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NW Fishletter #385, Sept. 4, 2018
 BPA Outlines 2018 Spill Surcharge For NWPCC
Bonneville Power Administration officials outlined the methods and reasoning behind the agency's 2018 spill surcharge, in a presentation to the Northwest Power and Conservation Council on Aug. 15.
The $10.2 million surcharge was finalized June 21, with no changes made to the agency's May 8 preliminary estimate.
Daniel Fisher, BPA power rates manager, said the surcharge is based on modeling 80 years of water runoff conditions, and an analysis of monthly forecast generation and market prices. He said a forecast was used instead of actual costs to provide consistency from year to year, and to avoid making changes in the middle of a rate case.
Fisher also outlined in his presentation how BPA reduced the estimated $38.6 million average cost of lost generation using program spending reductions applied at the BPA administrator's discretion.
This year, these reductions amounted to $28.4 million, lowering the customer surcharge to $10.2 million by applying savings from reduced fish and wildlife program costs, additional secondary sales expected during spill and adjustments made to apply the surcharge to non-Slice sales only. (Slice customers are directly affected by increased spill and assume the associated cost risk independent of Bonneville, Fisher said.)
Bryan Mercier, executive manager of BPA's Fish and Wildlife Division, told the Council most BPA customers seemed to recognize the agency is in a difficult position, and appreciated how it handled the surcharge. He said by using modeling, Bonneville will rely on its reserves to absorb any costs above those expected from spill in a low water year, and will enjoy higher reserves in above-average water years.
"The volatility is reflected in our reserves," he said. "That's one of the values of our product. The energy market is very volatile; Bonneville's is not." -K.C. Mehaffey
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