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BPA Chief Optimistic for Utilities' Pacts by Andrew Sirocchi Tri-City Herald, June 9, 2007

The Bonneville Power Administration's lead executive said Friday he's optimistic that public and private utilities will resolve their differences over cash compensations that reduce rates for residential and small-farm customers, and that new contracts with the utilities can be negotiated by 2008.

BPA Administrator Stephen Wright said all of the administration's contracts will expire in 2011, and how quickly new deals are negotiated depends on whether utilities can come to terms over a residential exchange program that was struck down by a federal court in May.

"One of the most important things we can do is to try to push the parties to resolve these issues on their own," Wright said.

"We're trying to create a common interest on all the parties."

The common interest is money.

For utilities, what's at stake is having the time to plan for how much power they'll need to purchase from sources other than BPA after 2011, when they will be required to cover the increased demand through new energy sources or pay a premium for the administration's power.

New sources are likely to need new infrastructure, but utilities won't be able to make those investments until their contracts are complete.

"When you're planning for (power) generation, you're planning years ahead," said Jean Ryckman, manager of the Franklin PUD.

For residential and small-farm customers who purchase their power from investor-owned utilities, what's at stake is the cost of their own electricity.

Pacific Power's residential customers in Walla Walla and elsewhere in Eastern Washington and Eastern Oregon could see a 16.8 percent rate increase, or $11.49 a month, because Bonneville stopped making the cash payments after the 9th Circuit Court of Appeals struck down the residential exchange program.

The Northwest Power Act of 1980 requires Bonneville to share benefits of its historically cheap hydropower with residential and small-farm customers of private utilities, but BPA is required to do that without raising rates paid by publicly owned utilities.

Bonneville reached a settlement in 2000 with six investor-owned utilities to provide $300 million annually between 2002 and 2005.

Public utilities appealed, saying BPA had incorrectly calculated the benefit and was illegally transferring costs to them.

"We felt our customers were paying higher rates than they should," Ryckman said.

The Appeals Court agreed, and Ryckman said this week representatives from public and private utilities began negotiating a new process to compensate customers of investor-owned utilities.

"It's really a tough schedule," she said. "It's really aggressive but we all share the same goals. We can do it."

Wright said he doesn't expect the next year or so to be easy, particularly when so much money is on the table and there already is distrust that utilities are not being treated equally.

"There's going to be a lot of tension over the course of the next eight or nine months," Wright said. "It's not going to be easy. It will be very hard."

Jim Sanders, general manager at Benton PUD, said the utilities will solve their differences in time to have the new contracts by 2008.

"At the end of the day, the parties will come to an agreement," he said. "There will be some technical negotiations, but I'm optimistic that by August or September 2008 we'll have the bulk of the work done."

While Ryckman said she's unsure when the work will be completed, she is certain that all the utilities want the same thing.

"The really important thing is the fact that the parties do understand the importance of working together," she said. "What none of us wants is for this to go back to D.C. We don't need legislation to resolve this."