BPA ends FY 2026 operationally stable but short of revenue goals

The Bonneville Power Administration ended fiscal year 2026 with $460 million in net revenues, $49 million below its target. Performance diverged sharply across the power marketer’s two business lines: Power Services exceeded its net revenue target, while Transmission Services experienced a revenue shortfall. Still, BPA met four of its six financial targets in FY 2026, indicating overall stability and operational resilience.

An overview of BPA’s year-end results was presented at the Nov. 12 Quarterly Business Review by Kim Thompson, acting chief financial officer. She began by noting that beneath BPA’s headline numbers, the year was marked by a “sharp divergence between our two distinct business lines, driven by planned customer rate relief, court-mandated spill operations and a challenging water year.”

Power net revenues

Power Services finished the fiscal year with $343 million in net revenues, exceeding the target by $61 million. This was driven by non-routine revenue mechanisms, coupled with lower operating expenses, rather than hydropower operation, which are typically associated with positive power net revenues.

One of these non-routine actions was the collection of $40 million through the Financial Reserves Policy surcharge due to FY 2025 financial results. BPA also recognized an additional $39 million through a settlement agreement reached with the Mid-Columbia public utility districts related to Canadian Entitlement payment obligations under the Columbia River Treaty.

On the other hand, hydropower sales were $176 million lower than forecast. Though regional water supply reached 93% of normal—an improvement over the three preceding years – the timing and shape of runoff poorly aligning with peak demand, diminishing secondary power sales. Court-ordered spill also reduced hydropower production by an estimated 1.1 million megawatt hours, further hampering hydropower sales.

Transmission net revenues

For Transmission Services, lower revenues combined with planned rate relief and higher expenses contributed to a $110 million revenue shortfall of its $226 million target. Recording only $116 million in net revenues primarily resulted from customers deferring long-term point-to-point transmission service, which can be delayed for up to five years as they complete generator interconnections or energization projects. These deferrals represent postponed revenue rather than permanent loss but reduce Transmission’s near-term cashflow.

Additionally, a planned rate settlement to provide customers rate relief reduced Transmission’s revenue requirement by $48 million. This action, paired with higher operational and overhead expenses required to support accelerated grid projects, also contributed to the business line’s cost under-recovery in FY 2026.

Financial reserves

BPA ended the fiscal year with $550 million in reserves for risk, which equates to 70 days cash on hand and meets the established liquidity target of maintaining a minimum 60 days cash on hand. Sixty days is the goal for the entire enterprise as well as BPA’s individual business lines.

Power Services ended the year with $252 million in reserves for risk, or 46 days cash on hand. Since this is below the lower threshold, the full $40 million Power Services surcharge will once again trigger under the Financial Reserves Policy. At the Nov. 12 Quarterly Business Review, BPA announced the surcharge will be applied to Power rates from December 2026 through September 2027, resulting in an average effective increase of 2% for the Priority Firm Tier 1 rate. The Financial Reserves Policy surcharge starts replenishing BPA’s financial reserves when financial reserves drop below 60 days cash on hand for either Power or Transmissions Services. 

In contrast, Transmission Services ended the fiscal year with $298 million in reserves for risk, translating to 125 days cash on hand. This amount exceeds Transmission’s upper threshold of $283 million, which is one condition for activating the Financial Reserves Policy’s Reserves Distributions Clause. However, given that BPA’s overall reserves for risk balance did not exceed the upper threshold of $768 million, an RDC will not trigger for transmission customers based off FY 2026 results.  

Risk Mitigation and Financial Policies Refresh

During the QBR, Thompson also provided an update on BPA’s 2026 Risk Mitigation and Financial Policies Refresh. The process kicked off in August with a series of five public engagement workshops that will be followed by the release of a draft financial plan and a month-long public comment period ending Dec. 11. BPA aims to produce a final updated financial plan in March 2027.

The effort includes reviewing the adequacy of the Financial Reserves Policy’s risk mitigation tools, including its surcharge and reserves distribution clause mechanisms, which have triggered more than anticipated since BPA implemented the policy in 2018. The updated Financial Plan and related policies will be designed to uphold BPA’s strategic goals and place the business on a more cost-effective, sustainable path.

BPA’s full end-of-year results are available on the Quarterly Business Review webpage. The 2026 annual report, which will be published on Nov. 16, also captures BPA’s year-end financial performance and includes a letter from BPA Administrator and CEO Travis Kavulla.