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http://www.heraldandnews.com/articles/2005/07/12/news/top_stories/atop4.txt

Klamath power measure OK'd

July 12, 2005

Combined wire, local reports

The effects of a potentially sharp rise in power costs for Klamath Basin farm irrigators would be mitigated under a House-passed bill that won Senate approval Monday.

The bill now goes to Democratic Gov. Ted Kulongoski, who is expected to sign it.

At issue is a plan by Pacific Power to boost rates for about 1,300 farmers on the Klamath Reclamation Project and neighboring lands when a 50-year contract expires next April.

The contract is a result of deals dating to the early 1900s that involve low-cost power agreements and the utility's construction of hydroelectric dams in the region.

Pacific Power wants to bring the contract farmers' electric rates into line with those charged to other irrigators, arguing that the outdated contract rates are far below what's needed to cover costs of generating and delivering power and maintaining the system.

But analysts estimate that forcing an immediate rate catch-up once the contract expires would boost prices by an estimated 1,200 percent. Farmers say absorbing a huge rate increase all at once would drive some of them out of business.

The bill, Oregon Senate Bill 81, requires that any rate increase, which needs approval of the state Public Utility Commission, be phased in so the affected customers would not face annual increases of more than 50 percent for seven years.

Sen. Doug Whitsett, R-Klamath Falls, said the phase-in bill provides a ''critical safety net for Klamath irrigators'' who otherwise could face crippling power costs.

The bill passed by a 22-6 vote, with two members absent. Started in the Senate, the bill was amended in the House before coming back for vote. Originally the rate phase-in would have applied to agricultural increases statewide. In the House, the bill became focused on Klamath, said Chris Huntington, spokesman for Whitsett.

Irrigators, both on and off Klamath Reclamation Project, still hope to negotiate a deal with Pacific Power to keep the power rate down. If the negotiations don't work, then the bill will provide for protection, said Ed Bartell, member of the Klamath Off-project Water Users.

"We wanted a safety net for all the irrigators to make sure that we wouldn't have a 1,000 to 2,000 percent increase overnight," he said.

The power rate issue has caused conflicts between farmers who need water in the drought-plagued region and environmental activists who say a major rate boost could reduce irrigation and conserve more water to help threatened and endangered fish.

The irrigation power prices are part of an overall 12.5 percent rate increase request by Pacific Power that's pending before the PUC. The agency said it expects to decide on the request by early September.

On the Net: Senate Bill 81 www.leg.state.or.us

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