The Bonneville Power Administration and its transmission customers have reached a partial settlement to avoid a rate increase for transmission as customers manage through a difficult economy.
Under the settlement, BPA will use some of its financial reserves to cover transmission costs so transmission rates remain level in fiscal years 2012 and 2013. BPA transmission rates are separate from wholesale power rates and apply to Northwest utilities and others that transmit electricity on high-voltage BPA lines. However, the settlement does not cover the costs of integrating wind power into the grid or use of the Montana Intertie. Those costs will be considered in BPA’s current rate case.
“This agreement provides relief for our transmission customers in these turbulent economic times,” said Cathy Ehli, vice president, BPA Transmission Marketing and Sales. “Solid transmission planning and management have allowed us to increase financial reserves, making some funds available to avoid a rate increase.”
While BPA is in a position to keep rates flat for the 2012-2013 rate period, the future will see rising expenses. Costs associated with four major transmission projects BPA is building or proposing to build, efforts to integrate wind, newly required physical and cyber security measures and capital projects to replace or refurbish aging transmission lines and other equipment are all looming expenses for BPA.
“In the short-term, we are in a good position to avoid increasing rates,” said Ehli. “However, as we look to our next rate case, we will have to deal with the impact of these rising costs.”
The settlement agreement excludes rates BPA charges for use of the Montana Intertie, which BPA partially owns. This 500-kilovolt power line integrates generation from Montana’s Colstrip power plant into BPA’s transmission system.
Before the start of the 2014 rate case BPA will hold a public process to discuss the future of its portion of the Montana Intertie. Ultimately, BPA will decide whether or not to include the Montana Intertie as part of its transmission network or to continue to charge a separate rate.
The settlement agreement also excludes certain ancillary and control area services that allow BPA to maintain system reliability. These services, which include wind integration, will be litigated in the rate case.
BPA also agrees in the settlement to work with customers on a number of issues concerning dynamic transfer capability. Dynamic transfers allow utilities to remotely control and manage power plants on another utility’s transmission system. With 3,000 megawatts of wind now interconnected to BPA’s transmission system and another 2,000 megawatts possibly coming on line over the next two years, dynamic transfer capability could help move wind development forward.