Klamath Basin Water irrigators charge breech of contract 113006

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Irrigators charge breech of contract
Klamath off-project customers seek $86 million

Tam Moore Capital Press 11/29/06

Irrigators in the upper Klamath Basin filed suit Nov. 29, saying PacifiCorp Energy reneged on a 50-year-old contract when it adopted a new agricultural pumping tariff.

The Klamath Off-project Water Users Inc. seeks $86 million for breech of contract.

President Ed Bartell, a Sprague River rancher, says the contract PacifiCorp's predecessors issued 50 years ago has no termination date.

Dave Kvamme, a PacifiCorp spokesman, said the company legal department hasn't seen the suit, filed in Klamath County Circuit Court. He declined comment.

Oregon's Public Utility Commission earlier this year accepted a PacifiCorp filing that raises irrigator pumping rates both in the off-project area and to farmers and irrigation districts within the U.S. Bureau of Reclamation Klamath Project.

Project irrigators are making "reasonable" power rates an issue in closed-door settlement talks involving conditions of renewing PacifiCorp's Klamath hydroelectric licenses that expired earlier this year.

In it's order, the PUC didn't get into legality of the 1956 contract originally negotiated between Klamath Basin Water Users Protective Association and California Oregon Power Co.

For the off-project area, Bartell said basis of the contract was a belief that if more ranch acreage was encouraged in the upper basin, that would increase downstream water flows available to Copco's hydroelectric plants.

"There's a (U.S. Geological Survey) study that shows Sprague River flows have increased 42 percent since then," Bartell said.

The off-project irrigators include hundreds of ranches located above Upper Klamath Lake in Klamath County, Ore.

"People are going to be going out of business if we don't do something about it," Bartell said in an interview.

He said the $86 million in damages is calculated as the difference between the newly-adopted Oregon tariff and the 50-year-old rates, spread over a 20-year period.

An alternate calculation shows an $86 million trust fund would be needed if interest earned by the fund were to pay ranchers the difference between tariff rates and the bargain basement pumping rate set in 1956.