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BPA Undergoes 3rd Financial Audit

by Tom Detzel, The Oregonian staff
The Oregonian, August 7, 2003

WASHINGTON -- The Department of Energy's inspector general has launched a review of Bonneville Power Administration spending, marking the third investigation into the beleaguered power marketer's operations.

Spokeswoman Wilmatine Slaughter of the inspector general's office confirmed the new audit Wednesday.

"We do have an ongoing review at Bonneville, and it's on selected aspects of overhead costs," she said.

Slaughter said the audit was in its preliminary stages and declined to be more specific about what areas of spending are under scrutiny.

Jeff Stier, a BPA vice president, said auditors seemed most interested in transmission costs.

Separate audits by the General Accounting Office are examining overall finances and cuts in spending for salmon recovery.

BPA is a federal agency that markets nearly half the Northwest's electricity. It raised rates 45 percent after experiencing huge financial losses and long-term cost increases from the Western energy crisis and drought of 2000 and 2001.

Another 5 percent increase is slated for Oct. 1, and utilities and industries that buy power say the agency should cut costs rather than raise rates. BPA recently said it would set up a new process to let customers monitor its spending.

The three audits come as congressional scrutiny of the agency mounts. Language in a House-passed spending bill also requires the Energy Department to conduct an independent review of BPA's mission and finances, Stier said.

The language was inserted by a subcommittee led by Reps. David Hobson, R-Ohio, and Peter Visclosky, D-Ind.

Visclosky belongs to the Northeast-Midwest Coalition, a group that has contended BPA and other federal power-marketing agencies in the South and Southwest get unfair taxpayer subsidies.

In a July 1 interim report, the General Accounting Office said BPA's rising costs and financial problems could prompt some customers to buy power elsewhere. It also said the risk is higher that BPA could miss a debt payment to the U.S. Treasury.

Stier disputed both assertions Wednesday. He said the agency is in no danger of missing its $788 million Treasury payment this year and, with the pending rate increase, has an 80 percent probability of making its payments through 2006.

"The conclusion that BPA is at significant risk of losing customers really calls into question the viability of BPA as a business," he said. "Frankly, that conclusion was not supported by any quality analysis whatsoever."

However, the accounting office said big increases in staffing, power costs and fish and wildlife spending had helped pushed BPA's rates above prevailing Northwest market prices for most weeks between Jan. 1, 2002, and March 17.

Tom Detzel
BPA Undergoes 3rd Financial Audit
The Oregonian, August 7, 2003

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