BPA will gain an additional $10 billion of borrowing authority, increasing it from $7.7 billion to $17.7 billion, under provisions of the $1 trillion infrastructure bill Congress passed Nov. 5 and President Joe Biden signed Nov. 15.
The borrowing boost in HR 3684 was championed by Sen. Maria Cantwell (D-Wash), who successfully increased the amount in an earlier version of the bill from $2 billion to $10 billion and added terms saying BPA can't access more than $6 billion of that through 2028.
Also included is a requirement to update Bonneville's financial plan by the end of 2022. In updating the plan, the bill explicitly calls on the BPA administrator to consider "asset management planning and sound business principles" when determining the allocation of the borrowing authority, which must be applied "across the mission responsibilities."
In addition, the agency must engage with customers before finalizing the financial plan update and consider customer recommendations for prioritizing asset investments.
This stakeholder engagement in the plan update and BPA financial and cost management efforts had been lobbied for by Bonneville's power and transmission customers earlier this year.
These customers included the Public Power Council, PNGC Power, and the Northwest and Intermountain Power Producers Coalition, all of which pushed for some of the provisions to be included in the terms of the most recent rate case, BP-22.
"We're very excited to have that passed." Scott Simms, executive director of the Public Power Council, told Water Power West. "I think it's a great outcome, one that couldn't have been possible without Sen. Maria Cantwell, as well as bipartisan support, such as from Rep. Jim Risch" (R-Idaho).
Simms pointed in particular to the "sideboards" in the bill that Bonneville customer groups had lobbied for, which include the staged tranches of the additional authority before and after 2028, the year when customers can sign new contracts with the agency, he said.
Also, bill language initially called for splitting the additional borrowing evenly between transmission and generation, Simms said, but the passed legislation requires considering the agency's needs when apportioning it.
"Our preference for how BPA will use this new authority is to be very thoughtful and planful of any use of funds," he said. "This is a tool to help them in the long run. The big part is sitting down at the table with customers on this."
He added, "There's no reason to expect they won't follow through. BPA has been a great partner in pursuing this funding."
Another of the customer groups working behind the scenes on the bill while it was being crafted was PNGC Power, which also tried to include some of its provisions in the BP-22 rate case settlement earlier in the year.
"PNGC advocated for BPA and customers to make a borrowing authority solution part of the BP-22 settlement," Roger Gray, PNGC president and CEO, told Water Power West in an email. "Although it was not part of the ultimate BP-22 settlement, the need remained. Several parties worked with BPA to obtain this additional borrowing authority in the infrastructure bill. We are fortunate to have this now, but the BP-22 settlement and needs in the NW exceed what is provided and we look forward to continued work with BPA and other customers to find lasting and comprehensive solutions."
Spencer Gray, NIPPC executive director, told Water Power West, "The wait was worth it for the most significant infrastructure bill in decades. The Northwest's senators played a pivotal role in passing new funding, contracting authority, and siting reform to build out the nation's transmission system and upgrade the grid.
Bonneville's long-term access to federal capital is now secure and customers will have a bigger say in how it's spent," he continued. "These are once-in-a-decade accomplishments, and that's only in the energy sector. We needed the federal government to step up and fill gaps that industry and state governments can't fill on their own, and that's now begun."
NW Energy Coalition applauded the new borrowing authority, but also had concerns with some of the bill's language.
"We appreciate Congress giving BPA additional borrowing authority as the agency has lots of modernization investments that are needed to ensure that BPA can play a critical role in facilitating the Northwest and the West's transition to clean energy," NWEC Executive Director Nancy Hirsh told Water Power West via email. "We expect BPA to establish not just long-term financial performance goals but explicit financial performance metrics that are tied to all of the agency's public purpose obligations.
"Some specifics might include transmission projects that help integrate new wind, solar and storage projects (e.g. Montana to Washington upgrade), and system upgrades around the Tri-Cities to address summer peak constraints," Hirsh said.
"One additional concern about the language in the authorization is the focus on lowest possible rates," Hirsh noted. "NWEC recognizes that the value of the federal power system is broader than rates and criteria for investments should also include minimizing risks, addressing the need for tribal justice, supporting decarbonization of the energy sector and mitigating the impacts of climate change."
BPA echoed its earlier comments about the additional $10 billion made after it passed the Senate in August.
"This action moves us one step closer to a significant increase in the amount of low-cost capital we can borrow from the U.S. Treasury," BPA told Water Power West in a statement. "We appreciate the efforts of those responsible for the borrowing authority increase that would provide Bonneville flexibility and future funding certainty to meet our near-term and future capital funding levels.
"While access to additional borrowing from Treasury would provide these benefits, it doesn't change our focus on our long-term financial goals," the statement continued. "We will continue to prioritize prudent debt management and sustainable capital funding practices, which are focuses of our Financial Plan refresh initiative."