BPA has announced its upcoming wholesale rates. The impacts vary by utility - UEC will pay an estimated 2.5 percent less for wholesale power and 8.5 percent more for transmission services. (Transmission rates, generally BPA’s cost to deliver power over its lines to our system, have a lesser impact on our bottom line than power rates.)
This legacy power we receive from BPA – power from McNary and other dams and the nuclear generating station at Richland – goes toward serving the vast majority of our 10,700 members.
We also buy a higher “tier” of power from BPA, as well as purchasing power in the open market. Those additional sources of wholesale power mainly serve our very largest industrial loads and continuing growth in our community from new homes, businesses and agriculture.
For each source of wholesale power we buy, we have strategies to lessen the potential impacts of higher prices, all with the goal of stabilizing rates.
As the summer progresses, we are considering the impact of upcoming wholesale costs on the retail rates we charge you. It is a critical decision, as 75 cents out of every $1 in revenue we receive goes to pay for the wholesale power we deliver to you.
The cost of wholesale power is a main driver of rates, but not the only driver. The other costs of serving you – substations, poles, wires, bucket trucks, office buildings, labor, insurance, government regulations and all other expenses – are variable by utility, and each has to account for them in their rates.
Utilities do this with the help of a cost-of-service study, which UEC is now undergoing. Our study will outline costs needed to serve each customer class. The study seeks to balance cost recovery among customer classes, with a goal of minimizing one class subsidizing the others.
Our Board will consider the cost-of-service study, as well as management recommendations, and decide this fall whether a rate adjustment is needed for 2022. As always, the objective will be to provide high quality service at the best value to you.