Senators urge compromise over BPA rates

WASHINGTON (AP) - Northwest senators are urging the Bonneville Power Administration to look for a compromise in a battle brewing between public and private utilities in the region.

The six senators representing Washington, Oregon and Idaho say the BPA must lead an effort to avoid what could become a bitter fight over electricity in the region.

Private utilities say a recent federal appeals court ruling will push up their rates by 13 percent effective in June. Most of Oregon and Idaho are served by large private utilities such as Portland General Electric Co., Avista Corp. and PacifiCorp, while public utilities dominate Washington state.

The BPA, based in Portland, Ore., is a not-for-profit federal agency that markets power from 31 federal hydroelectric dams and a nuclear plant in the Northwest. The agency accounts for about 40 percent of the electricity consumed in the region, selling to about 140 utilities in Washington, Oregon, Idaho and Montana.

In their letter, the senators urged the BPA to look for common ground.

"Everyone in the region has an interest in reaching a legally sustainable compromise that ... allows BPA to enter into new power supply contracts with public agencies before the current contracts expire," the senators wrote. "This requires that all stakeholders - public and private utilities, BPA and consumers, states and public utility commissions - join together in good faith in an effort to negotiate a mutually agreeable and legally sustainable compromise."

Without such a compromise, Congress could step in, with unknown consequences for the BPA and the utilities it serves, the senators said.

The letter to BPA Administrator Steven Wright was drafted by the office of Sen. Maria Cantwell, D-Wash., and signed by all six senators in the region - three Democrats and three Republicans.

Mike Hansen, a BPA spokesman, said the BPA welcomed the letter and agreed that the recent court ruling poses a regional problem.

"We need a regional solution and we have a long history of doing just that," he said.

The letter comes as a power war threatens to pit several large investor-owned utilities - which supply electricity to 60 percent of residential consumers in the region - against scores of publicly owned utilities in a fight over access to BPA's low-cost hydropower.

In a May 3 ruling, the 9th U.S. Circuit Court of Appeals agreed said the BPA had overstepped its authority when it set an annual subsidy to reduce electricity rates for residential and small farm customers of the privately owned utilities.

The BPA and its utility customers have long fought over the appropriate level of the subsidy, known as the "residential exchange" program.

The exchange - established by the Northwest Power Act in 1980 - allows private utilities to swap higher-cost power they generate for lower-cost hydropower generated by the BPA. In practice, the exchange usually comes in the form of a financial payment, not an actual power exchange, and customers see it as a credit on their monthly bills.

Last week, BPA said it was immediately suspending payment of $28 million a month in residential exchange benefits because of the May 3 ruling, which came in a lawsuit filed by public utilities.

The BPA is seeking a rehearing of the ruling by a larger panel of the 9th Circuit, but a final decision will be made by the Justice Department. Meanwhile, the agency is struggling to defuse an impending crisis.

A group of private utilities, led by PGE and Pacific Power, a division of PacifiCorp, have taken out newspaper ads blasting the BPA and vowing to "fight for our customers' rights."

Residential customers will see their bills increase by an average of 13 to 14 percent, the ad says, calling the ruling "unfair and flat-out unacceptable."

The power companies said they will work vigorously to restore benefits for their customers. The ad is signed by leaders of PGE, Pacific Power, Avista, Puget Sound Energy and Rocky Mountain Power.

Ratepayer advocates and investor-owned utilities in Oregon say Congress should consider reopening the 1980 Northwest Power Act, which sets terms for the BPA and private utilities in the region.

But any congressional action raises the possibility of forcing BPA to sell its federal power at market rates - an action lawmakers from both parties oppose.

Other states, notably California, would likely welcome the chance to buy cheap BPA power, experts say.

Paul Murphy, a Portland-based energy lawyer, said a major change could hurt the Northwest.

"It would be a tragedy for this region to lose BPA's benefits," he said. "If something happened that dramatically raised the cost of power, it would have a very deleterious effect on the economy of the region."
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