The Bonneville Power Administration on Thursday proposed a 9.6 percent average power rate increase to its wholesale customers, including Clark Public Utilities. The federal power marketing agency said the increase was needed to compensate for reduced sales of surplus power as utilities turn to natural gas, and to continue investments in the Columbia River power system.
BPA is also proposing a 13 percent increase in its transmission rates, which it says are necessary to maintain reliability and meet rising demands for power transmission.
The rate increases, if approved following an extensive public review process that will extend into next summer, will be passed on to Clark Public Utilities and other BPA wholesale customers. Those utilities will decide how much of the cost increases will affect their business and residential customers. Clark Public Utilities obtains 57 percent if its electrical power from BPA.
The Clark Public Utilities Board of Commissioners will ultimately determine rates for its customers, said Pat McGary, director of energy resources for Clark Public Utilities
"This announcement was anticipated and these are not final rates," McGary said. "There will be a process involving customer utilities across the region prior to a final rate determination in July 2013, and the final rates will go into effect October 1, 2013."
BPA said that 8 percent of its proposed rate increase is due to expected decline in sales of its surplus power. The market for that surplus power has shrunk primarily due to lower natural gas prices,
the power agency said. The other 1.6 percent of the proposed rate increase is due to other unrelated cost increases.
"We are acutely aware of the economic impact of our rates and have worked closely with the region to develop a plan that keeps rates as low as possible while making needed investments in infrastructure," said Steve Wright, BPA administrator and chief executive officer, in a statement. "We remain committed to covering all our costs and providing timely repayment to the U.S. Treasury."
BPA said the proposed increase in transmission rates, if adopted, would be the first increase in eight years. It said that construction of new lines and replacements to maintain reliability and allow integration of renewable resources, such as wind, accounts for approximately 7 percent of the proposed transmission rate.
The remainder of the increase would be spent on meeting security requirements and other mandates, as well as operational and maintenance expenses.