A Bush administration plan to force the Bonneville Power Administration to sell electricity at market rates could boost prices 65 percent and cost Northwest ratepayers $1.3 billion, according to a new report.
PORTLAND, Ore. — A Bush administration plan to force the Bonneville Power Administration to sell electricity at market rates could boost prices 65 percent and cost Northwest ratepayers $1.3 billion, according to a new report.
The Northwest Power and Conservation Council analysis shows the effect would be similar to the West Coast energy crisis of 2000-01.
“It’ll slam the brakes on our regional economy and raid the pocketbooks of working families a second time,” said Sen. Maria Cantwell, D-Wash.
But a U.S. Department of Energy spokesman said the plan outlined in the president’s proposed 2006 federal budget caps any annual rate increase at 20 percent.
“We think it’s a minimalist approach to bringing the BPA and other power marketing agencies around the country into the 21st century with respect to operating their businesses,” said DOE spokesman Joe Davis in Washington, D.C.
Bonneville, based in Portland, is one of four federal power marketing administrations that serve the nation. It provides nearly half the electricity generated in the Northwest, most of it from a system of hydroelectric dams along the Columbia River.
“We don’t see it will have a big effect on consumers of electricity,” Davis said of the proposed shift to market-based power rates for the BPA.
The power council, however, predicted the plan would boost residential electricity bills for customers of public utilities by $24 per month while customers of investor-owned utilities that generate some of their own power and buy the remainder from Bonneville would see a monthly increase of about $10.
The council estimated the total cost of rate increases at $1.7 billion, resulting in a loss of $1.3 billion in personal consumer income and a loss of more than $300 million in federal and state personal income taxes.
“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,” said Melinda Eden, chairwoman of the four-state federal council established by Congress in 1980 to balance energy needs with the environment.
A spokesman for Sen. Gordon Smith, R-Ore., repeated Smith’s opposition to a market-based rate for Bonneville.
“He has promised to do everything in his power to make sure this proposal goes nowhere,” Smith spokesman Chris Mathews said today in Washington, D.C., noting that the chairman of the Senate Energy Commitee, New Mexico Republican Pete Domenici, “has said it’s pretty much a nonstarter.”
Mark Krasnowsky, spokesman for the NW Energy Coalition, said the proposal “seems to be the first step in an attempt to privatize the BPA,” an effort that has run into strong regional opposition since deregulation of the energy industry began in the mid-1990s.
The opposition includes the Seattle-based coalition, an alliance of more than 100 environmental and service organizations, utilities and businesses in Oregon, Washington, Idaho, Montana, Alaska and British Columbia.
Davis denied the market-based rate proposal was a move toward privatization.
“We don’t see allowing power marketing administrations to increase rates as tantamount to privatization,” Davis said. “Privatization involves selling the assets of an agency, and we’re not talking about selling assets.”
Krasnowsky noted the region benefits from Bonneville power because hydroelectricity is far cheaper to produce than other sources. “This is meant to be operated for the benefit of the people of the Northwest,” he said.