Powering Strong Communities

Bonneville Power Administration to Use $350 Million in Funds for Power Rate Reductions

Bonneville Power Administration Administrator John Hairston recently adopted BPA staff’s proposal to allocate the fiscal year 2022 power reserves distribution clause amount of $500 million toward rate reduction and other high-value purposes, BPA said on Jan. 10.

Specifically, $350 million will be used to reduce FY 2023 power rates, while $100 million will be allocated to reduce debt or for revenue financing and $50 million will be used to prepay certain maintenance needs of existing fish and wildlife mitigation assets.

The RDC, a rate mechanism that implements an element of BPA’s Financial Reserves Policy, triggered for BPA’s Power Services based on FY 2022 end-of-year results. It allows the administrator to repurpose financial reserves when certain conditions are met.

The primary condition is that both the agency and the business line must exceed their upper days cash on hand thresholds -- 90 days cash on hand for the agency and 120 days cash on hand for a business line.

Days cash on hand is the number of days a business can continue to operate using its own cash on hand with no new revenue. 

The amount above the thresholds can be used for debt reduction, incremental capital investment, rate reduction through a dividend distribution or any other high-value business-line-specific purpose determined by the administrator.

Originally scheduled for Dec. 15, 2022, the final decision on the Power RDC was delayed to allow time for staff to fully consider and respond to the extensive comments received during the public comment period, BPA said.