Irrigators, PacifiCorp square off over electricity charges

By MATEUSZ PERKOWSKI
Capital Press

November 03, 2009

The Klamath Off-Project Water Users group faced off against PacifiCorp over electricity rates in the Oregon Court of Appeals on Tuesday, Oct. 27.

The group, which represents irrigators outside the Klamath Project, alleged that in 2006 the power utility increased electricity rates in violation of a previous contract.

PacifiCorp countered that the 1956 agreement was terminated with permission from the Oregon Public Utility Commission, which oversees electricity rates in the state.

Off-project irrigators rely on electricity to pump water, which is used to irrigate crops and eventually contributes to increased flows in the Klamath River.

Melinda Davison, an attorney for the irrigators, argued that as long as they provide the utility with additional water to run its hydroelectric dams, Pacificorp is bound by a contractual obligation to charge 0.75 cents per kilowatt hour.

Under the rate schedule enacted in 2006, the company would over time increase rates to roughly 8 cents per kilowatt hour, Davison told Capital Press after the hearing.

The group is seeking damages for the difference between the contracted rate and the new rates implemented by PacifiCorp.

Bruce Campbell, an attorney for PacifiCorp, said the irrigators' arguments have already been rejected by the Oregon Public Utility Commission and a trial court.

"They lost their battle fair and square," Campbell said during oral arguments.

The irrigators are trying to circumvent the commission's authority by claiming their contract with PacifiCorp is a separate issue from the state-governed electricity rate schedule, he said.

"Presumably, any customer who doesn't like their rate can sue the utility," Campbell said. "In effect, this would roll back what the PUC did."

The idea that irrigators are trying to create a back door which other electricity users could exploit to avoid rate hikes is "utter nonsense," Davison said.

Most electricity customers don't have contracts with PacifiCorp and instead pay according to a rate schedule, she said. In fact, there are very few such contracts left in existence, Davison said.

Campbell said the contract between the irrigators and PacifiCorp doesn't specify a termination date, but that does not mean the agreement is effective in perpetuity.

Under Oregon law, contracts are only perpetual if they're specified as such, he said. Otherwise, the agreements are considered indefinite and can be ended with prior notice, he said.

Davison argued the context in which the contract was created indicates that it is perpetual. However, the irrigators weren't allowed to present that evidence before the Oregon Public Utility Commission or the trial court, she said.

The contract's perpetuity is tangentially related to another controversy in the Klamath region, Davison told Capital Press after the hearing.

The irrigators' contract with PacifiCorp hinges on continued hydroelectric power production along the Klamath River, she said.

The power utility has reached a tentative deal with state and federal agencies to remove four hydroelectric dams and restore salmon spawning habitat in the river.

Even so, the dam removal agreement doesn't preclude the irrigators from seeking damages for breach of contract, Davison said.

Under the terms of the deal, dam removal is subject to numerous studies and would not begin until 2020.

"As long as those dams are there generating electricity, we still have a case," Davison said.