More About BPA’s Rate Increase

Dear Member:

The McKenzie River Reflections weekly newspaper reported last month on the Bonneville Power Administration’s (BPA’s) rate increases for the next two years. Average wholesale power rates will increase 7.1% and average transmissions rates will increase 4.4%. I’ll pick up the story from there to give you some background on BPA’s increase and how it will affect your electric bill.

Infrastructure costs continue to grow for the 31 dams that comprise the federal hydroelectric system in the Pacific Northwest. While the Army Corps of Engineers and federal Bureau of Reclamation operate the dams, it’s your electric bill dollars that we deliver to BPA that then go on to fund those projects’ maintenance and replacement programs.

What’s driving the rate increase is newly re-financed debt that saved money with more favorable terms and now must start to be paid. This is in addition to the ongoing operational maintenance and capital replacement programs occurring at each dam. These costs continue to grow because the dams have been generating clean renewable power for 60 to 90 years now. As I said at last year’s District Meetings, this is our proud legacy and responsibility as a long-time BPA customer since the early 1950s.

Other rate pressures include the Ferndale, Washington Alcoa smelter’s decision to buy less power from BPA, lower forecasted market proceeds for that power due to abundant natural gas, and fish & wildlife program costs that mitigate the impacts of hydroelectric dams. One local example of these program costs is BPA’s proposed funding of ODF&W’s acquisition of 224-acres west of Eugene near Coyote Creek through a conservation easement for native wet prairie restoration and water fowl foraging.

How will BPA’s rate increase affect your electric bill? We won’t know until we forecast next year’s revenues and expenses over the coming months. I believe we’ll find a revenue gap that will create pressure for electric rates to go up. Another rate pressure is mild winter weather. A warmer January, February, and March kept your electricity bills lower, but our 2015 budget anticipated normal electricity usage to pay for your electric system. The term “belt-tightening” is being used frequently at Lane Electric these days as we postpone purchases and dial-back programs while sustaining long term commitments. I’m proud to say that thanks to Lane Electric’s remarkable employees and directors, we’re on track to successfully manage this significant unexpected revenue shortfall for this year.

I’ll continue to keep you updated on how those rate pressures will affect your electricity bill as we go through the budget process. In the coming months your Board of Directors will work carefully and diligently to determine what the rates need to be to keep the Co-op financially sound and reliably maintained.

And visit sometime soon to stay informed on all things going on along the McKenzie and support a local newspaper!