Federal Electric Power:

Development of Bonneville Electricity Rates for the 1988-89 Period

RCED-88-126: Published: Jun 7, 1988. Publicly Released: Jun 7, 1988.

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In response to a congressional request, GAO reviewed the Bonneville Power Administration's (BPA) proposed utility rate increases for 1988 through 1989 to determine: (1) why BPA needed the increases; and (2) how BPA was able to limit the amount of the increase to 7.7 percent.

GAO found that BPA: (1) first proposed a 35-percent rate increase to meet operating costs, to offset declining sales revenues, and to ensure timely repayment of its Treasury obligations; (2) reduced the rate increase to 7.7 percent by revising its sales revenue projections for its direct service industries and customers, and modifying the costs associated with its risk-mitigation measures; and (3) intends to continue its joint budget reviews with customers and the public. GAO also found that including risk-mitigation measures in the rate proposal: (1) provided BPA with a mechanism to adjust its rates if future revenues do not meet projected levels; and (2) should ensure that BPA will be able to meet its Treasury obligations.

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