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Washington PUD Rejects BPA Settlement by Business Journal staff Portland Business Journal, November 17, 2003

The board of directors of a public utility district in Washington state has rejected a legal settlement proposed by the Bonneville Power Administration. Unless it reconsiders, the Snohomish County PUD's unanimous rejection of the deal means a regionwide temporary rate reduction will not happen and the utilities will head to court.

Portland-based BPA has been trying to settle a lawsuit that challenges the nature and level of investor-owned utility benefits and other contractual arrangements made by BPA in 2001.

If the settlement succeeded, BPA would have eliminated a 2.2 percent rate increase that took effect Oct. 1 and reduce rates 7.4 percent below 2003 average rates. The net effect, compared to current rates, would be a nearly 10 percent reduction in wholesale power rates for fiscal year 2004.

"BPA has offered a one-time, one-year deal that doesn't get at the real issue--the 46 percent rate increase it imposed in the past two years," said PUD Commission President Kathleen Vaughn. "We must work on solutions that protect the interests of our customers over the long term."

Snohomish County PUD is the first public utility in the region to vote down the BPA proposal, but the settlement required approval by all litigants to go into effect.

The Snohomish PUD said it remains committed to negotiating a global agreement in the region that provides:

• Immediate and sustained rate relief to BPA's public utility customers;
• A serious commitment by BPA to reduce its organizational costs;
• Adherence to the 1980 Regional Power Act; and
• A strategy to substantially improve governance, cost control and dispute resolution processes of the BPA, which will encourage progress toward long-term contracts with the agency to preserve the benefits of the federal system for the Northwest region.