We remain committed to cost discipline across the organization, which has been critical to improving the competitive position of both the Power and Transmission business lines, while strengthening their balance sheets through higher cash reserves and lower leverage.Marcus Harris, BPA Chief Financial Officer
The Bonneville Power Administration reports that its strong 2021 financial performance has carried into the first quarter of 2022. BPA’s current net revenue forecast is $456 million compared to a rate case net revenue forecast of $178 million.
These results come on the heels of a strong FY 2021 performance that led to a $14 million distribution of reserves to its Power customers, lowering power rates for FY 2022.
“Our trading strategies and increased energy sales to our Power customers are promising, but it’s too early to celebrate,” said BPA Administrator and CEO John Hairston. “We have three more quarters to go, and last couple of years have taught us that weather and market uncertainty is the new normal. I am cautiously optimistic about our financial prospects for FY 2022.”
While the revenue forecast is stronger than the rate case expectation, BPA projects that its FY 2022 expenses will be $11 million higher than projected. Last year, BPA beat its expense projection by $35 million.
“We remain committed to cost discipline across the organization, which has been critical to improving the competitive position of both the Power and Transmission business lines, while strengthening their balance sheets through higher cash reserves and lower leverage,” said BPA Chief Financial Officer Marcus Harris. “This is the fifth year our programmatic costs have remained flat, with the exception of modest budget increases this fiscal year for IT and the Transmission business line. It has become increasingly difficult to meet our strict cost targets. We are seeing labor and material costs rising.
Continued success on this front will require continued refactoring to ensure we are achieving our highest priority business outcomes with less overall spending power. We will continue to focus on where we can save, what we can do less of and what we can stop doing altogether.”
The first quarter forecast for FY 22 end-of-year reserves is coming in very strong, with both business lines forecast to be above the upper threshold for the reserves distribution clause. The first quarter point forecast for end of year reserves for risk shows Power Services at $906 million, Transmission Services at $211 million and the agency at $1.1 billion.
“Our reserves are an important hedge against the uncertainty we face year to year in markets, water supply, runoff shape and the threat of unexpected weather-related costs,” said Harris. “At this early stage, we should be encouraged – but there is work left to do before we declare success.”
BPA’s full first quarterly business review is available at the link.
The Cluster Study is BPA’s primary means of processing and offering service to customers with requests for long-term firm transmission service over the BPA network.
Agency moves from 90-year to 30-year forecast model to account for streamflows increasingly impacted by climate change.
Meet BPA employee Mike Cohan, an energy efficiency metering technician who travels throughout our service territory identifying areas where customers can conserve electricity.