Bonneville Power Increase Announced, CEC Analysis Underway
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In July, BPA announced rate changes for wholesale electricity and transmission services for the 2018–19 rate period beginning October 1. On average, BPA will increase electricity rates 5.4 percent and reduce transmission rates 0.7 percent for its 133 utility customers. Although BPA announces these rate changes as “average,” they impact every utility differently due to variables such as customer mix and seasonal energy use. Our management team is working with your board of directors to analyze the impacts to CEC. We will make every effort to minimize any rate change to members. If one is unavoidable, we will communicate that well before implementation.
Historically, any CEC rate increase has either been a lower percentage than BPA’s or we have been able to absorb the increases entirely. Since 2001, CEC has raised rates only three times despite numerous BPA rate increases during that time. We have accomplished this through astute cost management and continually increasing efficiencies. However, changes within this latest BPA rate increase impact CEC’s rates differently than in the past and indicate new challenges ahead.
BPA is taking a new approach to how it values and recovers the costs of operating its transmission system and the peak power demands placed on that system. Earlier this year, BPA canceled construction of an 80 mile, 500,000 volt transmission line in the I-5 corridor. Its objective was relief of grid congestion in the highgrowth area of western Oregon and Washington.
“Bonneville determined it could meet its obligations to provide reliable, robust transmission service with a more innovative, flexible approach,” the agency stated in its announcement. Part of this approach means BPA is valuing and pricing its transmission services and peak power demands differently from the past. This has implications for utility costs, including CEC’s.
These costs directly relate to times when a utility requires the most electricity to serve its members. When the timing of that peak demand conflicts with how the entire energy and transmission system operates most efficiently, the utility is charged more for the energy and transmitting that energy during such times. This means Northwest utilities in colder climates, including CEC, must explore ways to ensure demand for electricity better synchronizes with overall BPA system operations.
Until we have fully completed our analysis on the structure of BPA’s rate increase, we cannot speculate on the impact to members’ rates. While we do not yet have the answers, I want you to be aware of the issues and be assured we will do everything possible to find new, efficient and innovative ways to deliver your electricity in the most cost-effective way possible.
Dave Markham
President and CEO
