The Bonneville Power Administration (BPA) on July 24 adopted an 11% average transmission rate increase and a 9% percent average wholesale power rate increase to support needed improvements in BPA’s system and to maintain reliability of the federal hydropower and transmission system.
“We recognize that rate increases are very challenging for customers, especially for those still in the throes of a slow economy,” Elliot Mainzer, acting BPA administrator, said in a statement announcing the increases.
The increases are necessary, however, to preserve the long-term value of federal generation and to support the reliability of the high-voltage transmission lines that serve Northwest public utilities, he said. The transmission rate increase is the first in six years and stems from a growing construction program driven by the need to repair and replace aging infrastructure and increase in spending on mandatory compliance and security requirements. An average of $20m per year in financial reserves will be used to offset part of the rate increase.
BPA has completed or is in the process of rebuilding a number of transmission lines in its service territory that have reached or exceeded their expected useful life. Those projects include numerous 115-kV projects, such as the 28-mile Grand Coulee-Creston No. 1 line in Washington; the 29-mile Midway-Benton No. 1 line and the 11-mile Benton-Othello No. 1 line, which are both on the Hanford reservation in Washington; and the 34-mile Midway-Moxee line in Washington.
Other 115-kV rebuild projects include the 41-mile Lane-Wendson No. 1 line in Oregon; 58 miles of line between Tillamook and Hillsboro in Oregon; and 41 miles of transmission between Kalispell and Polson, Mont. BPA also plans to rebuild the 97-mile, 230-kV Alvey-Fairview line in Oregon.
The wholesale power rate increase for BPA’s utility power customers stems from higher costs to operate and maintain the federal hydroelectric system, higher costs to fund existing long-term agreements for the fish and wildlife mitigation program and reduced revenues from surplus power sales due to low market prices, BPA said.
The new rates will affect utilities differently depending on the amount of power and type of services they purchase from BPA. Local utilities ultimately determine the rate impact of BPA rates on individual businesses and residents.
Wholesale power and transmission rates are developed every two years through a formal rate-setting process with BPA’s utility customers and other stakeholders. The process began in November 2012 when BPA announced its rate proposals for fiscal years 2014 and 2015.
The final rate proposal will be filed with FERC by the end of July to provide the required 60 days for review and approval before the new rates take effect on October 1.