Mark Engler Freelance Writer Capital Press - July 22, 2005

SALEM - Oregon Gov. Ted Kulongoski this week signed a bill designed to guarantee that farmers in the Klamath Basin won’t see their energy bills go up by more than 50 percent in any given year over the next seven years.

Senate Bill 81 was first passed in the Senate back in April as a measure simply to allow public utilities to charge customers different rates to encourage energy conservation. In the Oregon House of Representatives amendments were added requiring utilities to provide payment-credits as necessary to avoid rate increases of greater than 50 percent.

“This is a bill the governor has been working on in order to avoid any rate shock for farmers and irrigators in the basin,” said Anna Richter Taylor, a Kulongoski spokeswoman. “He’s been interested in finding a fair approach, and Senate Bill 81 ultimately does that.”

Klamath farmers have been under contract to receive low-cost power for decades as a result of an agreement whereby the U.S. Bureau of Reclamation traded water rights with the California-Oregon Power Company to develop hydroelectric generation facilities in the region.

Those contracts are set to expire next spring, after which irrigators will likely have to start paying rates more in line with the power’s actual market value.

“This measure is a critical safety net for the Klamath Basin irrigators to allow them time to adapt to a possible rate increase of more than 1000 percent,” said Sen. Doug Whitsett, R-Klamath Falls.

The Oregon Public Utilities Commission in June dismissed a petition by PacifiCorp, the company that now serves the irrigators, to void power contracts with more than 1,000 basin farmers. The commission ordered that Klamath Basin ag power rates be consolidated as part of general rate increase proceedings for all of PacifiCorp’s Oregon customers.

A commission decision in PacifiCorp’s general rate case, in which the company seeks an overall increase of 12.5 percent, is expected no later than Sept. 12.

Irrigators tend to want actual rate-hike questions postponed until next year when PacifiCorp’s hydroelectric project on the Klamath River comes up for relicensing before the Federal Energy Regulatory Commission. Senate Bill 81 is, however, seen as giving some assurance that in any event rates will “gradually ramp up,” so that irrigators “don’t get it all at once,” said Dave Solem, a member of the Klamath Water Users Association board of directors.

“Our real objective is to negotiate a reasonable power rate, and not go to a tariff rate,” he said. “But (SB81) will give people the opportunity to make some adjustments over time.”

Solem said in the grand scheme of things, cheap power tends to in fact encourage better water conservation, rather than more water usage, as is sometimes suggested by critics of farmers in the region.

“In our district, 100 percent could be gravity irrigated, but probably 75 percent is sprinkler irrigated now,” he said. If farmers are forced to cut power costs in drastic fashion, they may ultimately revert to less water-efficient flood irrigation systems.

Senate Bill 81’s “rate shock” amendments passed on 47-10 vote in the House June 2 and then on a 22-6 vote July 11 in the Senate.

Sen. Vicki Walker of Eugene was among six Democrats who voted against the bill upon its return to the Senate. She said she feels the seven-year rate-cap period is longer than she would have liked; she’d have preferred farmers start paying full market rates for their power in three to five years.

Sen. Charlie Ringo, D-Beaverton, also a “no” vote, said that while he supports “cushioning the rate shock on farmers,” he believes the bigger problem in the basin is “too many people chasing too little water.

“One of things that contributes to this is the subsidized rates for the irrigation of the water,” said Ringo.