Finance

BPA said negative revenue due to high market prices and dry conditions

BPA said negative revenue due to high market prices and dry conditions
(photo courtesy BPA)

The Bonneville Power Administration has released its second official forecast of the expected financial performance for fiscal year 2024.

BPA markets power from 31 federal dams across the U.S. Pacific Northwest.

Dry conditions and increased power purchases made during the January cold snap have resulted in agency net revenues of -$280 million, which is $375 million below the financial performance target.

Power Services’ net revenue forecast is -$285 million, which is $385 million below agency targets. Higher power purchase expenses are the main driver.

Transmission Services’ net revenues are forecast to be $1 million, which is $5 million above target. Increased operating revenues were offset by higher operating expenses and cost pressures related to commercial activities.

“Record low generation combined with record market prices have made this a challenging year from a financial standpoint,” said Marcus Harris, BPA’s executive vice president and chief financial officer. “Despite these challenges, the financial measures we have put in place have positioned us to meet our reserves targets. Through these first two quarters, we continue to execute on all financial plan targets except for net revenue as a result of significant power purchase expense.”

Agency financial reserves for risk are forecast to be $720 million at the end of the fiscal year, a decrease of $567 million from the prior year. BPA forecasts ending the year with 97 days cash on hand, which exceeds BPA’s minimum threshold of 60 days.

BPA’s Quarterly Business Review is a forum that started in 2008 to share financial results and provide updates on major spending areas like proposed capital projects in order to provide more visibility on budgets and an opportunity for stakeholder input. Based on feedback from its customers, in fiscal year 2018, the QBR switched from a heavy focus on financial reporting to a briefing on the state of the business.

In March 2024, Hydro Review reported that BPA released its final Provider of Choice Policy, which captures its policies, products and services for utility customers in new long-term wholesale electric power contracts beginning in 2028.