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Keeping Prices Low Will Be Battle

by Lukas Velush, Herald Writer
The Herald, February 22, 2005

The lack of a powerbroker in Congress could make energy prices soar,
a former BPA official says.

Preventing the Bonneville Power Administration from as much as doubling the rates it charges utilities such as the Snohomish County PUD will be harder than many industry insiders expect, said the federal agency's former administrator.

Following the lead of previous administrations, President Bush on Feb. 7 announced that he wants to raise Bonneville's rates to help pay down the national debt.

Energy experts from throughout the Pacific Northwest believe the region will, as it has so many times before, fend off Bush's proposal.

Former Bonneville administrator Randy Hardy isn't so sure.

"I'd say this is as serious, if not more serious, than every effort we've seen in the last 20 years," said Hardy, who served as Bonneville administrator from 1991 to 1997. "To dismiss this out of hand would be a grievous mistake."

Bonneville a cash cow?

Bush estimates that he can collect $12 billion by making federal energy wholesalers such as Bonneville charge market rates for electricity that has been sold at cost for decades. Based on today's market rates, that could double BPA's rate over five years. Bonneville uses dams on the Columbia River and a nuclear power plant in Hanford to provide half of the electricity used in the Northwest.

The PUD buys 80 percent of its electricity from Bonneville and can ill-afford another rate hike. Its 295,000 customers have had among the state's highest electricity bills since the 2000-01 West Coast energy crisis. That's when illegal electricity market manipulation by Enron Corp. and others sent the PUD's rates shooting up by more than 50 percent.

Opponents to Bush's plan list at least two laws that will have to be changed and note that the Northwest's congressional delegation is unified in its opposition. They say the region can and must win the fight to protect an economy that's just now recovering from the double whammy of the energy crisis and the recession that came after the Sept. 11, 2001, terrorist attacks.

No powerbrokers

Hardy said the region's Bonneville advantage is at risk because there are no longer powerbrokers in Congress to snuff the plan out. Bush's plan is also simpler, which could make it easier for Bush to slip it through Congress.

In the 1980s and early 1990s, it used to be that utility managers could go to U.S. Rep. Tom Foley or U.S. Sen. Mark Hatfield and "say kill this," Hardy said.

Foley, a Democrat from Spokane, was either the speaker of the house or the majority leader during the 1980s and early 1990s, and Hatfield, a Republican from Oregon, was the chairman of the powerful Senate Appropriations Committee during much of the 1990s.

Before that, the region had powerful Washington Sens. Henry M. "Scoop" Jackson and Warren "Maggie' Magnuson protecting the state's electricity turf.

"This is the first time in almost 50 years that we have been without people in the delegation in those powerful positions," Hardy said.

Worse, Bush's plans for Bonneville are less complicated than past attempts to get extra cash out of the agency, Hardy said.

This administration is just asking Bonneville to go from charging what it costs to generate electricity to charging what the market says electricity is worth. Previous administrations tried to privatize BPA or to change the way it borrows money, which were apparently much more difficult.

Region will fight

Still, at least two federal laws will have to be changed, including the Northwest Power Act of 1980, which stipulates that Bonneville must sell its electricity at cost.

"I agree with (Hardy), that it's a more serious threat than just a budget proposal," said Sen. Maria Cantwell, D-Wash.

She said she will fight, as will the rest of the Northwest delegation.

"It's just more of this crazy (deregulation) philosophy of theirs," Cantwell said. "We're not going to stand for it in the Northwest."

"I feel confident that there are enough senators who are outraged that it won't go through the Senate," she said.

Bush has friends in House

Hardy agrees, but worries that the measure could get through the House of Representatives, which is filled with legislators from around the country who think the country has been subsidizing the Northwest's low-cost power.

"If it can get to the floor of the House, it just might pass," he said. If that happens and the Senate rejects it, then it would head to a conferring committee where differences between House and Senate bills are ironed out. Or, as Hardy put it, "where anything can happen."

In the end, though, Hardy predicts the region will band together and yell loud enough to keep Bonneville's rates down.

Local utility managers hope he's right.

"It's really misguided for the administration to do this because it would throw our economy in the toilet," said Dave Aldrich, president of the PUD's governing commission. "It'd obviously be horrible for the state and horrible for the PUD's customers. Electricity rates would have to go up."

Lukas Velush, Herald Writer
Keeping Prices Low Will Be Battle
The Herald, February 22, 2005

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