Those with the power get the payday

Do not be alarmed — yet — by the latest Bush Administration assault on the Bonneville Power Administration. The alleged $1 billion raid on Northwest ratepayer pocketbooks is based on U. S. Office of Management and Budget calculations. The only entity in Washington, D.C., as dangerously inept with numbers is the Congress.

As you may have read, the administration wants to change the longstanding BPA practice of dedicating revenues from sales of surplus electricity to hold down the cost of power sold to regional utilities. Federal dams dependent on river flows seasonally generate more electricity than those customers can use, so the rest is auctioned in the wholesale energy markets. Those sales help keep our utility rates among the lowest in the nation.

Those sales, and those rates, have frequently attracted the attention and envy of other regions, their representatives, and administrations looking for an easy buck. President Bush is not the first to covet Bonneville’s money, but it has been among the most imaginative. Last year, the avenue of attack was a cap on some of the borrowing the agency does to finance new transmission lines and other capital improvements. This despite the fact Bonneville has been a chronically reliable business partner. Northwest utilities regularly complain their customers suffer because the agency too scrupulously budgets against the risk of missing its annual payment to the U.S. Treasury.

That risk would seem to be increased by new administration policy. If Bonneville surplus electricity sales exceed $500 million, Treasury gets the extra. OMB estimates the change will help reduce the federal deficit by $924 million between 2007 and 2016, but potentially increase electricity rates for businesses and homeowners by about 5 percent.

Those projections touched off bipartisan grumblings among the region’s senators and representatives. Spokesmen for public utilities and industrial electricity users were also unhappy.

And possibly premature. Thursday, Energy Secretary Samuel Bodman told the Senate Energy and Natural Resources Committee he would hold off on implementation of the new policy until he has consulted with the region’s congressional delegation. The poor secretary already finds himself in a squeeze between OMB and senior senators like Idaho’s Larry Craig.

Although the administration expects a windfall from Bonneville, the agency itself expects a breeze, if that. It projects $530 million in revenues from the wholesale electricity markets in fiscal 2007. The Treasury would capture all of $30 million. By comparison, Bonneville’s annual Treasury payment is slightly more than $1 billion. Bonneville, assuming normal water years, projects surplus sales in 2008 of $410 million, and just $390 million for 2009. If those projections are right, the Treasury would get zilch bonus dollars, just Bonneville’s scheduled payments. The Northwest Power and Conservation Council expects slightly more damage to the region.

“They’re guessing higher market rates than we do,” says Bonneville spokesman Ed Mosey. “We don’t know what that number is.”

As gas users around here know too well, prices are extremely volatile, most recently to the upside. High natural gas prices would drive up wholesale electricity prices, meaning more revenue for Bonneville. We can only hope the administration’s projections for gas prices are as errant as its ongoing assumptions that more spending and more tax cuts will halve the federal deficit sometime soon.

The peril to the Northwest lies less on gas price projections than on the administration’s need to show more revenue. If OMB demands $1 billion out of the region, it can set whatever cap on wholesale electricity revenues Bonneville can keep that will generate that sum, or whatever sum will dress up the budget. If $500 million does not work, maybe $400 million will, or $300 million, or $0.

Once command over Bonneville’s revenues passes to Washington, D.C., from Washington, Idaho, Oregon and Montana, the game is up. If the administration is determined to change the rules for Bonneville, which it thinks it can without any say-so from Congress, matters can deteriorate in a hurry.

Then you can panic.