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Delegation opposed to president's BPA proposal

| February 24, 2005 11:00 PM

By STEVE KADEL Western News Reporter

Libby residents' relatively low electricity rates could zoom upward under President Bush's proposed budget for 2006.

That's because the president wants Bonneville Power Administration to begin selling power at market prices. Currently, its rates are based on cost, which makes them lower than market rates.

Flathead Electric Cooperative buys 45 percent of its power from BPA, said local coop office director John Desch. If Flathead's costs were to increase, the coop would have to pass the boost along to members or try to cut expenses by reducing equipment maintenance or through other methods, Desch said.

He added that previous administrations have not proposed anything so severe.

"I haven't heard of something like this before," Desch said.

Rep. Denny Rehberg, R-Montana, has estimated that rates might jump as much as 50 percent under the proposed BPA change. He has already begun efforts to block the idea, having sent a letter to the federal Office of Management and Budget that decried the "totally unacceptable" rate increase.

Sen. Conrad Burns, R-Montana, promised to do everything in his power to prevent the rate shift from happening.

"The intentions by the administration to move BPA's power rates to a market-based structure rather than cost based is a flat-out bad idea," Burns said. "This would have a devastating effect on consumers in Montana and the Northwest. I will not let it stand."

Sen. Max Baucus, D-Montana, also ripped the idea.

"I strongly oppose the administration's proposal," he said. "The administration's recommendation to raise rates by 20 percent a year would devastate Montana. It would result in steep electric rate increases for businesses and consumers across the state, chilling economic growth and hitting our struggling economies hard.

"I'll work together with my congressional colleagues and members of the Montana delegation to fight these proposed rate changes."

BPA sells power to providers in Oregon, Washington, Idaho and northwest Montana

Flathead Electric buys 44.7 percent of its power from PacifiCorp - essentially the same amount as it gets from BPA. That combination has provided Lincoln County residents and businesses with more affordable electric costs than many other places, Desch said.

"We've been pretty low, comparatively, for a while now," he said.

A survey in July 2003 showed local residential electric rates running slightly below the average for utilities throughout Montana.

Montanans in general paid slightly lower electric rates - 7.6 cents per kilowatt hour — than the national average of 8.7 cents, according to a study in October 2003 by the Energy Information Administration. Washington residents were lowest among Pacific Northwest states with an average of 5.3 cents, followed by Idaho with 6.7 cents and Oregon with 7.1 cents.

Idaho has a low average electricity rate because virtually all public utility districts and municipal electric cooperatives buy BPA power.

Estimates among Western lawmakers for the price boost of switching BPA's rate structure ranged from 20 percent to 50 percent. Bush administration spokesmen have said the plan could save up to $12 billion over 10 years by removing subsidies and other types of federal assistance.

Desch said private utilities must get approval from the state Public Service Commission for rate increases. However, coops such as Flathead can make such decisions based on a vote of their own board of directors.

Flathead probably wouldn't opt to defer maintenance of its equipment, Desch said, adding, "We like to have reliability for the members."