The Bonneville Power Administration on Wednesday announced wholesale power and transmission rate increases that will take effect Oct. 1, but Flathead Electric Cooperative is spreading out the impact of higher power costs.

Flathead Electric imposed a 3.75 percent rate increase on customers last month in anticipation of BPA rate increases that come around every two years.

Co-op customers can expect another rate increase of 3 to 3.5 percent next June.

Ken Sugden, Flathead Electric’s general manager, said trustees decided that incremental, annual rate increases in June would help smooth the transition to higher power costs rather than imposing larger increases every other year in October, just before the winter months.

“We’re not going to raise rates in October, but we’ll get higher bills from Bonneville,” Sugden said.

The utility’s most recent rate increase amounts to an increase of less than $4.75 per month for most residential customers.

BPA announced that it is imposing a 9 percent average wholesale power rate increase and an 11 percent average transmission rate increase starting Oct. 1. The transmission rate increase is the first in six years.

Sugden said transmission charges account for about 10 percent of the co-op’s BPA costs. BPA’s total rate charges account for about 50 percent of Flathead Electric’s annual costs.

According to the BPA, this year’s rate increases are needed to support federal hydropower and transmission systems to “continue to reliably deliver carbon-free, affordable power to Northwest homes and businesses.”

“We recognize that rate increases are very challenging for customers, especially for those still in the throes of a slow economy,” BPA Acting Administrator Elliot Mainzer said. “But the increases are necessary so that we can preserve the long-term value of carbon-free federal generation and support the transmission lines that serve Northwest public utilities.”

The transmission rate increase stems from a growing construction program driven by the need to repair and replace aging infrastructure and increase spending on mandatory compliance and security requirements.

An average of $20 million per year in financial reserves are being used to offset rate increases that would otherwise be higher.

The wholesale power rate increase is due to higher costs of maintaining and operating the region’s federal hydropower system plus higher costs for funding long-term agreements for BPA’s fish and wildlife mitigation program.

Flathead Electric officials say about a third of every electric bill goes to the program, which is intended to make up for habitat losses from construction of federal dams.

BPA rates are developed every two years through a formal process that began last November when proposals were announced for the 2014 and 2015 fiscal years.

The new rates will affect utilities in the region differently, depending on the amount of power and the types of services that are purchased from BPA. Local utilities ultimately determine the impact of rate increases on individual businesses and residents.

The final rate proposal will be filed with the Federal Energy Regulatory Commission at the end of July to provide 60 days review and approval.

Reporter Jim Mann may be reached at 758-4407 or by email at jmann@dailyinterlake.com.