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Study says Plan Will Raise BPA Rates

by Associated Press
The Daily News, February 10, 2006

PORTLAND, Ore. (AP) -- A Bush administration budget proposal to divert surplus electricity sales from the Bonneville Power Administration could force a 7 percent rate increase by 2008, a new study says.

Utility customers would see a rate increase about half that amount, reducing personal income by $109 million and cutting 1,120 jobs in the Pacific Northwest, according to an analysis released Thursday by the Northwest Power and Conservation Council.

The chairman of the regional council criticized the proposal but an administration spokesman said it would benefit Northwest ratepayers in the long run.

The president's 2006 budget, released this week, would require Bonneville to give the U.S. Treasury all revenue in excess of $500 million annually from the sale of surplus electricity.

The Treasury would use the cash to reduce Bonneville's federal debt, increasing the amount the power marketing agency could borrow in the future for construction projects such as transmission system improvements.

"In spite of the short-term increase in power rates, we believe Bonneville customers will benefit in the longer term through lower rates and better access to capital to improve and upgrade critical infrastructure and facilities," said Craig Stevens, a spokesman for the Energy Department in Washington, D.C.

But the Treasury also could use the money to help trim the national deficit at the expense of Northwest ratepayers, said Tom Karier, chairman of the regional power council. "Basically, it's a windfall for the Treasury," Karier said. "It would reduce Bonneville's bank account, increase Bonneville's costs, and force a future rate increase."

Bonneville, an Energy Department agency based in Portland, sells electricity generated at 31 federal dams, a nuclear plant and several wind power plants in the Columbia River Basin. Most of the BPA's 149 customers are publicly owned utilities.

Bonneville typically has surplus electricity to sell at various times during the year when water levels rise in the hydroelectric system. Most is sold to utilities in the Southwest.

The estimated revenue from surplus power sales for 2007-09 is about $645 million per year, meaning that an average of $145 million would be paid each year to the Treasury if the president's budget proposal is approved.

The power council analysis concluded it have the same effect as removing $145 million from the Northwest economy each year.

"Not only are we concerned about the potential impacts on Northwest ratepayers and the economy, but this proposal would set an alarming administrative precedent by targeting Northwest ratepayers to reduce the federal deficit without the consent of Congress," Karier said.

Stevens said the effect on ratepayers would be slight in comparison to the benefits when Bonneville is "seeing higher than normal historic revenues" and "is expected to reap a considerable net gain over the next several years."

But he said administration officials plan to meet with Northwest senators to discuss any impact.

The analysis was done at the request of Sen. Gordon Smith, R-Ore. A spokesman was not immediately available.

Associated Press
Study says Plan Will Raise BPA Rates
The Daily News, February 10, 2006

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