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Power Credits Must Be Saved by Editorial Board Democrat-Herald, May 23, 2007

If you're a Pacific Power customer, your electric bill is about to jump because of an unfortunate but understandable chain of events. It's now up to utilities in the region and the Bonneville Power Administration to work out a way around the problem. They have an incentive to do this, for without an agreement, Congress may get into the act, and that could kill the whole notion of Northwest hydropower benefiting the Northwest region.

The story starts with the 1980 Northwest Power Act, one of the many achievements of Sen. Mark Hatfield and his colleagues in Congress. It provided that the benefits of federal hydropower in the Northwest be shared with residential and farm customers of investor-owned public utilities. Until then, only publicly owned utilities got that low-cost electricity, and since Oregon was served mostly by investor-owned utilities, Oregon residents were getting the shaft.

The act also provided, however, that publicly held utilities lose nothing just because the benefits now would be more widely shared. That principle has indirectly led to the current complication.

Under the act, the Bonneville Power Administration was supposed to use a formula to determine how much residents served by private utilities get. There was a time in the 1990s when, for a variety of reasons, the formula would have created wild swings in power bills. Instead, BPA negotiated settlements with the private utilities providing for about $300 million a year in residential and farm benefits or credits a year. The publics felt these settlements were too generous to the private utilities, to the detriment of the publics. Now the 9th Circuit Court of Appeals has agreed, saying that because they were not based on the formula in the power act, the settlements were not consistent with federal law.

The principle of the Power Act is that all the residents of Northwest states have an equal interest in the federal dams and their electric output, and all ought to to benefit from that low-cost power. That sound principle must be preserved.

BPA is putting the settlement money into reserves, so when the residential and farm credits are again worked out, they can be paid. In the interest of ratepayers, who have to pay about $120 a year extra until this is done, a solution had better be worked out soon.