Norm (Norm Messer) says...

This article contains factual errors that I pointed out in comments on an earlier editorial addressing this topic (here: http://www.wenatcheeworld.com/news/20... )
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The present article states:
"The contract will be extended five years if the BPA can show the contract meets a legal test of (1) providing the region with more economic benefit than job creation alone, ...In their successful lawsuit, the cooperatives argued that the BPA has no legal obligation to sell to large power customers like Alcoa, and (2) the low rates it gives those big customers hurts the federal agency’s small customers by forcing them to pay more. (3) The appeals court upheld the BPA’s discretion to sell power by contract to large purchasers like Alcoa, (4) but required the BPA to show that such contracts provided a “legitimate business case” — widespread economic benefit to the region." {I added the numbers to address the specific errors}
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(1) The legal test is not "providing the region with more economic benefit than job creation alone". This was the gist of the test proposed by BPA that was explicitly rejected by the court. The standard that must be met, according to federal statute 16 USCA § 838g(1) is that the rates must be set "...consistent with sound business principles". The portion of the contract found by the court to be in violation of the statute was a provision under which "BPA agreed voluntarily to make a nearly $32 million cash “benefit” payment to the aluminum
company, so that the company could purchase power from one of BPA’s competitors." (page 5 of the pdf of the opinion, here: http://www.ca9.uscourts.gov/datastore... )
2) While these considerations were mentioned in the opinion, agencies (like BPA) have wide discretion in deciding how to comply with statutory requirements. The court's statement was quite clear: "We also explained that 'BPA’s authority to sell power to the DSIs does not mean that BPA may simply give money to the DSIs by calling the agreement a ‘power sale’ with ‘monetized service benefits.’ ”
PNGC, 550 F.3d at 878"
(3) BPA's "discretion to sell power by contract to large purchasers" was never at issue. The issue was whether contract provisions under which BPA would make cash payments to such large purchasers when it could not sell them power at the low rates complied with the statutory requirement that the contract must be "...consistent with sound business principles".
(4) The words you place in quotes, "legitimate business case" do not appear in the court's published opinion. The requirement of acting "consistent with sound business principles" is in the statute (ie. from Congress, not the court); the interpretation of the court is that a contract provision requiring BPA to make cash payments to a purchaser is not "consistent with sound business principles."

December 24, 2009 at 12:37 p.m. ( permalink | suggest removal )