PR 97 06

FOR IMMEDIATE RELEASE

THURSDAY, NOV. 16, 2006

CONTACT: Mike Hansen or Carrie Reese (503) 230-5131
 

PORTLAND, Ore. – The Bonneville Power Administration’s 2006 annual report shows that the agency earned record-setting modified net revenues and reduced its wholesale power rates for 2007 to many of its customers.

“We had an outstanding year,” said Steve Wright, BPA administrator. “We have now recovered from the financial effects of the 2000-2001 West Coast power crisis. This year’s return to normal water conditions and our aggressive cost management efforts over the past several years enabled us to rebuild our financial health.”

BPA’s audited financial results for fiscal year 2006 which ended Sept. 30 show net revenues of $611 million on total operating revenues of $3.4 billion. Adjusted for certain debt management actions and the effects of mark-to-market accounting, BPA’s modified net revenue totaled $445 million.

The agency, which markets power from 31 federal dams in the Federal Columbia River Power System and one nuclear plant, reduced its wholesale power rates for 2007 on average by approximately 3 percent and made its U.S. Treasury payment in full and on time while continuing to control costs and reduce staffing. BPA’s 2007-2009 power rates provide the highest probability (95 percent during 2007 and 2008) BPA has ever had that it will cover all its costs in the next rate period.

The agency ended the fiscal year with $1.193 billion in financial reserves after making its annual Treasury payment. About $250 million of the cash reserves are a cash flow shift resulting from a new arrangement with Energy Northwest for paying costs associated with its operation of the region’s only nuclear plant. The plant is located near Richland, Wash.

Wright said this is a far cry from just five years ago when BPA lost $700 million due to the power crisis and a near record low water year.

“With the region’s multi-billion dollar asset back on solid financial footing, I feel great about where we are and the direction we are heading,” added Wright. “With our financial strength restored, we are now focused on preserving the value of the Northwest hydro system.”

In regard to that future, this year BPA issued its proposal for long-term wholesale power contracts that will replace the existing contracts that expire in 2011. The new contracts will give Northwest parties the certainty they need about their responsibilities for meeting load growth after 2011. This long-run assurance is the key to development of electric infrastructure that is crucial to the ongoing health of the Northwest economy.

The proposal, referred to as the Regional Dialogue proposal, grew out of four years of discussions with the region’s utilities and other stakeholders. It will significantly reduce risk and further ensure that BPA will continue to fully repay taxpayers’ investment in the Columbia River power system. The decisions regarding the Regional Dialogue proposal are scheduled for early 2007.

BPA is a not-for-profit federal agency that markets about 35 percent of the electricity consumed in the Pacific Northwest. The power is sold to over 140 Northwest utilities. BPA operates a high-voltage transmission grid, comprising more than 15,000 miles of lines and associated substations in Washington, Oregon, Idaho and Montana.

For more information and a copy of the annual report, go to the BPA Web site at: www.bpa.gov/corporate/Finance/a_report .

Additional highlights of the 2006 fiscal year include the following:

• BPA’s internal operating costs of $492 million were $33 million below the annual budget amount of $525 million. 

• BPA and Energy Northwest refinanced $842 million in Energy Northwest bonds this year, saving ratepayers about $53 million in the next rate period. All three major bond rating agencies affirmed their existing high bond rating for these transactions.

• BPA concluded an 18-month Power Function Review of BPA’s power cost structure, conducted with customers and stakeholders, which reduced planned spending by $122 million a year over the rate period. 

• BPA completed 14 major capital programs to shore up transmission reliability on schedule and within budget. These included energization of the 63-mile Schultz-Wautoma 500-kilovolt line as well as reconductoring and upgrading lines, replacing poles and spacer dampers, enhancing security and more.

• BPA captured 44 average megawatts of new conservation. The American Council for an Energy Efficient Economy recognized BPA as a National Champion of Energy Efficiency. 

• BPA and its publicly owned utility customers worked collaboratively to implement an innovative flexible rate program that allows BPA to maintain lower financial reserve levels and lower rates.