Avista Corp. is challenging a Bonneville Power Administration decision that dramatically reduces the financial benefit its electrical ratepayers receive through access to cheap Columbia River hydropower the federal agency markets.

The Spokane-based energy company last month filed a petition asking the U.S. Ninth Circuit Court of Appeals to review the BPA decision, joining other Pacific Northwest investor-owned utilities that it says have filed such appeals separately or plan to do so.

"We're suing on behalf of the customers," residential and small-farm ratepayers who will be forced to pay higher rates for years because of the ruling, says Larry La Bolle, Avista's director of regional and federal issues.

Meanwhile, Spokane-based Inland Power & Light Co., which is on the opposite side of the legal dispute, has joined with other consumer-owned utilities to challenge the decision as well.

Its CEO, Kris Mikkelsen, is president of Northwest Requirements Utilities, a trade group representing 53 consumer-owned—or "public"—utilities that rely on the BPA for wholesale supply and transmission. The group joined with two other regional entities that serve public utilities, the Public Power Council and PNGC Power, to file an appeal with the Ninth Circuit appellate court in November.

The new round of litigation suggests that the BPA has failed, with its decision issued in late September, to resolve amicably a decades-old battle between public and investor-owned power providers, which already have spent considerable time wrangling in the courts.

The dispute revolves around the BPA-managed residential exchange program, under which utilities share access to Columbia River hydropower, equating to hundreds of millions of dollars worth of electricity a year. Federal law requires that the power be made available preferentially to public utilities, many of which have little or no generating capacity of their own. The investor-owned utilities, though, also benefit from it—in the form of payments from public utilities, disbursed by the BPA—and pass those benefits on to their residential and small-farm customers as a credit on monthly bills.

The central issue has been how best to divvy up those benefits in a fair manner.

The dispute came to a head in May 2007 when a Ninth Circuit ruling raised questions about the legality of payments the BPA was making to Avista and the region's five other investor-owned utilities. Its ruling stemmed from a lawsuit over agreements reached in 2000 between the BPA and those utilities that were the basis for a big jump in the amount of money the utilities received.

Since the federal ruling last year, the public and investor-owned utilities have been working with BPA to try to reach an agreement that would pass legal muster and address the public utilities' concerns. Both sides were dissatisfied, though, with the BPA 's recent decision.

Avista said the decision reduced its 2009 benefit under the residential exchange program to less than $3 million, a fraction of the $23 million forecast by the BPA earlier this year, and forced the company to raise its rates.

In a press release issued Sept. 30, Avista President and CEO Scott Morris said, "BPA has failed to provide benefits the regions' public and private utilities agreed would settle our longstanding dispute over how the residential exchange program has been conducted. It is unacceptable to Avista that our customers are being negatively impacted because BPA did not implement the agreement."

La Bolle says a big part of Avista's objection to the decision has to do with a requirement that the investor-owned utilities pay back more than $700 million they were overpaid over five years.

Avista believes, La Bolle says, that agreements the investor-owned utilities reached with the BPA eight years ago "were very clear that there would never by a repayment by our customers if those agreements were found to be invalid."

On the other side of the issue, Susan Ackerman, a Portland-based attorney for Northwest Requirements Utilities, says that association believes the way in which BPA is calculating benefits "will result in benefits that are too high over time" for the investor-owned utilities.