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BPA: On Course To Settle Legal Dispute,
Lower Elec Rates

by Jessica Berthold, Dow Jones Newswire
Wall Street Journal - October 7, 2003

LOS ANGELES -- The Bonneville Power Administration is on track to secure by Oct. 15 the signatures it needs for a legal settlement that would lead to lower electricity rates, said BPA spokesman Mike Hansen Tuesday.

The administration raised rates by 2.2% a week ago, but will issue rebates for that increase and lower rates by another 7.7%, if it can resolve a legal dispute with the utilities to which it sells wholesale power, Hansen said.

The administration markets power from federal dams in the Pacific Northwest. About 135 utilities in the Northwest buy power from the BPA.

The legal dispute centers around Bonneville's practice of giving a financial incentive to investor-owned utilities, rather than selling them cheap power. Municipal utilities, which buy the cheap power, feel the incentive is too high.

As reported, the proposed settlement would have private utilities postpone receipt of a combined $75 million a year in financial incentives from 2004 through 2006, though the money would eventually be disbursed with interest.

Parties representing the BPA, investor-owned utilities and public utilities seem willing to sign the settlement agreement by Oct. 15, the deadline by which the signatures are required for the deal to proceed, Hansen said.

The remaining public utilities then have 90 days to sign the settlement. After that, the investor-owned utilities have 10 days to review the signatures, do a risk assessment, and decide if they want to move forward.

The BPA and the public utilities then have a final 10 days to review the deal, Hansen said. There are more than 60 parties to the case.

"If, after the 110 days, it's all still a go, then the rate decrease will take place immediately, and there will be rebates associated with the Oct. 1 rate increase," Hansen said.

The BPA will be able to give rebates of about $12 million a month if a settlement is signed, the administration has said.

Last February, the BPA expected it would need to raise rates by 15%. But thanks to relief from a dry spell that helped fill hydropower dams, cost-cutting and a settlement over contracts with bankrupt Enron Corp. (ENRNQ), Bonneville was able to cut that estimate to 2.2%.

Jessica Berthold, Dow Jones Newswire
BPA: On Course To Settle Legal Dispute, Lower Elec Rates
Wall Street Journal, October 7, 2003

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