BPA rate proposal could bump local rates 6 percent

Energy retailers and politicians throughout the Northwest are decrying a Bush Administration budget proposal that could see a 10 percent rate increase to help offset the growing federal deficit.

The Bonneville Power Administration announced last week it will be opening a "rate case" in July toward a 10 percent increase in 2008 and 2009.

According to a spokesperson for Flathead Electric Co-op, it could result in an electrical rate increase of 6 percent to northwest Montana power users.

"Our hope is that the strong opposition by legislative delegates will resolve the issue in our favor," said Stephanie Wallace, community affairs director for FEC. "I contacted our Senators Burns and Baucus and Representative Rehberg immediately in hopes that they were going to jump on the opposition bandwagon. All three are adamantly opposed to the administration dictating that BPA redirect the secondary revenue and all three are actively fighting on behalf of us and our members."

Wallace said, "If BPA is forced to do this and this situation becomes a reality, they anticipate a wholesale rate increase of about 10 percent in 2008 and 2009. That translates to a 6 percent increase for FEC members at a retail rate."

Flathead Electric keeps rates reasonable and predictable "and our goal is to do everything we can to make sure that expectation by our members continues," she said.

"We do feel vulnerable in light of the BPA situation, but we will continue to try to influence things where we can in order to provide the reliability and affordability members want and deserve," Wallace said.

The administration's budget proposal for 2007 is to raise secondary revenues through the BPA to raise $500 million to pay down existing debt. The BPA had $2.8 billion in debt at the U.S. Treasury and it is projected to reach its borrowing cap of $4.5 billion by the year 2011.

Montana Senators Max Baucus and Conrad Burns have joined five other Northwest senators in opposing the proposal. A letter was sent to the White House last week signed by Montana's two senators along with Sens. Maria Cantwell, D-Wash.; Patty Murray, D-Wash.; Larry Craig, R-Idaho; Ron Wyden, D-Ore., and Gordon Smith, R-Ore.

The letter notes that the BPA has been fiscally responsible and has made early payments on the debt totaling $1.46 billion above its annual payments.

Burns expressed concerns that the proposal "short-circuits the regional consensus necessary to balance the complimentry goals of meeting our fiscal responsibilities, providing growth, and investing in our energy future."

The concern was widespread in the Pacific Northwest states.

"This is hardly time for the administration to impose a gratuitous rate increase on the Northwest," said Marilyn Showalter, executive director of the Public Power Council in Portland, Ore. "We are just now climbing out of the last disaster the federal government failed to address - the western energy crisis."

Showalter expressed concerns that the administration's budget proposal would hurt the delicate balance of power production and fish recovery in the Columbia River System.

"By trying to skim the top off the river system in good water years, the administration is limiting the flexibility of the river system to balance out good-water years with bad-water years, and to address the unknown future costs for fish that are currently in the hands of a federal court," she said.

Tom O'Connor, executive director of the Oregon Municipal Electric Utilities Association, said the proposal reverses the BPA's long-standing policy to use revenues from surplus power sales to help lower rates for Northwest electricity consumers.

"This proposal means a potential $1 billion transfer of dollars from our local communities to the federal government over the next ten years," O'Connor said.

O'Connor expressed concerns that the BPA can divert the funds administratively without congressional approval.

"This is nothing more than a hidden attempt to gouge the Northwest's ratepayers to the tune of about $1 billion, and at the worst possible times," said Steve Johnson, executive director of the Washington Public Utility Districts Association.

Cantwell issued a statement said she would fight the proposal.

"The Northwest economy has already suffered enough as a result of the Western energy crisis, which brought BPA rate increases of more than 40 percent," Cantwell said. "As far as I'm concerned, this ill-advised plan is dead on arrival."