Information About the Residential Exchange Settlement

Recent news stories have said that electricity rates in Oregon will increase as much as 13%. Your rates are not increasing.

These stories are referring to the electric rates of PGE, Pacific Power and other investor-owned utilities.  These companies have been receiving payments from BPA through a special program called the Residential Exchange. The 9th U.S. Circuit Court of Appeals recently ruled against the methodology used to calculate the Residential Exchange payments, so BPA has suspended them.

Background:

Publicly owned utilities, like Columbia River PUD, have first right to the low-cost hydropower produced by the Federal Columbia River Power System.  The Residential Exchange program was implemented by BPA 25 years ago as a way to share some of the benefits of the hydropower system with residential and small farm customers of privately owned utilities, including Pacific Power, Portland General Electric, Avista, Puget Sound Energy, and others.  Instead of directly receiving some of the low-cost power produced by the hydro system, those utilities received monthly cash payments from BPA.  The payments appeared as a credit on their customers' bills. From the time the program was implemented until 2001, BPA  paid $50 - $150 million each year for the Residential Exchange program.

In 2002, BPA changed the methodology it used to calculate the Residential Exchange payments.  As a result, annual payments jumped to $350-$380 million a year.  This resulted in higher wholesale rates for public power utilities who purchase power from BPA.  Columbia River PUD customers paid rates that were 3.5% higher from 2002-2006.  That equates to over $1 million a year being removed from our economy.

On May 3, 2007, the 9th US Circuit Court of Appeals ruled that the changed methodology that BPA used to calculate payments beginning in 2002 was illegal.  As a result of this ruling BPA has suspended Residential Exchange payments until a new settlement can be reached.

Read an editorial by PUD General Manager Kevin Owens about the Residential Exchange Settlement.