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Bush Hopes to Force BPA Plan

by Matthew Daly, Associated Press
Bellingham Herald, March 4, 2005

ENERGY: Northwest lawmakers vow to block move by administration.

WASHINGTON, D.C. -- Energy Secretary Samuel Bodman said Thursday the Bush administration is going forward with its plan to force the Bonneville Power Administration and other federal power suppliers to sell electricity at market rates, despite congressional opposition.

Northwest lawmakers say they have enough votes to block the plan, which they say could boost energy prices in the region by as much as 20 percent and cost Pacific Northwest ratepayers $1.3 billion. The chairman of the Senate Budget Committee said Wednesday the plan will not be included in a Senate budget resolution to be adopted this year.

But Bodman told the Senate Energy and Natural Resources Committee that the proposed rate plan would remove unfair government subsidies and allow the BPA and other federal power suppliers to operate in a more businesslike, efficient manner.

The administration proposes to "very gradually" increase federal electricity rates to average market prices throughout the country, Bodman said, rather than allow suppliers to base rates on the cost of producing electricity, as they now do.

"This will accelerate recovery of taxpayer subsidies and repayment of (federal power agency) debt owed to Treasury, while creating a more level playing field for the wholesale power market," Bodman said Thursday.

Bodman's comments brought this retort from Oregon Sen. Ron Wyden: "We're going to block you, Mr. Secretary, I'll just give you that up front."

Wyden, a Democrat, called the market-rate plan "economic poison" for the Northwest. He and other lawmakers said the plan could raise residential energy bills in the region by as much as $400 to $500 a year.

Wyden, a member of the energy panel, pressed Bodman on whether officials would try to accomplish the rate change through an administrative action, rather than seek congressional approval. Bodman assured Wyden he had no such intentions.

"I'm just an engineer, sir, and not a lawyer, and so I would tell you ... that I do not believe that I or anybody at the Energy Department has the flexibility of doing an end run" around Congress, Bodman said. "That's why this is in the budget, the request. It is our view that this would require legislative change."

Sen. Maria Cantwell, D-Wash., challenged the Energy Department's authority to pursue the rate hike plan. She cited a provision in the 1993 energy and water appropriations bill that prohibits the Energy Department and other federal agencies from "conducting any studies relating or leading to the possibility of changing from the currently required 'at cost' to a 'market rate'"for BPA power.

The BPA, based in Portland, Ore., supplies nearly half the electricity in the Pacific Northwest, most of it from a system of federal dams along the Columbia and Snake rivers. Since its creation in the 1930s, BPA's rates have been based on cost rather than market prices, which are typically much higher. The agency currently charges utilities about $31 a megawatt hour, well below market prices of $40 to $50 per megawatt hour.

"Taking money out of working families' pockets, causing job loss and forcing businesses to leave the Northwest is exactly the opposite of sound economic policy," Cantwell said.

Now that lawmakers know the administration still wants to pursue the plan, Cantwell said, "We need to make sure the message is clear: We'll bring to a screeching halt any piece of legislation that contains this proposal."

Matthew Daly, Associated Press
Bush Hopes to Force BPA Plan
Bellingham Herald, March 4, 2005

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