Financial Reserves Policy
BPA adopted a Financial Reserves Policy in the BP-18 Rate Case to ensure BPA has sufficient financial reserves, or cash, and to support BPA’s financial objective to have access to liquidity. The BP-18 Final Record of Decision committed to a follow-up process to determine how to increase Power Services’ minimum level of financial reserves from $0 to the preferred lower threshold, as well as explore how reserves could be used to provide rate stability to customers.
BPA has proposed a financial reserves surcharge which would be implemented if either business line’s financial reserves fell below 60 days cash on hand. This proposal would help rebuild Power’s reserves, provide rate stability and be simple to implement. Based on current financial reserves positions, Power customers would see a small rate increase in FY 2020 while Transmission customers would see no rate impact.
BPA is incorporating comments that were submitted after the March 20 workshop and will present a draft proposal at the April 20 workshop. Previous meeting materials and model results are available here.
BPA committed to creating a Leverage Policy in the plans that would outline how it would achieve a debt-to-asset ratio of 75 to 85 percent within 10 years and 60 to 70 percent in the long-term. BPA as an agency had a debt-to-asset ratio of 90 percent as of Sept. 30, 2017. Lowering the amount BPA is leveraged will help to lower interest costs, support BPA’s strong credit ratings, maintain borrowing authority, and improve financial strength and flexibility.BPA has proposed a policy that would ensure the debt-to-asset ratio for each business line and the agency stays the same or improves in every rate period in order to achieve its debt-to-asset ratio targets. How this would be achieved, whether through tools like revenue financing or higher debt repayment, would be determined in the rate case process. Other tools, such as reduced capital investment and changing regulatory treatment of certain investments from capital to expense, would be determined in the IPR process.BPA is incorporating comments that were submitted after the March 20 meeting and will present a draft proposal at the April 20 workshop. Materials from past workshops are available here. Important dates
Quarterly Business Review and Quarterly Financial Package
The Quarterly Business Review is an hour-long webcast hosted by Administrator Elliot Mainzer and senior executives with briefings on the state of the business and updates from Finance, Power and Transmission leadership. This meeting was revamped as part of the strategic plan to increase agency accountability for delivering results. The QBRs will also include a rotating selection of important, relevant business initiatives or issues. The meetings are recorded and posted at a later date. More details, including materials from past meetings, are available on the QBR web page.The Quarterly Financial Package provides additional financial details including business line income statements, capital expenses, a forecast of end-of-year financial reserves and the forecast of the Slice true-up adjustment. The information is available on the financial overview web page.Important dates
*End-of-year reporting schedule may be different due to report timing. Dates are subject to change.