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Private Utilities to Raise Electric Rates by Rachel La Corte, Associated Press Seattle Post-Intelligencer, June 7, 2007

Residences, small farms will see increases of 9% to 17%

OLYMPIA -- Residential and small-farm customers of Washington's private utilities will see an immediate increase in their monthly electricity bills after state regulators on Wednesday passed along the effect of a recent federal appeals ruling against the Bonneville Power Administration.

Bills for customers of Puget Sound Energy, Avista and Pacific Power will go up between 9 percent and nearly 17 percent, effective Thursday.

"We're not happy about it at all," said Avista spokesman Hugh Imhof.

Avista customers face a 9 percent increase, about $6 a month. "This is something that's going to affect our most vulnerable customers," Imhof said.

The increase, approved by the state Utilities and Transportation Commission, affects about 45 percent of electricity customers in Washington. The change does not affect customers of public utilities, such as Seattle City Light, which make up about 55 percent of electricity customers in Washington.

The average Pacific Power customer faces a 16.8 percent increase, about $11.50, a month, with bills for Puget Sound Energy customers going up about 13 percent, or just over $10 a month.

The commission already has asked other Northwest utility regulators to urge the Justice Department to allow the BPA to seek reconsideration of the adverse ruling, which ultimately led to higher bills.

The BPA is a federal agency that markets about 40 percent of the electricity consumed in the region and sells to about 140 utilities in Washington, Oregon, Idaho and Montana, most of them public utilities.

The 9th U.S. Circuit Court of Appeals ruled May 3 in a lawsuit filed by public utilities that the BPA overstepped its authority when it set an annual subsidy to reduce electricity rates for residential and small-farm customers of the privately owned utilities.

BPA and its utility customers have long fought over the appropriate level of the subsidy, known as the "residential exchange" program.

The exchange, established by the Northwest Power Act in 1980, allows private utilities to swap higher-cost power they generate for lower-cost hydropower generated by BPA. The exchange usually comes in the form of a financial payment, not an actual power exchange, and customers see it as a credit on their monthly bills.

"We don't believe that anyone would seriously argue that families and small farms aren't deserving of a share of the benefits of the region's hydro system," said PSE spokesman Roger Thompson. "I think the question is what is the right level of benefit."

The court decision did not require BPA to stop the payments. But earlier this month, BPA said it was immediately suspending payment of $28 million a month because of uncertainty over the ruling.

The private utilities did not request the change, which is the removal of a credit that came from BPA.

"All the utilities are pretty much united in this, we really want to fight to get our customers' rights back," Imhof said. "We're certainly fighting to get this reversed. We're doing everything we can."

He said that Thursday, representatives from public and private utilities would meet to try to find a solution.

Joel Myer, spokesman with Mason County Public Utility District No. 3 in Shelton, said this isn't a case of public utilities against private utilities. But he said private utilities customers shared more of the credit than they should have, with public utility customers shouldering an unequal burden.

"Our issue isn't that private utilities don't get a benefit. We believe that the benefit should be spread around," he said. "The only issue we have here is how to equitably deal with that benefit."

Puget Sound Energy, Washington's largest electricity and natural gas utility, serves more than 1 million electric and 700,000 natural gas customers in King, Pierce, Jefferson, Island, Kitsap, Kittitas, Lewis, Skagit, Snohomish, Thurston and Whatcom counties.

Avista Utilities provides electricity and natural gas to more than 300,000 customers, mostly in Eastern Washington and northern Idaho.

Portland-based Pacificorp -- known in Washington as Pacific Power -- serves more than 120,000 electric customers in five Washington counties: Columbia, Garfield, Kittitas, Yakima and Walla Walla.