BPA plan could cost Flathead Electric millions

The Daily Inter Lake

A Bush administration proposal that calls for the Bonneville Power Administration to charge market rates for its electricity could cost Flathead Electric Cooperative as much as $20 million per year.

General Manager Ken Sugden first heard about the proposal on Friday. If approved, he said it would have a "drastic" effect on local power rates.

"Right now, market rates are about $15 per megawatt hour above what we pay Bonneville," Sugden said. "We've been looking forward to lowering rates, but if they're forced to go to market rates, we'd have to raise rates."

Bonneville currently supplies about half of Flathead Electric's total power needs. The remainder comes from PacifiCorp at a substantially higher rate.

Once the PacifiCorp contract expires in 2006, the co-op is hoping to buy almost all of its electricity from Bonneville. Sugden recently estimated that this switch could save the company more than $12 million per year, which would likely result in a significant rate decrease.

If Bonneville instead starts charging market rates and the market stays at its current level, "it would probably cost us an additional $15 million to $20 million per year," Sugden said.

Several Pacific Northwest power customers are currently negotiating with Bonneville about the possibility of entering into a 20-year, cost-based power contract. Sugden said the Bush administration proposal could lend impetus to complete that effort and lock in the low-cost power.