A few reluctant cities served by Utah Power & Light Co. are jeopardizing an out-of-court settlement between the privately owned utility and the Western Area Power Administration.
The delay in settlement could mean trouble for some 81 city-owned power companies and rural electric co-ops that depend on federal hydroelectric power to supply their customers. New 15-year contracts are scheduled to take effect Oct. 1, but actual implementation depends on the settlement becoming final.The agreement requires UP&L to get some 156 Utah and Wyoming customer cities that joined the suit to support the settlement. At least two Utah cities and Evanston, Wyo., are opposed.
Donald B. Holbrook, an attorney representing UP&L, said he does not believe those decisions are final, however. He said UP&L representatives plan additional meetings to resolve concerns.
Another factor complicating the settlement is an appeal to the 10th Circuit Court of Appeals in Denver by the National Wildlife Federation. That group is challenging the portion of the settlement relating to environmental impact statements involving Colorado River dams.
The suit challenged WAPA's policy granting preference power allotments to municipal power companies, charged that WAPA exceeded its authority in purchasing and reselling non-federal power, and claimed that WAPA violated EPA standards by not preparing an environmental impact statement in connection with the dams.
Last year, U.S. District Judge J. Thomas Greene dismissed the first two issues by summary judgment. Trial was scheduled on the environmental issue until the groups reached a negotiated settlement this spring. That effort was undermined, however, when the National Wildlife Federation filed an almost identical suit on the environmental issue. The group took advantage of Greene's 24-hour grace period to file their appeal.
Mike Hacskaylo, general counsel for WAPA, said he is aware that UP&L is having trouble getting all cities to sign the settlement. He said WAPA and its sister organization, the Colorado River Energy Distributor's Association, are ready to sign once UP&L has its endorsements secured. He said WAPA is ready to deliver power on Oct. 1.
Hacskaylo said he said he does not know what impact an order from the appeals court delaying implementation of the new contracts would have. "I'm sure you'd see some scrambling, but as to just what would happen, that's anybody's guess."
UP&L sued in hopes of getting access to the preference allocations when the original contracts ran out in 1989. The settlement would prevent UP&L from re-initiating the suit in the future although others could bring a similar action. UP&L did make some inroads, though.
First, the new contracts will be limited to a 15-year time period, compared to the original 30-year contracts. Also, UP&L will receive access to some power sales deals that could provide up to $8 million in purchase savings. That aspect is subject to market availability and may not materialize if market conditions change drastically.
Attorneys would not speculate on what will happen if the settlement is not finalized. They said there remains a good possibility that all the cities will sign and that the settlement will take effect as planned.
"It's a very complicated issue, one that is not easy to explain," Holbrook said. "We're pushing very hard and hope to have things completed by the end of this month."