November 30, 2011

Contact: Gene Fadness (208) 334-0339



Settlement results in restoration of BPA credit


The Idaho Public Utilities Commission’s active participation in a federal court appeal has resulted in a settlement that slightly reduces bills for Rocky Mountain Power customers and restores a Bonneville Power Administration credit after a near four-year absence. 


Restoration of the credit means a reduction of about 0.2 cents per kWh to the bills of Rocky Mountain’s residential and small-farm customers effective Dec. 1. After a deferral account is paid off in two years, the credit should become higher.   


“While the amount is not large initially, restoring the BPA credit is a step in the right direction that could lead to larger credits in the future,” said Commissioner Marsha Smith. 


“We want to praise our legal staff and others here for their ongoing commitment and effort in this appeal and the resulting settlement,” said Commissioner Mack Redford. 


BPA is a Portland-based federal agency that markets power from 31 federal dams and a nuclear plant in the Northwest.  The 1980 Northwest Power Act requires that residential and small-farm electric customers in the Northwest share in the benefits of the region’s federal hydroelectric projects through one of two ways.  Customers of consumer-owned utilities, such as rural co-ops and municipalities, benefit with preferential access to low-cost federal power from BPA.  Customers of the region’s investor-owned utilities (IOUs) – such as Rocky Mountain Power – receive their share of the benefit through a financial credit on the bills of residential and small-farm customers.  About 85 percent of Idahoans are customers of IOUs, while the others are customers of consumer-owned utilities. 


In May 2007, the Ninth Circuit Court of Appeals declared that BPA did not act in accordance with the Northwest Power Act when it approved a settlement in 2000 regarding credits to customers of the region’s investor-owned utilities. The court said the 2000 settlement gave customers of the region’s IOUs too much in credits while customers of public co-ops and municipalities were overcharged. 


Shortly after that decision, BPA suspended the credit for Idaho’s three major IOUs (Rocky Mountain Power, Idaho Power and Avista Utilities) until the BPA could re-calculate the rates and credits to comply with the court’s directive.  The impact was severe for Rocky Mountain Power customers, where the loss of the credit meant a 28 percent increase for residential customers and a 51 percent increase for irrigation customers. 


The Idaho commission joined with commissions in Washington and Oregon, Rocky Mountain Power and other investor-owned utilities to appeal the Ninth Circuit decision, objecting especially to the “Lookback Adjustment.” That adjustment withheld future credits to customers of IOUs in order to refund the amount of the credits in the overturned 2000 settlement to the consumer-owned utilities. 


As a result of the states’ appeal, a settlement was reached among the three state commissions, the regional IOUs and almost all the consumer-owned utilities. The parties agreed to discontinue the Lookback Adjustment, resulting in an immediate restoration of the credit, though not at the same level as the credit before the court’s 2007 ruling. The settlement also fixed the amount of credits to be paid all Northwest IOUs over the next 17 years. 


“Getting the Lookback Adjustment removed was a key victory for customers, ensuring them future protection against any future liability,” said Paul Kjellander, president of the Idaho commission.


Idaho customers of Rocky Mountain Power currently have a negative balance of $1.67 million which will be applied against the credit over the next two years.  Once that is paid off, the credit should increase.