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Clark Utility Backs Settling with BPA Over Rates by Allan Brettman The Oregonian, December 24, 2003

Utilities sued after power rates climbed by more than 40 percent;
BPA's offer of $600 million in rate and expense cuts requires all 78 agencies to agree

VANCOUVER -- Clark Public Utilities commissioners voted Tuesday to endorse an out-of-court settlement in a rate dispute with the Bonneville Power Administration.

Seventy-one other public utilities and six investor-owned utilities also must approve the accord by Jan. 21 for the settlement to occur. And the Snohomish County PUD, Washington's largest public utility, has said it will not sign the agreement, arguing that BPA can offer a better deal and should be forced to change its business practices.

Numerous lawsuits were filed by utilities, including Clark, after BPA entered into contracts in 2000-01 that gave the region's investor-owned utilities power rather than a monetary subsidy called for under federal law. The lawsuits were filed after utilities saw their rates increase by more than 40 percent, and they blamed BPA's contractual arrangements for contributing to the increases.

BPA has offered to settle the lawsuits by paying the public utilities with $500 million in rate reductions and finding $100 million in expense cuts in 2005-06. The reductions would mean a one-year cut of nearly 10 percent in wholesale rates.

"This agreement is not perfect, but it would be a compromise among all parties," Clark Commissioner Carol Curtis said in a statement. "It seems unlikely to us that we can negotiate a better settlement. And success with the court action seems highly unlikely."

However, according to the utility, it's unlikely that Clark's rates would drop if the settlement were approved.

Although early announcements talked of rate decreases, Clark's power costs under the settlement would not drop enough to affect overall rates, said spokesman Mick Shutt.

He said Clark anticipates saving $7 million between now and 2011, if the deal is approved -- a small fraction of the utility's overall electricity purchases.

However, the agreement would make a rate increase less likely for the nonprofit utility between now and 2011, Shutt said.

Snohomish County PUD commissioners voted Nov. 18 to reject the proposed settlement. The commissioners followed that with a Dec. 9 letter to Steve Wright, BPA administrator, reconfirming its rejection.

"Our plan . . . is to move forward with discussion here at our utility about some long-term reforms we'd like to see at the BPA," said Neil Neroutsos, a spokesman for the Snohomish County PUD.

In addition to Snohomish County, the Clallum County PUD has voted to reject the settlement.

Nine public utilities, including Clark, have voted for the deal, said Bill Murlin, a BPA spokesman.

"If one of these utilities involved in litigation says no, then the settlement is done," Murlin said. "Nothing is accomplished. Rates stay where they are; lawsuits stay where they are; everything is status quo."

Snohomish County has 290,000 customers. Clark is the second largest utility in the state, with 165,000 electricity customers.