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PUD Vote Short-circuits Settlement

by Christopher Schwarzen, Times Snohomish County bureau
Seattle Times - November 19, 2003

So no more rate reduction

EVERETT -- The Snohomish County Public Utility District (PUD) has refused to settle its lawsuit with the Bonneville Power Administration over rate subsidies, a move that effectively kills a proposed rate reduction for 72 Northwest public utilities next year.

Despite last-minute pleadings to delay action by Gov. Gary Locke and officials from Bonneville, the three-member PUD commission voted unanimously yesterday to reject a settlement that would have reduced wholesale federal energy rates by nearly 10 percent for public utilities in Washington, Oregon, Idaho and Montana.

Bonneville has been looking to settle a lawsuit filed in 2001 in which the 72 public utilities claimed the federal agency illegally offered energy and monetary rebates to private, investor-owned utilities such as Puget Sound Energy. But for the settlement to be binding, all 72 utilities had to sign. The PUD's rejection almost assuredly sends the lawsuit to federal court unless PUD commissioners reconsider their decision by a Jan. 24 deadline.

The public utilities, which have first crack at Bonneville's electricity, say the costs of energy and rebates during the 2001 energy crisis forced Bonneville to raise wholesale rates to public utilities such as the PUD. Those rate increases were passed on to consumers.

In exchange for agreeing to the settlement, Bonneville agreed to provide the public utilities with $500 million in rate reductions immediately and to find another $100 million in expense cuts next year. The reductions would have meant a refund of the 2.2 percent rate increase Bonneville approved in October and another 7.4 percent cut in wholesale rates.

Public utilities such as Tacoma Power had said the reductions were enough for them to consider the settlement, and several expressed disappointment yesterday at the PUD's decision.

"This settlement seemed like a reasonable compromise to bring some relief to the region," said Steve Klein, Tacoma Power's superintendent. "If (the PUD) opposes the settlement, then tell us what's wrong with it or create an alternative."

PUD officials said Bonneville's proposed settlement reductions would stabilize rates only during a three-year period. There is no assurance that rates won't rise again after 2006.

"This lawsuit is because of Bonneville's repugnant actions (in the past)," said Snohomish PUD Commissioner Dave Aldrich. "We've offered Bonneville a litany of suggestions by where they could substantially cut costs, but they've squandered those dollars."

The public utilities' lawsuit seeks more rate relief than the settlement has offered and stabilization of those rates over a longer period of time.

The PUD, which purchases about 80 percent of its energy from Bonneville, has pledged not to pass along rate increases next year to customers, but other utilities may not be able to do the same.

Locke, who supported the settlement along with governors from the other Northwest states, also expressed disappointment yesterday, according to spokesman Michael Marchand. Locke said in a letter to PUD officials Monday that rate reductions were needed to stimulate the Northwest economy and prevent business closures.

"He was hoping he would get a chance to talk to the commissioners before they went forward with litigation," said Marchand.

Bonneville Administrator Steve Wright said he was willing to discuss differences with PUD officials before the Jan. 24 settlement deadline.

"We urge Snohomish to reconsider, or at a minimum describe an alternative that is a better path," Wright said in a written statement.

Christopher Schwarzen
PUD Vote Short-circuits Settlement
Seattle Times Company, November 19, 2003

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