Rising BPA Costs and Strategic Investment Initiative Drive Rate Changes

CEO Dave MarkhamCentral Electric Cooperative will implement a rate increase impacting all customer classes effective January 1, 2020. Though not unexpected, the decision to do so is never welcome but necessary. This marks only the fourth rate increase in the past 20 years.

Two major cost drivers influenced this action. The first, outside CEC’s control, is the Bonneville Power Administration’s continued rate increases every two years. BPA, which supplies virtually all of CEC’s wholesale electricity, raised transmission rates on its customers for the 2020-2021 rate period—a 5.97% increase for CEC. BPA also imposed a 1.5% surcharge on its utility customers to ensure the agency retains levels of financial reserves above the minimum required to remain solvent.

The other cost driver is CEC’s strategic investment initiative, which dedicates $147 million over the next 10 years to strengthen and upgrade its infrastructure to ensure continued safety, efficiency and long-term reliability. This initiative will also help meet Central Oregon’s increasing requirement for more electricity, fueled by population growth and members’ evolving needs.

The strategic investment initiative accelerates the upgrades to CEC’s poles, wires, underground cables and substations. Funding this 10-year initiative will be achieved through a combination of rates and borrowing, and will position the co-op to provide safe and reliable electricity to our members for the next 79 years.

Much analysis and thoughtful deliberation went into the decision to increase rates. When BPA raised utilities’ wholesale electricity rates in 2017, CEC successfully avoided passing it on to you at that time. A recent cost-of-service analysis, however, confirmed we could not absorb BPA’s rate increase again. The COSA helps guide management and the board to understand the financial impact of the BPA rate increase and the 10-year strategic investment initiative.

As a result, the increase in the residential rate is 5.2%. You will see the rate adjustment on your February bill. Despite this action, I am proud to say CEC’s residential rate will remain approximately 18% below the Oregon average and 33% below the national average.

Look for more information about the rate increase in the January issue of Ruralite and on CEC’s website, www.cec.coop.