September 28, 2001 11:00 pm

By Gary Fletcher

Observer Staff Writer

ENTERPRISE Wallowa County Pacific Power customers are paying new electrical rates. After a 10-month review process the Oregon Public Utility Commission recently approved the new prices.

As a result of the Sept. 10 rate order, Pacific Power's overall net prices increased 0.6 percent, spokesperson Jan Mitchell said.

The impact varies, depending on the customer class. Commercial customer rates increased from 2 to 11 percent, according to Mitchell.

Residential rates, meantime, actually decreased 1.4 percent when various credits are taken into account. Those include a credit Pacific Power negotiated with the Bonneville

Power Administration that passes through benefits from the federal hydrosystem for residential and small farm customers.

Irrigation customers rates have dropped 2.3 percent, she said.

The residential customers new tiered rate structure is divided at 500, 1000 and over 100 kilowatt hours per month.

The less power that is used, the better the rate is, to encourage conservation. Typically, those using over 1,400 kilowatt hours per month will see an increase, Mitchell said.

In compliance with Senate Bill 1149, previous subsidies for certain rates were eliminated. The new prices have to reflect actual cost of providing power in each category.

When Pacific Power filed for a rate change last November, it asked for an overall change in base rates of 21 percent, which it said would have increased residential rates about 15 percent.

Were pleased we were able to keep the net impact to our customers to a minimum compared to other utilities in the region, said Judi Johansen, Pacific Power president and CEO. While we can provide much of our customers needs through our generating units, we do need to cover our expenses and still be able to invest to make needed improvements to serve our growing communities.

Most of Pacific Powers increase is related to increased net power costs the company has incurred to serve its customers. The rest takes into account significant capital investments made in recent years to meet load growth and to continue to provide safe, reliable service to customers.

In addition to settling issues in the general rate case, the commission endorsed an agreement between Pacific Power, commission staff, the Citizens Utility Board and Industrial Customers of Northwest Utilities that settles issues involving recovery of power costs beyond September 2001.

While the recovery of significant excess power costs incurred to date is still the subject of other proceedings, this agreement goes a long way toward reflecting in rates what we expect power costs to be going forward, and sets out a process to complete work on a new power cost model, Johansen said.

Under the agreement, as long as net power costs stay within a certain range, no change will be made in customers base rates. If power costs are higher than anticipated, the company will defer part of those costs for possible future recovery. If costs are lower than expected, a portion of that reduction in costs would also be tracked for future return to customers.

This power recovery mechanism remains in place until May, when a new power cost level is expected to be reflected in customers rates following a regulatory review of the companys new power cost model.

Pacific Power, a division of Pacific Power provides electricity and related services to 516,000 customers in Oregon. The parent company also serves customers in Washington, Idaho, Utah Wyoming and Northern California.