BPA releases first official forecast of expected financial performance for FY 2026

The Bonneville Power Administration’s first quarter financial forecast shows mixed results for the agency’s expected end-of-year performance. While the outlook is positive for most measures, agency net revenues currently fall short of the target for fiscal year 2026, and BPA’s debt-to-asset ratio is on track with caution.

The Q1 projection for end-of-year agency net revenues is $21 million below the target of $509 million – primarily driven by a dip in expected Transmission Services revenues due to customers deferring transmission service requests. Conversely, Power Services is currently on track to achieve its end-of-year net revenue target of $283 million; however, it is still early in the year.

While presenting BPA’s finances at the Feb. 12 Quarterly Business Review, Chief Finance Officer Tom McDonald underscored the uncertainty of the first quarter forecast. Factors such as water conditions and market prices may significantly change BPA’s net revenue picture and other financial results before the fiscal year end.

Chief Administrative Officer Robin Furrer, standing in for Administrator John Hairston, shared that BPA is closely monitoring Power’s net revenues and the variables that may impact it, including snowpack. From a hydropower operations standpoint, while snowpack is well below average in much of Oregon and Washington, conditions are significantly better above Grand Coulee, especially in southeast British Columbia and parts of Idaho and Montana.

“We expect the geographic diversity of the federal hydropower system will benefit us as we move through the year,” Furrer said.

BPA is also closely monitoring other possible risks for lost Power revenues, such as the outcome of litigation over Columbia River system operations. 

The agency’s metric for debt-to-asset ratio, also known as leverage, is at 79.5% in Q1 – one-tenth of a percent below the end-of-year target of 79.6% or less. The narrow margin prompted BPA to note it as on track with caution. Since 2018, BPA has consistently worked to reduce debt relative to the value of its revenue-generating assets. This progress has slowed in step with BPA’s increased investments in transmission expansion.

BPA projects an improved liquidity position for FY 2026 and currently expects to end the year with 75 to 95 days cash on hand, exceeding the target of at least 60 days. This translates to $607 million to $768 million in agency reserves for risk.

From the business line perspective, Power is estimated to end the year with reserves for risk between $381 million and $442 million, up from $270 million at the end of FY 2025. This forecast range is just above the lower threshold of the Financial Reserves Policy.

Transmission is forecast to end the year with reserves for risk between $227 million and $327 million, up from $220 million at the end of FY 2025. If Transmission ends the year at the high end of this range, the business line would exceed the Reserves Distribution Clause threshold. However, for the RDC to trigger for Transmission, the two-tier test must be met, which requires the agency reserves for risk to also exceed its upper threshold. The RDC allows the administrator to repurpose financial reserves for other high-value purposes that lower the business line’s revenue requirement, such as investments back into the business or distributions as rate reductions.

Also of note from the QBR, BPA shared a reminder that it will initiate a review of its Financial Plan policies. This critical undertaking is designed to enhance risk mitigation strategies and ensure alignment with BPA’s strategic objectives. The review process intends to draw valuable insights from the agency’s recent experience managing financial resilience through three consecutive challenging water years. Moreover, the review aims to optimize BPA’s financial framework for future uncertainties and for long-term stability. This proactive step underscores BPA’s commitment to prudent financial management and operational resilience.

View the detailed first quarter results on bpa.gov under the Quarterly Business Review page.