BPA cuts payments to six Northwest U.S. utilities

LOS ANGELES May 21 (Reuters) - Customers of six investor-owned utilities in the U.S. Pacific Northwest will see residential and small farm electricity rates rise due to a federal court ruling, the federal Bonneville Power Administration warned on Monday.

The BPA said it would immediately suspend subsidy payments of $28 million per month to the six utilities because of a ruling by the Ninth U.S. Circuit Court of Appeals that said the payments violate parts of the 1980 Northwest Power Act.

The investor-owned, or for-profit, utilities affected are in four states -- Washington, Oregon, Idaho and Montana.

They are Portland General Electric Co. (POR.N), Avista Corp. (AVA.N), Puget Sound Energy Inc. PSD.N, Idaho Power Co. (IDA.N), NorthWestern Energy NWEC.O and Berkshire Hathaway Inc. (BRKa.N) (BRKb.N) subsidiary PacifiCorp, the BPA said.

"We very much regret that it is necessary for us to suspend payments at this time, since we understand this may rapidly result in large and, for some, severe rate consequences," said Steve Wright, BPA administrator and chief executive officer.

The Northwest Power Act was a U.S. Congress action in 1980 designed to help all -- commercial and residential -- customers in the four states. But what the BPA is doing with the refunds raises rates for municipal customers, the court said.

The BPA sells Pacific Northwest utilities relatively cheap power generated by 31 federal dams and one nuclear plant.

Lee Beyer, chairman of the Oregon Public Utilities Commission, blasted the court's ruling and said the U.S. Congress should step in with a short-term fix.

"This decision will take $128 million annually out of the pockets of residential and small farm customers served by Portland General Electric, PacifiCorp and Idaho Power," in Oregon, Beyer said.

The ruling could, he said, mean an additional $900 million in already-issued refunds in Oregon would have to be repaid.

"We strongly disagree with this decision," Beyer said. "The Commission will do everything within its power to get it reversed."

"This money flows directly to customers and is not a benefit for utilities," the Oregon PUC said.

PacifiCorp serves 1.7 million customers, with about 85 percent of them in Utah and Oregon with the rest, in descending order, in Wyoming, Washington, Idaho and California.

With about 800,000 residential and commercial customers, Portland General is Oregon's largest utility.

Puget Sound Energy is the oldest and largest utility in Washington and has more than 1 million electricity customers.

NorthWestern serves about 640,000 electric and natural gas customers in Montana, South Dakota and Nebraska.

Idaho Power is the biggest provider for Idaho electricity customers with about 465,000 customers in a service area including central and southeastern Idaho. Avista has 346,000 electricity customers in Oregon, Washington and Idaho.