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TPU to Refund $15 Million to Customers

by John Larson
Tacoma Weekly, November 27, 2008

Tacoma Public Utilities (TPU) will pass along most of a $16 million refund from Bonneville Power Administration (BPA) to customers of Tacoma Power, which will base the refund amounts on 2007 electrical use and will credit the money on current customers' bills.

The utility anticipates that the credit will start showing up on customers' bills by February.

The TPU Board voted last month to pass the money to customers after the utility received a refund from BPA for overpayment. Last year the 9th U.S. Circuit Court of Appeals ruled that BPA had improperly calculated the rates it had charged to private sector utilities since 2001. As a result, it overcharged public utilities.

Tacoma Power agreed to a $16.2 million settlement in April.

TPU staff recommended holding on to the money to offset against rate increases in the future.

Board members Tom Hilyard, Laura Fox and David Nelson voted in favor of the refund, while Bob Casey and Peter Thein voted against it.

"Politically, that is a very expedient thing to do," Casey said. The board should not act on political impulses, he remarked.

Casey said staff had good reasons for wanting to hold on to the money. He noted that TPU's 2009-10 biennial budget calls for $150 million in capital improvements. If revenue is lower than anticipated, TPU may find itself needing to borrow money by late 2010 to pay for such improvements. Therefore, refunding the money will just increase the amount it will have to borrow, which will translate to higher rates, according to Casey.

He also argued a rebate would not benefit ratepayers who have moved, such as many apartment residents. "We are going to have difficulty finding those people," he remarked.

Casey noted many apartment dwellers do not have separate meters, so the landlord would get all of the refund. The same thing could happen in commercial buildings with multiple tenants, he added.

"I think this is premature in many respects," Casey observed.

Thein said TPU may need to raise rates in 2011 as a result of a rebate. He noted that some public utilities that received a refund from BPA decided against handing the money over to customers, including Seattle City Light and the public utility districts in Mason, Clark and Snohomish counties.

The board also voted to direct $900,000 of the refund to TPU's Family Need fund, which assists low-income, elderly and disabled customers struggling to pay utility bills.

Hilyard argued that given the economic downturn, he considered the rebate and funding Family Need "as part of our moral and ethical responsibility to the community we serve."

Although Tacoma Power has not yet calculated the amounts, it anticipates that most residential customers will receive a credit equal to just more than one half of an average months' electric bill.

"Calculating customer usage and then putting the refunds in place, unfortunately, takes a lot of time," said TPU Director Bill Gaines. "We will conduct this process as expediently as possible, but will need our customers to show patience while we work out the details."

In response to a question by Nelson, Gaines said the BPA overcharges have been in the federal courts for years. Asked whether the 9th Circuit decision could be appealed, he replied, "I suspect one will be filed."

John Larson
TPU to Refund $15 Million to Customers
Tacoma Weekly, November 27, 2008

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