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Utilities, Irrigators ask Federal Appeals Court to Halt BPA Rate by Associated Press Capital Press, April 25, 2003

Increase could damage NW ag industry, slow economic recovery

PORTLAND -- Rural utilities and irrigators have asked a federal appeals court to halt a possible Bonneville Power Administration rate increase, saying it will slow the economic recovery and damage the agricultural industry across the Pacific Northwest.

"I have to say it's pretty disheartening, given the financial situation in the Northwest," said Chuck Dawsey, general manager of the Benton Rural Electric Association.

The petition filed with the 9th U.S. Circuit Court of Appeals challenges the Feb. 7 decision by Bonneville chief Steve Wright to trigger the so-called "safety net cost recovery adjustment clause" in BPA wholesale electricity contracts.

The federal power marketing agency has a right to schedule a rate hearing if it estimates there is a 50 percent chance it cannot make required debt payments to the U.S. Treasury, about $800 million this year, based on revenue projections.

Wright has said a rate increase may be needed despite cost reductions and debt refinancing that has stretched revenue farther than expected during Bonneville's recovery from the Western energy crisis in 2001.

The BPA had to buy high-priced power on the spot market in 2001 to meet customer demand that exceeded the generating capacity of its hydroelectric system and one nuclear power plant, which supply roughly half the power to the Northwest.

Wright resisted pressure to call off the rate hearing for over two months before it was held last week.

About 100 people showed up at BPA headquarters, including representatives of the utilities and irrigators who testified they oppose the rate increase, said Ed Mosey, BPA spokesman.

"Our point is we think the agency is awash in potential solutions to avoid going into the safety net," said Darryll Olsen, spokesman for the Columbia-Snake River Irrigators Association and the Eastern Oregon Irrigators Association, who also submitted a letter to BPA officials after he testified.

"Triggering the rate case was a very poor signal to make to the region," Olsen said. "There's a real vote of no confidence in the BPA administrator right now."

Mosey said Wright has already told critics that Bonneville is trying to minimize any rate increase but it needs the option of raising rates at the end of the current federal fiscal year if revenue fails to meet expectations.

"Steve has been saying zero to 16 percent, so it's at least possible we can eliminate it, but he has to have the flexibility until the end of the current rate schedule process, which is on Sept. 30," Mosey said.

But Indian tribes say a small rate increase will not be enough for Bonneville to fund all of its wildlife conservation and salmon protection programs.

"That will put more pressure on the agency to cut its fish and wildlife budget," said Don Sampson, executive director of the Columbia Inter-Tribal Fish Commission.

The tribes estimate that Bonneville can maintain conservation program levels with less than $1.80 a month increase for the average residential electricity customer.

Nancy Hirsh, an analyst for the NW Energy Coalition in Seattle, said Bonneville is caught in the middle of many competing interests. But she said the agency has to find a way to solve its financial problems to restore confidence.

"BPA has a lot of obligations it must fulfill but it needs to avoid the crisis-to-crisis management style it seems to be in," Hirsch said.

A decision on rates is not expected until June.

The 9th Circuit, meanwhile, can take any number of legal steps to respond to the petition or dismiss it.