EVERETT — Millions of dollars can be saved in the future if the Snohomish County PUD decides against a proposal that would lower its cost of buying electricity by 10 percent for one year, said Ed Hansen, the PUD’s general manager.

On Tuesday, Hansen proposed that the PUD reject a deal that would see it pay 9.7 percent less for the electricity it buys from the Bonneville Power Administration if it and 71 other public utilities agree to drop a lawsuit against BPA, the Northwest’s federal energy wholesaler.

Instead, the PUD should push ahead with litigation that challenges how BPA distributes the electricity it gets from hydroelectric dams on the Columbia River and from a nuclear power plant, Hansen said.

In his recommendation for rejecting the settlement offer, Hansen said the PUD would only save $12 million that would have to be paid back in the future.

"We don’t think a one-year rate reduction provides fair value for dismissing litigation that could save Snohomish PUD somewhere between $100 million and $300 million over 10 years," Hansen said.

That savings would come if BPA gives public utilities a larger share of the power, he said.

The lawsuit claims that the formula BPA is using to distribute the electricity it generates for the 2002-06 rate period is too favorable to private utilities such as Puget Sound Energy, and that it sets a bad precedent for future rate periods.

BPA spokesman Ed Mosey said the agency hoped its settlement proposal, made in late October, would resolve those differences. It gave the public utilities 90 days from Oct. 24 to decide to settle. If all 72 utilities don’t agree to settle, then rates won’t go down.

"We’re not going to go back into negotiations," Mosey said. "This is the final offer."

BPA’s settlement proposal is supported by most of the Northwest’s congressional delegation, as well as by large energy customers in the PUD’s service area, including Boeing Co. and Kimberly-Clark Corp.

Hansen said PUD commissioners could decide to vote for or against settlement at an upcoming meeting, or could decide to take no action within the 90-day period, which would serve to reject the settlement proposal.

"We haven’t made a decision yet, but we’re certainly concerned about the terms of the settlement that Bonneville is proposing," said Kathy Vaughn, PUD commission chairwoman. "There are more issues here than a one-year rate decrease."

Vaughn said the commission needs to take a hard look at its relationship with BPA and find a better way to lower rates over the long haul.

Reporter Lukas Velush:

425-339-3449 or

lvelush@heraldnet.com.