Region’s power users would be zapped by Bush plan

Northwest senators enjoyed only a short celebration Wednesday when Budget Committee Chairman Judd Gregg said he will block efforts to increase Bonneville Power Administration rates. Energy Secretary Samuel Bodman told the Senate Energy and Natural Resources Committee Thursday the Bush Administration remains determined to do just that.

In office barely a month, Bodman has obviously bought into tired assertions the region’s residents and businesses have been taking U.S. taxpayers for a ride. If our power is cheaper, and our chief provider is a government entity, ergo our rates are low because many of us get our power from the government.

Never mind that the bulk of that power comes from the dozens of hydroelectric dams, federal and non-federal, that once churned out kilowatts almost as cheap as the water itself. Long-time residents can recall a not-too-distant past when electricity was “too cheap to meter.” Prior to 1981, Bonneville wholesale rates were less than three-quarters of a penny. The rate today is more than double that, adjusting for inflation.

There’s a lot of bad history behind that sorry state of affairs. But not sorry enough for the administration.

Its 2006 budget includes language that would require Bonneville to break a decades-old policy — reiterated in several episodes of law-making — that utility and industrial customers pay only generation, transmission and administrative costs. Power at cost has been the guiding principal of federal power system managers in the Northwest since the 1930s.

Really, it’s been a fundamental of utility regulation. Public and private utilities alike charge ratepayers the cost of delivering electricity to their premises. Private utilities may earn profits. They accept a regulated rate of return as a tradeoff for being a monopoly. Public utilities return any surplus to their membership. It’s the same all over the United States.

The difference between what we pay and what most of the rest of the country pays is the difference between oil and water, or coal and water, or natural gas and water. Fossil fuel plants are expensive because they need fuel and, many, pollution-control equipment. You just can’t pour coal through a turbine the way you can water.

And you can’t pour — or pound — common sense through ideologues.

The Energy Department is determined to see Northwest residents charged a market rate for their power. And a national market rate at that. There is no national market. Electricity markets are regional, and rates reflect regional differences in generation resources. Rates charged by public and private Northwest utilities are relatively uniform because most have some access to hydropower, either their own or Bonneville’s.

The region’s senators have correctly identified the administration’s intentions for Bonneville and three other agencies that sell power from federal dams as nothing more than a tax increase. The Northwest Power Planning Council estimates the plan will cost the region as much as $1.7 billion, and 13,000 jobs. Another estimate pegs the potential jobs loss at upwards of 40,000. Remember, the region lost more than 100,000 jobs as a result of the 2000-2001 energy crisis that caused much of the higher rates we pay today.

As Sen. Ron Wyden, D-Ore., told Bodman, “This is economic poison for our region.”

Bodman told Energy Committee members the administration would not raise Bonneville rates by executive action. With the commitment by Gregg, R-N.H., that no bill sanctioning an increase will get out of the Budget Committee, the idea would seem to be dead. But controversial budget provisions have a way of resurfacing, sometimes attached to must-pass legislation. For example, leaders may push approval of oil drilling in the Alaska National Wildlife Refuge through the Senate by adding it to an unrelated budget measure.

And while Senators Maria Cantwell, D-Wash., and Larry Craig, R-Idaho, say a 1996 bill prohibits a change from cost to market rates, the bill language may not be as ironclad as they suggest. Blocking studies leading to a change, as that bill does, is not the same as blocking the change itself.

Bodman says he has not read that language. He should. He also needs to visit the Northwest to see for himself our electricity generation and transmission system. As an engineer, he should appreciate the differences between our grid and those more familiar to him. Our comparative rate advantage, sadly eroded as it is, does not rise from the fact may of the region’s dams were built with the help of federal loans, but from the fact they are dams and not nuclear or coal-fired generation plants.