plan stalls pacificorp fee halts talks klamath 070214

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Plan stalls: PacifiCorp fee halts talks. Power transition for local irrigators at standstill

By LACEY JARRELL Herald and News 7/2/14

Plans to move forward with a federal power plan for Klamath Project irrigators stalled at a Klamath Power and Water Agency (KWAPA) board meeting Tuesday.

The talks stalled when representatives of PacifiCorp announced the possibility of a transition fee for irrigators planning to switch from PacifiCorp to Bonneville Power Agency (BPA), which is a federal energy electrical provider.

“I don’t see that the board can make a decision and go forward with that transition charge hanging over us,” said KWAPA Executive Director Hollie Cannon.

The fee could mean a 2- to 3-cent per kilowatt increase for Basin farmers, according to Dean Brockbank, vice president and general counsel of PacifiCorp.

“Some would probably say those 2 or 3 cents are exorbitant; some would probably say it’s not exorbitant enough,” he said.

Brockbank explained that the Bureau of Reclamation (BOR), which oversees the Klamath Project, would receive the BPA power deliveries and would be considered Pacifi-Corp’s direct customer. He said BPA has federal preference power, which can only be sold to other federal entities, such as the BOR. Because of this, BOR would be the end customer, and would be billed for the use of the system, Brockbank said.

Irrigators would be considered third parties and BOR would have to figure out how to bill them individually.

“It would be up to Reclamation to figure out how to pass along those costs to the irrigators or KWAPA,” Brockbank said.

Transition tariff

Irrigators do not have to sign up for the federal power program — they can voluntarily elect to receive power from BPA, but once the transition is made it’s permanent, unless power from BPA is no longer available, Brockbank said.

Brockbank said it could take up to 10 months to find out if the fee is applicable to the sale of federal power to the BOR and Basin irrigators.

The transition fee is separate from distribution fees, many of which are already being billed to PacifiCorp customers, Brock-Bank said.

“I’m paying a power rate, that if my commodities take a downturn, I’m out of business. Period. I think you guys are taking a windfall off the irrigators’ backs,” said board member Gary Wright.

Brockbank said PacifiCorp is not making a windfall.

“We have tried for five years with irrigator groups, with Bonneville, with Reclamation, to come up with solutions to make this work. Fundamentally, power sales are done on a cost-of-service basis. What it costs is what customers are charged,” Brockbank said.

Cannon said he estimates that for every penny the power rate goes up, PacifiCorp collects an additional $1.3 million. Since 2006, PacifiCorp has taken an extra $13 million per year out of the Basin, he said.

“Who’s getting the benefit of that?” Cannon asked.

Incurred costs

Brockbank said when rates go up, it’s because PacifiCorp has incurred costs. He said the costs are considered “systemwide” and are distributed among customer classes accordingly.

“The company makes money by making a return on certain investments. We are a for-profit company — that’s no secret,” Brockbank said.

Klamath Project farmer Warren Haught said he thought the “whole thing sounds like a bucket of worms.” He wanted to know if the energy cost savings are going to be long-term.

Matt Walter, of Chiloquin, said he thought the information about the transition tariff should have been announced earlier in the decision-making process. He said federal power deliveries were only marginally advantageous to begin with and now too much time has been wasted.

“It’s a giant crapshoot. I think a lot more of this information should have been brought forward in good faith a long, long time ago,” Walter said.

The federal power program is part of the 2010 Klamath Basin Restoration Agreement and the Klamath Basin Hydroelectric Settlement. The agreements seek to establish reliable water supplies and affordable power rates for irrigators, restore fish habitat, help the Klamath Tribes acquire the 92,000-acre Mazama Tree Farm and remove four dams on the Klamath River.

ljarrell@heraldandnews.com ; @LMJatHandN

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