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Fate of BPA'S Borrowing Increase Still Uncertain

by CBB Staff
Columbia Basin Bulletin - September 27, 2002

A $1.3 billion federal loan to the Bonneville Power Administration for future transmission line construction and improvements is uncertain of winning congressional approval this year.

Meanwhile, the House Appropriations Committee has criticized the Northwest Power Planning Council for not doing a better job of scrutinizing BPA's construction, power plant acquisition and other capital funding projects, in general, and its original $2 billion borrowing increase proposal, in particular.

Legislation to authorize a $1.3 billion increase for Bonneville was included in the Senate-passed energy bill in April. But Jeff Stier, BPA vice president for federal affairs, on Thursday said it was possible that Congress might not reach agreement on a final bill, although House-Senate negotiations are making progress.

A change in borrowing authority must be made by passing permanent legislation, not a funding increase. The FY03 appropriation bill that funds the Department of Energy could also carry permanent borrowing increase legislation, but has yet to be passed by either the House or Senate. With the new fiscal year starting Tuesday, Oct. 1, Congress has not passed any of the 13 annual spending bills and this week passed a continuing resolution funding most government agencies at current levels through the end of next week.

House and Senate energy bill negotiators may not be able to reach compromise on several "thorny disagreements," including electric utility restructuring, Stier said. "There is a question whether there will be an electricity title or an energy bill at all," he said.

If the energy bill negotiations fail, he hoped the borrowing increase could be included in the spending bill. But it is uncertain whether Congress will pass the Department of Energy appropriation bill by mid-October when it plans to recess for the November election campaign season. Also, congressional leaders have not decided whether to return after the election for a lame-duck session to complete its budget work. Instead, they and President Bush might agree to extend current spending levels for most departments until early next year, when a new Congress will take office. "We don't know what is going to happen with appropriations," Stier said.

If neither the energy bill nor the energy spending bill are passed in time, he said it is doubtful Bonneville will get congressional approval for the borrowing increase this year.

Sen. Patty Murray, D-Wash., a leading supporter of the increase, said it is needed to address transmission bottlenecks, which form "one of the most acute energy problems facing Washington State."

"In our state, there are more than 40 major bottlenecks in the regional transmission system, preventing electricity from flowing between producers and consumers," Murray said in April. "By granting BPA the authority to borrow up to $1.3 billion to build new transmission lines, electricity will flow more freely."

Currently Bonneville has legal authority to borrow up to $3.75 billion from the U.S. Treasury for capital investments in power systems, including fish and wildlife measures, transmission systems and capital equipment. The agency expects to tap $630.8 million of its remaining borrowing authority in FY03 and to reach its limit in FY04.

With the support of Northwest members of Congress and the Power Council, BPA last year asked the president and Congress for a $2 billion increase.

The $1.3 billion hike that won Senate approval in April has yet to be considered by the House, which passed its energy bill last year without the Bonneville increase. Current House-Senate negotiations to resolve differences between their two energy bills have not yet addressed the BPA loan issue.

Earlier this year, President George W. Bush in his FY03 budget proposed a $700 million increase in future borrowing authority for Bonneville. That would raise the agency's limit to $4.45 billion. But partly because House Senate energy bill negotiators are currently considering the $1.3 billion borrowing increase legislation, both the House nor Senate appropriations committee left Bush's proposal out of their FY03 spending bills for the Department of Energy.

"The (Northwest Power Planning) Council has not exercised as much independence as Congress intended on major capital funding decisions by Bonneville," the House Appropriations Committee said in a report on its energy and water appropriation bill, which the committee approved Sept. 5. Because the council is funded by Bonneville, the committee said it is "concerned that a potential conflict of interest exists, which has diminished the council's independence."

To help ensure a conflict is avoided, the committee report directs Bonneville and the Council to submit by Nov. 1 information concerning the formulation of the Council's budget as it pertains to the Council's "capability to carry out its responsibilities with the independence and objectivity that Congress intended" under the 1980 Northwest Power Act.

Mark Walker, Council director of public and government affairs, said he believed the House energy and water subcommittee staff was particularly concerned that the Council did not scrutinize Bonneville's original $2 billion borrowing authority increase proposal.

"In particular, they thought we were too quick to support Bonneville last year when it made its first run at an increase in borrowing authority - that we didn't take a good critical look, especially at the level they wanted," Walker said.

Walker said he believes the committee staff is "trying to send a message to the Council, that they expect us to take a hard look at Bonneville's activities and basically give them a critical assessment, and evidently they're disappointed."

Council members have not yet seen the language. "We'll do our best to comply with the request of the committee" and provide the report, Walker said.

Stier said he was somewhat mystified by the committee's criticism. "At least from Bonneville's perspective, the council is stubbornly independent. We probably wish sometimes they'd be less independent," he said.

Stier added that the council does not have specific authority under the Northwest Power Act to oversee its transmission system, which is the main activity to be funded by the borrowing authority increase. "The staff that wrote this is under the mistaken impression that the council has a major role in transmission," he said. "But the council doesn't have any oversight role over planning or construction or operation of the transmission system."

Some Power Council members would dispute that, Walker said. "Our charge is to ensure the Northwest has an adequate, efficient and reliable power supply. They would argue it's hard to separate transmission from the other elements," he said.

CBB Staff
Fate of BPA'S Borrowing Increase Still Uncertain
Columbia Basin Bulletin, September 27, 2002

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