Wasco Electric Cooperative

BPA Interim Payments At the March 25th board meeting, the co-ops board of directors signed the Bonneville Power Administrations Interim Payment Agreement which provides interim rate relief payments to the regions utilities in relation to the residential exchange program.

The residential exchange program is a system in place that allows private, investor-owned utilities to receive cash payments from BPA that allow their residential consumers a share of the benefits of the cheaper federal hydropower system in the northwest. The monies to fund these payments come from higher rates charged to BPA’s public power customers, like Wasco Electric.

A group of public power utilities claimed that the exchange agreement reached between BPA and the investor-owned utilities in 2001 violated the law set forth in the Northwest Power Act and successfully sued BPA in the U.S. Ninth Circuit Court.

Since the May 3, 2007 court decision, BPA has discontinued payments to the investor-owned utilities but has continued to collect $28 million per month through the rates charged to the public power sector.

In the interim payment agreement, BPA is returning $205 million to the public power utilities in the region. These interim payments are a one-time cash payment that will be subject to a “true-up” at the conclusion of the current rate case, scheduled to conclude in September.

In addition to signing the Interim Agreement, your board of directors made two very important and fiducially responsible decisions concerning the $333,000.00 interim payment your cooperative received from BPA

First, because the payment agreement includes language regarding a true-up at the conclusion of the rate case, the board has decided to hold the funds in an account until all decisions regarding these payments are final, supposedly this fall.

Secondly, the board made a decision on how to use these funds to maximize the benefits to the membership. Rather than creating a temporary rate deduction, the decision was made to put these funds back into the electric plant which serves the members.

The cooperative is currently replacing over 200 bad power poles throughout its system and needs to replace a power transformer in one of its substations and rather than borrowing long-term money to complete these projects, the board decided to use the interim funds to offset some of the costs.

The bottom line is this; continue borrowing long-term funds to pay for capital improvements and create upward pressure on rates to cover the debt service, or use the interim funds to offset the need for borrowing money and help to create rate stability. The board’s decision to use the funds to offset the need for future borrowing is one that will benefit the entire cooperative membership for some time.