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December Bills May be Cheap by Leif Nesheim The Daily World, November 14, 2008

The Grays Harbor PUD is working on a plan to eliminate the electricity charges on customers' December bills as a way of channeling back a refund from the Bonneville Power Administration.

Ratepayers would still have to pay taxes and fees. A typical residential PUD bill is about $100 a month, with taxes and fees accounting for about $35.

Meantime, PUD officials have learned that the BPA will be repaying the PUD about $17 million instead of the $8 million announced earlier.

The refund follows a dispute over BPA's "residential exchange program" that is designed to subsidize residential and small farm ratepayers of private utilities that don't have access to cheap federal hydropower from Bonneville's Columbia River dams.

The subsidy has come from public utilities such as Grays Harbor, which has fought bitterly against how the program has been administered.

The public utility district now expects a $17 million refund over the next six years, including an initial payment of $5 million received in October. That money will be used to drop electric charges from the December bills.

Future refunds will be used to keep rates lower.

The utility considered looking for a way to track down the customers who paid the subsidies from as far back as 2000, but dropped that plan as impractical.

"That's a heck of a lot better than $8 million," PUD Commissioner Jim Eddy said of the $17 million refund.

However, the amount is only about half what PUD officials believe Bonneville owes the utility district for the past subsidies.

Starting next year the PUD will receive another $3.2 million in reduced power bills from Bonneville as its share of the refund owed to Northwest public utility districts. The PUD will receive about $1.5 million a year in reduced bills in each of the following six years, PUD finance officer Doug Streeter said. The PUD initially thought it would receive the initial $5 million and a series of reduced annual discounts totaling just about $8.2 million.

Although PUD officials said they are glad to be receiving more than twice what they thought Bonneville would offer, they still believe the agency owes utility districts much more than it plans to pay.

Grays Harbor PUD paid about $4.5 million a year to Bonneville for the residential exchange program. According to the statutory formula, Grays Harbor should have been paying about $400,000 a year, PUD General Manager Rick Lovely said. That means Bonneville would owe the Grays Harbor PUD nearly $33 million, Lovely said.

He said the utility district plans to seek the rest of the money it believes it is owed and may go to court again if necessary.

In May 2007, the 9th U.S. Circuit Court of Appeals ordered Bonneville to determine a new rate structure and repay public utilities - including Grays Harbor PUD - money collected as part of the residential exchange program since 2000.

Though the $5 million payment for October 2006 through September 2008 comes relatively close to the PUD's calculation for that time period, the credit covering October 2001 through September 2006 is where "the big short" is, PUD Assistant General Manager Doug Smith said.

Bonneville determined that it overcharged the public utilities $767 million dollars. Part of Bonneville's decision re-establishes the residential exchange program. The agency's formula determines that private utility companies are owed about $250 million, of which $71 million would be withheld to repay public utility districts.

Bonneville's solution was developed based on recommendations from a consortium of private and public power utilities, Bonneville Administrator Steve Wright said in a September statement explaining the payments. The difficulty was making key elements of their recommendations fit the requirements of the law, he said. Grays Harbor PUD wasn't one of the utilities agreeing to the compromise.

The federal agency offered interim payments last spring that the PUD turned down under the premise that accepting the money would have prevented any further legal challenges. Taking the money now shouldn't negate the PUD's right to seek the rest of the money it believes it is owed, Lovely said.