BPA raises rates for some Northwest public utilities by 7.8 percent

Bonneville Power Administration will raise wholesale power rates for its consumer-owned utility customers, such as in Vancouver, Canby and Eugene, by 7.8 percent in October.

That’s a bit less than the increase the federal power marketing agency was talking about a month ago, and far less than the 12 to 20 percent range that was discussed last year.

BPA sells power generated by 31 federal hydroelectric dams and a nuclear plant to about 140 publicly owned utilities in the region.

The agency said Tuesday that driving the rate hike are the capital costs of rehabbing aging dams, fuel purchases and repairs at the Columbia Generating Station — the region’s only nuclear plant — and fish and wildlife mitigation costs.

A higher rate increase was avoided by borrowing more from the U.S. Treasury, adopting a mechanism that will adjust rates when its reserves become depleted and by settling a long standing dispute over payments it makes to customers of investor owned utilities in the region.

“A 7.8 percent rate increase is still a big, painful increase, but it’s better than what Bonneville was suggesting initially,” said Kevin O’Meara, deputy director of the Public Power Council, an advocacy group for publicly owned utilities.

The 2012 rate case is significant because it’s the first one in which the federal power marketing agency has implemented tiered rates. Until this year, BPA has served whatever demand public utilities throw at it — often supplementing its own power with market purchases — and blended the costs into an overall rate. Under the new system, consumer owned utilities can buy a fixed amount of power at a “Tier One” rate, then pay market rates for any demand growth beyond that level.

The agency says the new rules will stabilize its first-tier rates and give customers flexibility to build their own plants or buy power in the market, which some think they can do more nimbly and economically than the 800-pound federal gorilla. The new structure also provides a major incentive for conservation, as it is more expensive to buy power at market rates than garner the equivalent efficiency savings.

The 2012 rate case is also the first to incorporate a 20-year settlement of another highly contentious issue, the residential exchange program. The exchange gives residential and small-farm customers of investor owned utilities a share of cheap hydropower generated by the federal system.

Earlier this year, the BPA reached an agreement on the payments with all the investor-owned utilities in the region, their state regulators, ratepayer advocates for public and private utilities, and, importantly, by consumer-owned utilities representing 88 percent of BPA’s public utility demand.

In essence, it would establish a fixed schedule of payments escalating from $182 million starting in the fiscal year that begins Oct. 1 to $286.1 million in 2028 — a total of $4.07 billion over the 17 years.

BPA also said Tuesday it will reduce the rate it charges for integrating wind onto its transmission grid by 4.7 percent. The cost of integrating has been a hot-button issue, and BPA says those costs are increasing. Its says the rate reduction is possible because of some additional geographic diversity of the wind projects on its system and changes to the calculation of necessary reserves.

–Ted Sickinger From the Oregonian

See original article.