities to provide adequate power," he said. "We've seen the consequences of the West Coast energy crisis, and we do not want to see it repeated. If we are going to have an adequate energy supply in the future, we need to be developing the infrastructure now."
BPA will take public comment on the proposal through Sept. 29. A final decision is scheduled for January 2007.
More information is available online at www.bpa.gov/power/pl/regionaldialogue.
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