By Lisa Meiman
Western Area Power Administration is on track to fully expend the $500 million that the organization received from the Bipartisan Infrastructure Law to support more replacement power and transmission capacity purchases caused primarily by drought and increasing power market volatility.
“This was a singular but impactful step to support our customers during extreme weather and megadrought conditions,” said Administrator and CEO Tracey LeBeau. “We are collaborating closely with our customers, generating agencies, the Departments of Energy and Interior and members of Congress to explore and implement longer-term solutions.”
The funds, and the Purchase Power and Wheeling program
more broadly, support grid reliability and stabilize electric power rates for more than 700 not-for-profit utilities, Native American Tribes, federal and state agencies and other WAPA customers.
“This is a success story for the Bipartisan Infrastructure Law,” said Senior Vice President and Chief Financial Officer Michael Peterson. “This funding for WAPA’s purchase power and wheeling program was timely, tightly focused and well scoped to meet our incremental PPW program needs for fiscal years 2022 and 2023. Following passage of legislation in mid-November 2021, WAPA added the necessary governance and oversight for these specific funds by Jan. 1 to track the deployment, execution and repayment of these funds down to the penny.”
WAPA expects to deploy about 60% of this funding during fiscal year 2022, which ends September 30, with 40% to be deployed during the first three quarters of fiscal year 2023. WAPA expects to fully expend this funding by the end of September 2023.
WAPA also projects that more than half of the funds deployed will be repaid to the Treasury by September 2023, with the balance to be fully repaid in the years thereafter.
“We greatly appreciate the support we received to provide this funding,” said Peterson. “It delivered immediate relief for this fiscal year and next as we continue to collaborate with our customers and stakeholders on extreme weather and drought conditions. Absent this funding, WAPA’s near-term capacity to sustain PPW activities in support of our mission might have been in question.”
WAPA purchases power in the energy marketplace when hydropower is insufficient to fulfill WAPA’s contractual obligations to customers, most of whom are utilities serving millions of people in rural and traditionally underserved communities in the West. Wheeling refers to purchasing transmission capacity to facilitate the delivery of power to customers outside of WAPA’s high-voltage transmission system.
Although these purchases occur every day as part of WAPA’s normal operations, factors such as drought, extreme weather and rising energy prices have required WAPA to use greater amounts of PPW funding and reserves to cover the shortfall in hydropower.
As WAPA is an at-cost power provider and these costs are reimbursable, higher purchase power and wheeling costs cause upward pressure on power rates and must be repaid by customers.
Note: The author is a public affairs specialist.