Oregon's top utility regulator accuses BPA of backing away from agreement

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Oregon utility chief says BPA unfair to state's two biggest utilities Ron Eachus says the federal agency is trying to back out of an agreement for power

Wednesday, April 11, 2001

-------------------------------------------------------------------------------- By TOM DETZEL of The Oregonian staff

http://www.oregonlive.com/news/oregonian/index.ssf?/news/oregonian/nw_41bpa11.frame

WASHINGTON -- Oregon's top utility regulator sharply criticized the Bonneville Power Administration on Wednesday, saying the agency's latest move to hold down rates is unfair to the state's two biggest utilities.

Ron Eachus, chairman of the Public Utility Commission, accused the BPA of backing away from an agreement to give investor-owned utilities in the region a block of power and cash equivalent to 1,900 megawatts over the next five years.

The result will be higher costs for Portland General Electric and PacifiCorp, which together serve more than 1.2 million customers in Oregon, more than 70 percent of all the state's ratepayers, Eachus said.

"We just have a history of BPA backtracking on their agreements," Eachus said. "It's going to increase rates for the residential customers of the investor-owned utilities."

The criticism came a day after acting BPA Administrator Stephen Wright called on both public and private utilities to curtail power purchases from the agency, which sells wholesale electricity from federal dams in the Northwest.

Wright also said the region's aluminum smelters should shut down for two years and called on Northwest consumers to conserve, warning that the BPA may otherwise have to raise rates as much as 250 percent in October.

Bonneville spokesman Ed Mosey defended the appeal to private utilities, saying Wright is asking for sacrifices from everyone to keep rates low.

The BPA is able to produce about 8,000 megawatts of power from dams in the Columbia River system and one nuclear plant, but the agency has contracts with utilities and aluminum companies to provide about 11,000 megawatts.

Part of the reason Bonneville is projecting triple-digit rate increases is that it must fill that gap on the open market, where prices have skyrocketed because of the crisis in California and this year's drought conditions.

Last fall, the BPA reached agreement with PacifiCorp, PGE and other four other investor-owned utilities in the region that guaranteed them 1,000 megawatts of electricity and the equivalent cash to buy another 900 megawatts.

The agreement evolved from "residential-exchange" provisions of the 1980 Northwest Power Act, which require the BPA to share benefits of low-cost hydropower with residential and farm customers of the investor-owned utilities.

Now, the BPA says the market value of that power has grown far beyond what anyone imagined. Wright said Monday that the private utilities could give up some of the power and still get record benefits under the act.

The utilities have said they're open to negotiating with the BPA. But Eachus said PacifiCorp and PGE would end up being forced to replace the BPA power they give up with more expensive power on the open market.

That would translate into higher rate increases for residential customers, he said.

"I think the ratepayers of the investor-owned utilities have given enough to the BPA," Eachus said. He argued that rising power prices have eroded the value of the cash portion of the settlement to about 100 megawatts instead of 900.

Mosey said investor-owned utilities would still reap a windfall. The BPA's costs of meeting the full 1,900-megawatt obligation next year was estimated to be $1.5 billion. By comparison, their benefits under residential exchange the past five years averaged only $75 million.

Mosey said public utility customers are also being asked to cut their BPA load by 5 percent to 10 percent.

"What we're saying is for the good of the region, for the good of the state of the good of the economy, let's be reasonable and let's everybody agree to try to reduce their cost on Bonneville," he said.

PacifiCorp spokeswoman Jan Mitchell said the utility is reviewing the BPA's request and will work to make sure its customers continue to receive the benefits of federal power.

Kregg Arnston, a spokesman for PGE, said the utility agrees that giving up some BPA power will put "upward pressure" on rates. He said the utility is "willing to look at it and do our part" if all BPA customers are treated fairly.

You can reach Tom Detzel at 503-294-7604 or by e-mail at tom.detzel@newhouse.com.

-- Martin Thompson (mthom1927@aol.com), April 12, 2001


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