The Bonneville Power Administration will cut its contract power rates by an average of 2.5% for the electricity produced from federal dams in the Columbia River basin and a nuclear power plant near Richland.
The rate cut for Northwest public utilities, which takes effect Oct. 1 and extends until the fall of 2023, is the first in more than a decade. It comes at a time when the agency has been under pressure from officials of regional utilities to improve cost controls after a series of rate increases over the past two decades.
“We heard that message from our customers loud and clear, and are doing our level best to cut costs and pass the benefits on,” said Doug Johnson, a BPA spokesperson.
In the Puget Sound region, Seattle City Light, Snohomish Public Utility District and Tacoma Power all receive contract power from BPA. The cost of this power is one factor used as these utilities set rates for their customers.
Johnson cited two important things that made the rate cuts possible — reducing some expenses and better than expected revenues from surplus sales to Northwest and other western utilities during the past two years.
The rate cut also resulted from a change in plans in how the BPA would deal with debt, according to Scott Simms of the Public Power Council, an association which represents more than 100 utilities in the Pacific Northwest.
BPA had initially proposed to use $95 million a year in projected power revenues to pay off additional debt. But BPA eventually accepted a proposal by public power utilities to pay off no more than $40 million a year — a savings of $110 million over the two-year period
“This balancing effort allows BPA to retire debt while returning noticeable near-term savings back to the region at a time when many Northwest communities are hurting,” Simms said in a written statement.
BPA also initially proposed an 11.6% increase in the power transmission rates through its regional grid. But in the final record of decision, that rate increase was pared back to 6.1%.
“Confronting and solving these issues demonstrates that BPA, its customers and the region benefit from a tariff designed by the Northwest for the Northwest,” said John Hairston, BPA’s administrator.
BPA was created in 1937 to deliver and sell the power from Bonneville Dam on the Columbia River, and today provides about one third of the electricity consumed in the Pacific Northwest from its network of federal dams and a nuclear power plant.
BPA also owns and operates the nation’s largest high voltage transmission systems, according to agency officials.
In a written statement, Seattle City Light spokesperson Julie Moore said that the utility receives about a third of its power from BPA and has been deeply involved on a range of issues with BPA, including the rate case.
“We’re proud of our efforts … all savings from City Light’s lower BPA bill will be passed along to City Light customers,” Moore said in the statement.