Trends from initial FY 2026 financial forecast continued into Q2 for BPA

Similar trends from first quarter financial performance results continued for the Bonneville Power Administration into the second quarter for fiscal year 2026. While agency net revenues continue to fall short and the agency debt-to-asset ratio is higher than expected, BPA is on track to meet most of its end-of-year targets.

The Q2 projection for end-of-year agency net revenues is $15 million below the target of $509 million.

Halfway through the year, Transmission Services net revenues are $89 million below the end-of-year target of $226 million. Power Services is currently forecast to end the year $71 million above target, but better-than-expected water conditions have been hampered by court-ordered spill increases that began in April. These ongoing operations have led to reduced generation and revenues, a trend anticipated to continue throughout the spring and summer months.

While presenting BPA’s Q2 financial results at the May 14 Quarterly Business Review, Chief Financial Officer Tom McDonald cautioned that these forecasts could change considerably.

“There is still significant uncertainty remaining at this time of year with respect to water conditions, market prices and other variables,” McDonald said. “Our net revenue picture may change significantly, which could also impact some of our other financial metrics, including our financial reserves. A summer heat wave event could result in unexpected costs of $300 million or more, and uncertainty has only increased due to court-ordered Columbia River system operations.”

The Q2 forecast for agency end-of-year reserves for risk is projected to be between $590 million to $755 million, equivalent to 74 to 95 days cash on hand.

From the business line perspective, Power’s reserves for risk are forecast to be between $370 million to $466 million, or 65 to 82 days cash on hand, at the end of this fiscal year. Given the time left in the fiscal year, McDonald emphasized that risks could still materialize for Power before the fiscal year concludes.

Transmission’s reserves for risk are forecast to range from $220 million to $289 million, or 96 to 126 days cash on hand, at the end of this fiscal year.

The Q2 report shows that the agency’s debt-to-asset ratio is forecast to end the year at 80%, which is above the target of 79.6%, making the target red. This forecast increase is largely the result of Energy Northwest’s significant borrowings necessary to increase the output of the Columbia Generating Station. While the money has been borrowed during FY 26, it is not expected to be spent until FY 27.

On the other hand, BPA continues to retain sufficient borrowing authority, which is critical for BPA to support capital projects. The borrowing authority indicator is a measurement that tracks BPA’s available U.S. Treasury borrowing authority over a rolling 20-year period. At the QBR, McDonald shared that this key performance indicator is green, assuming BPA retains the use of additional access to capital tools such as the Lease Purchase Program, where BPA utilizes third-party revenue bonds to fund transmission projects without depleting its borrowing authority with the Treasury.

McDonald also shared an update on BPA’s effort to review its Financial Plan policies. This undertaking is designed to enhance risk-mitigation strategies and ensure alignment with agency strategic objectives, drawing on valuable insights from experience managing financial resilience through three consecutive poor water years. Moreover, the review underscores BPA's commitment to prudent financial management and operational resilience. BPA is fine-tuning the timing for the public workshop process, which is likely to begin this summer.

View the detailed second quarter results on bpa.govunder the Quarterly Business Review page.