State of the Bonneville Power Administration 2014 Greg

State of the Bonneville Power Administration 2014 Greg Delwiche, BPA Deputy Administrator

Rates – Overview Filing FY 2016 -2017 power and transmission rate proposal in mid-Nov. • • Importance of managing our cost structure Essential our rates remain competitive Transmission rate increase drivers include: • • Increased capital-related costs to sustain an aging transmission system, and Increased capital-related costs to expand the transmission system to meet regional needs. Preliminary rate effect: • • • In April, we indicated that the Power rates could increase by 8. 7 percent for the next rate period and Transmission rates could increase by 6. 1 percent. As a result of Energy Northwest debt optimization, the Power rate increase may now be slightly less than 7 percent. The Transmission rate increase is currently estimated to be around 5. 5 percent. Power rate increase drivers include: • • • Increased program expenses to operate and maintain the federal hydro system and to meet BPA’s fish and wildlife obligations. Increased principal and interest payments associated with past capital spending. Increased Residential Exchange commitments and potential for other Rate Case drivers. 2

FCRPS Modified Net Revenues 3

Climate Change: 2013 -14 • New IPCC effort nearing completion • Summary Report: October, 2014 – Preliminary report published September, 2013 – Already receiving international attention (e. g. last week’s UN Global Climate Summit) • Numerous regional and national studies underway using new global climate models, including studies funded by BPA and other regional partners 4

Preliminary Findings Statements International Scientific Consensus IPCC-4 (2007) IPCC-5 (2014) The earth's atmosphere is warming because of increasing greenhouse gases Unequivocal Human activity is causing the warming Very likely Extremely likely Sea level rise is occurring due to global warming Likely Very Likely Sea levels will rise 0. 3 -0. 8 m by 2100 Possible Likely Heat waves have increased due to global warming Very likely Likely Droughts have increased due to global warming Likely in some areas Extreme precipitation events will increase and intensify Very likely Likely Temperature forecast level of confidence at global scales High Temperature forecast confidence at regional scales Low-moderate Moderate Precipitation forecast level of confidence at global scales Low Moderate Precipitation forecast level of confidence at regional scales Low

IPCC 2013 -14 and Pacific NW • Latest projections are a little warmer in the Pacific Northwest (0. 6°C/1°F) than previous studies • Latest projections still have a large range of possible annual precipitation, but with a very slight upward trend (+4%) • BPA-Corp-Reclamation 2009 -11 study results were good, but new one will factor in the warmer and slightly wetter data • There may be a wider range of uncertainty in streamflows (Rupp, et al. , 2013)

Navigation Considerations • Upstream navigation channel would continue due to existence of dams • Lower Columbia late summer/autumn low flow/stage period is likely to become longer (i. e. July. November) – Possible need for more lower river dredging • Sea level rise likely to affect river, especially closer to the coast

Columbia River ESA Biological Opinion • • Updated Biological Opinion completed in January NOAA confirmed Action Agencies on track for Bi. Op performance standards for hydro and habitat and the hydro system is meeting its ESA obligations Litigation has been filed in Federal District Court of Oregon and oral argument scheduled for June, 2015 Continue to focus on “All-H” 2014 Bi. Op implementation with effective partnerships across the region 8

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1, 434 Snake River sockeye returned to Redfish Lake as of mid-September. The highest return since the 1950 s. Redfish Lake

Snake River Fall Chinook Redds 2013: 6, 391 7000 6000 5000 4000 3000 2000 1000 0 1986 1991 1996 2001 2006 2011 Snake River fall chinook redds in the Clearwater River

Ben & Jerry’s Ice Cream Website – “What’s New? ” October 9, 2014 • Here at Ben & Jerry’s we are constantly inspired by other values-led businesses. • Patagonia has been a pioneer in this space, and has created an organization built upon an appreciation and respect for outdoor recreation and the environment. • “Dam-busting” is one of the issues Patagonia has tackled for over 30 years … they’ve been openly involved with various grassroots efforts and dam removal campaigns. • Earlier this year, Patagonia released Dam. Nation, a documentary film, which takes a deep dive into America’s ‘deadbeat’ dams. • For communities that depend on river ecosystems—many Native American, fishing, and recreation communities, namely—damming rivers and streams has devastating consequences. • “With the film, we’re saying, let’s pay attention, and let’s specifically take out the four dams on the lower Snake River. This is sort of the holy grail of dam removal. At the moment. ” • People interested in lending their voice to the dam removal campaign can sign Patagonia’s petition, which will be sent to the Obama Administration and environmental leaders the NOAA Fisheries and the Army Corps, among others. 12

Columbia River Treaty The U. S. Entity final recommendation was sent to the U. S. Department of State on Dec. 13, 2013. The final recommendation supports a modernized Treaty that would simultaneously: • • Better address the region’s interest in a reliable and economically sustainable hydropower system and reflect a more reasonable assessment of the value of coordinated power operations with Canada; Continue to provide a similar level of flood risk management to protect public safety and the region’s economy; Include ecosystem-based function as one of the primary purposes of the Treaty; and Create flexibility within the Treaty to respond to climate change, changing water supply needs and other potential future changes in system operations while continuing to meet authorized purposes such as navigation and irrigation. 13

Columbia River Treaty Status of U. S. Entity Regional Recommendation • • • The U. S. Government has begun to engage internally to deliberate on the issues surrounding the Treaty The Administration’s consultation process has begun and is gathering input from various Federal agencies States, Tribes and other stakeholders can continue to share their perspectives, through the relevant agencies, on renegotiating the Treaty 14

Northwest Power Pool Initiative • • • 19 utilities funding Phase 3 tasks through 2014 Developing transmission/generation visibility tools Exploring the potential for a sub-hourly energy imbalance market (“SCED” or “EIM”) within the Pacific Northwest Need to demonstrate that regional reliability/efficiency benefits outweigh costs Maintain BPA’s operational independence and respect for non-jurisdictional status BPA continues to cooperate with California ISO - Pacifi. Corp EIM to assure no negative impacts to BPA operations, but is focused on the Northwest Power Pool 15

Human Capital Management • • • The Department of Energy reinstated all of BPA’s delegated human resource authorities on Sept. 30, 2014. This reinstatement brings to closure 13 months of extensive work to complete the “Get Well Plan” and to re-establish a fully compliant, high performing human resource function at BPA. Reconstruction results: üfinished 3 months ahead of schedule; üpriority placements can only come from external cases which we had 403, of those, only 9% (or 35 cases) yielded priority placements; üthose 35 cases resulted in 135 potential priority placements and at this time it is estimated that approximately half (70) will come on board (46 have accepted, 25 are still in process and 64 have declined). 16

Questions? 17