Golden Northwest Alum. v. Bonneville Power Admin.

Decision Date03 May 2007
Docket NumberNo. 03-73426.,No. 03-73786.,No. 03-73820.,No. 03-74002.,No. 03-73707.,No. 03-73753.,No. 04-70546.,No. 03-74651.,No. 03-73779.,No. 04-70286.,No. 04-70382.,No. 03-73775.,No. 03-74801.,03-73426.,03-73707.,03-73753.,03-73775.,03-73779.,03-73786.,03-73820.,03-74002.,03-74651.,03-74801.,04-70286.,04-70382.,04-70546.
Citation501 F.3d 1037
PartiesGOLDEN NORTHWEST ALUMINUM, INC., Petitioner, Public Utility District No. 1 of Cowlitz County, Petitioner-Intervenor, v. BONNEVILLE POWER ADMINISTRATION, Respondent. Public Utility District No. 1 of Benton County; Public Utility District No. 1 of Cowlitz County; Public Utility District No. 1 of Franklin County; Public Utility District No. 2 of Grant County; Public Utility District No. 1 of Grays Harbor County; Public Utility District No. 1 of Pend Oreille County; The City of Seattle, Seattle City Light Department ("Generating Public Utilities"), of Cowlitz County; Washington Public Utility District No. 1, of Franklin County, Washington; Public Utility District No. 2 of Grant County; Washington Public Utility District No. 1 of Pend Oreille County; Washington, The City of Seattle; City Light Department; Blachly-Lane Electric Cooperative Association; Central Electric Cooperative; Clear Water Power Company, Inc.; Consumers Power, Inc.; Coos-Curry Electric Coop., Inc.; Douglas Electric Cooperative; Fall River; Rural Electric Cooperative, Inc.; Lane Electric Cooperative; Lost River Electric Cooperative, Inc.; Northern Lights, Inc.; Okanogan County Electric Cooperative; Pacific Northwest Generating Cooperative; Raft River Rural Electric Cooperative, Inc.; Salmon River Electric Cooperative; Umatilla Electric Cooperative Association; and West Oregon Electric Cooperative, Inc., Petitioners, Alcoa Inc., Intervenor, v. Bonneville Power Administration, Respondent. Canby Utility Board, Petitioner, v. Bonneville Power Administration, Respondent. Public Power Council, Petitioner, v. Bonneville Power Administration, Respondent, Portland General Electric Company, Respondent-Intervenor. Benton Rural Electric Association, The Cities of Port Angeles, Ellensburg, and Milton, Washington, The Town of Eatonville Washington, Alder Mutual Light Co., Elmhurst Mutual Power and Light Co., Lakeview Light and Power Co., Parkland Light and Water Co., Peninsula Light Co., The PUD No. 1 of Clallam, Clark, Kittitas, Lewis, Mason and Snohomish Counties, Washington, PUD No. 3 of Mason County, and PUD No. 2 of Pacific County, Washington, Petitioners, v. Bonneville Power Administration, Respondent, Portland General Electric Company, Respondent-Intervenor. Public Utility District No. 1 of Grays Harbor County Washington, Petitioner, v. Bonneville Power Administration, Respondent. Confederated Tribes of The Umatilla Indian Reservation, and The Yakama Nation, Petitioner, v. Bonneville Power Administration; Federal Energy Regulatory Commission, Respondents, Portland General Electric Company, (PGE), Respondent-Intervenor. Golden Northwest Aluminum, Inc., Petitioner, Alcoa Inc., Intervenor, v. Bonneville Power Administration, Respondent. Confederated Tribes Of The Umatilla Indian Reservation, Petitioner, v. Benton Rural Electric Association, The Cities of Port Angeles, Ellensburg, and Milton, Washington, The Town of Eatonville Washington, Alder Mutual Light Co., Elmhurst Mutual Power and Light Co., Lakeview Light and Power Co., Parkland Light and Water Co., Peninsula Light Co., the PUD No. 1 of Clallam, Clark, Kittitas, Lewis, Mason and Snohomish Counties, Washington, PUD No. 3 of Mason County, and PUD No. 2 of Pacific County, Washington, Petitioners, v. Bonneville Power Administration, Respondent. Public Utility District No. 1 of Grays Harbor County Washington, Petitioner, v. Bonneville Power Administration, Respondent. Public Utility District No. 1 of Benton County, Public Utility District No. 1 of Cowlitz County, Public Utility District No. 1 of Franklin County, Public Utility District No. 2 of Grant County, Public Utility District No. 1 of Grays Harbor County, Public Utility District No. 1 of Pend Oreille County, The City of Seattle, Seattle City Light Department ("generating Public Utilities"), of Cowlitz County; Washington Public Utility District No. 1; Public Utility District No. 2 of Grant County WA; Public Utility Dist., No. 1 of Pend Oreille County, Washington; The City of Seattle, City Light Department; Blachly-Lane Electric Cooperative Association; Central Electric, Cooperative; Clear Water Power Company, Inc.; Consumers Power, Inc.; Coos-Curry Electric Coop, Inc.; Douglas Electric Cooperative; Fall River Rural Electric Cooperative, Inc.; Lane Electric Cooperative; Lost River Electric Cooperative, Inc.; Northern Lights, Inc.; Okanogan County Electric Cooperative; Pacific Northwest Generating Cooperative; Raft River Rural Electric Cooperative, Inc.; Salmon River Electric Cooperative; Umatilla Electric Cooperative Association, and West Oregon Electric Cooperative, Inc., Petitioners, v. Bonneville Power Administration, Respondent. Public Power Council, Petitioner, v. Bonneville Power Administration, Respondent.
CourtU.S. Court of Appeals — Ninth Circuit

