BPA implements financial reserves surcharge for Power customer

BPA implements financial reserves surcharge for Power customer

December 18, 2025

The Bonneville Power Administration is implementing a $40 million surcharge to power rates effective now through Sept. 2026 to rebuild financial reserves depleted by operational and financial challenges posed by three consecutive low-water years. The surcharge results in an annual average effective rate increase of 2.2% for non-Slice Tier 1 rates.

BPA established the Financial Reserves Policy and its related mechanisms to maintain a prudent level of financial reserves consistent with sound business principles and to promote rate stability over the long term for ratepayers. This policy and BPA's strict cost-management efforts have resulted in rates that are flat or below national inflation over the previous decade.

"We know that a surcharge was unexpected by our ratepayers," said John Hairston, BPA administrator and CEO. "Our third quarter forecast indicated a low probability of triggering a surcharge, but continued cost increases in power purchases, resulting from a third bad water year in a row, were the primary driver."

BPA's use of a financial reserves policy provides a consistent, transparent and financially sensible method for determining BPA's target ranges for financial reserves available for risk. The policy along with the tools used to maintain acceptable financial reserves levels are often cited by credit rating agencies as a reason for BPA's continued strong credit rating and overall fiscal health.

"We recognize this surcharge impacts our customers, and we are actively working to improve our forecasting and transparency," Hairston continued. "BPA is committing to leading a holistic reevaluation of our current risk mitigation measures, including surcharges, prior to our next rate case and leveraging the lessons learned from these three consecutive poor water years and their strain on the agency's financial reserves."

BPA has only triggered a power surcharge once before in 2020. Since then, BPA has provided rate reduction through its reserves distribution clause in 2022, 2023 and 2024, for a total dividend distribution of $529 million. These dividends help reduce mid-period rate pressure and keep the annual average rate change from 2020 to 2026 at 1.5%, significantly less than ongoing inflation in those years.

For more information on the power surcharge and its implementation, see the Administrator's Dec. 11 letter posted to the Risk Mechanisms & Rate Adjustments webpage.

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