TACOMA, Wash. -- Washington state's law giving voters veto power over the funding of major power projects cannot apply to three Washington Public Power Supply System nuclear plants already under construction, a federal judge ruled Tuesday.
But by agreement of all parties in the case, the judge will allow the full force of the law to be effective while the lawsuit challenging it is taken to the U.S. Court of Appeals.
U.S. District Court Judge Jack Tanner said the new law, Iniatitive 394, would be unconstitutional if applied to the three nuclear plants already under construction in the state.
Tanner's ruling applied only to the 1, 2 and 3 plants being built by Washington Public Power Supply System.
Steve Zemke, leader of Don't Bankrupt Washington, the group that sponsored the initiative, said he believed Tanner's ruling would be overturned by the U.S. Court of Appeals in San Francisco.
Attorneys on both sides of the issue had agreed to ask the judge to stay the effect of his decision in the event he ruled against the measure which takes effect July 1. Tanner agreed to grant their request.
An attorney for one of the banks challenging the initiative said those who oppose the initiative agreed it would cause too much 'uncertainty' if the initiative were not in effect while being appealed.
Opponents recognized any attempt to issue bonds while the appeal was pending would run into difficulty with with the bonding houses.
A WPPSS spokesman said that allowing the initiative to take effect while Tanner's ruling was appealed would have 'no immediate impact' because the supply system did not plan to seek any additional financing for the reactor projects until next February.
Initiative 394 requires ratepayer approval before a public utility can issue bonds to finance a power project in the state capable of generating more than 250 megawatts.
Voters approved the initiative by a wide margin last November.
Since then, WPPSS has terminated two of its five nuclear projects. A third was delayed because of huge cost increases, the difficulty of obtaining continued financing and questions about the need for the high-priced electricity it would generate.
Tanner noted the U.S. Constitution specifically prohibits states from passing laws that impair the carrying out of existing contracts.
In rendering his oral decision after reviewing many bulky briefs and a day of arguments, Tanner said the initiative 'seriously impaired' contracts between the Washington Public Power Supply System, the federal Bonneville Power Administration and holders of WPPSS bonds issued to finance the three plants.
The BPA, a federal agency established to distribute electricity, is underwriting the costs of the three WPPSS plants through a series of agreements with Northwest utilities.
The effect of Initiative 394 on future energy projects in the state, such as any effort to restart construction of WPPSS plants 4 and 5, didn't figure in Tanner's ruling.