Notices

January 2008

Concept Paper

Discussion of Chehalis River Basin Flooding and Solutions (Click to read paper)

June 2007

Residential Exchange Editorial

Lewis PUD Response to Private Utility Residential Exchange Program

June 12, 2007

Over the past couple of weeks there has been a flurry of media coverage regarding the May 3rd ruling by the 9th Circuit Court of Appeals and the resulting decision by the Bonneville Power Administration (BPA) to suspend $350 million in annual federal hydro system benefit payments to Northwest private utilities including Puget Sound Energy (PSE).  The Chronicle carried two articles by the Associated Press, one on May 28, 2007, titled “Utility Battle Brewing over Rates Charged by BPA, and a second one on June 7, 2007, titled “Private Utility Customers to See Rate Jump”. 

On May 21, 2007 Puget Sound Energy CEO, Stephen Reynolds, issued a statement that its customers are entitled to receive federal hydro power benefits from BPA and that the 9th Circuit Court ruling will cause a significant increase in electric bills for PSE residential and small farm customers.  PSE stated that as a result of the court’s action, its customers will face higher bills while the customers of municipal utilities and public utility districts will continue to be subsidized.  Mr. Reynolds further notes that PSE will be requesting that the Washington Utilities and Transportation Commission allow it to suspend the residential rate credit and that will result in a 13% increase in the average residential bill.  PSE indicates that the residential exchange program has equitably distributed the benefits of the federal hydro for many years and that the recent court decision created a harsh inequitable disparity for the regions citizens.

Public Utility District No. 1 of Lewis County (Lewis PUD) submits this letter to offer some clarification and to remind folks that there are always two sides to a story and that this is surely the case with regard to BPA payments to the private utilities.

Lewis County PUD and other public utilities believe the 9th Circuit Court decision vindicates public utilities’ claim that BPA has been overcharging the Lewis PUD and its customers and using that money to subsidize the electric rates of the private utilities customers. 

The real injustice here is that the customers of Lewis PUD and 118 other Northwest public utilities have been paying much more than they should have for over five years to support BPA’s now-illegal and excessive “residential power exchange” program. 

This program of direct cash payment to the private utilities started 25 years ago in an attempt to meet a 1980 Northwest Power Act requirement that some benefits of the federal hydro power system be set aside for residential customers of private utilities.

BPA includes the costs of the “residential exchange” payments in the rates for the electricity it sells to public utilities like Lewis PUD which are then passed on to their customers.  Historically, these payments have usually fluctuated between $50 million and $150 million per year.  That is a range most public utilities have accepted as reasonable and fair.

However, in late 2001, following the West Coast energy crisis, these payments ballooned to between $300 and $380 million a year under new BPA – Private utility contracts.  Public utilities were outraged, because their customers’ rates, including Lewis PUD, were raised to cover these costs.  And these BPA costs for the private utility payments were added to already excessive rate increases by BPA.  BPA increased rates to public utilities and Lewis PUD 46% on October 1, 2001, and Lewis PUD passed these costs on to its customers with a 30% retail increase.  Public utilities filed suit against BPA making the argument that the private utility contracts were illegal.  

Since 2001, private utilities have collected almost $1.8 billion in total payments from BPA, according to Public Power Council figures, about double the historical average, at public utilities expense.  A typical Lewis PUD’s residential customer, using 2,100 kwh per month has been paying $6 to $7 per month more for electricity to fund the excessive payments to subsidize the private utility customer rates.

Now that the Court has ruled in favor of public utilities, it’s time to even things up.  It is time to return to a fair and equitable payment system that complies with the Northwest Power Act. 

As a result of the 9th Circuit ruling and BPA’s suspension of the private utility payments, private utilities, including PSE, have begun a political campaign calling for congressional action to change the Northwest Power Act.  Public Power believes any kind of political strategy is risky for the Northwest. Everyone in the Northwest benefits from lower-cost BPA power, and there have been repeated attempts outside the region to take that benefit away from us.  Seeking a political solution with Congress opens the door to yet another power grab, creating shortages and driving up power costs for everyone in the Northwest.  If the rest of the country has its way, BPA power would be priced at market prices instead of at cost, a two or three fold increase.
 
