Case No. PAC-E-07-10, Order No. 30329

May 31, 2007

Contact: Gene Fadness (208) 334-0339




Ninth Circuit decision temporarily suspends BPA credit


Responding to a recent federal court decision, state regulators today approved an application by Rocky Mountain Power to eliminate a credit its residential customers receive effective June 1 and to its irrigation customers on or about July 12.


A panel of three judges on the Ninth Circuit Court of Appeals recently declared that the Bonneville Power Administration did not act in accordance with the law when it negotiated a settlement regarding the distribution of wholesale power and credits to electric utilities and customers in the Northwest. Because of the court’s decision, BPA suspended the credit to customers of investor-owned utilities in four Northwest states.


For Rocky Mountain Power’s southeastern Idaho residential customers, the result is a 28 percent increase for the average customer who uses 1,000 kWh per month. For irrigation customers, average bills will increase 51 percent on or after July 12.


The Idaho Public Utilities Commission said it recognized that suspension of the benefit “will result in an immediate and substantial increase in residential and small-farm irrigation customers’ electric bills. However, we also acknowledge that this credit is a direct pass-through by the utilities of a federal benefit, and the actions of the federal court and federal agency with authority over such benefits are what require our actions in eliminating the billing credit.”


The Idaho Public Utilities Commission has joined commissions in Oregon, Washington and Montana asking the Ninth Circuit for a re-hearing on the issue. Re-hearings are granted in cases of “exceptional importance.” The commissioners said this case easily meets that standard. “Indeed, it is difficult to imagine decisions that would have more direct impact on such a large number of people,” the commissioners said.


BPA is joining with the state commissions in seeking re-hearing. “We believe the court’s decision on the settlements are in error,” said Mark Gendron, BPA vice president of requirements marketing. “We are exploring all potential viable avenues for rehearing, including by the full court, if possible.”


The Idaho commission said the Ninth Circuit’s decision comes at an already difficult time for Rocky Mountain Power’s Idaho customers. “Dry conditions are negatively impacting electric bills throughout Idaho. Farmers who have already completed their business plans for the year and planted crops face higher fuel and fertilizer costs. The court’s decision exacerbates this problem many times over,” the commission said. “Customers have our assurance we will do all we can to reverse or mitigate the impact of this decision.”


The Northwest Power Act of 1980 requires that residential and small-farm customers in the Northwest share in the benefits of the region’s federal hydroelectric projects. Customers of public utility districts, such as rural co-ops and municipalities, typically benefit from the federal hydroelectric system with preferential access to low-cost federal power provided by BPA. Customers of the region’s investor-owned utilities, such as Rocky Mountain Power and Idaho Power, receive their share of the benefit through a Residential Exchange Program (REP) that results in financial credits on the electric bills of residential and small-farm customers.


The amount of the credit is determined by formulas using various factors, including a utility’s average system cost for producing power. In 2000, BPA offered the region’s investor-owned utilities the option of entering into a settlement in lieu of a more traditional REP calculation. Several public utility districts challenged the settlement, alleging BPA had overstepped its authority under the Northwest Power Act and that the result was too small a benefit to publicly owned utilities and too large a benefit to customers of investor-owned utilities. The court ruled in favor of the public utility districts, eliminating the REP for the first time in nearly 30 years until a new settlement can be reached.


To soften the blow for irrigation customers, Rocky Mountain Power proposed an immediate end to the residential credit and to use the remaining amount in the REP fund balance to carry irrigators through until the balance is zeroed out, which the company says will happen July 12. The company maintained that residential credits have received a benefit this year through the winter heating season, but irrigators have not received any benefit yet with the irrigation season just under way.


The Idaho Irrigation Pumpers Association polled its members who said they favor distributing the remaining credits in the balancing account at pre-termination levels rather than reducing the credit to make it last longer.