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Bush Official Denies Plan to Sell Off BPA by Tom Detzel, The Oregonian staff The Oregonian, February 6, 2003

WASHINGTON -- President Bush's budget chief said Wednesday that the administration has no plans to privatize major functions of the Bonneville Power Administration, despite suggestive language in the president's new budget.

However, Mitch Daniels, director of the Office of Management and Budget, stopped short of declaring the BPA completely off limits, saying that "improvements are in order" at the agency that provides nearly half the Northwest's electricity.

Daniels' remarks came in a brief exchange with Sen. Ron Wyden, D-Ore., at a budget committee hearing. Wyden said privatizing the BPA "would be poison for our area, and I'd like to give you a chance to take that off the table."

Daniels said there is "no such interest on our part -- if you mean by that the privatization of the entire authority out there."

Still, Daniels quickly added that there have long been questions about the fairness of the BPA's operations to taxpayers. "Improvements are in order, but not what you call privatization," he said without adding more detail.

It was unclear Wednesday whether Daniels' comments would soothe Northwest lawmakers, who quickly close ranks when it comes to protecting the BPA because of the importance of low-cost federal power to the economy.

The agency sells electricity from 29 federal dams and one nuclear plant to utilities in the Northwest at cost. Critics call this an unfair subsidy because the system was built with low-interest borrowing from the U.S. Treasury.

Over the years, privatization advocates have argued that taxpayers would get a better return on their investment if the BPA sold power at market rates.

The agency's defenders say Northwest ratepayers -- not taxpayers -- are paying back the BPA's borrowing as well as all other costs of operation.

The debate arose anew this week because of language in a "program assessment" within the new Bush budget. The assessment criticized the BPA and the three other regional power administrations in the Department of Energy.

The BPA's generation and transmission functions "could be performed under contract or through non-federal ownership," the assessment said, while the BPA's debt structure "places part of the cost of (the BPA) on the general taxpayer."

Wyden, citing the budget language, reacted skeptically to Daniels.

"It sure looks like a dog and acts like a dog. It seems to indicate support for privatization," he said. "You've told me that you're not interested in doing that. Know that our region feels very strongly about it."

Sen. Gordon Smith, R-Ore., did not attend the hearing but said in an interview that he plans to make clear to the White House and Daniels that privatizing the BPA "is a losing issue in the Pacific Northwest."

Rep. Peter DeFazio, D-Ore., who is co-chairman of the bipartisan Northwest Energy Caucus, called Daniels' statement "far from Shermanesque." He said he planned to circulate a letter to Bush objecting to any privatization plans.

"I suspect every member of the delegation would sign it," he said.

Related Pages:
Protect Northwest Hydropower Editors, The Oregonian, 2/6/3