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BPA's Role May be Scrutinized Under Bush by Jim Barnett The Oregonian, January 14, 2001

The president-elect selects as his energy nominee a man
who once proposed to sell off the power agency the Northwest relies on

WASHINGTON -- In April 1999, Sen. Spencer Abraham, R-Mich., joined two Republican colleagues in offering a bill that would strike at the heart of the Northwest's system of electricity production and distribution.

The bill called for the government to sell off the Bonneville Power Administration, the Portland-based agency that sells low-cost hydropower from federal dams in the Northwest, and let a private company market the agency's electricity to the highest bidder.

Nearly two years later, after losing his bid for re-election, Abraham returns to Capitol Hill this week as President-elect Bush's choice to run the Energy Department. This time, as he seeks Senate confirmation, he is likely to take a more conciliatory posture.

Abraham will face a panel dominated by Westerners whose states rely on federal power agencies. Ironclad assurances about the agencies' future are unlikely, but Abraham could offer the first glimpse of a Bush energy policy that gives states greater control.

"You're going to see a policy that will ask states like California to get in the business of providing their own power," said Sen. Larry Craig, R-Idaho. "They've got a responsibility for themselves. The Pacific Northwest has a responsibility for itself."

Abraham comes to the Energy Department job with a reputation as an intelligent and savvy political player, but with virtually no experience in the field. His lack of a record has prompted speculation that his job will be to carry out energy policies developed at the White House.

Craig said he met with Bush during a recent Senate retreat. The two didn't talk specifics about the BPA, Craig said, but Bush made it clear that the Northwest shouldn't have to fear a power grab by California as a result of that state's poor planning for deregulation.

"The thing George W. Bush knows is what he is inheriting is the result of literally no energy development in the last eight to 10 years and an attitude that we didn't have to produce it," Craig said.

Bush and energy During the campaign, Bush spoke often about energy, talking mostly about ways to boost domestic production of oil and natural gas. A keystone of his energy policy, he said, would be to open portions of the Arctic National Wildlife Refuge to exploration.

The questions of electricity supply and efforts to open the industry to competition received less attention. But as governor of Texas in 1999, Bush signed a bill deregulating utilities and allowing electricity customers to choose their own supplier.

The law has yet to take full effect, and it's unclear whether Texas legislators learned from mistakes that have led California to the brink of widespread blackouts. But the law jibes with Bush's commitment to free markets and competition among private industry.

Although Bush has yet to propose a similar plan for the nation, energy watchdogs in Washington think it's only a matter of time before he acts. Those who advocate free-market competition hope that federal power agencies, including the BPA, will be in for a jolt.

"I'm of a mind that he has bitten into the electricity issue, and this is not foreign and scary stuff for him," said Dick Munson, executive director of the Northeast-Midwest Institute, a regional advocacy group in Washington.

The institute has been a longtime critic of public power agencies, arguing that their very existence amounts to a federal subsidy to the regions in which they operate. The BPA, the group claims, gets federal financing at below-market rates and gives Northwest industries an unfair advantage by charging rates based on its costs rather than market demand.

Abraham's role unclear Previous administrations have tinkered with the idea of selling federal power agencies. Among the most dedicated opponents of federal power agencies was David Stockman, who served as Ronald Reagan's chief of the Office of Management and Budget.

In recent years, similar proposals have come from Congress, mostly from members such as Abraham whose states have nothing to lose. The bill he co-sponsored in 1999 was drafted by former Sen. Rod Grams, R-Minn., who also lost his re-election bid in November.

Their proposal to sell the BPA went further than most endorsed by Northeast-Midwest. It was part of a broader plan to dismantle the Department of Energy and sell its assets, including the Strategic Petroleum Reserve.

The bill appears to be Abraham's only foray into energy policy. During his one term, Abraham was a member of the Judiciary Committee, and he used the seat to make himself a force on immigration issues.

Abraham's choice for the energy post was a surprise in Washington -- some senators expected the job to go to former Sen. Slade Gorton, R-Wash. -- and his thin record on the subject has left members of the Energy and Natural Resources Committee wondering what direction he'll take.

Sens. Ron Wyden, D-Ore., and Gordon Smith, R-Ore., plan to ask Abraham about his plans for the BPA, which is required by law to serve Northwest customers first before exporting power to other regions. Both will look for Abraham to soften his position.

"Senator Wyden would find it very troubling if Spencer Abraham is wedded to his prior position," said Josh Kardon, Wyden's chief of staff.

BPA insulated Abraham, like all of Bush's Cabinet nominees, declined requests for an interview. But no matter his personal views, energy experts said, political considerations likely would prevent Abraham from making big changes in operations of the BPA.

The BPA was created during the Depression as part of President Roosevelt's New Deal, and its stated goal was to provide a "yardstick" of cost-based rates against which privately owned utilities should be measured.

Today, the BPA and other federal power agencies serve rural areas of the country that provided Bush his biggest election margins. Bush might not like the idea of a federal role in the electricity industry, but his supporters in the rural Northwest depend on it.

Smith counts himself among them. With Gorton's loss to Maria Cantwell, Smith is the last Republican senator from a West Coast state, and he faces re-election in 2002. Keeping BPA power flowing is crucial for his base in Republican-leaning Eastern Oregon.

"It's an issue in which I will play the pivotal role in defending the Northwest's interests," Smith said last month. "I think I am very well-positioned with the Bush administration to make that defense."

Some members of Congress from the Northwest think Bush's preference for handing power back to states could play to the benefit of the region. Peter DeFazio, D-Ore., wants to explore ways to transfer control of the BPA's assets to Washington, Oregon, Idaho and Montana, and he thinks Bush might go along.

For the time being, Bush's plans for the BPA and the electricity industry remain a mystery. Craig said he got few details from the president-elect but was heartened by his willingness to take suggestions from Capitol Hill.

"One of his top priorities is the development of an energy policy and its execution," Craig said. "It's going to be a cooperative effort between the Bush administration, but it's going to happen."