LIGHT READING INLAND POWER AND LIGHT inlandpower.com
APRIL 2018
Pending BPA Charges Could Impact Inland Power and Our Members After decades of delivering reliable and inexpensive hydropower, Bonneville Power Administration (BPA) faces a future in which customers could abandon it for cheaper power. BPA got into this difficult situation because of two events. One, an influx of excess wind and solar power from California and around the Pacific Northwest has caused secondary market prices to drop significantly. Secondary sales are a critical revenue component for BPA’s financial stability and without these sales their financial forecast is dreary. Based on BPA’s projections, many utilities will be paying approximately $42.68/MWh in 2028, while market rates are forecast between the low $20’s to $30’s. Inland Power is currently under contract with BPA until 2028, but anticipates that it will not purchase all of its power from BPA if secondary markets are more competitive.
that they would need to implement a CRAC. Therefore, Inland Power is anticipating an approximate charge on all kWh sales, which would then be passed on to our membership. If enacted, this charge would begin in October and would continue for six months while BPA re-evaluates its financial position. As its financial position improves, the cost recovery adjustment will be reduced or eliminated. BPA Court Ordered Spill Surcharge
In addition to the secondary market and CRAC pressures BPA is facing, Judge Simon of the Oregon District Court has ordered the Corps of Engineers and BPA to spill additional water over the Lower Columbia and Snake river dams. This order is a result of a year-long hydro modeling effort ordered by the judge to impose maximum spring season spill. While several opposed the order, it is now up to the Ninth Circuit Court of Appeals to decide.
At the same time as the lowered secondary market prices, the agency faces court-ordered increased spill requirements over dams and more Potential Surcharges spending on fish and wildlife mitigation and recovery.
Could Temporarily
BPA has appealed this order, but anticipates that additional costs associated with the court ordered spill could reach $40 million, which the agency would collect through a surcharge unless it is able to find internal offsets. If this surcharge is implemented, it would also be passed along to Inland’s members.
Inland Power and other utilities in the region that depend on BPA face a fastImpact Your Inland approaching financial impact with two possible charges being passed directly Power Electric Bill. to the utilities it serves. Inland Power has As mentioned, the spill surcharge has been not been given official notification that appealed, but if an appeal is not successful, BPA anticipates these two charges will be approved, but trends indicate that one, they will implement a surcharge by May 31 and it would occur or both, are likely. for several months during the high runoff season. BPA Cost Recovery Adjustment Charge
BPA’s cost recovery adjustment charge (CRAC) is a clause in Inland Power’s wholesale rate schedule that allows BPA to adjust the rate, if necessary, to meet its financial obligations. The cost recovery adjustment is triggered when BPA’s projected financial reserves drop below a predetermined level - a level that would endanger BPA’s ability to make its U.S. Treasury payments and meet other financial obligations. At BPA’s last quarterly review, they announced that there was a 72 percent chance
While we hope that neither of these surcharges are implemented, they are being discussed heavily with BPA and within the industry. We wanted to provide our members with an early communication so that members could anticipate and understand these temporary charges to their accounts should they occur. Inland will send out a separate communication notifying members if either of these charges become official and the impact they will have on our rates.
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