By Mark Jaffe, EUCI energy writer
Declines in hydropower output, caused by low stream flows in the Pacific Northwest, are forcing the Bonneville Power Administration (BPA) to buy more wholesale power leading to a projected $44 million loss.
The agency had set a target of $70 million in revenues – so the gap between the goal and the projected loss is $114 million.
The shortfall is expected to lead the BPA to end the year with 58 days of cash on hand. Its Power Services, which markets power, and Transmission Services, which delivers power, will end the year with 50 days and 78 days of cash on hand respectively.
BPA markets power from 31 federal dams, the Columbia Generating Station nuclear plant, and several small non-federal power plants. It serves an area that includes parts of Idaho, Oregon, Washington, Montana, Wyoming, Nevada, Utah, and California.
The forecast for Power Services is below the 60-day threshold that triggers the Financial Reserves Policy Surcharge. When financial reserves drop below the threshold, the surcharge automatically adjusts the following year’s rates to increase BPAs financial reserves to reach the target range.
Power Services is forecasting a $15.6 million loss. It had a revenue target of $108 million. The loss was driven mainly by higher power purchase expenses due to higher prices, lower stream flows, and dry weather conditions.
Transmission Services is expected to sustain a $27.7 million loss instead of its projected $48.4 million in revenue.
“While there is a lot of uncertainty in BPA’s forecast for the rest of the year, with respects to the potential power surcharge, we are examining what financially prudent actions we can take to reduce the likelihood of a surcharge,” Veronica Wittig, BPA’s acting chief financial officer, said in a statement.
“However, I want to emphasize that we feel confident that we have adequate within-year liquidity to make our full treasury payment at the end of the year,” Wittig said.
Despite the revenue pinch, BPA said it is planning $1.2 billion in capital spending for its “Evolving Grid” program, which includes 23 projects with a total cost of $5 billion.
“While there is a lot of uncertainty in our forecast for the rest of the year, we are prepared to implement our financial plan and the liquidity tools it provides,” the BPA said.
In the first quarter of 2025, the expense category that includes wholesale power purchases saw a $191 million increase in charges, “mainly due to dry conditions leading to an increase in purchases, particularly in December through February,” the BPA said.
The federal Energy Information Administration estimated that U.S. hydropower plants generated 13% less electricity in 2024 than the 10-year average, the lowest amount produced since 2001.
“Extreme and exceptional” drought conditions have been affecting different parts of the United States, particularly the Pacific Northwest, which hosts the majority of U.S. hydropower capacity,” the U.S. Drought Monitor said.
Reservoir storage at the end of September was 48% of capacity in Oregon, 67% of capacity in Washington, 76% in Montana, and 60% in Idaho, according to the U.S. Department of Agriculture.
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