Bpa Chief Says Audit Overstates Subsidy Decisions To Build Dams Based On Low Interest Rates At The Time

Wed., Oct. 22, 1997

Associated Press

Rep. Peter DeFazio, D-Ore., and the Bonneville Power Administration rejected a government audit’s conclusion Tuesday that federal taxpayers spent $377 million last year to subsidize BPA’s operations.

DeFazio, former chairman of a congressional task force on Bonneville, said the report was a “rehash of stale and outdated arguments about non-existent interest rate subsidies.”

The General Accounting Office said the $377 million was in the form of low-cost debt the BPA enjoyed as a result of low interest rates dating to the construction of hydropower dams on the Snake and Columbia rivers over the past 50 years.

BPA Deputy Administrator John Robertson said in a written response to the GAO that the audit overstates the cost to the government. He said the audit assumes that historically assigned interest rates the BPA pays to the U.S. Treasury “are now insufficient because interest rates have increased the past 50 years.”

But those rates were based on obligations to the Treasury “at the time the decisions to construct were made, not by subsequent interest rates as in the case of a variable or floating-interest mortgage,” Robertson said.

Nevertheless, lawmakers who want to sell all government-owned power agencies hailed the report as further evidence that the agencies’ customers enjoy cheap electricity at the expense of others, primarily customers in the East and Midwest. “This is the clearest evidence to date that billions of federal dollars are going to subsidize power in regions of the country at a benefit to a very select few,” Rep. Marty Meehan, D-Mass., said.

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