Paul M. Murphy, Murphy & Buchal, LLP, Portland, OR; Jay T. Waldron & Raymond S. Kindley, Schwabe Williamson & Wyatt, Portland, Oregon; R. Erick Johnson, Portland, OR; Daniel Seligman, Vancouver, WA; John H. Hammond, Jr., Beery Elsner & Hammond, Portland, OR; Gary A. Dahlke & R. Blair Strong, Paine Hamblen Coffin Brooke & Miller, LLP, Spokane, Washington; Scott G. Seidman & Michael M. Morgan, Tonkon Torp, LLP, Portland, OR; Cheryl Chevis, Portland General Electric, Portland, OR; Barton L. Kline, Boise, ID; Kirstin S. Dodge, Perkins Coie, Bellevue, Washington; Stephen C. Hall, Stoel Rives, LLP, Portland, OR; Wayne W. Harper, Montana Power Company, Butte, MT; Mark R. Thompson, Public Power Council, Portland, OR; Terence L. Mundorf, Marsh Mundorf Pratt Sullivan & McKenzie, Millcreek, WA; Christopher W. Leahy, Fredericks Pelcyger Hester & White, Louisville, CO; Timothy R. Weaver, Yakima, WA; Paul M. Murphy, Murphy & Buchal, LLP, Portland, OR; William H. Walters, Miller Nash, LLP, Portland, OR; Frank V. Langfitt, Ater Wynne, LLP, Portland, OR, for the petitioners.

William H. Walters, Miller Nash, LLP, Portland, OR; Kurt R. Casad, Jeffrey K. Handy, Stephen J. Odell & Thomas C. Lee, Office of the United States Attorney, Portland, OR; Randy A. Roach, Office of General Counsel-BPA, Portland, OR, for respondent BPA.

Dennis Lane, Beth G. Pacella, Robert H. Solomon, Federal Energy Regulatory Commission, Washington, D.C., for Respondent FERC.

Scott G. Seidman & Michael M. Morgan, Tonkon Torp, LLP, Portland, OR, Cheryl Chevis, Portland General Electric Co., for respondent-intervenor PGE.

On Petition for Review of an Order of the Bonneville Power Administration. BPA No. Power Act WP-02.

Before STEPHEN REINHARDT, W. FLETCHER, and JAY S. BYBEE, Circuit Judges.

WILLIAM A. FLETCHER, Circuit Judge.

Petitioners in this consolidated appeal seek review of the 2002-06 wholesale power rates set by the Bonneville Power Administration ("BPA") during its WP-02 rate proceeding. Two sets of petitioners contend that BPA unlawfully inflated the rates charged to public utilities and cooperatives — BPA's "preference" customers. First, the Public Generating Pool and Pacific Northwest Generating Cooperative argue that BPA shifted onto its preference customers the costs of supplying power to its direct-service industrial customers. Second, the Western Public Agencies Group, Public Power Council, and Public Utility District No. 1 of Grays Harbor argue that BPA shifted onto its preference customers the costs of settling its obligations to its investor-owned utility customers. In addition, a third group of petitioners, Confederated Tribes of the Umatilla Indian Reservation and the Yakama Nation, argues that the WP-02 rates are not sufficient to satisfy BPA's fish and wildlife obligations.1

We hold that BPA acted lawfully when it allocated to its preference customers part of the cost of acquiring power to serve its direct-service industrial customers. However, consistent with our decision in a companion case filed at the same time as this one, Portland General Electric v. BPA, 501 F.3d 1009 (9th Cir.2007), we hold that BPA acted contrary to law when it allocated to its preference customers part of the cost of the settlement BPA reached with its investor-owned utility customers. We also hold that BPA's fish and wildlife cost estimates and, by extension, the rates based on those estimates, are not supported by substantial evidence.

I. Background

BPA is a federal agency that markets power generated primarily by federal hydroelectric projects in the Columbia River basin. BPA's customers include public utilities, cooperatives, and federal agencies (collectively "preference customers"); investor-owned utilities ("IOUs"); and direct-service industrial users ("DSIs"). See Aluminum Co. of Am. ("Alcoa") v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984) (describing BPA's customer groups). Other opinions of this Court chronicle the history of BPA and describe the tangle of statutes that govern its operations. See, e.g., Portland Gen. Elec. v. BPA, 501 F.3d 1009 (9th Cir.2007); Pub. Power Council, Inc. v. BPA, 442 F.3d 1204 (9th Cir.2006); M-S-R Pub. Power Agency v. BPA, 297 F.3d 833 (9th Cir.2002) (as amended); Ass'n of Pub. Agency Customers, Inc. v. BPA, 126 F.3d 1158 (9th Cir.1997). We focus here only on those facts directly relevant to this appeal.

Pursuant to the Pacific Northwest Electric Power Planning and Conservation Act ("Northwest Power Act" or "NWPA"), 16 U.S.C. § 839-839h, BPA periodically determines the wholesale power rates it will charge its customers. Section 7 of the NWPA, 16 U.S.C. § 839e, governs BPA's ratemaking activities. Section 7 requires, among other things, that BPA charge rates sufficient to cover its costs, "including the amortization of the Federal investment in the Federal Columbia River Power System." Id. §...

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  • Alcoa, Inc. v. Bonneville Power Admin.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • October 16, 2012
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  • Portland General Elec. Co. v. Bonneville Power
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