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Leaders say Bush's Plan Would Raise Power Rates

by Matthew Daly, Associated Press
Idaho Statesman, February 8, 2005

WASHINGTON -- The Bush administration called Monday for a major change in the way the Bonneville Power Administration and other federal power suppliers charge their customers, to rates based on market prices at the time rather than the cost of producing the electricity.

Officials said the plan could raise electric power rates in the Pacific Northwest by as much as 20 percent a change that one Northwest lawmaker called the equivalent of a billion-dollar tax hike.

Western lawmakers from both parties vowed Monday to block the proposal, contained in the president's 2006 budget.

In Idaho, virtually all of the public utility districts and municipal electric co-operatives buy power from BPA.

Twelve of those buy 100 percent of their power from BPA. They are: Clearwater Power; the City of Heyburn; Idaho County Light and Power; Kootenai Electric Co-operative; Lost River Electric Co-operative; the city of Plummer; Raft River Electric Co-operative; the city of Rupert; Salmon River Electric Co-operative; the city of Soda Springs; Southside Electric Lines; and United Electric Co-operative.

Three more get 89 percent or more of their power from BPA: the city of Bonners Ferry; Fall River Rural Electric Co-operative, and Northern Lights Inc. of Sagle.

The plan also would affect three other regional agencies that supply power to dozens of states: the Colorado-based Western Area Power Administration; Georgia-based Southeastern Power Administration; and Oklahoma-based Southwestern Power Administration. Overall, the plan could save up to $12 billion over 10 years by removing subsidies and other federal assistance, officials said.

But the proposal immediately faced trouble in Congress. Sen. Pete Domenici, R-N.M., chairman of the Senate Energy and Natural Resources Committee, called it "politically untenable."

"Every once in a while, administrations of either party come up with this idea, and I won't support it," Domenici said.

Sen. Gordon Smith, R-Ore., also opposed the plan, which he said could cost Northwest ratepayers as much as $2 billion over three years.

"BPA's customers are still recovering from the West Coast energy crisis and a sluggish economy. They've already been hit with rate hikes and they can't afford any more. I am going to exhaust every right and privilege I have as a senator to kill this proposal," Smith said.

A spokesman said Smith, a senior member of the Energy Committee, met with new Energy Secretary Samuel Bodman on Monday and told him he opposes the market-based plan.

Bruce Carnes, a top deputy to Bodman, said the plan would merely take away unfair subsidies that have allowed BPA and other federal providers to supply cheap power at artificially low rates.

Carnes cited studies by the Government Accountability Office and the Congressional Budget Office showing that the four federal power agencies continue to be subsidized, mostly in the form of favorable interest rates unavailable to other providers, such as Indian tribes, municipalities and private companies.

"There are plenty of sources of power out there. They can't compete with the BPA, because they are charging a discounted price based on cost and subsidy," Carnes said in an interview.

The administration plan "levels the playing field" with nonfederal providers that are being undercut by as much as 30 percent, Carnes said.

But Northwestern lawmakers called the plan a direct attack on the wallets of their constituents.

"This is the same as a billion-dollar tax hike on Washington state, and as far as I'm concerned, it's dead on arrival," said Sen. Maria Cantwell, D-Wash. "To think we would arbitrarily pay more for power generated right here in the Northwest is ludicrous."

Cantwell and other lawmakers said the change could cost Northwest consumers more than $480 million in the first year, and at least $2.5 billion over three years.

Rep. Jay Inslee, D-Wash., denounced the plan as a "radical change," and said it was particularly inappropriate coming from an administration that has done little to protect the Northwest from price-gouging by Enron and other power companies.

"It's too much to take, for an administration that sat on its hands and allowed Enron to gouge and pillage ... and now wants to hit us with a 20 percent increase. That's just unacceptable," Inslee said.

Rep. Peter DeFazio, D-Ore., called the plan alarming.

"If the president wants to find places in his budget to combat deficits, he should eliminate tax cuts for millionaires, rather than dig into the pockets of Northwest ratepayers," DeFazio said.

A spokesman for the BPA declined to comment Monday, saying the agency was still studying the proposal.

Bonneville, the federal power marketing agency based in Portland, supplies nearly half the electricity in the Pacific Northwest, most of it from a system of federal dams along the Columbia and Snake rivers.

Matthew Daly, Associated Press
Idaho Statesman business editor Mike Maharry contributed to this report.
Leaders say Bush's Plan Would Raise Power Rates
Idaho Statesman, February 8, 2005

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