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Economic and dam related articles

Utilities/BPA Plan Would Reduce
BPA Costs by $200 Million

by CBB Staff
Columbia Basin Bulletin - April 16, 2004

Under a proposal announced today (April 16), the Bonneville Power Administration's costs would decrease while residential and small-farm customers of investor-owned utilities would get certainty about future benefits from the Federal Columbia River Power System.

A public comment period extends through May 14.

BPA, PacifiCorp and Puget Sound Energy have agreed on terms that would modify existing power contracts in a way that reduces the federal agency's costs by $200 million in 2005-2006.

The two investor-owned utilities (IOUs) would forgo about $100 million in BPA payments and defer the remaining $100 million with interest until 2007-2011. BPA is also offering similar terms to Avista, Portland General Electric, Idaho Power and NorthWestern.

In return, all Pacific Northwest IOUs' customers would get certainty about the range of benefits they would receive in 2007-2011. BPA provides the benefits under a federal law that requires a sharing of low-cost federal hydropower value with the small-farm and residential customers of IOUs.

Steve Wright, BPA administrator, said: "We continue to strive to find responsible ways to keep our rates as low as possible. This proposal is the single greatest action we can take to help our rates situation for next year."

The proposal significantly reduces BPA's costs over the next two years. The resulting BPA rate would be 6 percent lower than it would otherwise be. Other factors such as water volume in the Columbia River, which affects BPA's ability to earn revenue from power sales, will also influence rates.

The proposed agreement captures some of the financial benefit to all BPA customers that was contained in a litigation settlement that failed in January. Some public agency customers of BPA have sued the agency over the level of benefits going to the IOUs. The proposal announced today does not resolve this litigation.

The proposal defines the IOU residential and small-farm benefits as financial payments equivalent to 2,200 average megawatts of power in 2007-2011. The agreement eliminates uncertainty about resource planning for BPA and the IOU's.

"PacifiCorp believes that this settlement offers value to our residential and small-farm customers in Oregon, Washington and Idaho by providing additional certainty regarding the level and determination of benefits associated with the Federal Columbia River Power System," said Scott Brattebo, director of regulation for PacifiCorp. "It also provides an important near-term rate reduction for BPA's customers."

Brattebo said that PacifiCorp would be seeking an order from the Oregon Public Utility Commission requesting approval to execute the proposed agreement and would also seek support from the Washington Utilities and Transportation Commission and the Idaho Public Utility Commission.

John Saven is CEO of Northwest Requirements Utilities, which represents 47 public power customers of BPA. He said, "This proposal allows BPA to achieve a major cost reduction for the next two years, when BPA customers really need it, while not precluding public power from pursuing outstanding litigation concerning the underlying IOU contracts." He commended BPA staff for their efforts.

CBB Staff
Utilities/BPA Plan Would Reduce BPA Costs by $200 Million
Columbia Basin Bulletin, April 16, 2004

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