Understanding the Rising Cost of Electricity

Columbia Rural Electric Association (CREA) is committed to providing safe, reliable, and affordable electricity to our members. Beginning this fall, the Bonneville Power Administration—which currently supplies nearly all of Columbia REA’s power—will increase its wholesale power and transmission rates. This decision, made through BPA’s regular rate-setting process, will increase the cost of electricity for all public power utilities across the Northwest. CREA will continue to keep you informed and will work diligently to manage costs while maintaining the high-quality service you expect.

What The 2025 Bonneville Power Rate Increase Means for You

Some of the main drivers of electricity costs are the wholesale rates set by the Bonneville Power Administration. BPA recently finalized its rate case, setting the wholesale power and transmission rates it will charge electric cooperatives and other power utilities over the next 3 years.

Why Are BPA Rates Increasing?

The 2025 rate increase is driven by several key factors. First, rising operational costs are putting pressure on BPA. Maintaining and modernizing the region’s expansive hydroelectric dams and transmission infrastructure is becoming more expensive, and those costs are being reflected in new rate structures.

In addition, the new rate structure will enable the advancement of critical initiatives to meet customers’ needs and support national priorities for more abundant, reliable, and secure energy. BPA is committing resources to advance major power and transmission projects, bolster cybersecurity measures, and improve the overall resilience of the power grid. These proactive steps are essential for keeping power delivery safe and consistent.

Finally, market and environmental pressures are contributing to higher costs. Changing regulations, clean energy mandates, and volatility in the energy market all increase the cost of doing business, which ultimately impacts the rates passed down to utilities.

Rate Impact on Columbia REA

The combined cost of Columbia REA’s Tier 1 and Tier 2 power is expected to rise by 3.3%, while the cost to deliver that power over transmission lines is projected to increase by 13.5%. These new BPA rates went into effect on October 1 and will remain in place through September 30, 2028.

Understanding Tier 1 & Tier 2 Power Rates

Tier 1 power is the most affordable and makes up the majority of Columbia REA’s power supply. It comes primarily from BPA’s existing federal resources, like hydropower from the Columbia-Snake River System and nuclear energy from the Columbia Generating Station.

Tier 2 power is used when a utility needs more electricity than its allocated Tier 1 amount. Tier 2 power comes from additional, often more expensive sources. Utilities that use Tier 2 power pay a higher cost to meet additional demand over and above what is covered by Tier 1 power. This is 1 reason why we talk so much about energy efficiency programs and rebates and other ways to use less energy in your homes and businesses; the less electricity Columbia REA members use, the less Tier 2 power Columbia REA needs to purchase.

Columbia REA’s Advocacy Efforts

Columbia REA actively engaged in BPA’s recent rate case through its membership in the Public Power Council and Northwest Requirements Utilities. These organizations—representing not-for-profit, consumer-owned utilities like Columbia REA—played a critical role in pushing back on BPA’s initial proposal, which called for much steeper rate increases.

Thanks to coordinated advocacy and strong member participation, PPC helped secure roughly $45 million in annual reductions to BPA’s proposed power and transmission costs. Also, NRU achieved over $18 million in annual savings for its members by securing more favorable Tier 1 power and transmission rates. These efforts directly contributed to lowering the final rate impacts across the region, including a significantly reduced rate increase for Columbia REA.

This outcome underscores the importance of Columbia REA’s voice in regional policy discussions and our ongoing commitment to advocating for safe, affordable, reliable power on behalf of our members.

The Impact of Inflation on Electricity Costs

Broader economic conditions— particularly inflation—have significantly increased the cost of providing electricity. Rising prices for fuel, labor, and other essential services continue to drive up Columbia REA’s operational expenses, despite our ongoing efforts to manage costs. In addition, the prices of critical infrastructure components such as transformers, power poles, and wire have surged in recent years due to supply chain disruptions, material shortages, and increased nationwide demand. For example, the cost of line transformers has increased by 126% over the past 5 years.

What Does This Mean for Our Members?

While Columbia REA works diligently to manage costs, BPA’s wholesale rate increase, combined with the continued rise in inflation, may drive higher retail electric rates for members beginning in fiscal year 2026 and likely continuing through the remainder of the 3-year rate period and beyond.

Columbia REA will continue to focus on system upgrades, safety, and wildfire mitigation. We must keep the health of our system in the best shape possible to avoid costly repairs, safety concerns, and outages.

Our energy efficiency team will continue to help members save on energy costs through incentives for efficiency upgrades to homes and businesses— and it will guide members through the process from start to finish for the most energy savings.

Despite the upcoming increase, BPA’s electricity—sourced primarily from clean, renewable hydropower—remains 1 of the most affordable and reliable energy sources in the nation. According to the U.S. Energy Information Administration, the national average residential electricity rate in 2024 was 16.48 cents per kilowatt-hour. In comparison, Washington’s average was 12.2 cents, and Columbia REA members pay just 9.8 cents. This places Columbia REA among the most affordable electric utilities both statewide and nationwide.

As a cooperative, we do not set rates to generate a profit. Columbia REA remains committed to transparency, cost control, and maintaining the infrastructure necessary to continue providing safe, reliable, and affordable power to our members.