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Senators Urge BPA to find a Compromise Over Rates by Matthew Daly, Associated Press Seattle Times, May 30, 2007

WASHINGTON - Northwest senators are urging the Bonneville Power Administration (BPA) to look for a compromise in a battle between public and private utilities in the region.

The six senators representing Washington, Oregon and Idaho say the BPA must lead an effort to avoid what could become a bitter fight over electricity in the region.

Private utilities say a recent federal appeals-court ruling will push up their rates by 13 percent, effective next month. Most of Oregon and Idaho are served by large private utilities such as Portland General Electric (PGE), Avista Corp. and PacifiCorp, while public utilities dominate Washington state.

The BPA, based in Portland, is a not-for-profit federal agency that markets power from 31 federal hydroelectric dams and a nuclear plant in the Northwest. The agency accounts for about 40 percent of the electricity consumed in the region, selling to about 140 utilities in Washington, Oregon, Idaho and Montana.

In their letter, the senators urged the BPA to look for common ground.

"Everyone in the region has an interest in reaching a legally sustainable compromise that ... allows BPA to enter into new power-supply contracts with public agencies before the current contracts expire," the senators wrote. "This requires that all stakeholders - public and private utilities, BPA and consumers, states and public-utility commissions - join together in good faith in an effort to negotiate a mutually agreeable and legally sustainable compromise."

Without such a compromise, Congress could step in, with unknown consequences for the BPA and the utilities it serves, the senators said.

The letter to BPA Administrator Steve Wright was drafted by the office of Sen. Maria Cantwell, D-Wash., and signed by all six senators in the region.

Mike Hansen, a BPA spokesman, said the BPA welcomed the letter and agreed that the recent court ruling poses a regional problem.

"We need a regional solution, and we have a long history of doing just that," he said.

The letter comes as a power war threatens to pit several large investor-owned utilities - which supply electricity to 60 percent of residential consumers in the region - against scores of publicly owned utilities in a fight over access to BPA's low-cost hydropower.

In a May 3 ruling, the 9th U.S. Circuit Court of Appeals said the BPA had overstepped its authority when it set an annual subsidy to reduce electricity rates for residential and small-farm customers of the privately owned utilities.

The BPA and its utility customers have long fought over the appropriate level of the subsidy, known as the "residential exchange" program.

The exchange allows private utilities to swap higher-cost power they generate for lower-cost hydropower generated by the BPA. The exchange usually comes in the form of a financial payment, not an actual power exchange, and customers see it as a credit on their monthly bills.

Last week, BPA said it was immediately suspending payment of $28 million a month in residential exchange benefits because of the May 3 ruling, which came in a lawsuit filed by public utilities.