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BPA Plan Could Lower
Tri-City Electric Rates

by Chris Mulick
Tri-City Herald, February 12, 2008

How much would 22 million compact fluorescent bulbs cost?

A proposal to resolve a long-running dispute between public and private utilities over the federally operated Columbia River power system would trim electric rates in the Tri-Cities, but by how much isn't clear.

The plan floated by the Bonneville Power Administration last week would combine one-time cash payments to utilities plus a wholesale power rate cut of 4 percent on average the first year. But that's just one scenario being used to kick off negotiations with utilities.

"Basically this is a starting place," said BPA spokeswoman Katie Pruder. The final plan will take effect Oct. 1 and will address a 9th Circuit Court of Appeals ruling that BPA gave away too many benefits to private utilities in contracts that took effect in 2001 under the agency's Residential Exchange Program.

That program attempts to benefit residential and small farm customers of private utilities by exchanging higher-cost private utility power for lower-cost BPA power through cash payments.

But the court ruled last May that public utilities have been overpaying for BPA power since 2001. Bonneville immediately suspended the exchange payments to private utilities.

Those benefits amounted to $336 million a year to private utilities. BPA's new proposal would provide $250 million annually minus whatever is carved out each year and given to public utilities to settle the dispute.

Before the agency doles out money for public utility overpayments made prior to the court ruling, it hopes to distribute the $504 million it's been collecting since. Under the proposal released last week, that would amount to $315 million for public utilities and $189 million to private utilities, although near-term payments initially would be smaller for both.

The proposal then would dole out $620 million to public utilities in reduced rates for as long as 20 years to make up for overpayments from 2001 to 2007. The plan assumes $40 million would be available to offset electric rates in the first year, providing for an average wholesale rate cut of 4 percent.

That $40 million, and varying amounts in future years, would come right out of the $250 million provided to private utilities once Residential Exchange payments are resumed.

Didn't get all that? You're not the only one.

"The proposal is a little confusing to me at this point," said Franklin PUD Manager Jean Ryckman.

"I think part of it is not really clear," said Benton REA Manager Chuck Dawsey.

Ryckman worries the total being provided to public utilities is inadequate and wants to make sure they are paid a competitive interest rate. "Right now I'm not jumping for joy, but I'm still open to hearing more about the details," she said.

Dawsey also wants a more aggressive repayment schedule so ratepayers who were overcharged are the same ones who get the money back in the form of lower electric bills.

"That's probably a pretty naive thought but the sooner the money is returned the more likely it goes back to the right people," he said.

Related Pages:
BPA: Conservation Saved Enough to Power Small City by Michael Jamison, Missoulian, 1/20/8

Chris Mulick
BPA Plan Could Lower Tri-City Electric Rates
Tri-City Herald, February 12, 2008

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