The future of the Residential Exchange Program
Manager’s Article
MOST Missoula Electric Cooperative (MEC) members don’t spend much time thinking about federal power policy. Yet one of the Northwest’s most important energy programs, the Residential Exchange Program (REP), helps determine how the benefits of the region’s federal hydropower system are shared. The decisions being made today will have a direct impact on the long-term cost of electricity for cooperative members.
The REP was created by the Northwest Power Act of 1980. At the time, Congress recognized that some utilities had access to low-cost federal hydropower while others relied on more expensive power resources. The REP was designed to spread the economic benefits of federal hydropower more broadly across the Northwest.
In simple terms, the program allows residential and small farm customers served by higher-cost utilities to receive a share of the value created by the federal hydropower system. Bonneville Power Administration (BPA) administers the program as required under federal law, and today it affects millions of residential and farm consumers throughout the Pacific Northwest.
Why you should care
The Residential Exchange Program directly influences how the value of the federal Columbia River power system is distributed throughout the Northwest. Those financial transfers ultimately affect the cost of providing electricity.
MEC receives preference power from BPA, a benefit intended by Congress to help keep electricity affordable for consumer-owned utilities like electric cooperatives. Changes to the REP could alter how those federal power benefits are shared, potentially increasing costs that eventually flow through to cooperative members.
While the exact impacts will depend on future decisions, the dollars involved are significant. That makes it important for MEC to remain actively engaged in the process to protect the value of the federal power system for the members who own the cooperative.
Looking Ahead to 2028
The current Residential Exchange Program operates under a regional settlement agreement reached in 2012. That agreement expires on September 30, 2028, making the coming years critical for determining how the program will operate in the future.
Beginning in 2022, BPA facilitated discussions among public power utilities, investor-owned utilities and other stakeholders in hopes of reaching a new post-2028 settlement. Those negotiations did not produce an agreement. As a result, BPA shifted to a formal process to implement the REP through its policy and rate-setting proceedings.
Where Things Stand Today
In March 2026, BPA issued its Record of Decision establishing the new Residential Purchase and Sale Agreement that will take effect after September 30, 2028. Several investor-owned utilities have challenged that decision in the U.S. Court of Appeals for the Ninth Circuit.
Although the legal issues are technical, the outcome could have meaningful financial consequences for Northwest consumers. If the value of the federal hydropower system is redistributed differently, it could affect the cost of power for public power utilities such as MEC, and ultimately, the rates paid by our members.
Simply put, this case is about how the financial benefits of the Columbia River federal hydropower system are allocated. Those benefits can total hundreds of millions of dollars each year, making the outcome important for every electric consumer in the Northwest, including members of Missoula Electric Cooperative.
That being said, we will continue working alongside other consumer-owned utilities to ensure the Northwest Power Act is implemented as Congress intended, and that the benefits of the federal hydropower system remain available to the rural cooperative members it was created to serve.
