Low flow may lead to BPA rate hike

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Hydropower meant cheap power for the Northwest.

The Bonneville Power Administration on Friday warned that it may have to increase hydroelectric power rates after reduced Columbia River stream flows led to a $230 million budget shortfall.

Thanks to lower-than-expected snowpack, the nonprofit federal agency — which operates and sells power generated from the federal dam system along the Columbia — said it expects to end its fiscal year with $450 million less in sales than it originally forecast.

The BPA generates the majority of its revenue through wholesale power sales to Pacific Northwest electric utilities, generated by streamflows along the Columbia River basin.

But about one-fifth of its revenue comes from market-rate sales of surplus power, fueled primarily by mountain snowpack that melts and trickles into the hydro system in the Spring.

Snowpack this spring resulted in the fifth-lowest amount of runoff in the history of the hydro system.

“This is a bad situation that has just gotten worse,” BPA Administrator Steve Wright said in a news release Friday. “We had hoped a wet spring would help snowpack across the Columbia River Basin, but that didn’t happen.”

The shortfall isn’t expected to lead to any immediate rate increases.

BPA said it will cover the difference by dipping into its reserves, though it warned that could hamper its ability to handle future below-average water years.

The BPA holds rate negotiations every two years with Pacific Northwest utility regulators, and the next rate case will begin this summer, likely concluding in the fall.

BPA spokeswoman Katie Pruder-Scruggs said any rate increase wouldn’t take effect until October 2012.

It’s up to each of the BPA’s utility customers to determine how much of any increase in wholesale power costs would be passed on to residential and business customers.