BONNERS FERRY — An amendment to the city's upcoming contract with the Bonneville Power Administration was approved by the Bonners Ferry City Council on Tuesday, Aug. 18.

The amendment adds definitions for terms included in the contract as well as the potential impact if the city adds a new resource during the next two years, City Administrator Mike Klaus told the council.

"A lot of it doesn't mean a whole lot to us but it is a required element of the amendment," Klaus said.

The motion was approved by the council with no additional comment with the council authorizing the mayor to sign the BPA contract amendment.

The amendment is part of an extension of the city's contract with BPA through 2044.

Electricity purchased from BPA is billed under two pricing tiers: Tier 1 and Tier 2. In Tier 1, utilities lock in a set amount of power from the existing federal system at a cost-based rate. Beyond that, Tier 2 rates are charged for energy that a utility obtains from the federal agency in addition to its contractual right to power at Tier 1 rates, BPA officials said on their website. 

The system can be explained using an analogy to a phone data plan: once someone uses their allotted data, any additional data costs significantly more. When the city of Bonners Ferry maxes out its Tier 1 allotment — which happens every month — it must pay the higher Tier 2 rate. 

Tier 1 costs have remained relatively stable in recent years. Tier 2 costs, however, have climbed sharply. BPA says Tier 2 rates “increased 83% to reflect much higher market energy prices in the last two years.” Because BPA does not own the electricity used to meet Tier 2 demand, agency officials said BPA must purchase that power from outside suppliers, whose prices have risen. 

These increasing Tier 2 prices have led to higher monthly bills for the city. In September 2023, Tier 2 rates were $33 per kilowatt hour. By October of this year, the rate had climbed to $70.66 per kilowatt-hour — more than double. That resulted in Bonners Ferry paying nearly $50,000 more this October than in September 2023 to BPA despite using less Tier 2 power. 

Recently, the costs increased to $70.66 per kilowatt hour. In September 2025, Tier 2 rates were $60.25, which means Tier 2 rates rose 17.3%. As a result, the city’s Tier 2 power costs increased from $82,000 to $101,000 in one month — nearly a $20,000 increase. 

BPA officials said the increasing volatility of power markets and the resultant higher risk premiums is behind the higher costs.

BPA is the only entity able to supply electricity to Bonners Ferry, Klaus said previously. The city’s only other source is the Moyie Dam, whose production varies depending on water levels. 

Among concerns raised by citizens at the Aug. 18 meeting was a change to the increased minimum of living spaces, which a resident said could hurt the construction of accessory dwelling units or smaller dwellings.

"It would price people out of doing things like a mother-in-law suite or ADU on their property where you could have a quality, small efficiency or maybe a one-bedroom type dwelling unit …," the man said. "It kind of goes against the Planning and Zoning stated goal of encouraging infill on underutilized properties or vacant lots."

The man told the council he questioned whether the city needed to set a limit when the proposed change would not affect many people.

"I'm not sure this is something we really need to limit against," he added.