Unobligated balances protect power and transmission cost stability
FOR IMMEDIATE RELEASE: Dec.14, 2016
CONTACT: Teresa Plant, email@example.com or firstname.lastname@example.org; 720.962.7411
Lakewood, Colorado – Western Area Power Administration announces the latest evolution of its unobligated balances strategy – strengthening management controls and accounting for current business needs. These balances are a sustainable funding tool that help meet WAPA's core mission of providing safe, secure, reliable and affordable energy and transmission services to its customers at cost based rates consistent with sound business practices. More than 40 million homes and businesses across 15 states are served by WAPA customers.
Unobligated balances are reserve funds that allow WAPA to deliver on its round-the-clock core mission when faced with budget shortfalls, like continuing resolutions; adverse hydrological conditions, such as drought; and other operational emergencies. Carrying reserves for these purposes is a common business practice in the federal government and the broader electric utility industry. WAPA has used unobligated balances to operate and manage hydrological and financial risk since its inception 39 years ago.
"Our unobligated balances have no impact on the firm power and transmission rates WAPA customers pay," said WAPA's acting Chief Financial Officer Dennis Sullivan. "Instead, the reserve fund minimizes or prevents adverse impacts to our customers during these operating emergencies."
For WAPA, unobligated balances also support multi-year construction investments and provides scheduling flexibility with capital construction projects. WAPA's unobligated balances currently stand at $767 million.
A federal Government Accountability Office audit of this business practice in 2015 produced no significant findings. WAPA committed to finalize its unobligated balance strategy by year end. Implementation of that strategy is currently underway and includes:
- increasing ability to stabilize power rates due to drought conditions by reallocating $47 million to purchase power contingencies with a goal to reach optimal account levels by Fiscal Year 2020
- reducing capital construction unobligated balances by $116 million, including more than $100 million returned to Treasury in FY16
- returning $328 million to the Treasury Reclamation fund in FY16; previous five-year returns totaled $894 million
- adjusting annual Operation and Maintenance budgeting assumptions to better account for certain personnel costs
See the Unobligated Balances Fact Sheet for more or go to The Source for a presentation.
About WAPA: Western Area Power Administration annually markets and transmits more than 25,000 gigawatt hours of clean, renewable power from 57 hydroelectric powerplants owned and operated by the Bureau of Reclamation and the U.S. Army Corps of Engineers in 15 western and central states. It is part of the U.S. Department of Energy. Follow us on Twitter @WesternAreaPowr or visit the website at www.wapa.gov.