336 



rate case was that a discount was no longer necessary because 

 increased "[seasonality] would benefit irrigators sufficiently." ^ 



D. Seasonality of BPA Rates Was Greatest in 1979. 

 Seasonality, as it was applied by BPA in 1979, was not as favorable 

 to irrigators as the irrigation discount before 1974, but it did 

 roughly preserve the historic ratio between rates for summer only 

 irrigation usage and year around usage. In 1979 BPA's winter 

 energy rate was 1.9 mills/kWh and its summer energy rate was 1.0 

 mills/kWh (See Exhibit 1). Winter demand charges were $1.05 kW- 

 month and summer demand charges were $0.93 kW-month. 



Thus, the ratio between winter and summer energy rates 

 was almost 2 to 1 and the ratio of the winter demand charge to the 

 summer demand charge was 10 to 9. These ratios reflected the basic 

 fact that BPA's need to acquire resources to serve growing winter 

 loads was driving BPA's costs. Seasonality as applied in 1979 

 resulted in irrigators paying summertime rates of about 70 to 75 

 percent of the average rate for preference customers for year- 

 around usage. 



With the exception that BPA is now incurring substantial 

 annual costs for fish & wildlife (approximately $300 million per 

 year) which did not exist in 1979, it is true today, as it was in 

 1979, that the primary driver of BPA's costs is the need to acquire 

 capacity and energy resources to serve BPA's growing winter loads. 

 Recently, BPA's increasing costs has also included the cost of 

 planned transmission facilities to assure reliable service for 

 Puget Sound and Portland area peak loads in the winter. 



E. BPA Has Significantly Reduced Seasonalitv Since 1979. 

 Some winter peaking utilities have consistently objected to BPA's 

 increased seasonality. It causes greater costs to be passed 

 through to their retail consumers to pay for the increased cost of 

 BPA power during the winter period. Because of their low usage in 

 the summer, the increased cost of winter power was only partially 

 offset by lower costs during the summer. In addition, many 

 utilities had flat rates, or it was difficult to increase their 

 winter period retail rates enough to cover their increasing BPA 

 power purchase costs in the winter months. In other words, the 

 extent of BPA seasonality was causing some BPA customers to have 

 higher overall rates, or it was causing cash flow problems during 

 the winter period, or both. 



In response to these and other objections, BPA 

 consistently reduced the seasonality of its rates in rate cases 



The Record of Decision in the 1979 BPA rate case said, "BonneviUe considered a special rate to 

 irrigators to insure that the percentage increase in their power costs would not exceed the average increase 

 for all Bonneville's customers. Bonneville chose not to impleinent such a rate because the seasonal 

 differentials in the proposed rates would benefit irrigators sufficiently..." (pg. 13). 



