WASHINGTON – The Bush administration called Monday for the Bonneville Power Administration to reverse its longtime policy of using surplus revenue to lower electricity rates for Northwest consumers and instead use the money to pay down the federal debt.
The administration called the proposal “consistent with sound business practices,” but lawmakers from the region called it yet another attack on the Oregon-based regional power agency and Northwest consumers. They said the change could raise electricity rates by as much as 10 percent.
About 80 percent of the Snohomish County PUD’s power is supplied by the BPA. And it’s the BPA’s biggest customer.
“Energy prices are already through the roof,” said Sen. Maria Cantwell, D-Wash. “Now the administration is trying to squeeze extra dollars out of Northwest businesses and families, just when our economy can least afford it. This is nothing more than a billion-dollar tax hike on the Northwest economy, and I intend to fight this proposal at every opportunity.”
Reps. Peter DeFazio, D-Ore., Greg Walden, R-Ore., and Doc Hastings, R-Wash., also vowed to defeat the plan, which they called “a disguised rate increase.”
The proposal, part of the president’s budget request for the fiscal year that begins Oct. 1, follows the administration’s call last year to charge BPA customers based on market rates rather than the cost of producing electricity – a change Northwest lawmakers ultimately defeated.
Under federal law, BPA has authority to sell surplus power to customers both inside and outside the Northwest. The revenue from surplus power sales is then used to lower BPA’s electricity rates throughout the Northwest.
Under the administration’s proposed budget for the fiscal year that begins Oct. 1, any surplus revenue above $500 million would go to pay down federal debt, rather than lower power prices for BPA customers.
According to budget documents, the plan could raise Northwest power rates by an estimated $924 million over the next 10 years, depending on the amount of surplus power BPA sells and the market price of power.
The BPA said in a statement that the proposal would not affect rates in 2007, but did not rule out rate hikes after that.
“This administrative action will both reduce the federal deficit and provide BPA with needed financial flexibility to invest back into energy infrastructure and to pay down debt,” the statement said.
Bonneville, the federal power marketing agency based in Portland, Ore., supplies nearly half the electricity in the Pacific Northwest.
Alex Conant, a spokesman for the White House budget office, said the plan would let the BPA make capital investments to improve service and reliability while making future rate hikes less likely.
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