McMinnVille Water & Light reports BPA price shock, transformer purchases and facility plans

McMinnVille Water & Light General Manager John Dietz briefed the council on capital and operational work, saying the utility faces higher power and transmission costs from the Bonneville Power Administration (BPA), is buying three replacement substation transformers, and is advancing a new operations facility while continuing water‑main replacements and transmission pole upgrades.

Dietz told the council that BPA’s upcoming rate change will raise power costs by about 8 percent and transmission costs by about 18 percent starting Oct. 1; Water & Light staff estimate this will increase the utility’s wholesale power bill by roughly $3 million to $4 million annually. Dietz said BPA purchases represent about 70 percent of the electric system’s supply cost and that total BPA‑related expenditures are approximately $32–$34 million of a roughly $46 million total supply cost figure discussed in the presentation.

To respond to equipment aging and resilience needs, the utility commission approved purchases of three substation transformers for just under $5 million total. Dietz said the transformers ordered are replacements for the system’s oldest units and have long manufacturer lead times (about 52 months), and staff are working with suppliers to shorten delivery toward a 2027 in‑service target. Two of the transformers are allocated to the Windeshire substation to support Cascade Steel service banks 3 and 4.

Dietz also described a planned new operations and warehouse facility. The project has completed schematic design and is in the design phase; staff expect a rough order‑of‑magnitude estimate to arrive soon and are using a construction manager/general contractor (CMGC) procurement approach. Dietz said the utility is exploring mass‑plywood construction using a portion of the utility’s sustainable watershed timber yield for panels and noted local manufacturer interest.

On distribution and transmission work, Dietz said the utility is replacing older 115 kV transmission line poles along a corridor between Baker Creek and Bertano Lane and expects to complete multi‑year pole replacements by about 2028–2029. The replacement program includes using self‑supporting steel corner structures for increased resiliency.

Water operations updates and other items

Dietz reported water main replacement work on 7th Street to replace ductile iron pipe and said crew planning targets additional cast‑iron replacements (after a cluster of four full‑circle breaks) for next year. He said the utility conducts an annual watershed tour and has held a second tour for legislators to show the steel mill and electric infrastructure.

Rate and contract timing

Commissioners decided to hold customer rate increases below 5 percent in the near term by phasing the BPA‑related cost pressure across the remaining three years of the current rate period. Dietz said the utility will enter a new BPA provider‑of‑choice contract that begins Oct. 1, 2028; the commission expects to sign the local contract in October or November and BPA will complete its signature in December. Dietz also said the utility is targeting a new rate period and continuing to manage transformer lead times and supply pressures driven by global material indices.

What the council was told about timing and next steps

Dietz said the new operations facility could begin construction as early as next summer if budget and procurement proceed on schedule; using an off‑site temporary location during construction could shorten construction duration from about 18 months to roughly 11 months. The transformer delivery schedule and BPA contract negotiations will affect longer‑term rate planning. Dietz also described workforce and resiliency actions including increased vegetation trimming, a second brush crew, storm stock materials and mutual‑aid participation planning for winter storms.