PR 72 04
BONNEVILLE POWER ADMINISTRATION
FOR IMMEDIATE RELEASE:
THURSDAY, Sept. 16, 2004
Contact:
Ed Mosey |
, BPA (503)-230-5131
BPA to lower wholesale electricity rates 7.5 percent in October
Rate cut should help energize Northwest economy
PORTLAND, Ore. -
The Bonneville Power Administration announced today that it will reduce its wholesale power rates 7.5 percent Oct. 1. The agency’s administrator said the action is aimed at strengthening the region’s economy.
“This is great news,” said Kyle McSlarrow, deputy secretary of energy. “This rate reduction reflects the Administration’s and the Department’s commitment to controlling costs and thereby growing the economy and prosperity of the Pacific Northwest.”
“Cost cutting and a positive outlook for surplus sales revenues make this reduction possible,” said Steve Wright, BPA administrator. “This is the result of more than two years of hard work by many parties throughout the region and particularly the BPA staff to take responsible actions that can benefit the region’s economy.”
BPA reduced costs $70 million since the rates were last set in 2003. Another $350 million in savings are forecast for fiscal years 2005 and 2006. Over half of the latter were secured last June through agreements with investor-owned utilities about their benefits from the Federal Columbia River Power System.
Wright said, “I am especially heartened that BPA was able to take this positive step despite five consecutive years of low stream flows in the Columbia Basin. The rate reduction effectively leaves $123 million in the pockets of Northwest ratepayers.”
Technically, BPA reduced the safety net cost recovery adjustment to zero. The Safety Net Cost Recovery Adjustment Clause, which is contained in the rates, triggered last year to ensure BPA could make its annual payment of principal and interest to the U.S. Treasury. Treasury borrowing funded construction of Columbia River dams and the region-wide, high-voltage transmission grid. BPA is a not-for-profit agency that operates on its own revenues. This reduction preserves the integrity of the standards we have set for repaying the U.S. Treasury, said Wright.
McSlarrow and Wright noted that although the key variable for next year’s rates will likely be the amount of revenue generated from sales of surplus power in the West Coast market, the Department and BPA intend to continue to take actions to maintain this course of cost control and rate reduction.
This wholesale rate reduction might or might not mean that local utilities will reduce their retail rates. That will depend on the type of power product and amount of power purchased from BPA. Many other utility-specific factors, such as cash reserves, net operating income and capital plans come into play. For information on retail rates, contact local utilities.
For graph of rate history see link: http://www.bpa.gov/corporate/BPAnews/2004/images/chart_rates_real_vs_nominal.jpg.
Submitted for distribution on 09-16-2004 at 11:13 AM
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