Idaho Public Utilities Commission
Case No. AVU-E-08-06, Order No. 30672
November 14, 2008
Contact: Gene Fadness (208) 334-0339, 890-2712
Avista rates increase as result of BPA action
A reduction to a credit given by BPA to residential and small-farm customers of Avista Utilities will result in an average 6.1 percent electric rate increase, or about $4.97 per month. The rate change is effective dating back to Nov. 1.
A ruling by the U.S. Court of Appeals for the Ninth Circuit in May of 2007 resulted in a significant reduction of the total Bonneville Power Administration Residential Exchange credit given Avista customers, as well as customers of other investor-owned utilities in Idaho including Idaho Power Co. and Rocky Mountain Power.
After the court decision, BPA calculated that Washington and Idaho customers of Avista were still eligible for $22 million in benefits. However, since then BPA has reduced that benefit to $3 million. Idaho’s share of that $3 million is $762,600. Because of that reduction, the credit for Avista’s Idaho customers is being reduced from about a half-cent per kWh to 0.057 cents per kWh, which results in the 6.1 percent increase to rates.
The Ninth Circuit Court of Appeals said BPA did not act in accordance with the Northwest Power Act when it approved a settlement in 2000 regarding wholesale power rates and Residential Exchange Program credits to customers of public and private utilities in the Northwest. The court said customers of the region’s investor-owned (private) utilities received too much in credits while customers of public co-ops and municipalities were overcharged.
The Northwest Power Act authorizes BPA to enter into power exchanges with investor-owned utilities in the Northwest to allow residential and small-farm customers to share in the benefits of the low-cost power generated by BPA’s hydroelectric dams. Avista’s customers get a cash rebate when its costs to provide power are higher than BPA’s.
BPA now claims that there were a number of years when Avista’s average system costs were less than an exchange rate established by BPA and that Avista owes BPA $16.5 million. BPA subtracted that amount from the original $22 million in benefits assigned to Avista customers. BPA subtracted another $2.57 million, the amount it claims it overpaid Avista between the original 2000 settlement and the 2007 court ruling invalidating that settlement.
Although the commission has no choice but to adopt Avista’s rate change, it continues to oppose the court decision and the method BPA used to determine what the current credit should be. The commission has filed a protest with the Federal Energy Regulatory Commission.
“The Northwest Power Act envisioned Residential Exchange Program benefits for all four states – Idaho, Montana, Washington, and Oregon. For the BPA administrator to issue a decision that all but eliminates these benefits for Idaho customers is inconsistent with the act.” the commission said. “The act does not say that the benefits are available in the other three states, but not in Idaho.”
“Based on the BPA Administrator’s Record of Decision, which wipes out all but minimal benefits to Idaho customers, the Idaho PUC will pursue all available legal remedies to address this punitive and egregious error,” the commission said. “We are extremely disappointed that the administrator did not use his discretion to address this imbalance of benefits in the four-state region.”