Significantly, the BPA will also move to mitigate risks of being too highly leveraged, intending to target a debt-to-asset ratio of 75% to 85% over the next 10 years. If market prices and loads-which are already considerably uncertain-further impact the BPA’s total revenues and rates, even more aggressive cost management steps may be needed, the agency said. It will also require reducing corporate costs through a long-term workforce reduction (to be met through attrition), consolidation, outsourcing, and process improvements, along with possible cuts in its supply chain and information technology. Measures include establishing a cost management goal with firm cost constraints to keep the sum of program costs at or below the rate of inflation through 2028.
That’s why, in a strategic plan released on Tuesday, the agency said it will take aggressive actions to manage costs and strengthen its financial health over the next five years (2018–2023).
“They have noted that the resurgence of competition in power markets will provide them with alternatives when their long-term wholesale power contracts with BPA expire in 2028.”įor the BPA, not taking action is not an option, because it says financial troubles-particularly those around cost management, debt management, and reserves-would jeopardize its mission and put the region’s environmental and economic health at risk. The agency currently has sufficient liquidity and high credit ratings, but troubles lurk in plain view: “Our power customers have expressed significant concerns that BPA’s recent pattern of rising costs and rates is unsustainable,” it said on Tuesday. Because the BPA’s power profile is predominantly hydropower, the agency is also highly reliant on the amount and timing of precipitation in the Columbia River and the shape, or timing, of the resulting runoff. However, the entity has struggled to maintain cost competitiveness and commercial performance amid a slew of new wind and solar capacity additions in the region, which are driving down power prices. It also operates and maintains about 75% of the high-voltage transmission in its service territory, which includes Idaho, Oregon, Washington, western Montana and small parts of eastern Montana, California, Nevada, Utah and Wyoming. Army Corps of Engineers, the Bureau of Reclamation, and the region’s sole nuclear power plant-the 1.1-GW Columbia Generating Station-to 142 electric utilities throughout the Northwest.Īltogether, the BPA provides about 28% of power used in the Northwest. The bulk of its revenues come from sales of 22 GW of power from 31 federal hydropower plants operated by the U.S. While the nonprofit federal power marketer headquartered in Portland, Oregon, is part of the Department of Energy, it is self-funding and covers its costs by selling products and services.
Overwhelmed by low wholesale power prices and changing customer needs in the Pacific Northwest, the Bonneville Power Administration (BPA) on January 30 unveiled a lifeline it hopes will allow it to remain commercially afloat.
0 kommentar(er)
