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Broad Issues Affect BPA Costs by Staff BPA Journal, June 2005

BPA's costs after 2006 are up, in large part due to providing substantially more benefits to the region than BPA did prior to 2002, and those benefits are for all customer and constituent groups. That's one of the major points Administrator Steve Wright discussed in a May 2 letter to Pacific Northwest citizens. The letter accompanied the Power Function Review draft closeout report (see following story below).

Wright's letter outlines why the agency's post-2006 power costs will be higher despite a reduction in direct-service industry loads and holding down internal costs to fiscal year 2001 levels. Wright also discussed risk, saying, "We face significantly greater risks now than we have previously. Our reserves are projected to be at the lowest level ever for entering a rate case."

Draft conclusions from Power Function Review

BPA's new proposed power cost structure for 2007-2009 includes both significant cost reductions and increases compared to BPA's initial program cost estimates. So reported Paul Norman, senior vice president for Power, in a draft closeout report on the Power Function Review May 2.

"After listening to PFR participants and completing our review, we're proposing to cut the costs in our earlier forecasts by about $80 million a year over the new three-year rate period," Norman said. "We are now asking for a final round of public review before we lock in cost estimates for our new rate proposal."

The Power Function Review process establishes costs for all programs supported by wholesale power rates in the 2007 through 2009 rate period. The final closeout report is due this summer.