The Bonneville Power Administration (BPA) will decrease power rates by an average of 2.5% and slashed its proposed transmission rate increase in half to an average of 6.1%, the federal power marketing administration (PMA) said in late July.
The new rates were announced as BPA released the final record of decision for its BP-22 power and transmission rate case as well as a tariff proceeding (TC-22).
The tariff proceeding adopted new language in BPA’s open access transmission tariff that will enable the power marketer to participate in the Western Energy Imbalance Market (EIM) if BPA chooses to do so. The decision of whether to join the Western EIM is a separate process outside of the tariff proceeding and is anticipated to be made by the end of the fiscal year.
In 2019, BPA issued a record of decision that addresses numerous policy issues and topics related to its participation in the EIM. BPA also signed a Western EIM Implementation Agreement with the California Independent System Operator that signaled the beginning of work on projects that need to be completed before BPA could start EIM operations.
Under a settlement adopted by the BP-22 record of decision, firm power tier 1 rates will decrease by 2.5% for fiscal years 2022 and 2023. Looking back over the previous decade, BP-22 will cap a 10-year period during which BPA’s power rate trajectory increased by less than 2% annually, which is in line with historical inflation rates.
“Rates that have matched inflation – not just in a single rate case, but over a sustained period – is proof of BPA’s commitment to bending the cost curve and driving down rate pressures on our power rates,” said BPA Administrator John Hairston in a statement. BPA’s announcement “demonstrates we are financially strong, competitive and responsive to our customers’ needs,” he said.
With respect to transmission, the settlement provided for a 6.1% average effective rate increase across the rate period, a number roughly half of what was proposed in an initial proposal.
“We’ve landed in a spot where BPA will be able to continue to keep its transmission commitments and re-invest in the value of BPA’s transmission infrastructure in a fiscally sound and responsible manner,” Hairston said.
Beyond rates, the BP-22 record of decision also establishes revenue financing for up to $40 million for both the power and transmission business lines. This financing will allow BPA to issue less debt and decrease upward rate pressures in subsequent rate cases.
As part of the settlement, BPA has committed to holding workshops on various topics of interest to customers, including revenue financing, EIM costs and benefits, balancing services, the Eastern Intertie, and transmission losses.
The tariff proceeding updated language in BPA’s tariff, including addressing the terms and conditions that will apply to transmission service if BPA decides to participate in the Western EIM. The adoption of this language enables the potential participation of BPA in the Western EIM without committing BPA to that path.
This proceeding also addressed Southern Intertie studies, transmission planning process, real power loss return, the removal of an exception for designation of Seller’s Choice agreements, ministerial edits to service agreement templates, generator interconnection procedures and requirements, and credit standards.
The changes captured by the final records of decision for BP-22 and TC-22 will be effective October 1. Specific to rates, BPA will file the case with the Federal Energy Regulatory Commission, requesting interim approval to start on that date while awaiting final FERC approval.
The Public Power Council (PPC) said that BPA’s final record of decision in the BP-22 rate proceeding largely advances the proposed approach from members of the PPC.
“The Northwest public power community came together with a unified voice to focus on a core set of high-impact issues with BPA on its upcoming power and transmission rates,” said Scott Simms, PPC’s Executive Director. “To come to agreement in the BPA rate case, we knew we needed a strategy that delivered meaningful savings to public power and was reasonable for BPA to run its operations.”
The PPC, established in 1966, is an association that represents over 100 consumer-owned electric utilities in the Pacific Northwest. PPC’s mission is to preserve and protect the benefits of the Federal Columbia River Power System for consumer-owned utilities. PPC is a key forum to identify, discuss and build consensus around energy and utility issues.