BPA End of Year Update

Consumers, taxpayers, and salmon are paying the price for Bonneville Power Administration’s reliance on aging infrastructure and antiquated business practices. The agency, which is housed under the U.S. Department of Energy, received a $10 billion boost from Congress in 2021 in its borrowing limit of taxpayer dollars from the U.S. Treasury. Since then, BPA has continued to invest in outdated infrastructure like the lower four Snake River dams and their finances are worsening.

In their final Quarterly Business Review (QBR) of the year, BPA  noted experiencing challenging water conditions for the third year in a row, which heavily impacted their financial health. So much so that a $40 million surcharge was triggered, which will mean higher electricity rates for customers next year.   

For this federal agency tasked with selling the hydropower generated by 31 dams across the Columbia Basin as well as mitigating the devastation that hydropower has caused salmon populations, “challenging water conditions” mean less water in the river systems across the Basin due to earlier than typical spring snowmelt and dry conditions. 

Conditions such as these force BPA to purchase a significant amount of replacement power to make up for the lost potential hydro generation, and also mean much less revenue from surplus power sales, causing the agency to dip into its financial reserves. As a result, agency net revenues were $211 million below BPA’s forecasted assumption for power rates, which led to the surcharge to recover this revenue. 

When BPA struggles financially, salmon are the first to pay the price. The agency flatlined fish and wildlife project funding for years in the late 2010s, causing fisheries managers to stall important restoration and hatchery projects for imperiled salmon populations.

This year showcased a trend that has been developing for decades, as BPA has struggled to operate and sell hydropower with increasingly unpredictable water availability in the region. Rather than an exception, years with low snowpack and prolonged low-water conditions are becoming the new normal in the Northwest due to a warming climate. 

Additionally, where the agency used to reliably profit off of surplus power sales on the wholesale market, the price of hydropower has for decades now been less and less competitive with renewables and gas.

The previously mentioned $10 billion increase in BPA’s borrowing authority from the federal government was approved with big transmission line projects and grid modernization in mind. Building out Northwest transmission line infrastructure, which BPA owns much of, is desperately needed to connect renewable energy projects to the grid and meet ballooning electricity demand. 

However, BPA has underdelivered on transmission investments in the years since, with the traffic jam to build and connect renewables still very much an issue. This means little progress towards a diverse, connected energy grid that could withstand unpredictable water availability, and more pressure on the status quo, aging hydrosystem, with salmon again left to hold the burden. 

Earlier this fall, BPA allowed the long-running Columbia Basin Fish Accords with tribes and states to expire. This fish and wildlife project funding via BPA revenues has recently accounted for half of the money the agency spends on such programs overall. It then withheld over $50 million of unspent Accord funding from Yakama Nation. 

“When BPA struggles financially, salmon are the first to pay the price.”

This funding had already been earmarked for critical salmon recovery work in years prior, with unspent money carried over into next fiscal year. This “carryover” funding is essential for fisheries managers to ensure stability in large, multi-year restoration projects. 

When asked during the QBR what led to the $40 million surcharge being triggered, BPA representatives stated that power purchases and cash outlays from prior year fish accruals (aka carryover funding) were the biggest factor. BPA has failed to develop new, affordable energy sources is not only hurting consumers, it is directly impacting their obligations towards salmon recovery.   

While the agency has announced plans to add over 800 megawatts of energy generation in the next 20 years to meet rising demand, it has for years sat on its hands, complacent with a hydropower system increasingly out of tune with the energy and climate demands of the present. If BPA is serious about recovering salmon, it must be proactive in diversifying away from hydropower and begin to fully honor its commitments to fisheries in the region.