Starting today, electric bills sent to Puget Sound Energy's roughly 950,000 residential customers will be an average $10 a month higher...

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Starting today, electric bills sent to Puget Sound Energy’s roughly 950,000 residential customers will be an average $10 a month higher, with small-farm operators and irrigators facing even larger increases.

The rate increase — which also affects six other privately owned power utilities in Washington, Oregon and Idaho — is the result of a May federal appeals court ruling against the Bonneville Power Administration (BPA).

Tuesday, the state’s Utilities and Transportation Commission agreed to allow Bonneville to end a longtime power credit that benefited residential customers and operators of small farms served by the seven private utilities, which together provide electricity to about 60 percent of the region’s population.

“Particularly for families of modest income, that $10 is significant,” said utility spokesman Roger Thompson.

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About 45 percent of Washington’s population — customers served by PSE, Avista Utilities and Pacific Power — will see immediate increases of between 11 and 17 percent on their electricity bills. Puget Sound Energy, with more than 1 million electricity customers in 11 counties, is the region’s largest utility. Avista provides service to nearly 325,000 customers in eastern Washington and northern Idaho. Pacific Power has residential customers in six states, including about 122,000 in Washington.

The change does not affect customers of public utilities such as Seattle City Light and Snohomish County Public Utility District.

The situation results from a long battle over attempts to equalize rates in the Northwest, where federal hydropower is cheaper than electricity bought on the open market.

BPA is a not-for-profit federal agency that sells power from the region’s 31 dams and one nuclear plant to about 140 public utilities across the region.

Utilities can buy power from two sources: the BPA or the open market which, for utilities, is like the difference between buying wholesale and retail.

Federal law gives public utilities priority in purchasing cheaper electricity from the Northwest’s federally owned power facilities, which generate about 40 percent of the electricity consumed by the region.

A 1980 federal law — the Northwest Power Act — sought to equalize rates paid by customers of both public and privately owned utilities.

As a result, BPA made payments of about $25 million a month — or $300 million annually — to the privately owned utilities, which passed that along to customers in the form of credits on their electricity bills.

Those credits are now suspended, which means customers have to make up the difference.

In the case of an average PSE customer, that will amount to $10.28 a month, Thompson said. Small-farm operators and irrigators will pay more because they use more electricity. Other business and industrial customers won’t be affected because they never received the credit.

“We’re very concerned not only because of the impact on many of the families we serve but because it’s a loss of equity, it’s a loss of fairness,” Thompson said.

But the public utilities also argue that their customers are being unfairly charged.

In 2000, BPA entered into a settlement agreement with the seven investor-owned utilities to determine how much money their customers would receive as credits between 2001 and 2006.

Several of the region’s public utilities sued, arguing that BPA officials stepped outside their legal authority and miscalculated the payments to the private utilities. They argued, too, that the deal with private utilities resulted in hefty rate increases for public utilities since their customers were essentially forced to pay for the credits given to private-utility customers.

In May, a three-judge panel of the federal Ninth Circuit Court of Appeals in San Francisco sided with the public utilities in questioning the legality of the BPA payments to the Northwest’s privately owned utilities.

Because of the court ruling, the BPA went before the state’s Utilities and Transportation Commission, which on Tuesday allowed the agency to suspend its credit payments to private-utility customers here.

Neil Neroutsos, a spokesman for Snohomish County PUD, said his utility purchases about 85 percent of its power from BPA.

Because of the private-utility settlements and the 2002 energy crisis, Neroutsos said, Snohomish County saw a 50 percent rate increase.

The payments made to privately owned utilities “are not supposed to increase the rates for public utilities,” he said. “We wanted to make sure [payments] are calculated in a way that is balanced for everyone.”

In a joint news release issued May 21, the seven privately owned power utilities affected by the court ruling vowed that they will fight to have their customers’ power credits restored.

Information from the Associated Press is included in this report.

Sara Jean Green: 206-515-5654 or

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