BPA Paying After Circuit Court Ruling
by Aaron VanTuyl
The Chronicle, March 27, 2008
The Lewis County Public Utilities District will receive a $3.2 million refund from the Bonneville Power Administration, and lower retail electricity rates are expected after the eventual completion of a hearing process.
The payment stems from a federal lawsuit against Bonneville for collecting excessive payments from the local PUDs through wholesale power costs, according to a news release from the Chehalis-based Lewis County Public Utility District.
In 2000, a group of public utilities districts filed a suit against the BPA in the U.S. 9th Circuit Court of Appeals after Bonneville stopped following the residential exchange provisions of Congress' 1980 Northwest Power Act.
The court found the residential exchange agreements between the BPA and investor-owned utilities to be inconsistent with the Power Act, according to the PUD's press release. Bonneville had been issuing benefits to the IOUs that gave them a significantly higher amount than what had been previously agreed upon.
In May of 2007, as per the court's ruling, BPA discontinued the monthly payments to the IOUs, but continued to collect them from the public utilities.
"There's only so many dollars, and if they (the IOUs) get more dollars it basically comes out of the public utilities' pockets," said the Lewis County PUD's General Manager Dave Muller. "So we've been paying more for about seven years than we should have paid."
Bonneville, essentially, has agreed to give the public utilities some of that money back. Just how much won't be determined until a hearings process is complete, though Muller said the estimate is between $50 million and $350 million. The hearings, currently underway, are expected to wrap up this fall.
"In any case, once they've finished the rate hearing process, then they will determine how much refund we should get, as well as what rates should be starting in October," he said.
"So, come August, September or October, what we should be getting is an additional refund and a rate decrease."
Each of the public utilities had the option of taking a $3.2 million interim payment agreement immediately, or waiting until the BPA makes a final decision on wholesale rates. Waiting on the refund, however, carries with it the chance that part of that refund will have to be returned. The Lewis County PUD's Board of Commissioners approved the IPA at their regular meeting Monday.
"We think it's too low and we should get more, but we're not assured of that," Muller said.
The agreement may also mean lower power bills, starting this fall.
"If Bonneville does it right, there should be a wholesale power rate decrease in October," he said. "If that's the case, our commissioners are pretty much committed to reducing retail rates."
A Feb. 22 press release from the BPA stated that interim payments totaling $336 million were offered to Northwest public and investor-owned utilities for fiscal year 2008.
"Given the current economic uncertainty, we want to create an option to get this money into the Northwest economy sooner rather than later," BPA Administrator Steve Wright said in the release. "We appreciate constructive participation of utilities and other stakeholders from across the region in the public process, and we have made significant changes to the interim payment contracts based on that input. We are hopeful that we can build on this momentum as work continues toward the long-term residential exchange program solution."
The $3.2 million refund will be used to help purchase a 10 percent share of the power generated from the 205 megawatt White Creek Wind Project, from the Klickitat PUD. The total cost will be about $40 million over the life of the wind project, Muller said, and provide 20.5 megawatts to Lewis County.
The PUD plans to issued bonds in the next few months to cover the rest of the cost, he added.
The purchase will help the PUD meet Initiative 937's requirement that, by 2015, 9 percent of its power should come from a renewable energy source.
The Lewis County PUD serves about 30,000 customers and is overseen by three elected commissioners. The utility draws 85 percent of its power from hydroelectric energy sources. About 11 percent comes from nuclear sources, 2.5 percent from coal, 1 percent from natural gas and 0.5 percent from 'other' sources, according to its Web site.
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