Your Alternative Financing Questions Answered

February 28, 2003

Can you provide me with information about the DOE Bonneville Power Administration (BPA) financing mechanism?

The Bonneville Power Administration (BPA), one of DOE's power marketing agencies, provides a wide range of technical support and a variety of project financing options. BPA is especially successful in bundling small projects with a pool of funding to obtain more favorable interest rates and signing interagency agreements to initiate projects as small as $5,000. Agencies sign contracts with utilities as well as an agreement with BPA for the financing. BPA uses third-party financiers and establishes a pool of funds for contracts. Its financing program is available in most regions of the country.

BPA chooses Federal agency projects that cannot be served by customary financing methods. Because BPA uses government credit, interest rates are 150 to 180 basis points below private sector rates. BPA uses the lower rates to allow agencies with 10-year payment constraints to implement projects by adding lower financing costs, making the payback time acceptable.

BPA pools Federal agency financing requirements across regions, agencies, time periods, and technologies to get low cost financing from private sources. BPA's financing mechanism is flexible, which means that it can be mixed with agency funds, entrance fees, appropriations, utility incentives, and grants. The program can also be used for new construction, water conservation, and renewables projects with few constraints. Financing can be provided for up to 15 years, though payment terms of 2 to 12 years are preferred.

For additional information, please contact:

Frank Brown, Energy Efficiency Representative
Bonneville Power Administration
Seattle Customer Service Center — PNF
909 First Avenue, Suite 380
Seattle, WA 98104-3636
Phone: 206-220-6774

What questions do you need answered? FEMP wants to provide the most useful information possible, but we need your help to achieve this! Please submit your questions via e-mail to Tatiana Strajnic of FEMP.