Lawmakers question plan for BPA funds
WASHINGTON – The Bush administration intends to make what lawmakers call an unprecedented “end run” around Congress that would raise power rates to some homes and businesses in the Northwest, Energy Secretary Samuel Bodman said Thursday.
Under a change proposed in next year’s budget, the Bonneville Power Administration would be required to use some of the money it gets for surplus power sales to pay down its debt to the U.S. Treasury. The action would raise rates to public power customers – by 5 percent, the administration says; by as much as 10 percent, opponents say.
Under questioning from a quartet of unhappy Northwest senators, Bodman called the plan a good business practice, but added he didn’t know if it was legal.
“In effect, the government is the banker for the Bonneville Power Administration – it provides the funds for it,” he said. “And when you have very good times, that’s the time that you pay down your debt.”
Sen. Gordon Smith, R-Oregon, questioned whether the plan would run afoul of a 1974 law requiring the agency to set rates as low as possible. Has the administration thought whether it could win “the inevitable court challenges,” he asked.
“If there are legal impediments, if it is illegal – I have not asked that question, so I do not know the legality of it or whether it would survive the inevitable court challenges you described,” Bodman replied.
BPA earns about 20 percent of its power revenues by selling energy to people and businesses other than its main customers. It uses that extra money – sometimes as much as $500 million a year – to keep rates low for primary customers.
But soaring energy prices are expected to drive that total higher, averaging perhaps $645 million a year over the next three years, BPA estimates. The administration wants the agency to use anything over the $500 million mark to pay down its debt to the U.S. Treasury, which at the end of last year stood at $2.8 billion.
When pressed by Sen. Maria Cantwell, D-Wash., Bodman said the administration intended to make the change under the Administrative Procedure Act, which allows federal agencies to create regulations without congressional approval.
The BPA has long been a popular target in presidential budgets, but Cantwell’s office later said this proposal is likely the first time an administration has tried to sidestep Congress by enacting the changes directly through BPA.
Ed Mosey, an agency spokesman, said later that BPA viewed the budget proposal as an instruction to proceed.
“In our view, it is an administrative process that doesn’t require a change in the law, or budget adoption,” he said.
During the hearing, however, Bodman promised Sen. Larry Craig, R-Idaho, to meet with Northwest legislators before taking any action. That put BPA in a holding pattern, Mosey said, awaiting word from the Energy Department and the Office of Management and Budget before it schedules public meetings on proposed rates.
Craig said the current system allows BPA to spread costs, remain reasonably competitive in the world, and keep a robust hydro system.
“I would suggest that what is now in the budget is a reflection of this city’s lack of understanding, if not sheer ignorance, of that system,” Craig said.