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BPA Proposal Irks Rural, Industrial Customers by Shelly Strom Puget Sound Business Journal, April 21, 2003

Rural and industrial customers of Portland-based Bonneville Power Administration have filed a court complaint regarding a proposal by the agency that would result in increased power rates.

The group, comprised of the Benton Rural Electric Association, the Columbia Snake River Irrigator Association, the Eastern Oregon Irrigators Association, Industrial Customers of Northwest Utilities and the Umatilla Electric Association, has filed a petition with the Ninth Circuit Court of Appeals.

The complaint challenges BPA's recent decision to pursue a rate increase as a way to ease deep financial problems--the agency has forecast a $1.2 billion shortfall through 2006.

BPA's plan is part of an agreement reached with customers last year that has a provision known as the "safety-net cost recovery clause." Utilities that filed the complaint see the rate hike as a mechanism to be used only as a last resort. Instead, say some observers, BPA is boosting rates as a top-tier solution for keeping finances in check.

And after multiple rate increases in recent years, some utilities say their customers can't endure additional rate increases. "Our members are at the end of their financial rope. It is apparent that BPA does not fully appreciate the impact that their rate increases are having on all sectors of the agriculture industry," said Darryll Olsen, executive director of the Columbia Snake River Irrigators Association.

BPA did not comment on the complaint, but reiterated its stance that the proposal is the best solution for the variety of entities that comprise its customer base. In an effort to stem massive losses, the Bonneville Power Administration announced it expects to raise wholesale power rates for utilities and large industrial customers.

Although the amount of the increase will be determined in a rate case process and could vary based on actual climatic and market conditions, it appears the increase could be in the neighborhood of 15 percent above current wholesale rates. If adopted, a new rate will go into effect Oct. 1, 2003.