National budget-reduction proposal would raise Northwest power rates and reduce jobs and income

February 20, 2007

A budget-reduction proposal by the Bush administration would force the Bonneville Power Administration (BPA) to raise electricity rates and result in the loss of 1,800 jobs in the Northwest and a reduction in personal income regionwide of $130 million, according to an analysis (90k PDF) by the Northwest Power and Conservation Council. The administration made a similar proposal in 2006, but it was removed from the budget by Congress.

This year, as in 2006, the Council joins members of the Northwest congressional delegation in criticizing the proposal, which Council Chair Tom Karier said would set an alarming precedent if enacted.

“The administration should not be allowed to impose a mechanism that collects money from Northwest electricity ratepayers for the purpose of reducing the national deficit,” Karier said. “If this proposal goes forward, it appears that the administration would be able to further increase the dollar amounts in future budget proposals without the need for authorizing legislation.”

In its Fiscal Year 2008 budget, the administration proposes to force BPA to pay revenues from the sale of surplus electricity, called “net secondary revenues,” that exceed $500 million per year to the federal Treasury to accelerate the repayment of BPA’s federal debt. BPA’s Fiscal Year 2008 budget estimates net secondary revenues of $630 million in 2008, $628 million in Fiscal Year 2009 and $630 million in Fiscal Year 2010. This would result in an advance payment for debt amortization in 2008 of $130 million, which would reduce BPA’s probability of Treasury repayment and result in a rate increase for BPA’s customers, most likely in 2009.

The proposal ignores the fact that BPA has voluntarily retired $1.675 billion of its federal debt over the last six years, and so forcing additional payments is an oddly punitive response to an effort that clearly reaped benefits for the Treasury, Karier said.

Increasing Bonneville debt retirement by $130 million per year would force Bonneville to raise its rates by about 7 percent, translating to a $2-per-month increase in the average electricity bill of a consumer whose utility is served by Bonneville, according to a Council analysis. The rate increase also would decrease personal income in the Northwest by about $128 million and result in the loss of 1,800 jobs, according to the Council.

The Council is an agency of the states of Idaho, Montana, Oregon and Washington and is directed by the Northwest Power Act of 1980 to prepare a program to protect, mitigate and enhance fish and wildlife of the Columbia River Basin affected by hydropower dams while also assuring the region an adequate, efficient, economical and reliable power supply.

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