PR 86 05 BONNEVILLE POWER ADMINISTRATION FOR IMMEDIATE RELEASE: TUESDAY, Nov. 8, 2005 Contact: Ed Mosey | , BPA (503)-230-5131     BPA proposes to adopt adjustable rates through 2009 Market uncertainties, fish costs overshadow rate process PORTLAND, Ore. - Following a six-month public process on costs in an environment of volatile energy markets and uncertain fish obligations, the Bonneville Power Administration proposes to adopt adjustable wholesale power rates for the 2007-2009 period. Customers have asked to keep rates as low as possible, so BPA, a not-for-profit federal agency, is proposing an adjustable rate rather than collecting revenues up front to protect against risk. BPA Administrator Steve Wright said, "By choosing this approach, BPA's rates should be lower on average through the three-year period than by using our previous approach to managing risk." Wright said that, based on current market assumptions and a range of probable expenses and revenues, the average rate for the next three years would be about $30 per megawatt-hour. However, he cautioned that actual rates are likely to be different. Over time, the rate will be adjusted based on future weather and market conditions. In addition, ongoing litigation over the impacts of federal dams on migrating salmon could result in significant new costs, Wright said, which would put additional upward pressure on the region's electric rates. Starting last January and continuing for six months, BPA held a public process to engage the region in examining and determining BPA's power-related program costs. As a result of the review, BPA reduced projected costs by about $100 million. Early next year, BPA will conduct another top-to-bottom public review of its costs and reflect the results in its final rate proposal. "We will continue to work hard to keep our costs down," said Wright. "The largest potential for reducing rates is help in meeting our cash flow challenges as we seek to recover from six years of low water. We are working closely with customers on some promising potential solutions to the cash flow issue. And, we are asking our customers and other stakeholders for that assistance. If they have ideas we haven't considered, we certainly want to hear them." BPA is beginning its first full-fledged wholesale power rate case in five years. The agency is scheduled to adopt a rate structure next July that will take effect Oct. 1, 2006, and remain in effect until Sept. 30, 2009. The rate proposal is the first step in an eight-month public process leading to a final record of decision July 7. The public is invited to comment on BPA's initial rate proposal during field hearings being held in November and December. Field hearings are scheduled for the following cities: Springfield, Ore., Tuesday, Nov. 29 Kalispell, Mont., Wednesday, Nov. 30 Spokane, Wash., Thursday, Dec. 1 Idaho Falls, Idaho, Monday, Dec. 5 Tacoma, Wash., Tuesday, Dec. 6 Portland, Ore., Wednesday, Dec. 7 BPA markets wholesale power and provides other benefits to virtually every utility in the Pacific Northwest. Forty percent of the region's electricity supply comes from the Federal Columbia River Power System, which comprises mostly federal hydroelectric facilities. It costs one-third to one-half as much as alternative resources, helping make Northwest electric rates among the most competitive in the nation. For highlights of BPA's FY 2007-2009 power rate case see the November 8, Issue Alert. For details on the rate case process, see the November 8, Backgrounder. Submitted for distribution on 11-08-2005 at 1:05 PM

Bonneville Power Administration, 905 N.E. 11th Avenue, Portland, Oregon 97232 Mailing Address: Media Relations - DM7, P.O. Box 3621, Portland, OR 97208-3621 Phone: (503)230-5131 FAX: (503) 230-5884 Web Site: http://www.bpa.gov