Proposals by the Trump administration to force the Bonneville Power Administration to sell electricity at market rates rather than its cost of generation, as Bonneville has done for more than 70 years, and also sell the federal high-voltage transmission system, which Bonneville operates, not only would violate federal law but would dramatically increase the electricity bills of Northwest businesses, industries, and residential consumers.
In a letter to members of the Northwest Congressional delegation, signed by Council Chair Richard Devlin, the Council objected to the proposals. The cost of Bonneville’s power is less than the average market price, sometimes far less, and the transmission system, at some 14,000 line miles, is the largest in the Northwest. In its letter, the Council refers to both proposals as “detrimental schemes for the economy of the Pacific Northwest.”
The Council asserts that the administration’s proposals would hurt Bonneville’s utility customers, and by extension their customers, by increasing the costs of power, transmission, distribution from local utilities to homes and businesses, and other ancillary components that are currently included in the existing BPA rates. Most of Bonneville’s customers are publicly owned, not-for-profit electric utilities, and many serve low-income, rural areas. Those customers would be particularly hard hit.
A typical residential customer of a Bonneville-customer utility currently pays about $94 per month for electricity. The rate increase under the Trump proposals could raise the average customer’s monthly bill by 15 percent to 30 percent, or higher depending on the price of power in the wholesale market. Customers in rural areas, where home heating is typically from electricity, could see an average 23-percent increase in their electricity bills, the Council estimates.
Both proposals violate federal law. Selling the transmission system is prohibited by Public law 99-349, the Urgent Supplemental Appropriations Act of 1986. Additionally, Public Law 100-371, the Fiscal Year 1989 Energy and Water Development Appropriations Act, prohibits spending federal dollars to study changing the pricing of federal electricity from cost-based to market-based rates for all federal power-marketing agencies.
Additionally, the administration proposes something of a fire-sale value for the transmission system. The administration supposes the sale would yield, over ten years, $3.29 billion, yet Bonneville’s 2019 annual report values the system at $6.7 billion.
The Trump administration is not the first to propose raising the cost of Bonneville’s power or selling the transmission system, or both. Both Republican and Democrat administrations have proposed such sales, presumably as a way to pump more money into federal coffers. All past attempts were defeated – this is one issue that has strong bipartisan opposition across the region.
Importantly, Bonneville does not rely for its budget on annual federal appropriations, but makes its money from power sales. In short, Northwest electricity consumers, not federal taxpayers, support Bonneville. For that reason alone, the latest proposals are a non-starter for Northwest members of Congress. According to the Council’s letter: “It is quite clear that Northwest consumers would see increased electricity bills under the Administration’s proposal.”