Case No. AVU-E-07-03, Order No. 30327

May 31, 2007

Contact: Gene Fadness (208) 334-0339




Ninth Circuit decision impacts Avista customers


Responding to a recent federal court decision, state regulators today approved an application by Avista Utilities to eliminate a credit its residential and small-farm customers and implement a surcharge of 0.144 cents per kWh to recover an over-refunded balance effective June 1.


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 must temporarily suspend issuing the credit to customers of investor-owned utilities in four Northwest states.


For Avista Utilities’ northern Idaho customers, the result is an average 9.5 percent increase for residential customers. The BPA credit for residential and small-farm customers was 0.459 cents per kWh. That credit disappears and a 12-month surcharge of 0.144 cents is added to recover an over-refunded balance of $913,000. To keep the over-refunded balance from growing larger, the commission ordered that both the suspension of the credit and the surcharge become effective June 1. However, commission staff will audit the balance account and institute a 30-day public comment period. The surcharge is subject to refund based on the result of the staff audit and comment period.


The Idaho Public Utilities Commission said it recognized that BPA’s 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 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 Avista 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.


Those wishing to submit comments regarding the interim surcharge must do so by no later than July 2. Comments are accepted via e-mail by accessing the commission’s homepage at and clicking on "Comments & Questions." Fill in the case number (AVU-E-07-03) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.