Both cost and demand continue to rise at the Bonneville
Power Administration, which sells electricity from the
federal power system to public utilities at lower prices
than others in the Pacific Northwest — but its plan to
deal with the predicament lacks key elements, the
Government Accountability Office has said.
It said BPA’s cash reserves had fallen to $188 million at
the end of fiscal 2002 and it nearly missed its Treasury
payment in 2003, the result of its obligation to meet the
demands of utilities in the region, even if they exceed
the production capacity of the federal power system. BPA
often has to purchase expensive additional power to do so.
Other obligations such as providing financial benefits to
investor-owned utilities and protecting fish and wildlife
have also increased costs relative to other vendors, said GAO.
It said BPA’s does not pass on the costs of acquiring
additional power to its customers and fails to provide
them with incentive to cut back or conserve.
BPA wants to limit its commitment as the net provider of
wholesale electricity in the region and proposes to limit
the amount of power customers can get at its lowest rates,
according to GAO.
It said however, that BPA has not clearly defined the limits
for its commitments or how it would implement incremental
rates, and that BPA had similar plans in the late 1990s but
did not implement them because of pressure from customers
to serve more demand.
While BPA has taken positive steps to centralize its risk
management process to better control costs, its new approach
lacks key elements to successful implementation, including
details on specific activities, resources, and time frames
needed to implement the plan, said GAO-04-694.
