Utilities shocked by BPA rate hike request Some companies won't pass along increase immediately

Associated Press

SEATTLE _ Some utilities in the state say that if the Bonneville Power Administration raises rates 250 percent in October, as it has threatened, they won't immediately pass the entire increase on to their customers.

"I can't impoverish the community with an increase like that," said Rob Orton, general manager of Peninsula Light Co. in suburban Pierce County. "I can't do it."

Instead, the company would propose a 43 percent increase this fall, then borrow money to pay Bonneville for the rest, he said.

Even with some other utilities doing likewise, though, the rate increase proposed by the federal power marketing agency could give the state's economy a beating.

"Oh my God," said the state's chief economic forecaster, Chang Mook Sohn. "I thought 25 percent, 50 percent. This is the first time we've heard that unbelievable rate increase."

BPA officials said Monday the agency would have to raise rates or face bankruptcy, due to failed energy deregulation in California and the region's worst drought on record.

Bonneville generates 8,000 megawatts of power. The region needs 11,000. The aluminum industry has scaled back its use by about 1,000, leaving Bonneville to buy the remaining 2,000 megawatts on the exorbitant open market.

Unless demand on its system is scaled back, Bonneville will have to raise rates 250 percent, it said.

That could mean hundreds of thousands of Washington residents could see the cost of lighting and heating their homes double or triple before the year's end.

Tacoma Power would more than double its rates -- increasing them by 125 percent -- if Bonneville follows through on its increase, said Steve Klein, the utility's superintendent.

If so, Tacoma's rates will have increased from 4 cents per kilowatt hour last year to as much as 9 cents come Oct. 1.

Seattle City Light would have to raise rates by 65 percent, and the Snohomish County Public Utilities District's increases would range from 15 percent to 80 percent.

Those utilities have already had significant rate increases this year.

"It's an ugly picture," said Julee Cunningham, a Snohomish County PUD spokeswoman.

Meanwhile, many utilities say they're stressing conservation in hopes of avoiding such a dramatic rate boost. Bonneville has asked them to reduce their demand by 5 percent to 10 percent.

Tacoma Power has cut 12 percent of its electrical load, and Seattle City Light has cut its by 7 percent.

"Essentially, BPA is asking for 50 megawatts from us, and we're saying we can give it to them," said City Light spokesman Bob Royer. "We need Bonneville to succeed. The region needs Bonneville to succeed."

But Bonneville might find less cooperation from investor-owned utilities like Puget Sound Energy, which has nearly 1 million customers in Western Washington.

Cutting its load by 5 percent to 10 percent would "further cut back the benefit for our customers and their bills," said PSE spokeswoman Dorothy Bracken. "We oppose any reduction in federal power benefits to our customers."

Memo: Nevertheless, PSE is also stressing conservation. It has asked the state's Utilities and Transportation Commission for permission to charge customers depending on the time of day they use energy.

-- Anonymous, April 15, 2001