Area utilities oppose BPA increase

August 30th, 2003

By Nathan Isaacs
Tri-City Herald staff writer

The Mid-Columbia's electric utilities remain opposed to the Bonneville Power Administration's expected rate increase in October, saying the hike isn't needed.

Chuck Dawsey, Benton REA manager, said the BPA is expected to have about $483 million in reserves by the end of September, which is more than enough to cover its costs.

The BPA announced Thursday that its October rate increase on electricity sold to the Northwest's utilities would be 2.2 percent. It is lower than previous estimates, all of which were reduced by a wet spring and higher-than-forecast revenues for surplus power sold outside the Northwest.

Mid-Columbia utilities -- comprised of Benton PUD, Franklin PUD, Benton REA and Richland's utility -- are not expected to pass on the increase to customers.

But although the BPA's increase is less than expected, Mid-Columbia utilities that imposed rate increases earlier this year are not expected to lower rates or refund customers.

"We'll take a good look at that, but we don't know," said Karen Miller, Benton PUD spokeswoman. "We have lowered rates before, and if we can (lower them), we will."

The BPA needs the increase to help make up a $200 million expected shortfall between now and 2006 to help pay some costs that were pushed into the future and for normal operating cash flow, said spokesman Mike Hansen.

Also, he said the increase improves the agency's probability it can pay its federal bills to the Treasury Department in 2004. That probability needs to be high to help with selling bonds and keep others in the nation from taking over the hydroelectric system, he said.

Dawsey said BPA has used those arguments in the past, but it doesn't mean they are accurate. He said the agency was predicting the chances of paying its federal bill, about $700 million, at below 50 percent earlier this year. The probability that BPA will pay that federal bill is 100 percent now.

Factoring into the discussion is the possible settlement between the Northwest's utilities and the agency over cash benefits it gives private utilities, which come from charging everyone higher rates.

Hansen said the rate increase could become a 6.4 percent decrease if a settlement can be reached by Sept. 15.

Benton PUD Manager Jim Sanders said progress has been made in the settlement negotiations since an impasse earlier this summer. Dawsey said a majority of utilities support a settlement, but opposition is coming from a few large investor-owned utilities.

Hansen said prices could drop $2 or $3 per megawatt-hour if a settlement is reached. "We're keeping our fingers crossed," he said.

Meanwhile, Mid-Columbia utilities are encouraging a letter-writing campaign with the hope customers can convince the agency to drop the increase altogether.

Dawsey said more than 2,000 letters were sent by Benton REA customers. Miller said more than 1,300 letters were sent by Benton PUD customers, including 500 collected during the Benton Franklin Fair & Rodeo.

BPA spokesman Ed Mosey said thousands of letters have been received by the agency, but an exact count isn't known. Many of those letters have been sent on to Washington, D.C.

The Benton, Franklin and Grant public utilities, the Industrial Customers of Northwest Utilities, the Benton and Umatilla rural electric authorities and the Columbia-Snake River Irrigators Association also are participating in lawsuits over the fall increase.

But Dawsey doesn't expect the suit, filed with the 9th U.S. Circuit Court of Appeals, to be resolved before the increase takes effect Oct. 1.


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