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PORTLAND ? If the Bonneville Power Administration is forced to sell
electricity at average wholesale market rates, as the Bush
Administration proposed last month, Bonneville's rates would jump up
65 percent and cost the region's ratepayers about $1.3 billion,
according to an analysis
(490k PDF) by the
Council.
?The impacts would be similar to those of the West Coast energy crisis
of 2000 and 2001, and those rate increases bludgeoned the Northwest
economy,? Council Chair Melinda Eden of Oregon said. ?Our regional
demand for electricity today is about the same as it was in 1989,
reflecting lower use than was expected after 2001. Our economy simply
has not rebounded, and to impose a rate increase that amounts to a
penalty on Northwest ratepayers would be ill-advised and unfair.?
Bonneville, a division of the federal Department of Energy, sells
electricity generated at 31 federal dams and one non-federal nuclear
plant. The power is sold at a price equal to the cost of its generation.
The Bush Administration's proposal would force Bonneville, a
self-financing agency, to raise its rates to nearly the wholesale market
price of electricity. The additional revenue would flow to the Treasury
to help balance the federal budget, according to Energy Secretary Samuel
W. Bodman in testimony before the House Energy and Commerce Committee on
February 9.
According to the Council's analysis, a 65-percent increase in the
price of electricity sold by Bonneville translates to an average
39-percent increase in the rates paid by consumers. That is because
electricity is just one component of electricity rates, and there is no
similar proposal to raise the cost of other components such as the cost
of power transmission.
The 39-percent increase for consumers translates to an average increase
of $24 per month in residential electricity bills for customers of
public utilities that buy their power from Bonneville and $10 per month
for customers of investor-owned utilities that generate some of their
own power and buy the remainder from Bonneville, according to the
analysis.
The result would be a $1.7 billion increase in the cost of Bonneville's
power, a corresponding $1.3 billion decrease in regionwide personal
income as consumers pay more for electricity, and more than a $300
million decrease in federal and state personal income tax receipts.
Other effects include the potential loss of 13,000 jobs in
energy-intensive industries, particularly the aluminum industry. Because
of high energy prices and low metal prices, only three Northwest
smelters are operating currently, and those are at limited production.
The analysis is based on calculations of the increased cost of
electricity and calculations of how changes in expenditures for
electricity filter through the economy. Here is a summary of the
analysis, which will be posted on the Council's website.
Summary of Effects of Bonneville Charging Market Rates
Change in Regional Electricity Costs
- $1.4 billion increase in cost of power from Bonneville
- $300 million increase in cost of power to residential and small farm
IOU customers
- Total: $1.7 billion total increase (spread over 3 years)
Effect on Utility Rates and Consumer's Monthly Bills
| Utility / Customer Type |
Percent Increase
in Rates |
Increase in Monthly
Residential Bill |
|
Consumer-Owned Average |
39% |
$24 |
| IOU Exchange Customer |
13% |
$10 |
Effect on the Regional Economy
- $1.3 billion decrease in personal income
- 13,000 decrease in regional jobs
- Additional effects on aluminum and other energy-intensive industries
- Decreased income and jobs in other regions
Effect on Tax Receipts
- $217 million decrease in federal personal income tax revenues
- Additional loss in federal revenues corporate profits taxes
- $59 million decrease in state personal tax revenues
- Additional loss in state revenues from corporate taxes
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