We are extremely fortunate at Coos-Curry Electric Cooperative to be the beneficiaries of the Federal Columbia River Power System (FCRPS), which consists of 31 federally owned hydroelectric dams within the Columbia and Snake River drainage. The Bonneville Power Administration was created to be the steward of the electricity generated by the FCPRS.

BPA markets and delivers this electricity across the Pacific Northwest to public power customers including municipalities, people’s utility districts and electric cooperatives, such as CCEC. For decades, there was an overabundance of low-cost FCRPS electricity, so BPA sold the surplus to large private customers in the region or exported it to markets outside the region, such as California.

Over time, public power customer loads have grown while the FCRPS remained essentially the same size. Responding to this dynamic, BPA initiated a two-tiered rate structure for their public power customers in 2011. BPA allocated to each public power customer a proportionate share of the FCRPS electricity and sold it at cost-based rates called Tier 1. When a BPA customer exceeds their Tier 1 allocation, they can buy Tier 2 power from BPA or get their own resources to meet their growing needs. Tier 2 is a market-based rate because BPA must purchase electricity from other generation sources to serve customer loads above what the FCRPS can generate.

For several years after BPA established tiered rates, Tier 1 and Tier 2 rates were nearly equal. That meant a BPA customer did not incur higher wholesale power costs as they experienced load growth above their Tier 1 allocation. However, in the past three years, Tier 2 rates have more than doubled Tier 1 rates. This is mostly because the development of new renewable generation has not kept up with the decommissioning of low-cost coalfired power plants. It is simple supply and demand—electricity supply is shrinking while demand is growing.

What does this mean for CCEC? CCEC’s load growth is minimal, and though we are reaching our BPA Tier 1 allocation, we have not yet exceeded it. So right now, CCEC is not exposed to the dramatic increase of BPA Tier 2 market-based rates.

CCEC is, however, experiencing the inflationary cost pressures influencing all aspects of our economy, including CCEC’s biggest cost drivers: labor, materials and BPA Tier 1 wholesale power. Read more about CCEC’s cost pressures on pages 4- 5.

Although CCEC is implementing a rate increase in March in response to inflationary pressures, we are fortunate not to be exposed to the dramatic cost increases of market-based wholesale power like many utilities serving fast-growing communities.