BPA Rate Moves Key
It's nothing like an eight-state power blackout, but the Northwest has produced a little-noticed energy-supply drama of its own.
The outcome, if it goes badly, could hit the pocketbooks of ratepayers and businesses in Tacoma and other parts of the region.
The plot is complicated, as most energy issues are. To simplify greatly, Tacoma Power and most other public utilities that use power marketed by the federal Bonneville Power Administration want BPA to back off from an emergency rate increase it announced months ago.
BPA Administrator Steve Wright took the action when it appeared the agency's cash reserves were dangerously low and there was a chance the agency might be forced to miss its annual debt payment to the federal treasury. The rate hike - as much as 12.8 percent - was to take effect Oct. 1.
Missing a debt payment would be just about the worst thing that could happen to the BPA and its customers. Congress is full of critics who think, wrongly, that the Northwest is unfairly enjoying federally subsidized low-cost power. Faithfully maintaining BPA debt payments is essential.
But BPA's financial picture has brightened considerably. Indeed, the BPA this month reported $424 million in net revenues so far this year, compared to a $1 million shortfall this time last year. Effective cost-management and lower borrowing costs accounted for the dramatic swing to black ink.
What the BPA's Wright needs to do now is cancel the emergency rate hike. Any increase in wholesale power rates would be a blow to slumping economies in Washington and Oregon.
The other criticial piece is a proposed settlement between the BPA and the Northwest's public utilities, who sued the agency last year for making a sweetheart deal with privately-owned utilities. The publics make a convincing case that the BPA violated the Northwest Power Act by dispro-portionately shifting hydro system benefits toward private utilities.
The settlement would require BPA to defer some budget costs, but the agency could resort to emergency rate hikes for 2005 and 2006 if its revenues go south. In 2006, the agency will adopt a new five-year rate schedule.
A volatile power market and costly salmon-restoration commitments pose formidable challenges for Bonneville. BPA chief Wright has his hands full. But he can safely protect both the Northwest economy and his own agency by scrapping the emergency rate hike and approving the settlement.
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