Columbia River PUD Signs 20-Year Power Purchase Agreement with Bonneville Power Administration

December 12, 2008

Columbia River People's Utility District (PUD) has signed a new 20-year power purchase agreement with its wholesale power provider, Bonneville Power Administration (BPA).  The contract guarantees preference access to power sold by BPA to provide increased rate stability for PUD customers through the year 2028.

"This contract is for our children and grandchildren," said PUD General Manager Kevin Owens. "It offers a significant hedge against rising energy prices in the future.  Most importantly, it guarantees that our core power supply is clean and renewable."

BPA has been the PUD's sole power provider since the PUD began providing electric service in 1984.  The PUD's first 20-year power supply contract with BPA was the cornerstone of the PUD's successful bond issuance that allowed the PUD to purchase the electric system from Portland General Electric.

"The benefits from the last 20 year contract term allowed the PUD to begin serving customers, and this new 20 year contract provides stability going forward, which is a huge benefit to our customers," said PUD Government & Community Relations Manager Valarie Koss.

PUD customers today save $6.5 million a year because the PUD's rates are, on average, 30% lower than PGE's.

"That is $6.5 million staying in our local community rather being sent to Portland," said Owens.

BPA Account Executive Theresa Rockwood and PUD General Manager Kevin Owens sign the BPA contract.  Back row, from left: PUD Board Members Dave Baker, Carol Everman, Dick Simpson and Darrel Purkerson, BPA Administrator Steve Wright, PUD Community & Government Relations Manager Valarie Koss, and BPA Senior Vice President of Power Services Paul Norman.

BPA has signed similar contracts with all 135 of the public power utilities it serves. BPA Administrator & CEO Steve Wright likened the new contracts to President Franklin D. Roosevelt's original vision for the Federal hydropower system.  It was during a campaign speech given in Portland in 1932 that FDR first outlined his vision for constructing hydroelectric dams to bring power to rural areas and strengthen the Northwest economy.  The U.S. Government built Bonneville and Grand Coulee Dams in the 1930s and 1940s, and congress created BPA in 1937 to deliver and sell power.

Today BPA markets power from 31 federal dams and one nuclear plant. Altogether, about 45 percent of the power consumed in the Pacific Northwest, including all of the power used by PUD customers, comes from BPA.  The region's average power costs are significantly lower than other parts of the country because of the low-cost, renewable hydropower generated by the dams.

Wright said several elements of the new contracts echo FDR's original vision, including cost-based rates, local control, and customer choice.

The new contract locks in power supplies and introduces a tiered rate structure. BPA will establish the amount of power available to each customer based upon FY 2010 energy usage and charge Tier 1 preference rates for that amount of power.

BPA has announced that after 2011 it will not meet the load growth needs of all its customers. Securing power supply for future load growth will be each customer's responsibility. The PUD is reviewing all options available to it to secure its power supply for load growth post-2011 including purchasing power through BPA at a Tier 2 market based rate.

"When we look at what's important to us and to our customers, it comes down to stability and predictability. This contract will allow us to be strategic in planning so that rates don't fluctuate," said PUD Board President Dick Simpson.