FY 2020 Financial Results
This week, BPA shared the financial results for FY 2020. Both Power and Transmission finished the year strongly. Here are the highlights:
Expenses came in lower than rate case forecast due mainly to delays caused by COVID-19 and lower than forecast interest expenses. BPA will carryover $24M of unspent funds (about half being Energy Efficiency Incentive funds) into FY2021.
Revenues were well above forecast thanks in large part to high secondary revenues due to water coming down during times of high market prices.
Expenses came in lower than forecast, also due to COVID delays and lower interest expense.
Revenues came in higher than forecast, thanks in large part to higher-than-forecast short term PTP sales due to high market prices and hydro generation along with higher NT loads due to warmer weather.
Given the strong financial performance within both Power and Transmission, financial reserves have soared. The table below shows end of year levels:
o Power is now well-above its lower threshold. Even if the Financial Reserves Policy Surcharge had not been postponed due to COVID, it would not have triggered.
o Because the agency is now above its upper threshold, a Reserves Distribution Clause (RDC) has triggered for Transmission. (Recall, there is a two-prong test that must be met before an RDC is triggered – the agency AND the business line must be above their upper thresholds.) This is the first time an RDC has triggered under the Financial Reserves Policy that was adopted in 2018. More on this, including NRU’s proposed comments, below.
BPA announced that it will hold an Integrated Program Review 2 (IPR2) process in the spring. This will allow BPA and customers to update budget assumptions for inclusion in the final BP-22 rates. IPR2 will focus on COVID, CRSO and capital. BPA has given no specifics beyond that. We will keep seeking intel.
Proposed NRU Comments Re: Transmission RDC
Triggering the RDC for the Transmission business line, as discussed immediately above, means that Bonneville has approximately $80 million to use in a way that is almost entirely at the Administrator’s discretion. On Thursday, Bonneville shared that the Administrator’s proposal is to use the entire $80 million towards early debt repayment. This would free up borrowing authority and save Transmission interest costs, but it would not provide short-term rate relief for Transmission. Recall, the Financial Reserves Policy provides for the Administrator to use surplus reserves for a “higher value purpose,” and provides three examples: rate relief, early debt repayment, or revenue financing.
The agency is allowing parties to submit comments on use of the RDC funds by November 30. NRU staff is proposing to submit brief comments stating that NRU finds debt repayment to be an acceptable use of the $80 million in transmission reserves available as a result of the RDC, provided that the agency can show that using the money in this way is consistent with Bonneville’s 2018 Financial Plan. The comments would note that, overall, the agency must take a comprehensive approach to financial planning and not make the RDC decision, rates decisions, or any other financial decisions, independently of one another. The comments would also observe the rising debt profile of Transmission, particularly compared to Power. Please provide any feedback or input on these proposed comments to Megan Stratman at email@example.com no later than close of business on Wednesday, November 25.
Ravalli Electric Cooperative Notifies NRU of Decision to Discontinue Membership
At the beginning of this week, Ravalli Electric General Manager, Mark Grotbo, provided official notice to NRU that Ravalli will not be renewing their membership with NRU in 2021. We appreciate the long partnership between NRU and Ravalli and wish them well.
Transmission Losses Settlement Update
There will not be a settlement of transmission losses issues in the BP-22 and TC-22 rate cases. Several parties, including NRU, at the direction of the Board, indicated that they would not oppose a settlement. However, other parties, including PNGC, the City of Idaho Falls, and a coalition of IOUs and marketers transmission customers, expressed opposition to the settlement. Concerns centered around the belief that there is not a capacity component when providing loss returns.
Based on the opposition, Bonneville has notified customers that it would not move forward with the settlement and would instead address transmission losses issues in the formal rate case proceedings. We believe that the outcome for transmission losses will be similar to, if not the same as what was presented in the proposed settlement. NRU will continue to implement board direction and make strong arguments that are supportive of proper compensation of the FCRPS
BPA’s New Energy Efficiency Tracking System
BPA is working to implement a new energy efficiency reporting system, called BEETS (BPA energy efficiency tracking system). While NRU staff thinks this is one of the best acronyms we’ve heard in recent history, we are equally interested in ensuring this system is implemented on schedule, on budget and addresses customer needs.
BPA has a poor track record in systems development, particularly in EE. This time around, they are using an outside vendor and minimizing customization. This helps with project scope and budget. BPA is also using a committee of about 10 customers (including several NRU members) to routinely seek feedback to ensure the new system meets customer needs and is useful. NRU staff receives regular briefings from BPA so we can monitor progress and influence the project to stay on schedule and within budget. So far, we’re pleased to say that seems to be the case. The expected Go-Live is spring of 2022.
NRU, NWRP and PPC Joint Webinar on NOAA Fisheries Columbia Basin Partnership Task Force Phase 2 Report
NRU, Northwest RiverPartners and the Public Power Council have collaborated to provide an informational webinar on the findings of the Columbia Basin Partnership Task Force. The Task Force was a joint effort, sponsored by NOAA Fisheries, to bring stakeholders from around the region together to determine salmonid recovery goals and develop proposals to achieve those goals. Recently, the governors of Montana, Idaho, Oregon, and Washington issued a joint letter stating their commitment to conducting a “Four State Process” to continue where the Task Force left off.
We are disseminating this information because the Four State Process has identified the goals presented in this report as foundational to improving fish populations in the Columbia River System and many of the proposals contained within the report would be impactful to hydropower. Webinar information and an excerpt from NOAA’s website further describing the Task Force and Phase 2 Report are shown below
Event address for attendees:
Date and time:
Wednesday, December 9, 2020 1:30 pm Pacific Standard Time (San Francisco, GMT-08:00)
199 704 1430
Access code: 199 704 1430
Excerpt from NOAA Fisheries Website:
NOAA Fisheries and its Marine Fisheries Advisory Committee (MAFAC) convened the Columbia Basin Partnership Task Force (Partnership) in 2017, bringing together diverse representatives from across the Columbia Basin to establish a common vision and goals for the Columbia Basin and its salmon and steelhead. The diverse group of parties on the Partnership includes Columbia Basin tribes; fishing, agriculture, conservation, river transportation, port, and hydropower interests; and the states of Idaho, Montana, Washington, and Oregon. All of these parties want to ensure that healthy runs of salmon and steelhead thrive into the future. Meeting the needs of our diverse social, cultural, and economic landscape — while leaving future generations with abundant, resilient salmon and a healthy ecosystem — will take ingenuity, innovation, and partnership.
The Phase 2 (Final) Report summarizes Partnership efforts and accomplishments through September 2020. An overarching message from Partnership members is a strong sense of urgency that immediate action is needed to address salmon and steelhead declines. The report provides recommendations for continuing collaboration going forward to further define and implement strategies to achieve the Partnership Goals. The report serves as the Partnership’s final recommendations to the NOAA Marine Fisheries Advisory Committee.