BPA maintains strong financial position despite challenging water year

The Bonneville Power Administration shared its end-of-year financial performance results for fiscal year 2025 at its Nov. 13 Quarterly Business Review. The public forum provided stakeholders an overview of the agency’s finances, including updates on key performance indicators, major spending areas and operating liquidity.

In FY 2025, BPA successfully achieved all its financial targets, demonstrating a strong financial position even amid a dry year that challenged our financial risk mechanisms. In addition to achieving agency revenue and cost targets, BPA sustained high investment-grade credit ratings, reduced its debt-to-asset ratio, and concluded the year with significant U.S. Treasury borrowing authority. Furthermore, BPA fulfilled its annual payment to the U.S. Treasury on schedule and in full, a $1.2 billion payment that affirmed its complete adherence to financial obligations for the year.

BPA's financial strength is fundamental to its role in driving the economic prosperity of the Northwest. To ensure this, BPA operates under a comprehensive long-term Financial Plan, which includes policies and tools designed to guide decision-making and maintain stable, competitive power and transmission rates over an extended period. The agency also sets annual targets to monitor its progress.

 “This year’s below-average water supply presented a significant challenge,” said Chief Financial Officer Tom McDonald. “Through several strategic actions taken this year and in prior years, however, we minimized the use of financial reserves, ending the year on much stronger footing than we otherwise would have. I’m proud of the work our staff did to mitigate difficult circumstances.”

BPA ended FY 2025 with agency net revenues of $74 million, exceeding the overall target by $4 million. This result was largely driven by Transmission Services revenues, which came in $22 million over target. However, this is $211 million below the rates-based forecast of $285 million.

Poor hydrological conditions for a third consecutive year caused BPA to make more market power purchases than anticipated. While some of these expenses were negated by strategic debt-management actions that provided additional liquidity and higher net revenues, Power Services ultimately fell $18 million short of its financial target, ending the year with net revenues of $59 million.

Transmission Services ended the year with net revenues of $15 million, exceeding the business line’s financial target by $22 million. This result was primarily driven by higher-than-expected operating revenues and debt-management actions that offset cost pressures.

FY 2025 marked a record year for agency direct capital execution, totaling $1.08 billion and falling within the target range. This result was driven by strong execution on several large projects, including McNary Dam turbine design and replacement, Chief Joseph Dam generator rewinds, Longhorn Substation, Pearl Sherwood-McLoughlin transmission line upgrade, South of Tri-Cities reinforcement, Vancouver Control Center construction and many others.

BPA ended the year with sufficient operating liquidity, with agency financial reserves for risk coming in at $489 million and exceeding the target of at least 60 days cash on hand. Transmission Services ended the year with $220 million in reserves for risk, equating to 94 days cash on hand. Power Services reserves, however, were strained by three years of below-average water and significantly higher-than-expected power purchase expenses. Power Services ended the year with $270 million in reserves for risk, or 50 days cash on hand, which is below the 60-day threshold. This triggered a rate-adjustment mechanism included in BPA’s Financial Reserves Policy known as the FRP surcharge.

The calculated Power surcharge amount, which will be applied in FY 2026 only, would increase the annual average effective wholesale Tier 1 Non-Slice power rate by 2.2%, rebuilding Power financial reserves by $40 million over the course of the year. The administrator will issue the final surcharge amount and rate by Dec. 15, following a public review and comment period.

BPA's end-of-year results are available on the Quarterly Business Review webpage.

For more information about BPA’s 2025 performance, see the Annual Report which will publish on Nov. 14.