Bush Budget Harms Northwest Ratepayers

President Bush recently unveiled a budget plan that, among other things, siphons money from the federal hydropower system and raises electric rates throughout the Pacific Northwest. Customers of the Bonneville Power Administration (BPA), which sells the power from the federal hydropower system, pay the full costs of operating the system. Taking revenues from the hydro system is a special tax on Northwest electricity customers and would harm the region’s economy; all residential customers of PGE, Pacific Power, and the public utility districts of Oregon would be negatively impacted.

BPA, along with every utility in the country, sells surplus power into the open market. The revenues from these surplus power sales help offset customer rates, keeping them from spiking in those years when demand is high or hydropower is low, and power must instead be bought from the open market. This system has worked for decades in maintaining a financial equilibrium for Northwest ratepayers. The price of electric power neither skyrockets nor plummets, so long as the years of surplus and drought in the federal hydropower system are allowed to balance each other out. The Bush Administration’s current budget would cancel this system and gather surplus revenues back to Washington instead, causing rates to increase in the Northwest.

Once Northwest electric customers become a source of revenue for federal budget-makers, you can bet they will come back for more. Rather than electric rates that are based on the costs of producing electricity, we will end up with electric rates that are largely set by the President and based on the needs of the federal budget.

This tax on Northwest electric customers is designed to make the federal deficit look smaller than it is, and thereby justify the Administration’s tax cuts. The difference in rates could be sizeable, amounting to $900 million over 10 years, according to the Salem Statesman Journal. In addition, as public utilities complain about the high rates, it is possible that BPA could respond by eliminating important energy programs that support cost-effective investments in energy efficiency and renewable energy. Fish programs would undoubtedly suffer.

It is possible that the revenue expected by the U.S. Treasury from BPA—or more specifically, from BPA customers—will never materialize. The Congressional Delegations of Oregon, Washington, Idaho, and Montana have united before to fight such proposals and been successful. Should this budget line be more than a political gimmick designed to facilitate tax cuts, the Delegations would undoubtedly unite to fight for Northwest customers, and the Northwest Region’s economy, once again.

In addition to higher electricity rates, the Bush budget would cut $91 million from the Weatherization Assistance Program, which helps poor folks weatherize their homes when cold weather hits. The combined effect of higher electric rates and loss of weatherization assistance would hit low-income ratepayers of the Northwest especially hard. Weatherization programs also provide much-needed conservation of energy for the system overall, keeping usage down. This energy savings would be lost.

Even when the Bush budget is good on an energy issue, it comes at the cost of another. The Administration did earmark an additional $66 million for solar energy projects, and $39 million for biomass energy. However, this comes at a cost of $23 million from geothermal projects and the $91 million cut in weatherization. The overall cut to renewable energy and conservation programs in this budget is significant.

The budget contains an additional $115 million in subsidies for nuclear energy projects. However, nuclear has not proven itself to be economically feasible (even leaving safety concerns out of the discussion); the Northwest Region’s ratepayers lost hundreds of millions of dollars in the Trojan and WPPSS nuclear projects. In fact, Oregon voters decided not to allow any nuclear projects until a permanent waste site is established, which would make a change in the law necessary before nuclear could join our energy portfolio. Nuclear power doesn’t make a lot of sense when compared to wind and other renewable sources of energy.

The Bush budget should be taken seriously, since it is the suggestion of the Executive Branch of our nation to its Legislative Branch about meeting energy needs and managing fiscal responsibilities. The budget line items we have mentioned today, however, look more like political tinkering and less like clean energy leadership. We hope it doesn’t become a real fight over the benefits of the Bonneville hydropower system, which customers should reap, just as they pay the costs. But if it does come to a real fight, we will be counting on our Congressional Delegation to do the right thing and fight for retaining the integrity of the system that our rates have helped to build.

To keep up with CUB, like us on Facebook and follow us on Twitter!

• Share this post on Facebook.
• Share this post on LinkedIn.
• Share this post with email.

« Back