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Snohomish PUD Wary of Settlement by Christopher Schwarzen, Times Snohomish County bureau Seattle Times - October 24, 2003

The Snohomish County Public Utility District (PUD) has 90 days to consider a legal settlement of a lawsuit with its chief energy supplier that could lower consumer electricity rates.

Bonneville Power Administration announced yesterday it was seeking approval of the settlement from the PUD's three-member board and about 70 other utilities on a lawsuit that challenges how the federal energy supplier distributes power to private utilities such as Puget Sound Energy.

If the PUD and all other public utilities agree to the settlement, Bonneville said it would reduce its wholesale energy rates by 7.4 percent beginning March 1. It also would rebate a 2.2 percent increase that was effective Oct. 1. Such a reduction could be used to lower the PUD's customer rates, which have increased since the 2001 West Coast energy crisis, Bonneville officials said.

Still, PUD officials said they were skeptical the settlement offered enough for their signature. "Yes, there's a one-year effective reduction, but there's no assurance whatsoever of withholding increases for successive years," PUD Commissioner Dave Aldrich said. "I'd be surprised if this board votes to sign."

Bonneville is looking to settle a lawsuit filed in 2001 in which public utilities said Bonneville is misusing the 1980 Northwest Power Act, which allows it to provide energy to private, investor-owned utilities such as Puget Sound Energy.

A 2001 contract between Bonneville and investor-owned utilities offered energy and monetary rebates to the private utilities as part of a formula for their share of the federal utility's power. The public utilities, which have first crack at Bonneville's electricity, said the costs of the energy and rebates during the 2001 energy crisis forced Bonneville to raise wholesale rates to utilities such as the PUD.

By law, all utilities involved in the lawsuit must sign the settlement for it to be effective.

PUD spokesman Neil Neroutsos said utility officials were studying the 3-inch-thick settlement document. The board isn't likely to reach a decision until close to the end of the 90-day period. Utility officials have discussed holding public meetings on the settlement.

Bonneville spokesman Mike Hansen said the agreement to end the lawsuit would save the federal utility almost $500 million in legal obligations to private utilities. That money would be used to pay rising costs and eliminate a rate increase, Hansen said.

The savings would be spread out during the next three years, Hansen said, creating a moderate rate stability that should be enough to keep Bonneville from needing a rate increase during that period.

The settlement also says Bonneville will look for $100 million more in savings that can be used to reduce rates further.

The Northwest delegation and governors from Washington, Oregon, Idaho and Montana issued letters yesterday supporting serious consideration of settling the lawsuit.

Utilities that rely less on Bonneville than the PUD also showed signs of support. Tacoma Power's superintendent, Steve Klein, said the agreement opens the door.

But the PUD is more reliant on Bonneville, with 80 percent of the local utility's energy coming from the federal entity. It has more at stake, Aldrich said.

"We've shown Bonneville other ways it can save money, and it's not listened," he said. "So this agreement makes me especially suspicious."