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Economic and dam related articles

Heat is On to Solve Utilities' Money Battle

by Bert Caldwell
The Spokesman-Review, August 5, 2007

Avista Utility customers saddled since June with a $6.69 addition to their monthly electric bills could get some relief before the start of the heating season if negotiators for the Northwest's public and investor-owned utilities can agree - for good - on how much power each group should get from the Bonneville Power Administration.

Larry La Bolle, Avista's director of federal and regional affairs, says a settlement could be reached despite reports no new meetings are scheduled. But he concedes that's the optimist in him talking. Side talks are going on, he says, and negativity sets the wrong tone.

La Bolle is a master of positivity. He managed the relicensing of Avista's Clark Fork River dams. More than 50 individuals and organizations participated in that successful effort.

The utility talks involve fewer negotiators, but a lot more money. And almost every resident of the Northwest has something at stake in a dispute that goes back 30 years, when utility managers realized the region was using up the last of its cheap hydropower. The Northwest Power Act of 1980 included a formula for dividing electricity generated by federal dams in the region, but the fighting never really ended. In fact, it escalated as private utilities like Avista got more Bonneville money, in lieu of power, at the expense of public utilities like Inland Power & Light Co.

Avista was receiving $20.1 million in so-called residential exchange money out of a total $300 million going to the residential and small farm customers of the Northwest's six private utilities, which deliver power to 60 percent of Northwest residents.

A May decision by the 9th U.S. Circuit Court of Appeals stopped the distribution. According to the judges, Bonneville has been playing games with the Power Act formula that is supposed to determine how much money should be paid the private utilities.

That led to the electricity rate increases for Avista - $6.03 per month in Idaho - and the other private utilities. The decision also triggered an appeal by the U.S. senators from Idaho, Oregon and Washington that the utilities work out their differences to assure the issue does not end up in Congress. Oregon Gov. Ted Kulongoski is demanding a resolution that restores residential exchange benefits to the 75 percent of Oregonians who are served by private power.

In Washington, a slight majority get their power from public utilities.

There's more than mere number crunching here, especially for Avista and Idaho Power, the two lowest-cost private utilities. If Bonneville were to apply the formula strictly as set forth in statute, they would lose all their residential exchange dollars to high-cost utilities. The negotiators agree that will not happen, but they have to be careful how they go about structuring a deal that requires the least tinkering with Power Act language.

La Bolle says the goal is "ratification" language that could be attached as a rider to another piece of legislation. The region's congressional delegation is willing to support the changes, he says, if public and private utilities endorse it unanimously.

"It's kind of a big step," La Bolle says but one that would ease much of the persistent tension that divides Northwest utilities.

Bonneville held a hearing Wednesday on the exchange program. The agency expected 100 to attend. Twice that number showed up. Although not a participant in the negotiations, Bonneville needs a resolution in order to proceed with the signing of new 20-year power contracts that will fundamentally change the way Northwest utilities acquire additional power.

Many left that chore to Bonneville, which sells 40 percent of all the electricity consumed in the region. But with all its hydropower and juice from the lone Northwest nuclear plant spoken for, new resources will be more costly. Utilities might be better off going their own way, or partnering to build new generating plants or wind farms, or improve conservation measures.

Meanwhile, a quick, equitable resolution to the residential exchange dispute would be helpful. Avista customers are paying more, but Inland and Kootenai Electric Cooperative members pay no less, with Bonneville holding the exchange money in escrow.

The status quo is doing nobody any good.

Related Pages:
Utilities, Consumers are Preventing Another Generation Gap by Bert Caldwell, The Spokesman-Review, 7/20/6

Bert Caldwell
Heat is On to Solve Utilities' Money Battle
The Spokesman-Review, August 5, 2007

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