To say 2020 has been a tumultuous year is an understatement. Still, Bonneville Power Administration’s fiscal year 2020 annual report shows the agency continued to deliver on its mission and strategic goals. The report, entitled “Resilience, Responsiveness and Results,” reflects not only the agency’s strong, reliable performance in an otherwise uncertain year, but also demonstrates that BPA’s financial plan is working.
“The global pandemic and historic regional wildfires in FY 2020 presented BPA with unprecedented challenges, operationally and financially,” said John Hairston, BPA’s acting administrator and CEO. “Through the perseverance of our workforce and the strategic and financial plans that kept us on track, we met these challenges and maintained our fiscal health. We will continue to make sound business decisions to maintain our financial resiliency while being a responsive business partner.”
Bonneville’s FY 20 financial performance exceeded targets established in the BP-20 Rate Case. The agency’s fourth quarter performance shows it ended the year with net revenues of $246 million, which is $233 million better than the rate case expectation. This is largely due to higher than expected revenues from secondary sales during heat waves in the summer months.
Power Services’ lower expenses and higher revenues resulted in net revenues of $255 million for this fiscal year, which is $208 million better than the rate case projection. Transmission Services’ lower expenses and revenues resulted in net revenues of negative $7 million, which is $29 million better than our rate case projection.
At the end of FY 20, BPA's days cash on hand was 113 days, with both Power and Transmission well above the 60 days threshold set in the Financial Reserves Policy. Because both the agency and Transmission exceeded their upper thresholds, the Transmission Reserves Distribution Clause has triggered for FY 21 application. The RDC allows the administrator to repurpose financial reserves for high value purposes, including debt reduction, incremental capital investment, rate reduction through a dividend distribution, or any other business-line-specific purpose determined by the administrator.
The RDC for Transmission was triggered in the range of $65 million to $80 million. BPA will share its intent for repurposing these reserves in November, followed by a comment period before the administrator makes a final decision. BPA will notify customers of the final decision no later than Dec. 15.
BPA maintained high investment grade credit ratings from its rating agencies in FY 20, and was financially stable enough to suspend Power’s Financial Reserves Policy surcharge to help customers through the COVID-19 pandemic. The pandemic continues to create significant challenges and uncertainties for utilities across the Pacific Northwest. The suspension of the FRP surcharge in June, when combined with extended payment options on a case-by-case basis, provided rate relief to power customers of about $3 million per month for the remainder of FY 2020 and avoided any potential of the surcharge triggering for FY 2021.
A devastating wildfire season had its own impacts on BPA and its customers, and will continue to impact fiscal year 2021. Multiple transmission lines sustained damage, but there were no reported damages to substation facilities. Most repairs qualify as capital replacements estimated at $5.5 million.
Power facilities operated by the U.S. Army Corps of Engineers also sustained damage to powerhouse windows, roofs, ATVs and communication equipment. The estimated cost of repairs ranges from $4 million to $8 million for the power portion, which will increase pressure on FY 21 budget levels.
Due to the COVID-19 pandemic impacts and a need for more budget flexibility while still managing to rate case commitments, BPA is carrying over $27 million of FY 20 department budgets into FY 21.
Hairston and Chief Financial Officer Michelle Manary will provide an overview of BPA’s FY 2020 performance at the Nov. 17 Quarterly Business Review. A recording of the webcast will be available after the meeting