Prior to 2001, BPA administered a reasonable sharing of the hydro system benefits between public and private utilities.  Public utilities accepted that level of sharing.  However in 2001, when BPA decided to abandon the historical fair sharing public utilities, including Lewis PUD, found the arrangement unacceptable.  It is Lewis PUD’s hope that a fair settlement can be reached for both public and private utilities that falls within the guidelines set by the court and that complies with the Northwest Power Act.

Dave Muller

April 2007

Lewis PUD Commisioners Adopt Resolution "Green Dams, Blue Skies"

On April 9, 2007, the Commissioners of Lewis County PUD approved Resolution 2378 relating to the Northwest’s Federal dams and hydro system and supporting the Northwest River Partners’ Campaign “Green Dams, Blue Skies”. 

The Commissioners oppose removing the lower Snake River dams or onerous changes in the federal hydro system operations that are not science based or cost effective.  The Commissioners opposition stems from the devastating impacts such actions would have on the Northwest’s economy and on the District’s power supply costs and the fact that it would remove of a clean, renewable and reliable energy resource.

Lewis County receives nearly all of it electrical supply from the Bonneville Power Administration (BPA), of which approximately 85% is generated by the federal hydro system.  The Snake River projects represent approximately 12% of BPA’s supply so removal of these dams would have significant impacts and the environment and BPA rates from replacement power.

The Lewis PUD Resolution supports the Northwest River Partners “Green Dams, Blue Skies” campaign to educate and raise awareness of benefits of the Northwest hydro system. 

BPA Rates and Cost Control

Over the past few years BPA has had significant rate increases to pay for market power purchases and to meet its payment obligations to the U.S. Treasury. Rate increases like these have hurt Northwest ratepayers and the economy. Non profit utilities, including Lewis County PUD, have fought back, rallying BPA to cut costs and to look for other efficiencies.

Rising Costs for Fish

Since 1978 Northwest ratepayers have spent more than $7 billion on fish and wildlife programs. Today BPA spends an average of $690 million each year on such programs. BPA fish spending amounts to approximately 21% of its power costs. Lewis PUD purchases nearly all its power from BPA and for calendar year 2006, paid BPA approximately $25 million for power. As a result Lewis PUD ratepayers in 2006 paid $5 million or approximately 13% for fish. A typical Lewis PUD residential customer that purchases 2,100 kilowatt hours every two months pays $100 for power of which $13 is for BPA fish programs.

Balanced, Measured Results for Fish: Draft BiOp

You will be hearing a lot more about fish spending and in particular, the Draft Biological Opinion, or "BiOp" (during the next several months). The federal government just released the Draft BiOp, which outlines how the Columbia River power system will operate over the next 10 years to protect fish listed under the Endangered Species Act. The draft BiOp comes at a time when record salmon runs have been recorded on the Columbia River for the past several years. The draft BiOp is the first step in promoting cost-effective restoration efforts for the benefit of salmon and ratepayers. Some say that more money is needed from ratepayers to save fish. However, others such as Northwest public utilities and Lewis PUD, want to see results-based and accountable fish spending by BPA. The region needs to focus on programs that provide a balance between the benefits for salmon and ratepayer costs. For more information please go to the website at Northwest River Partners.

NOTICE

On June 26, 2006, the Board of Commissioners of Public Utility District No.1 of Lewis County (District) approved an increase in the line extension costs for providing electric service to customers.  The District’s line extensions fees and charges had not been updated since 1991.  Fifteen years of increased costs for labor, material and supplies made the fee increase necessary.

The new fees and charges are be applicable to electric service applications made on or after July 1, 2006, and for applications made prior to July 1, 2006 which do not complete the line extension prior to December 31, 2006.  The Commission approved the December 31 deadline to allow customers who previously made electric service applications time to complete their development activities under the old line extension schedule of fees.

If you have questions relative to this notice and / or the status of your service application, please contact the District Engineering Clerk (748-9261 or 740-2405).