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BPA Rate Hikes Urged by Les Blumenthal, Washington, D.C., bureau Tri-City Herald - May 31, 2001

WASHINGTON -- At a time when electric rates in the Northwest already have risen sharply, a group backed by Midwest and Northeast members of Congress released a report Wednesday calling for changes at the Bonneville Power Administration that could push prices even higher.

The report, the latest in a series of attacks on Bonneville by the Northeast-Midwest Institute, argues that federal taxpayers have subsidized the region's lowest-in-the-nation energy rates. And, the report said, BPA should be required to increase its rates to current market levels.

"BPA is selling federal property that rightfully belongs to every U.S. taxpayer to a favored minority of businesses and communities for less than two-thirds of its market value," the report said. "The result is no different than had Northwesterners picked the collective pocket of the rest of us."

Bonneville markets electricity produced at 29 federal dams on the Snake and Columbia rivers and also runs the region's extensive power grid. Though the dams and the transmission system were financed through the U.S. Treasury, Northwest ratepayers have repaid billions of dollars over the years.

Among other things, the report said BPA profited handsomely from power sales to California and the region's aluminum companies were getting sweetheart deals on power, while other federal agencies, such as the Forest Service, auction off their commodities to the highest bidder. Northwest ratepayers need to finally realize they don't own BPA, the report said.

"The restructuring of BPA is past due," the report said, adding that if BPA started charging market rates, the profits could be used to help cut federal taxes and fund other federal programs. "It's almost as though there are 46 states in the United States of America and another four in the United States of Bonneville."

BPA officials said they've heard the allegations before.

"This is just a rehash of the same old, tired arguments," said Jeff Stier, a BPA vice president based in Washington, D.C.

BPA is considering raising its wholesale rates by up to 250 percent, having been forced to buy power on the expensive spot market because of the second-worst drought in the region's history.

Officials were uncertain Wednesday exactly how much residential rates would increase if BPA started selling its wholesale electricity at market levels. BPA charges about $25 per megawatt-hour for electricity. Wholesale electricity on the spot market is now selling at between $250 to $300 a megawatt-hour, and wholesale power sold through long-term contracts sells for $75 to $150 a megawatt-hour.

"The effect would be devastating to the region's economy," said Mike Hansen, a BPA spokesman in Portland.

Last year lawmakers from the Northeast and the Midwest introduced legislation that would have required Bonneville to boost rates. The bill went nowhere.

The same bill will be reintroduced soon, and Richard Munson, executive director of the Northeast-Midwest Institute, said sponsors hope to pick up support from California lawmakers upset that BPA has made money off their state's energy woes.

"The politics have changed because of California," Munson said. "I think there is some sentiment BPA has been profiteering from the California situation."

BPA and California utility executives have said BPA has not made excessive profits from sales to California.

The institute and the Northeast-Midwest Coalition of lawmakers have been frequent critics of BPA, alleging federal taxpayers are getting bilked.

Asked about subsidies to the coal and ethanol industries and federal support for Amtrak, all of which are important in the Midwest and Northeast, Munson said they also deserve to be examined.

"I am sure they are constantly examined or should be examined," he said.

Munson said the effect if BPA increases its rates may not be as dramatic as Northwesterners fear.

"The rest of the country has higher electric rates than the Northwest, and they are doing all right," he said.

Northwest lawmakers said there was nothing particularly new in the report.

"At a time when the West Coast is experiencing the challenges of an energy crisis and the Northwest's worst drought in half a century, I do not find it particularly constructive or useful to publish an intellectual challenge to the historical foundation of BPA," Rep. Norm Dicks, D-Wash., said in a statement.

Sen. Patty Murray, D-Wash., said all she has heard from families, businesses, school districts and local governments during the current congressional break has been about electricity prices.

"The Northeast and Midwest don't understand," she said. "They should back off now and work with us rather than being divisive."