Washington Utilities & Transportation Commission v. Federal Energy Regulatory Commission

Opinion by Judge CANBY.

BACKGROUND

THE RESIDENTIAL EXCHANGE PROGRAM

This case presents a challenge to certain cost calculations made by the Bonneville Power Administration (“BPA”) in its operation of the Residential Exchange Program of the Pacific Northwest Electric Power Planning Conservation Act (“Northwest Power Act”), 16 U.S.C. §§ 839 -839h (1985). BPA is the marketing agent for electric power produced by federal generating plants in the Pacific Northwest. The Northwest Power Act established a power exchange program between BPA and qualified investor owned utilities (“IOUs”) of the Pacific Northwest. The exchange program is designed to eliminate the disparities between electric rates paid by residential customers of IOUs and *937 the lower rates paid by customers of publicly-owned utilities. An IOU participating in the program may sell electricity to BPA at a rate that reflects the utility’s “average system cost” (“ASC”) and in exchange purchase an equivalent amount of power at BPA’s lower preferred rate. In actuality, no power is exchanged. Instead, BPA pays the utility the difference between the cost of the utility’s power and the cost of BPA power. In effect, the…