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For more information contact:
Dean Boyer, Director of Communications
(360) 741-2676, dboyer@wpuda.org

May 4, 2007
WPUDA welcomes appeals court decision over BPA payments

The Washington Public Utility Districts Association today applauded a 9th U.S. Circuit Court of Appeals ruling that the Bonneville Power Administration was charging public power utilities too much to subsidize the rates of investor-owned utilities.

“Our position has been that BPA should follow the law,” said WPUDA Executive Director Steve Johnson. “Clearly, as the court agreed, that has not been the case. This is good news for more than 1 million customers in Washington who get their electricity from public utility districts or other public power providers.”

As part of the Northwest Power Act of 1980, BPA is supposed to share some of the benefits of the federal hydroelectric system with residential and small farm customers served by investor-owned utilities.

The so-called “residential exchange” program was to be calculated based on a formula that takes into account the difference between BPA’s average system cost to provide power to public power utilities and those of the private utilities. It also was not supposed to affect the rates paid to BPA by public power utilities.

But in 2000, BPA abandoned the formula and, instead, reached a settlement agreement with six investor-owned utilities to provide benefits that averaged about $300 million a year between 2002 and 2005.

Several WPUDA members and other public power utilities filed suit, claiming BPA had overstepped its authority and was not following the law. In two opinions issued Thursday, May 3, the Court of Appeals agreed.

In Portland General Electric v. Bonneville Power, the court said, “BPA proceeded from a flawed legal premise about its settlement authority, and its defense of the settlement as consistent with [the law] appears to be post-hoc rationalization… BPA cannot unilaterally change the law.”

In a related case, Golden Northwest Aluminum v. BPA, also decided Thursday, the court found that BPA “unlawfully shifted onto [public power utilities] the costs of its settlement with [the investor-owned utilities].

Johnson noted that BPA has proposed, in what was known as the “regional dialogue” to continue the settlement payments to investor-owned utilities in future contracts. That proposal has been submitted to Department of Energy officials in Washington, D.C., for approval.

“We objected to the high cost of the settlement agreements in the regional dialogue and strongly urged BPA to follow the law,” Johnson said. “We would hope that BPA would now accept the court ruling and change its proposal for future residential exchange benefits accordingly.”

WPUDA represents 28 not-for-profit utilities that provide electricity, water, wastewater service and wholesale telecommunications to 1.7 million people in Washington.