Friday June 3, 2005

Klamath Falls Herald and News

Combined wire, local reports

The Oregon House easily approved a bill Thursday that would ease the effects of a potential increase in power costs for Klamath Basin farmers who benefit from below-market rates.

The measure, approved 47-10, would phase in a rate boost that's sought by Pacific Power by limiting year-to-year increases for seven years. The bill now goes to the Senate.

PacifiCorp seeks to raise electric rates for 1,300 customers on the Klamath Reclamation Project and neighboring lands by as much as 1,200 percent, to market rates, when the current 50-year contract expires next April.

The rate request is pending before the state Public Utility Commission.

A team of irrigators from the Klamath Water Users Association has been working on the issue since 1998, and has been talking with PacifiCorp officials for a year and a half. The talks have now moved before the commission.

The goal for irrigators is to get a "reasonable" rate, or an increase they can bear, said Dave Solem, manager of the Klamath Irrigation District. The bill would provide some protection while talks continue, he said.

"It's a safety net or backup plan for Project and off-Project power users in the event that a reasonable rate isn't negotiated," Solem said. "Everything is still on the table."

Under the measure, Senate Bill 81, there would be a gradual transition to market rates so customers would not face year-to-year price increases of more than 50 percent for seven years.

The contract stems from deals in the early 1900s involving low-cost power agreements and the construction of hydroelectric dams in the region.

The company says rates are far below those needed to generate and deliver power and maintain infrastructure.

Current power rates, at about half a cent per kilowatt hour, make for a more efficient irrigation project, Solem said. Farmers, the district and the U.S. Bureau of Reclamation all use electric pumps that help conserve and reuse water.

Farmers say absorbing a huge rate increase all at once would drive some of them out of business.

''If you don't think a power increase of 1,200 times will kill, you're wrong,'' said Rep. Bill Garrard, R-Klamath Falls. Garrard spoke in favor of the measure on the House floor Thursday.

An economist's report last year concluded that most but not all lands would remain productive at the electric rates.

The power rate issue produces conflicts between farmers who want water in the drought-plagued region for their crops and activists who are backing the rate boost because that could reduce irrigation and conserve more water to help threatened and endangered fish.

Steve Pedery of the Oregon Natural Resources Council said Thursday that delaying the full implementation of full market rates would cost other Pacific Power customers an estimated $20 million that they otherwise could avoid paying.

''The money has to come from somewhere,'' he said.