PORTLAND – Billed at its creation as a “last resort” to which Bonneville Power Administration would turn only in the most severe economic circumstances, the safety net cost recovery clause (SN CRAC) came to life last week.

The agency proposed adding another 15 percent to rates already hit by two ongoing CRAC surcharges. BPA said adding the SN CRAC at this rate for three years would raise $900 million and bring BPA’s average priority firm (PF) rate to about $37 per megawatt/hour (MWh). If approved after a rate case that is set to begin March 17, the SN CRAC would take effect Oct. 1.

Paul Norman, senior VP of BPA’s Power Business Line, did not mince words about what the increase will mean for the region: “If it goes through, it will have damaging impacts on an economy that is already suffering.” He said the agency has been “doing little else over the last few months than trying to stave this off,” hoping the Northwest economy would begin to mend, “but we ran out of options. There will be economic impacts. Some businesses will find that this is the straw that breaks the camel’s back.”

Customers will be called to attend meetings over the next couple of weeks to address both cost and financial issues. BPA doesn’t normally allow discussion of costs simultaneously with rates. It is taking a different approach this time in response to customers’ strong desire to aggressively cut BPA’s costs.

There is also a possibility that further progress could be made before BPA publishes an initial rate proposal March 17. There is a huge revenue gap, “but there is still an opportunity to reduce costs and make [the gap] smaller,” Norman said. “We’re trying to set it up so we can continue to make progress on costs.”

The formal case is expected to end in mid-June , when BPA will issue a final record of decision and forward it to FERC for approval.

During the workshops prior to March 17, BPA will also discuss the rate design of the increase. Norman said it could be fixed at 15 percent each year or vary up or down, depending on water conditions or secondary power revenues. “All sorts of options are in play,” he said.