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BPA Kicks Off Power Rate Case by Chris Mulick, Herald staff writer Tri-City Herald, November 9, 2005

Electricity rates would hold steady for the next three years under an initial rate proposal issued Tuesday by the Bonneville Power Administration.

But the federal power marketer expects many of its key assumptions to be uprooted and turned on their heads before a new rate schedule is adopted in July. Mostly, Tuesday's announcement kicked off an eight-month process that guarantees to raise a regionwide fuss between Bonneville and its competing customers.

Utilities immediately decried the proposal, arguing BPA could do better with the West Coast energy crisis now four years in the past.

"What gives?" asked Benton REA Manager Chuck Dawsey.

"I think we've got some work to do," said Benton PUD Manager Jim Sanders. "It's higher than we'd like it to be."

As a starting point, BPA has proposed a rate that would average "about $30 per megawatt hour" during the three-year period beginning Oct. 1, 2006. That's marginally higher than its existing rate -- less than 5 percent -- and the average effect on ratepayers would be even less.

But that could be brought down by cost cuts identified in the months to come by Bonneville, its utility customers and other stakeholders. It also could be driven up should a federal judge require increased flow and spill operations at federal dams, limiting hydroelectric generation, as environmentalists, fishing groups and Native American tribes are asking.

And, as always, rates would be influenced by weather. A string of dry years has limited BPA's ability to reduce electric rates since the 2001 energy crisis forced massive increases.

"We start with a number that is almost a fiction because it's based on a number of assumptions that are all going to change," said BPA spokesman Ed Mosey.

The agency didn't want to quote an initial rate for that very reason. But it has been riled by a vocal customer group, calling itself the Northwest Coalition for Affordable Power, which has demanded BPA cut its average rate to $27 per megawatt hour.

The group includes 20 public utilities of the more than 100 public utilities BPA serves and primarily exists to issue news releases raising awareness about its push for lower rates. The Benton and Franklin PUDs, Richland Energy Services and the Benton REA are members.

"They're just blowing smoke," Mosey said. "We're going to go through the whole deck of cards again. They need to come in and tell us how we can get to $27."

One assumption favored by utilities adhered to in the proposal would direct Bonneville to keep a lower operating reserve but allow the agency the ability to adjust its rates annually. In theory, that could lead to more rate changes over time, which utilities would have to manage themselves.