Court upholds rate hike
Updated: Thursday, November 04, 2010 10:00 AM
Klamath irrigators argue 1956 contract still applies to pumping rates
By MATEUSZ PERKOWSKI
A group of irrigators in the Klamath Basin has lost a legal challenge against the PacifiCorp power utility over increasing electricity rates.
The Klamath Off-Project Water Users claimed PacifiCorp breached a 50-year-old contract by charging more for electricity, which irrigators use to pump water.
In 1956, PacifiCorp's predecessor agreed to charge the group only 0.75 cents per kilowatt-hour in return for increased water flows.
The irrigators pump groundwater that eventually flows into the Klamath river, thus boosting electricity production at hydroelectric dams owned by PacifiCorp.
In 2004, PacifiCorp got approval from the Oregon Public Utility Commission, an agency that oversees power rates, to begin charging the group higher prices for electricity.
The rate was set to increase over several years from 0.99 cents per kilowatt-hour to 8 cents per kilowatt-hour.
The Klamath Off-Project Water Users filed a legal complaint against PacifiCorp, claiming the utility was contractually obligated to charge no more than 0.75 cents per kilowatt-hour in perpetuity.
The group sought financial damages based on the difference in price, which would amount to more than $86 million.
A circuit judge dismissed the lawsuit, ruling that the group could not challenge the Oregon Public Utility Commission's decision to approve the rate change.
The Oregon Court of Appeals has now ruled the dismissal order was correct, albeit for different reasons than outlined by the trial judge.
Although the contract between the irrigators and PacifiCorp does not contain a time frame under which the agreement will end, that does not mean its terms can't be extinguished, the appellate court ruled.
According to the opinion, "there is no wording in the off-project agreement that, when reasonably construed, is capable of even suggesting that the agreement was not terminable at will."
Melinda Davison, an attorney for the irrigators, said the Klamath Off-Project Water Users' board of directors expects to decide soon whether to appeal the ruling to the Oregon Supreme Court.
Davison said she's disappointed by the decision, since the group never got the chance to present arguments about the contract's perpetuity.
"I think, procedurally, the court is wrong," she said.