Managers Message

Erosion of Preference Power

 

Dear Members;

 

Since rising wholesale power costs will be driving future retail rate increases for Benton REA members, it is important we understand why wholesale power costs are rising.  Let’s take a look at erosion of Preference Power, another reason future wholesale power costs are on the rise.

The Bonneville Project Act (BPA Act) passed by Congress in 1937 includes a section fondly referred to as the "Preference Clause.” As amended, the Preference Clause guarantees public utility and electric cooperative customers (Preference Customers) in the northwest the first right to purchase, at cost, all of their electricity from the Bonneville Power Administration (BPA).   In 1980, the US Congress passed the Northwest Power Planning and Conservation Act (Act).  This Act extended financial benefits from the BPA to customers of the investor owned utilities (IOUs). The Act also provided assurance that the cost of extending the benefits to the IOUs would not increase the wholesale power costs for the Preference Customers. Over the years the Preference Clause and provisions of the Act have served the region well.

Recently, BPA and many northwest utilities have agreed to disregard the cost protections provided for Preference Customers by the Act.  In addition, failure to enforce the statutory rights of Preference Customers has allowed BPA to transfer its risk and cost of acquiring the output of new resources and to place the cost of extending benefits from the federal generating system to IOUs squarely on the backs of the Preference Customers.

The loss of cost protection under the Act and the failure to enforce the "Preference Clause” has and will continue to drive up the cost of BPA wholesale power for Preference Customers like Benton REA. While the Benton REA board and staff continue to fight a valiant battle to protect Preference Customer’s rights and to safeguard protections afforded in the Act we are often alone in our efforts. 

We know that retail rate increases are on the horizon, let’s work together to inform others of the reasons!!!  After all that is "The Cooperative Way.”

Sincerely,

Charles Dawsey

General Manager