WASHINGTON — The Bonneville Power Administration is asking six of the Northwest's private power utilities to forgo hundreds of millions of dollars in ratepayer benefits in order to help the agency recover its fiscal footing after the Western power crisis.
Bonneville and its public utility customers are looking for a deal involving PacifiCorp, Portland General Electric and other investor-owned utilities that could minimize a BPA rate increase this fall.
Such a deal would take pressure off electricity prices regionwide. But it presents a tough choice for the investor-owned utilities, whose residential and small-farm customers could see higher bills over the next three years as a result.
Closed-door talks involving the parties were scheduled to continue today and are said to be at a sensitive stage, with participants cautioning that a deal is far from certain. Some participants said last week that chances are good of reaching an agreement that could significantly cut BPA's costs.
In return, however, the private utilities could secure support for additional payments to those ratepayers during BPA's next rate period, 2007-11, plus they could settle outstanding legal challenges to their current BPA power allocations.
In addition, any agreement will need the support of public utility commissioners in Oregon, Washington, Idaho and Montana who regulate private utilities' finances and are watching out for ratepayer interests in the discussions.
The talks come at a particularly sensitive time for Portland General Electric, which has some of the region's highest rates and faces public takeover drives following the bankruptcy of its discredited parent company, Enron.
Even a modest hit on PGE ratepayers could push those efforts along. Lee Beyer, who sits on the Oregon Public Utility Commission, said a settlement could end up raising PGE and PacifiCorp's bills by up to 3 percent in the near term.
That might be a worthy tradeoff if ratepayers get better benefits in the future, he said. But Beyer also said he would examine any agreement skeptically.
"PGE customers have taken a pretty big hit, and I'm looking at getting those rates down, not up," he said. "It would be a really hard sell for me to save Bonneville's bacon and some of the others at the cost of PGE ratepayers."
PacifiCorp and PGE representatives declined to discuss the talks in detail.
A settlement could reduce the monthly BPA credits that residential and small-farm customers of the utilities get. Right now, the credit is worth $10.94 for PacifiCorp customers and $6.95 for a PGE customer using 1,000 kilowatt hours.
A deal would get BPA out of an obligation to pay a $200 million "reduction of risk discount" to the two largest private utilities — PacifiCorp and Puget Sound Energy — that was part of a controversial contract signed during the energy crisis.
Under a proposal now on the table, BPA would also defer $55 million in scheduled payments to the six private utilities until after 2006, and the utilities also would forgo $225 million more due from BPA over the next three years.
In return, the utilities in the 2007-11 rate period would receive between 200 megawatts and 400 megawatts of additional BPA power. The exact amount and how to value the power remains at issue, three sources familiar with the talks said.
Besides PacifiCorp, PGE and Puget, the other private utilities affected are Spokane-based Avista, Idaho Power and NorthWestern Energy in Montana.
In the settlement talks, all parties have some leverage.
Private utilities have signed contracts guaranteeing BPA financial benefits. The public utilities have a lawsuit that could nullify those deals. Bonneville has the hammer of a rate increase that all the utilities want to avoid.
"It seems to me that there's pressure on all sides," said Dick Byers, who is representing the Washington Utilities and Transportation Commission in the talks. "I'm optimistic. I think we are making progress."
Bonneville provides nearly half the region's electricity, selling wholesale power from federal dams in the Columbia River basin and one nuclear plant.