Enron-Like Madnessby Editorial Board
Seattle Post-Intelligencer - February 13, 2005
A few years ago, Enron and other power marketers sent Northwest electric rates soaring with the manipulation of a West Coast energy crisis. Now, President Bush wants to pick up where his one-time pals at Enron left off.
The president's budget proposes to charge premium prices, equivalent to those from higher-cost power plants, for the low-cost electricity produced by federal dams. The budget envisions "modest" annual rate increases to bring the costs up to those for power from other market sources.
Lawmakers and utility officials from Washington say the rate increases would equal or exceed those of the energy crisis. If the budget proposal passes Congress, they expect up to 20 percent yearly increases in the Bonneville Power Administration's wholesale electric rates.
In the state of Washington alone, the extra charges likely would mount within a decade to $1 billion to $1.5 billion per year, according to Jim Harding of Seattle City Light. As angry Democratic lawmakers see it, that's the same as a $1 billion tax boost.
Democrats aren't alone in objecting. Already, Sen. Gordon Smith, R-Ore., has promised to use any possible procedural maneuver to block the president's proposal. New Mexico Republican Sen. Pete Domenici, head of the powerful Senate Energy and Natural Resources Committee, said he won't support the administration.
As Domenici observed, other administrations have tried unsuccessfully to raise prices on power from the BPA and other federal power-marketing agencies. Congress has never gone along -- and for solid reasons.
The Bush administration talks about BPA's current rates as taxpayer subsidies of the region. In fact, though, BPA and other power-marketing agencies are charged by law with providing power at their costs. A government agency should not be a profit center.
BPA is such a dominant provider of electrical power that it is almost impossible to imagine how it could operate as a normal part of a market. If ordered to make money, Bonneville would almost inevitably take on monopoly-like powers to control prices, and in ways that would be almost impossible to monitor.
Even if practical solutions could be found, the attempt to foist new costs on the Northwest ignores the history of hydropower in the region. The power system grew out of federal attempts to spur economic development, encourage agricultural irrigation and provide flood control. The government's investments, which included a lot of Northwest tax dollars, have more than paid for themselves in returns to the federal Treasury and economic growth. The region continues to make exceptional sacrifices of its own, especially in the tradeoff between hydropower and salmon runs. A study released last week said 2001's modestly improved fish runs supported 18,000 Northwest jobs and $1.9 billion in revenue. Those figures would be dwarfed if the region really restored river runs, but that would derail any profiteering from Bonneville.
In an attempt to make some sense of its tax cuts, military expenditures and budget deficits, the administration is reviving all manner of ideas previously rejected by Congress. This one is a particular stretch, because Congress previously prohibited any government spending to even study the idea of charging market rates for BPA power, as Sen. Maria Cantwell, D-Wash, has pointed out.
Whatever fiscal pressures the administration is creating for itself, the region has economic realities of its own. Oregon's Sen. Smith told The Associated Press: "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 can't afford any more." As long as the administration is looking for power-marketing injustices to remedy, maybe it could first see if the Federal Energy Regulatory Commission can force suppliers to reimburse Western homeowners, businesses and schools for the energy crisis losses they continue to suffer.
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