02.12.07

Northwest Senators Fighting Proposal to Change Region's Electric Rates

Senators United in Opposition to Administration's BPA Proposal

WASHINGTON, DC - In a letter sent Monday to Administration Budget writers, eight Northwest Senators expressed their steadfast opposition to provisions included in the president's fiscal year 2008 budget proposal that could increase electricity rates in the Pacific Northwest by as much as 11 percent.

"It is disturbing that the OMB has included this proposal again after it was explicitly rejected by the Congress last year," the senators wrote. "OMB's proposal would increase regional electricity rates by an estimated 5.5 to 11 percent. It would also set a dangerous precedent of unwarranted, administrative micromanagement on decisions that must be achieved through Northwest consensus."

Senator Maria Cantwell said, "With every single Pacific Northwest senator united in opposition to the president's tired-out rate hike plan, this bad idea will once again go nowhere in Congress. Instead of futile attempts to push through ill-advised proposals, we need to move forward on a new energy policy that preserves our region's decades-old system of affordable hydropower while investing in the clean sources of home-grown fuel needed to put us on the path to energy independence."

Senator Gordon Smith said, "We've rejected these proposals before and we will again. Any threat to Northwest electricity rates is a nonstarter. Affordable electricity is important to the family budget and it helps spur the region's economy."

Senator Patty Murray said, "Year after year, the Administration has proved itself out of touch with the needs of the Pacific Northwest by attempting to increase the cost of heating our homes and providing electricity to our businesses. Our region does not want to see this budget balanced on the back of our ratepayers, and the Northwest delegation will once again work to beat back this shortsighted proposal."

Senator Ron Wyden said, "The federal government cannot use the BPA as its own personal slush fund whenever its feels the need for some extra pocket change. BPA already keeps its end of the deal by paying its debts on time, and in many cases, early."

Senator Mike Crapo said, "I'm glad to see the NW delegation continue to hold the line on this issue. Across party lines, we can all agree that increasing power rates for our constituents is unacceptable."

Senator Larry Craig said, "Last year we exhausted ourselves discussing this same proposal, this year we'll save our breath and simply respond 'NO.' OMB uses BPA for their budget gimmicks nearly every year, but no matter how big the 'ring' gets, we will continue to reject their proposals."

The letter was sent to Office of Management and Budget Director Rob Portman and signed by U.S. Senators Gordon Smith (R-OR), Maria Cantwell (D-WA), Patty Murray (D-WA), Mike Crapo (R-ID), Jon Tester (D-MT), Ron Wyden (D-OR), Larry Craig (R-ID), Max Baucus and (D-MT).

The full text of the Senators' letter follows below:

Rob Portman
Director
Office of Management and Budget
725 17th Street NW
Washington, DC 20503

Dear Director Portman:

We are writing again this year to voice our continued unified opposition to the proposal included in the Office of Management and Budget's (OMB's) Fiscal Year 2008 budget request. This proposal would raise Bonneville Power Administration (BPA) electricity rates and undermine decades of regionally-based decision-making on issues critical to the Northwest economy.

The latest proposal by OMB would redirect approximately $646 million in projected BPA revenues over the next five years to accelerate payment to the U.S. Treasury, beginning in fiscal year 2008. This ill-advised plan is but the latest in a long line of proposals - offered by both Democratic and Republican Administrations - that would erode the value of the Northwest's cost-based hydropower system. Immediate rate increases will negatively affect Northwest consumers and businesses. Moreover, this proposal undermines the regional consensus necessary to balance our fiscal responsibilities with providing the electricity necessary for economic growth and investing in our energy future.

It is disturbing that the OMB has included this proposal again after it was explicitly rejected by the Congress last year. As you know, Northwest ratepayers continue to recover from high power costs resulting from the Western energy crisis, which increased regional wholesale electricity rates by 46 percent. Six years after that crisis, our region has been working to ensure that BPA's future rates will be stable and predictable. Under an innovative agreement, a number of BPA's customers will pay more under emergency adverse financial conditions for BPA, in exchange for modest rate relief under normal conditions. The latest OMB proposal changes this dynamic by eliminating any benefit derived from this unique agreement. OMB's proposal would increase regional electricity rates by an estimated 5.5 to 11 percent. It would also set a dangerous precedent of unwarranted, administrative micromanagement on decisions that must be achieved through Northwest consensus.

BPA and regional stakeholders are in difficult discussions about the long-term future of the agency, and how best to maximize the value of this important asset with its limited resources. These decisions will depend on compromises made by Northwest stakeholders who value fiscal responsibility, building the regional economy and managing the system to meet a complex array of public purposes. OMB's continued advocacy of its rate increase plan undermines the careful process of collaboration that the Northwest has been developing.

Lastly, it is also important to note that Northwest ratepayers have long been responsible stewards of BPA. For more than two decades, Bonneville has successfully made its payments to the Treasury. Even as our region has grappled with the economic aftershocks of the Western energy crisis, Bonneville and its customers have voluntarily made almost made almost $1.8 billion in early payments to the Treasury in recent years. Bonneville's stakeholders place a high priority on prompt payment of financial obligations to the federal government.

We appreciate the desire for discussions on this net secondary revenue proposal in the region. However, we remain concerned that the assumption of revenues from this proposal for fiscal year 2008 will leave little time for these discussions to occur. Please know that we have noted and very much appreciate the Administration's decision not to pursue legislation to restrict the use of creative public-private partnerships to finance Northwest transmission facilities.

Thank you for your attention to this issue, which is of great concern to our constituents.

Sincerely,

[Signed] U.S. Senators Gordon Smith (R-OR); Maria Cantwell (D-WA); Patty Murray (D-WA); Mike Crapo (R-ID); Jon Tester (D-MT); Ron Wyden (D-OR); Larry Craig (R-ID); Max Baucus and (D-MT).

###