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Project irrigators in limbo over power costs

‘Transition charges’ said to be a ‘deal killer’


Plans for relieving Project irrigators from crippling power costs have come to a standstill.

“The situation on the federal power is not getting any clearer,” Hollie Cannon, executive director of the Klamath Water and Power Association, said Tuesday at the association’s August board meeting. “There are still a lot of unknowns.”
Transition charge
At the July board meeting, Dean Brockbank, vice president and general counsel of PacifiCorp, announced the possibility of a 2- to 3-cent per kilowatt-hour transition charge for irrigators who switch from Pacific Power to federal Bonneville Power Administration power deliveries.
“This transition charge of 2 or 3 cents on each kilowatt for up to five years is basically a deal killer,” Cannon said.
Klamath Project water managers began the move toward federal power deliveries after a 50-year contract between the Project and PacifiCorp expired in 2006. The contract guaranteed irrigators a low power price, and after it expired, power rates increased to standard rates.
Gary Derry, who is a member of the KWAPA and Shasta View Irrigation District boards, pointed out Shasta View’s power budget has increased from $36,000 in 2005 to $532,080 in 2014. This year’s figure is more than a half a million dollars despite at least $500,000 in energy improvements that have been made within the last five years, he said.
“That’s the reality of what’s going on out here,” Derry said. “It’s absolutely outrageous.”
Cannon said the proposed transition charge is based on money PacifiCorp has invested in the region. Revenue generated by the charge is meant to recoup those costs and avoid transferring additional costs to other PacifiCorp customers after irrigators leave the corporation’s service area.
Two options
According to Cannon, the KWAPA board has two options: One is to ask PacifiCorp to file a tariff case with the Public Utility Commission. He said PacifiCorp has agreed to not include a transition charge in the tariff, but the PUC or other industries could request the charge be included.
“That’s probably risky because it’s pretty certain that somebody is going to bring up the transition charge,” Cannon said.
The other option is to seek legislation exempting Project irrigators from the transition charge.
Derry told the KWAPA board he has always believed the federal energy deliveries would be secured through political action. But from a KWAPA standpoint, Derry said, he thinks the board has hit a brick wall.
“The staff here does not have the capabilities, nor does it have the desire to take on the legislative issue,” Cannon said.
“I do see this as a roadblock. It’s a deal breaker for me at this point,” Derry said.
Average cost
Board member Ed Bair said he believes it’s going to be difficult to bring anything to the Oregon or federal legislation that only benefits a specific group of people. He pointed out the average cost of a kilowatt-hour in the United States is 12.2 cents. He said Oregonians pay roughly 10.5 cents, and Californians pay about 13 cents per kilowatt-hour, which are both near the national average.
“If we were well above average, I believe a legislative opportunity may be there,” Bair said.
Cannon pointed out the proposed transition charge is a temporary, 5-year fee.
“The question is: Does that added expense for five years pay off in 15 or 20 years?” Bair said.
Bair suggested keeping the channels of communication open to see if the board can develop other avenues of relief.



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              Page Updated: Tuesday September 16, 2014 01:10 AM  Pacific

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