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BPA Settlement Could Roll Back Electricity Rates by Associated Press The Olympian, October 25, 2003

Cuts would be by nearly 10 percent

PORTLAND -- A proposed legal settlement backed by the Bonneville Power Administration would roll back wholesale electricity rates by almost 10 percent, if a number of the region's public utilities agree to the deal.

Steve Wright, the agency's administrator, said all the parties must sign the agreement within 90 days and give final approval within 120 days.

"The terms now on the table strike a balance of interest of all parties," said Kyle McSlarrow, U.S. deputy energy secretary. "I urge the utilities to sign the agreement."

The BPA, a federal power marketing agency, provides about half the Northwest's electricity from hydroelectric dams in the Columbia Basin and one nuclear power plant in Washington.

The proposal comes in response to legal action over what's known as residential and small-farm credits.

Those are payments the BPA makes to for-profit utilities, as a way of sharing the benefits of the low-cost Northwest hydropower system.

The credits have been in place since 1980 but until recently had been made as cash payments. Plans by the agency to change that to a mix of power and cash drew challenges from 72 public utilities, who questioned whether the for-profit utilities were entitled to actual electricity.

Under the terms of the agreement, private utilities would agree to defer receiving an additional $269 million in BPA payments until 2007, when the agency's next rate period begins.

Also, BPA payments to the private utilities would be subject to an annual floor of $100 million and a limit of $300 million in the 2007-2011 rate period. That compares with about $400 million a year in current contracts.

Essentially, the proposed settlement shifts financial benefits in the near term from private utilities to the BPA's public utility customers in the Northwest.

The arrangement could also mean higher monthly bills for residential customers at privately owned utilities in the near future, including PacifiCorp and Portland General Electric.