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March 05, 2008
Clatskanie PUD Challenges BPA in U.S. 9th Circuit Court
CLATSKANIE, Oregon (STPNS) -- Papers were expected to be filed Wednesday, March 5, in the United States 9th Circuit Court of Appeals in San Francisco by attorneys for the Clatskanie People?s Utility District (CPUD) challenging the Bonneville Power Administration (BPA) resumption of what CPUD administration and board members believe are ?unlawful? residential exchange payments.
The lawsuit seeks to stop the BPA from resuming the residential exchange settlement payments, which CPUD contends are ?in defiance of the previous court order? from the 9th Circuit Court issued last May.
The 9th Circuit Court is the court of original jurisdiction for BPA matters. The order, issued in May of 2007, held that BPA settlements with investor-owned utilities (IOU) on the residential exchange were unlawful and beyond their settlement authority. BPA has now developed a new residential exchange methodology and rate case proposal to modify the residential exchange payments.
In an attempt to create a ?legally sustainable solution that is the best for the Northwest? in the current rate case, BPA Administrator Steve Wright has appplied the proposed methodology retroactively and a framework to provide future annual residential exchange payments of $250 million, reduced by $40 million for past ?overpayments,? a CPUD press release issued Tuesday stated.
?These ?reductions? would presumably last over many years, although there is no method to assure that the BPA administrator might not change his mind in the next rate case This number is consistent with a proposal from a small group of utilities within the region which recommended a rate-case solution for BPA,? the press release stated.
Under the BPA?s current plan, the Clatskanie PUD would receive an interim settlement of approximately $3 million - about 10 percent of what it is estimated the BPA over-charged CPUD over the years of the previous residential exchange payments.
BPA is proceeding to? dramatically increase? the exchange payments over those which were provided for under the prior exchange methodology, ?the very act which was found unlawful by the court,? according to CPUD. ?BPA is attempting to implement a solution through a mechanism which is outside of the guidelines of the federal law which governs their operation.?
?We believe that BPA?s new exchange settlement payments are just as unlawful as the exchange settlement payments stopped months earlier,? stated Greg Booth, CPUD general manager. ?The BPA?s unlawful settlements have cost PUD customers about $30 million so far, or about 60 percent of the PUD?s annual operating cost. Our biggest concern, however, is what the future will mean if the BPA administrator is allowed to continue to operate outside the law.?
While the Clatskanie PUD is one of the smallest public utilities in the state in terms of numbers of customers, it is among the biggest in terms of power sold, because of its large and growing industrial load with the Georgia-Pacific Wauna Mill and the new industries at the Port Westward Energy Park. CPUD has the lowest rates in the state of Oregon, and the second or third lowest in the nation.
CPUD has sought to become less dependent on the BPA than many Pacific Northwest utilties by investing in other power resources. CPUD is a partner in the co-generation plant at the Wauna Mill, owns a natural gas-fired ?peaking? plant located at the Wauna Substation, and is currently partnering with Idaho irrigation districts in building a hydroelectric plant at the Arrowrock Dam in Idaho. CPUD also owns a ?slice? of the BPA?s hydropower and sells excess power on the open market with the proceeds helping to keep CPUD customers? rates low.
The CPUD press release continued: ?While we are withholding judgment on the wisdom and fairness of the amount of the exchange payments, the amount of and the mechanism for implementing this proposal is not consistent with the 1980 Regional Power Act. If BPA and its customers are going to implement an alternative to what is laid out in the law, then the region should work toward a consensus solution which can be adopted by Congress and implemented by contract. The BPA administrator can recommend solutions and work to develop regional consensus, but he needs to operate within the law. If the law doesn?t meet the needs of BPA customers and the region, then it should be modified by Congress as it has done numerous times in the past, not by a BPA administrator through a rate case in which he attempts to be the final arbiter of fairness for the region.?
In seeking a ?petition for review,? CPUD is asking the court to stop the BPA?s ?final action? plan issued on Feb. 28, because it is ?contrary to this court?s opinions in PGE (Portland General Electric) v. BPA and Golden Northwest v. BPA. Respondent (BPA) has no means to assure that any over payments to the IOUs would be recovered in the future. Respondent has deliberately tried to structure its proposed action to evade public and judicial review of its proposed interim payments to the IOUs. Expedited review now on these issues will likely reduce the amount of court review later.? That is the language in the conclusion of the lawsuit filed by Raymond S. Kindley and G. Kevin Kiely of the law firm of Cable Huston Benedict Haagensen & Lloyd LLP, which has long represented CPUD.
In laymen?s terms, CPUD board chair Merle Gillespie told the Chief Tuesday evening. ?The court told Bonneville they did wrong, and told them to do right. They (BPA) have the opportunity to fix it properly so we don?t get in this problem again, but in the rush to do some kind of interim thing - we think they?re doing something that will just lead to more problems. Clatskanie is asking them to do what the court said.?
The resumption of the residential exchange payments, Gillespie said, ?is an opportunity to fix what is wrong, but it should be done properly and right. That?s what we?re asking them to do.?
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