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BPA forecasts $221 million third‑quarter shortfall, cites low hydro and high market prices
Summary
BPA's CFO said agency net revenue is forecast at negative $221 million for the third quarter, driven by record‑low hydro output, high market prices and a near‑$300 million January cold‑snap loss; reserves and liquidity remain a focus as BPA monitors possible Reserve Distribution Clause outcomes.
The Bonneville Power Administration forecast a third‑quarter agency net revenue shortfall of $221 million, Executive Vice President and Chief Financial Officer Marcus Harris said during BPA's third‑quarter Quarterly Business Review.
Harris told attendees BPA's net revenue forecast is roughly $316 million below its KPI target, a gap driven by record‑low hydro generation, high market prices and an almost $300 million loss from a January cold snap. "We are still feeling the financial impacts of the record low hydro generation, high market prices and the near $300 million loss from the January cold snap," Harris said.
The shortfall reflects a combination of positive and negative drivers: higher operating revenues from trading and favorable market prices helped, while non‑IPR power purchase expenses were well above target. Harris said IPR operating expenses are running below target in part because of lower renewable and conservation purchases and reduced personnel costs, but the gains were more than offset by increased power purchases.
BPA's agency reserves are forecast to end the year at about $732 million, down $555 million from the prior year but modestly higher than the Q2 forecast. Harris gave an operational liquidity snapshot: the agency as a whole is forecast to end the year with about 100 days cash on hand, Power with about 92 days and Transmission about 12 days. He said modeled probabilities for Reserve Distribution Clause (RDC) events are low for Power (under 1%) but higher for Transmission (about 67% modeled probability with an expected value of $29 million).
On financing, Harris said BPA maintains strong investment‑grade ratings (Moody's A1, Fitch AA, S&P AA‑) and summarized recent debt activity, including tax‑exempt and taxable offerings and a green bond pricing. "Our strong credit ratings and heavy emphasis on investor outreach helped us achieve very competitive rates in both pricings despite some pretty significant market headwinds," he said.
Harris said BPA has not modeled a need to trigger an immediate cost‑recovery adjustment that would raise rates for customers but that the agency will continue to monitor liquidity and reserve positions into late August and early September before decisions on flexible debt payments are finalized.
BPA plans to publish the QBR slides and post responses to any submitted questions on its QBR web page; officials said they will continue to report on reserves and any material changes to the forecast at future briefings.
