Following Up From June: River Decision & Rate Impact
When I wrote to you about the court order requiring more water to be spilled past the Columbia and Snake River dams to help salmon and steelhead, I told you it would likely put pressure on our rates down the road, and you would hear from us as we learned more. We’ve learned more since then, and I want to bring you up to speed on where things stand.
As I mentioned in June, water spilled past a dam doesn’t pass through the turbines, so it doesn’t generate electricity. We must replace that lost generation with power bought on the open market, which costs more. Those added costs land on utilities like ours and eventually on you.
In September, Bonneville Power Administration, the federal agency we buy our wholesale power from, formally moved to recover those costs through higher rates. BPA has proposed recovering roughly $250 million over 2 years, which works out to about a 6.3% increase in the wholesale power rate it charges utilities like ours.
I want to be careful with that number, because it is easy to misread. 6.3% is the increase in BPA’s wholesale rate, the price NWCPUD pays for the power we buy. It is not a retail number, and it does not translate 1-for-1 to your bill, though some of it likely will reach you. What this ultimately means for our customer-owners has not been determined, and it won’t be until BPA works all the way through its process.
That is exactly why we participate in BPA’s ratemaking process. As BPA sets these rates, we are there alongside other public power utilities to ensure our customer-owners’ needs are represented, and someone is asking the hard questions on your behalf. We would rather help shape the outcome than sit back and wait to find out what it is.
This rate impact stems from a lawsuit led in part by the state of Oregon. We understand what salmon recovery means to this region. But a change this significant, affecting this many households and businesses, deserved a solution worked out among all the parties, not one ordered by a court.
As this moves ahead, our board of directors will do what it has always done: weigh each decision against its real effect on the people and businesses we serve. And we will keep our promise from June. You will continue to hear from us as the numbers become clear.
Roger Kline
General Manager and CEO