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Public Power Weekly Bonne~°ille to raise wholesale po~~-er rates rou ;hly 7°~~ i Jctober The Bonneville Power Administration will raise its rates by an average of 6% for customers who buy power and transmission and 7% for power only. Transmission rates will stay the same. The rate changes are expected to take effect Oct. 1 and will remain in place until October 2011, BPA said. The average priority firm rate for wholesale power will be $28.77 per megawatt-hour. That compares to the previous rate of $26.90/MWh. BPA said the power rate increase is its first since 2002 and is driven by both rising costs and decreasing surplus revenues. Power customers will also receive $163 million in returned overcharges due to a 2007 decision by the U.S. Court of Appeals for the Ninth Circuit on BPA's residential exchange program. Financial benefits for residential and small farm consumers of investor-owned utilities, which are based on BPA's power rates as well as other factors, will be $173 million, the utility said. "Nobody wants a rate increase, and we have worked very hard to keep the increase as low as possible," BPA Administrator Steve Wright said. "We tightened our belt and worked with stakeholders to keep the increase to a minimum, while honoring our commitments to fish, wildlife and maintaining system reliability." The primary causes of rising costs are actions to improve the safety and reliability of the Columbia Generating Station nuclear plant and actions to protect threatened and endangered salmon. BPA initially proposed a 9.4% increase in February, and in early April said a 15% to 20% increase looked likely. At that time, BPA said its financial picture had deteriorated significantly due to below-average water for hydro generation and the poor economy. Once the threat of a higher rate increase became clear, BPA said it identified more than $100 million in cost reductions. Those cost reductions, combined with an innovative agreement with the U.S. Treasury Department to provide an expanded line of credit, allowed the power rate increase to be brought back down to 7%, Bonneville said. BPA has instituted a wind integration rate of $1.29 per kilowatt per month, which was reduced from the initial rate proposal of $2.72. The decline is due primarily to actions taken by wind generators to reduce their use of BPA generation for reliability when wind power ramps up or down unexpectedly, http://www.naylornetwork.com/app-ppw/printFriendly.asp?projID=3214 (5 of 21)7/28/2009 3:37:08 AM