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Two More PUDs Reject BPA Settlement Offer by Staff and Associated Press Longview, WA, The Daily News, December 4, 2003

Two additional public utilties have joined the Snohomish County PUD in rejecting a settlement offer involing a lawsuit against the Bonneville Power Administration.

The decisions by the Clallam and Grays Harbor PUDs may help kill the settlement, under which Cowlitz County PUD customers would get some rate relief next spring.

Northwest public utilities sued the BPA in federal court in 2001, claiming that the agency illegally offered energy and monetary rebates to private utilities such as Puget Sound Energy, driving up costs for public utilities.

Earlier this fall, BPA offered to settle the lawsuits by providing the public utilities with $500 million in immediate rate reductions and cut $100 million in expense next year. These measures would mean a one-year cut in BPA wholesale rates of nearly 10 percent.

For the settlement to be binding, all 72 public utilities have to sign by Jan. 21.

Cowlitz PUD is party to the suit, but it has not yet decided whether to accept the BPA offer, Ron Worthington, the utility's director of customer services, said Wednesday evening.

"We're still evaluating at it. There is still considerable time to do that," Worthington said.

Cowlitz PUD buys most of its power from the BPA, the region's marketer of low-cost power from federal hydroelectric dams. If BPA reduces its rates 10 percent, the PUD would be able to back off the 2.5 percent rate hike it plans for April, utility officials say.

PUDs across the region are worried that the agreement might cost them more in the long run, and that the rate reduction could easily be added back in 2006, when contracts with BPA are renegotiated.

Snohomish County PUD, the largest in Washington with 290,000 customers, gave the agreement a major blow by rejecting the BPA last month.

Clallam County PUD followed suit on Nov. 24. Grays Harbor PUD, which 39,000 customers, plans to ignore the settlement offer altogether, according to Rick Lovely, the general manager there.

Lovely said he expects more utilities in Washington, Oregon, Idaho and Montana to follow suit and create a unified front against Bonneville.

"I think what Snohomish County (PUD) did was a brave thing to do," Lovely said, because the Snohomish County PUD ended settlement chances for all utilities involved. "They put a huge target on their chest, but I honestly think it gave courage to other public utilities."

Governors and legislators in the region, including Washington Gov. Gary Locke, have urged the public utilities to sign the agreement for the sake of improving the economy.

"If what is happening is some kind of strategy to reopen negotiations, it's not going to happen," Bonneville spokesman Ed Mosey said.