02.07.05

Cantwell, Murray Blast Bush Administration Plan That Could Double Northwest Power Rates

Senators will use "every tool at our disposal" to defeat Bush Administration plan

WASHINGTON, D.C. – U.S. Senators Maria Cantwell and Patty Murray (D-WA) today vowed to defeat a new Bush Administration plan that could double Northwest electricity rates. The proposal, included in the Administration's Fiscal Year 2006 budget, would increase the rates of the Bonneville Power Administration (BPA) until they are roughly the same as rates being charged elsewhere in national power markets.

The budget proposal itself is sparse on details, suggesting the Administration will " propose legislation to very gradually bring [power marketing administration] electricity rates closer to average market rates throughout the country." Meanwhile, trade reports today suggest the Administration would raise the rates of BPA and other federal power marketing administrations by 20 percent per year to achieve this goal. Over the next two years, this could raise BPA rates by over $1 billion, and nearly double Bonneville's rates within the next five years—depending on the market price for power. About 70 percent of the electricity consumed in the state of Washington is BPA power, which today is sold at cost—rather than market-based—rates.

"This is the same as a billion dollar tax hike on Washington state, and as far as I'm concerned, it's dead on arrival," Senator Cantwell said. "To think we'd arbitrarily pay more for power generated right here in the North west is ludicrous. This is an outrageous attempt to fleece North west ratepayers, and I will not stand idly by while this Administration attempts to dismantle BPA."

"The Administration's attempt to pay down the national deficit on the backs of Washington state ratepayers is both misguided and wrong," Senator Murray said. "Washington families and businesses need help rebuilding our economy, not added burdens."

Cantwell and Murray today sent a letter to President Bush, asking that the Administration immediately abandon the new plan. (follows below)

February 7, 2005

The Honorable George W. Bush President of the United States The White House 1600 Pennsylvania Ave. NW Washington, D.C. 20500

Dear President Bush,

We write in strenuous opposition to legislation contemplated in your Fiscal Year 2006 budget, which could nearly double electric power rates charged by the Bonneville Power Administration (BPA). Your proposal would deal a severe blow to the economy of the Pacific Northwest —essentially levying a $1 billion tax on our region's ratepayers over the next two years alone. In addition, it would upend the more than 50 years of law, policy and valued Northwest tradition that has made reliable, cost-based power the backbone of our regional economy and fabric of our rural communities. In short, your proposal is a non-starter, and we will use every tool at our disposal to prevent its implementation.

As we understand it, your budget proposes to fundamentally alter BPA's traditional cost-based rate structure—and increase the Northwest's power rates until they are equivalent with market rates throughout the country. According to press accounts, the Administration intends to raise the rates of BPA and other federal Power Marketing Administrations by 20 percent per year until this goal is achieved. Decades ago, the Northwest delegation and ratepayers of the Pacific Northwest rejected this notion—and instead chose to devise a system of laws and contractual agreements that would ensure the public benefits of the Columbia River would be shared in a manner designed to power the economic development of our region and balance our environmental priorities. Today, we remain united in protecting these values.

Unfortunately, this proposal would turn the Northwest power system on its head. By our calculations, fundamentally altering BPA's rate structure in the manner you have proposed would extract an additional $1.05 billion from the wallets of regional ratepayers during the first two years, and more than $2 billion over a four-year period. This, despite the fact our regional power rates are already at historically high levels—a result of the Western energy crisis of 2000-2001, precipitated in large part by the market manipulations of Enron and others.

There is no question in our minds that your Administration has to date turned a blind eye to the economic damage done by the Western power crisis—and this new proposal would only make matters significantly worse. Already, power rates in Washington state have risen by more than 90 percent in some areas; we have lost thousands of jobs; our low-income home energy assistance programs cannot keep pace with demand for services; and utility disconnection rates are at all-time highs. A near-doubling of regional power rates would only serve as an additional tax on every economic activity that requires electricity—further dampening the prospects for a healthy economic recovery in a region still struggling with the nation's highest unemployment rates. Quite simply, the economy of Washington state and the Pacific Northwest as a whole cannot sustain the additional damage this new proposal would inflict.

As such, we ask that you immediately abandon your plan to double electricity rates in the Pacific Northwest.

Thank you for your attention to this matter, which is of such extreme importance to our constituents. We look forward to your timely reply.

Sincerely,

Senator Maria Cantwell Senator Patty Murray

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