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Commentaries and editorials

Another Grab for Northwest Power

by Staff
The Oregonian, February 8, 2005

President Bush's proposal would strip away Bonneville's public benefits, drive up rates and damage the economy

President Bush has flung a live wire at the Pacific Northwest. The proposal in the president's 2006 federal budget to force the Bonneville Power Administration to charge market rates for its electricity could shock the region's economy like nothing else.

This is an awful, destructive idea that could annually add hundreds of millions of dollars to the power bills of homes and businesses in the region. "That would kill the economy of Oregon," said Rep. Darlene Hooley, D-Ore.

Bush's proposal is so clearly damaging that it's unnecessary to urge the Oregon delegation to fight it. Lawmakers of both parties are already energized: "I will oppose this nonsensical proposal with every fiber of my legislative being," said Rep. Peter DeFazio, a Democrat. Republican Sen. Gordon Smith said he has contacted Energy Secretary Samuel Bodman and promised to "oppose this proposal with all my remedies and rights as a U.S. senator."

Bush is seeking to require the BPA and the three other power marketing administrations in the nation to gradually bring their electricity rates closer to market averages. As it stands, BPA's wholesale rates are about $31 a megawatt hour. Wholesale prices now range from $40 to $50 a megawatt hour on the open market. For each dollar-per-megawatt hour increase, the Northwest would pay an additional $80 million a year, according to the Public Power Council, an association that represents consumer-owned electric utilities.

That means the Bush administration is proposing a change that conceivably could cost Northwest ratepayers more than $1 billion a year in higher electricity costs. The president could hardly come up with a policy to inflict more damage to our struggling economy.

The proposal makes virtually no sense in economic or budget terms. It would damage job growth and economic activity across the region. And it would do virtually nothing to help balance the federal government's budget.

What's really going on here is that Northeast and Midwest members of Congress, envious of low-cost Northwest power, together with ideologues opposed to the concept of federal power-marketing agencies, are trying again to move the BPA toward privatization.

Foes of the BPA have long argued that the low-interest debt held by the BPA is a subsidy and that taxpayers across the country essentially pay to keep Northwest energy costs low.

U.S. taxpayers did put up the money to construct the Columbia River dams that supply most of BPA's power, but Northwest ratepayers have been repaying this investment, with interest, ever since. For decades, in good times and bad, the BPA has repaid the U.S. Treasury on time and in full for its federal debt. Last year the BPA's annual payment, with interest, was $1.053 billion.

The rates that Bonneville charges cover its costs, and the Treasury is consistently and fully repaid for any taxpayer investments. There's not a problem here -- unless you are jealous of the Northwest's low-cost hydro system.

During his recent Senate confirmation hearing, Bodman, Bush's new energy secretary, told Sen. Ron Wyden, D-Ore., that he opposed privatizing BPA. Now, just a month later, the administration is clearly moving toward privatization. Its proposal would strip Bonneville of its primary public benefit: low-cost power. Once that's gone, so is the Bonneville Power Administration's entire reason for being.

Jeff Kosseff
Bush Plan Could Limit Growth of Power Grid
The Oregonian, February 8, 2005

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