SALEM - The Oregon Court of Appeals upheld a $131 million rate increase Wednesday that was charged by PacifiCorp to cover unexpected electricity costs during the western energy crisis in 2000 and 2001.

The decision affirmed the state Public Utility Commission decision in 2002 that allowed the Oregon subsidiary of ScottishPower to boost rates after it paid high prices for short-term power supplies when it couldn't meet demand.

The ruling upheld the Marion County Circuit Court.

Residential rates rose by 2.6 percent, which has cost the average household using slightly more than 1,000 kilowatt-hours a month about $1.75 a month, said PUC spokesman Bob Valdez.

The company's excess power costs are due to be paid off next summer, and rates then likely will be reduced, Valdez said.

PacifiCorp, which operates as Pacific Power in Oregon, serves about 500,000 customers around the state, mostly outside Portland and the Willamette Valley. The company also operates in five other western states.

Consumer and business groups opposed the rate increase, claiming the company used a risky wholesale power marketing strategy and failed to properly operate and maintain a major generating plant in Utah that broke down.

Wholesale power prices began soaring in 2000 as drought, utility industry deregulation problems, increased power demand and a lack of new generating plants caused a power crisis across the West.

A unanimous three-member appeals court panel said there was substantial evidence to support the PUC's conclusion "that the excess power costs were caused by PacifiCorp's reduced generating capacity and increased retail load rather than by the wholesale (power) contracts. We are bound by that finding," the court said.

Bob Jenks, director of the Citizens' Utility Board of Oregon, which challenged the rate increase, said no decision has been made whether to appeal the ruling to the Oregon Supreme Court.

Jenks said he was disappointed by the appeals court decision but not surprised.

"We recognize it's a hard road to get courts to overrule the PUC, which has an awful lot of discretion," Jenks said.

The court said it can overturn PUC rate orders only if they are not backed by substantial evidence or are unreasonable or illegal.