A sale of Bonneville Power Administration-supported bonds earlier this month by Energy Northwest should help BPA lower a planned rate increase that goes into effect late next year.
BPA had planned to increase its rates 8 percent for the upcoming two-year rate period beginning in October 2015, but scaled that back to 7 percent partly in response to the Energy Northwest bond sale, said BPA spokesman Mike Hansen.
The bond sale was the first of a potentially larger effort that could save BPA ratepayers as much as $1.8 billion in gross interest savings and restore up to $1.2 billion of BPA’s U.S. Treasury borrowing authority through 2044, according to a press release.
Energy Northwest sold the bonds on Aug. 5 to refinance about $321 million of outstanding regional cooperation debt associated with the never-completed nuclear Projects 1 and 3. Debt that was due to be repaid this year can be repaid between 2025 and 2028.
Regional cooperation debt refers to existing debt associated with the Columbia Generating Station and Projects 1 and 3 that also serves as a regional financial resource.
The bond sale is set to close Thursday. John Dobken, a senior public affairs analyst for Energy Northwest, said most of the savings should be realized through reduced interest rates. The region should see about $135 million in present-value savings.
The bond sale means that amounts recovered in BPA’s rates to pay Energy Northwest principal will instead be available to pay off similar amounts of more expensive federal debt, Hansen said. The new Energy Northwest regional cooperation bonds have a true interest cost of 3.17 percent.
This is the first of several potential bond sales that should help generate the $1.8 billion in gross interest savings BPA hopes for.
“If we do all of the refinancing, it allows us to pay off that Treasury debt, creating more opportunities for us to borrow in the future,” Hansen said.
Similar efforts in the past helped BPA preserve and restore about $2 billion in Treasury borrowing power and saved about $500 million in interest under BPA’s Debt Optimization Program.
-- Drew Foster: 509-582-1513; email@example.com