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BPA Proposal Could Hurt Irrigators by Sean Ellis, Farm Bureau Writer Idaho Farm Bureau Quarterly, September 2006

POCATELLO - If a current Bonneville Power Administration proposal is accepted, some irrigators who use pumps to get their water could see their power bills increase dramatically, by about $3,000 per month.

The BPA is proposing to decrease funding for its Residential Exchange Program, a federal program that permits customers of private utilities to enjoy the same low power costs as those who get their electricity from publicly-owned utilities.

"It will have a huge impact if it goes through as BPA is proposing," says Gene Fadness, public information officer for the Idaho Public Utilities Commission.

The BPA, a public power project, has enabled customers of publicly-owned utilities in the Pacific Northwest to enjoy low power costs for decades. Created by Congress, the REP helps customers of investor-owned utilities share in those same low costs by providing private utilities credits in the form of cash payments or more power.

In essence, it is a means for residential and small-farm customers not served directly by BPA to receive a fair share of the benefits from the federal hydropower system.

In Idaho, about 80 percent of electrical users get their power from investor-owned utilities.

BPA has proposed cutting the funding amount for the REP from the current $300 million level to $250 million beginning in 2012. Adjusted for inflation, the REP amount would need to be $350 million in 2012 to maintain current funding levels, according to the IPUC.

That kind of reduction would most significantly affect irrigation customers of Rocky Mountain Power, formerly known as Utah Power. However, it would also adversely impact customers of Idaho Power and other private utilities.

According to the IPUC, if BPA's proposal is accepted, the average Rocky Mountain Power irrigation customer who uses a 400-horsepower pump could expect to see their monthly bill increase by $2,807. Under that same scenario, an irrigation customer of a publicly-owned utility using that same 400-horsepower pump would see their monthly bill drop by $167.

The average residential customer of an IOU would see their monthly bill go up by $5.74 under the current proposal while the average residential customer of a publicly-owned utility would see their monthly bill decline by 75 cents.

Rocky Mountain Power has 60,000 total customers, including about 5,000 irrigation customers, in Idaho.

Fadness says the impact of the current proposal would not affect Idaho Power customers nearly as much because the credit that company receives from BPA isn't as large as the one Rocky Mountain Power gets. "However, it will negatively impact all customers of IOUs."

Idaho's public utilities commission was one of four state PUCs that sent letters to the BPA protesting the proposal. They were joined by Idaho's congressional delegation.

"All we're asking for is some balance," Fadness says. "We would at least like to see customers of IOUs get the same amount and not have this huge increase."

At an August hearing in Idaho Falls on the proposal, "the good majority of folks speaking against it were irrigators," Fadness says.

BPA officials see the situation differently and say the decrease is needed to ensure customers of publicly-owned utilities aren't being harmed by the amount of the REP.

When the 2000-01 energy crisis hit, the REP credit insulated private utilities from massive rate increases, but customers of publicly-owned utilities saw their rates increase by as much as 50 percent because BPA had to go to the expensive wholesale market to purchase an additional 3,000 megawatts of electricity.

According to BPA representative John J. Williams, a clause in the Northwest Power Act is meant to protect customers of publicly-owned utilities from being made worse off because of the REP credit.

The intent of the REP was to provide benefits to IOUs, but only if it did not affect the rate structure for the customers of publicly-owned utilities, says Williams, BPA's constituent account executive in Idaho.

As a result of the impact of the energy crisis, publicly-owned utilities filed a lawsuit against the BPA targeting the size of the REP credit. BPA's current proposal is meant to correct the imbalance between IOUs and POUs created by the energy crisis, Williams says.

In a joint letter, the four members of Idaho's congressional delegation said it wished "to add our voices in opposition to a significant cut in REP benefits that will adversely impact most of the residential and small farm customers in our state."

"It is our belief that most of the parties involved can agree to an equitable REP that does not reduce benefits to IOU customers," the letter stated.

Fadness says there is still a possibility some kind of compromise can be reached but "as of now, it looks like BPA does not want to modify their proposal."

The letters from the four PUCs and congressional delegation, as well as letters from the governor's office, did have an impact on the issue: "They definitely got our attention," Williams says.

As a result, BPA extended the comment deadline from Sept. 30 to Oct. 30. BPA officials hope the extension will give the two sides - publicly-owned and investor-owned utilities - time to reach a settlement.

As of mid-October, the two sides were far apart - publicly-owned utilities think the $250 million level for the REP is too much. If they don't reach an agreement, the ball will return to BPA's court and Williams says if that happens, the agency will stick to its current proposal.