Bonneville Power Administration $15 Billion In Debt; No Customers For Peak Power, Salmon Runs Dying
Nearly a century ago, America embarked on a great social experiment in the Pacific Northwest, charging up the Columbia River and erecting dams. It worked. Construction jobs pulled the country out of the Great Depression. Cheap electricity spurred the growth of cities like Seattle, Portland and Boise. And hydropower fueled the military effort to defeat the spread of fascism in World War II.
Now the system is buckling. The Bonneville Power Administration, the independent federal agency that sells the electricity produced by the dams, is careening toward a financial cliff. BPA is $15 billion in debt, facing a rapidly changing energy market increasingly dominated by wind and solar and a desperate need to maintain aging infrastructure that's expected to cost $300 million to maintain and upgrade by 2023.
"If this were a private company, you would be shorting BPA," said Tony Jones, an economist at consulting firm Rocky Mountain Econometrics. "If it was a private-sector company, it would restructure. Or this would be a good time to declare bankruptcy." Hydropower no longer produces the region's cheapest electricity. In the past, the utility relied heavily on selling surplus power at high rates to states including California, often referred to as the utility's ATM. But starting around 2008, California invested in wind and solar, and soon it no longer needed BPA's power. Bonneville was left with virtually no customers for its extra power.
As a result, BPA's rates have risen 30% since 2008. BPA currently charges its utility customers nearly $36 per megawatt-hour. On the open market, they could buy electricity for $22. BPA has survived so far because it inked 20-year contracts with its utility customers in 2008, before California and others shifted to solar, wind and natural gas. But those agreements end in 2028, and if BPA doesn't come up with a plan, its customers will buy cheaper electricity elsewhere.
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