Power Supply

If you live in the Pacific Northwest, chances are you use electricity marketed and delivered by the Bonneville Power Administration - best known as BPA. BPA is a federal agency headquartered in Portland, Or, that markets wholesale electricity and transmission to the Pacific Northwest's public and private utilities as well as to some large industries.

BPA provides about half the electricity used in the Northwest and operates over three-fourths of the region's high-voltage transmission.

While BPA is part of the Department of Energy, it is not tax-supported through government appropriations. Instead, BPA recovers all of its costs through sales of electricity and transmission and repays the U.S. Treasury in full with interest for any money it borrows.

• About 80 percent of the power BPA sells is hydroelectric.
• BPA owns and operates about three-fourths of the high-voltage transmission in the Pacific Northwest.
• BPA has spent more than $8.7 billion since 1978 to support Northwest fish and wildlife recovery which includes more than $4.7 billion in energy purchases and loss of energy sales due to fish operations.
• Since 1981, BPA has added more than 900 average megawatts to its long-term power supply through its energy conservation programs.

Hydropower Facts

Hydropower has provided the Pacific Northwest with clean, renewable and affordable electricity since the early 1900s.

• Providing a renewable source of energy:
  • Hydropower is a clean, reusable source of electricity. It produces no emissions and its fuel (water) can be used at each downstream dam.
  • Hydropower is domestic. Our supply of water is continually replenished through rain and snowmelt. We are not dependent upon foreign fuel supplies and their possible interruption.
• Providing an affordable and efficient source of energy:
  • In the Northwest, electricity from hydropower typically costs $10 per megawatt hour to produce. This compares to $60, $45 and $25 per megawatt hour to produce electricity, respectively, at nuclear, coal and natural gas plants. To determine these price comparisons, planners calculate what it costs to build, maintain and operate these differing generation facilities.
  • Hydropower also is more efficient than any other form of electrical generation. It is capable of converting 90 percent of available energy into electricity. The best fossil fuel plant is only about 50 percent efficient.
  • Hydropower can easily respond to power needs by its ability to be turned on and off quickly. Other forms of electrical production, such as a coal power plant, require a great deal of time to start or stop producing electricity.

Tier 1 / HWM

The amount of power a utility purchases from Bonneville Power Administration (BPA) during a specified time period will be used to help set the High Water Mark (HWM) for that utility. This HWM will set the amount of power a utility can purchase from BPA at BPA's low-cost rate (Tier 1).

Up until now, BPA has been able to provide enough generation to serve the needs of utilities in the Northwest with the Federal based hydro system (FBS). Starting October 1, 2010, this low-cost source of power was no longer adequate to serve all of our needs. Rather than dilute the value of this low-cost resource, the BPA has decided to cap the amount of power utilities can buy from this system. This low-cost hydro is referred to in future rate cases as "Tier 1." The HWM we'll define as a utility's ability to buy power at the Tier 1 rate.

Tier 2 Facts

What is Tier 2?

For many years, OCEC has relied on the Bonneville Power Administration (BPA), to use the Federal Based Hydro System (FBS) to meet all of our power needs. Over the past few years, power demand has exceeded the FBS's ability to meet the needs of the northwest utilities. This has caused BPA to go into the market place to provide the needed generation. This inability to meet the demand was one of the big reasons for the huge price spikes the region endured in 2001.

Why Tier 2?

As BPA readies power sales contracts to offer utilities such as OCEC, for long-term service starting on October 1, 2011, BPA is trying to best determine how to accomplish its need to provide power, while preserving the value of the FBS. To this end, leaving the FBS as pure as possible (not augmenting other more expensive power sources) will help keep rates as low as possible.

BPA wants each utility to make its own resource decisions to serve the new load above the amount the FBS can provide. Keep in mind that BPA is willing to acquire the resources needed to meet our load, but the resources that BPA chooses may not be the ones each utility would have chosen on their own.