BPA at risk of default, federal watchdog says
WASHINGTON - Congressional investigators say the risk of the Bonneville Power Administration defaulting on its debt to the U.S. Treasury has increased over the past several years as the federal power marketing agency's finances have deteriorated.
The General Accounting Office said Bonneville has paid too much for the outside electricity it needed to cover its customer demands. In addition, its operating costs have mounted - especially for protecting endangered salmon runs - and the utilities it serves are starting to look elsewhere for power.
Guest Opinion: A road map to get BPA to true zero
In the past three years, more than 30,000 jobs have been lost in the region — while BPA has added 500 positions.
Historically, our state has had a competitive advantage due to low-cost federal hydropower sold by BPA, but that advantage is gone. We now have higher rates than many other states.
Kimberly-Clark has operated a paper products plant in Everett for 74 years. But in two short years, the local plant's electricity rates have moved from one of the company's lowest in the country to the third-highest among its 30 facilities around the United States.
As a result, the Everett plant is becoming uncompetitive.
The Times noted that BPA's initial proposal for a 15 percent rate increase this fall was "alarming" and that BPA should push its current 5 percent proposed electric power rate increase to zero. ("Getting BPA to zero" editorial, June 20.)
But what BPA is calling a 5 percent rate increase is a "net" number. It's actually a 15 percent rate increase combined with a previously planned 10-percent rate reduction. The fact is that BPA still proposes to raise rates 15 percent above where they would have been on Oct. 1. This means that the utilities BPA sells power to must raise rates to their customers to cover a real 15-percent BPA rate increase over the rates planned and budgeted for starting on Oct. 1. This increase is both alarming and harmful to the region.
What BPA really needs to do is to get to "true zero" — and lower. In other words, the BPA administration must eliminate or completely zero out the 15-percent increase planned for October.
The good news is that BPA has plenty of tools to get to "true zero." The Snohomish County Public Utility District, regional businesses and other utilities provided several road maps that would get BPA to true zero.
The suggestions include:
• Using the revenues from surplus energy sales in 2003 to satisfy the current BPA revenue requirements rather than banking the money for future years;
• Recognizing cost reductions and revenue increases when they occur, instead of spreading them over multiple years;
• Deferring BPA's payments to Enron as allowed under a settlement agreement, instead of including the costs in BPA's current rates;
• Adopting recommendations by the Northwest Power Planning Council to reduce spilling water in July and August, which would save up to $110 million without harming any listed salmon stocks.
• Using a variety of other cash-management tools, which spread costs over multiple years; and
• Using the agreed-on formula for Treasury payment probability.
BPA should act now on these and other cost-control recommendations. Major electricity customers in the Northwest have worked diligently over many months to help arrive at these solutions. The road map is there.
Other federal agencies, such as the Federal Reserve, have been concerned enough about our nation's economy to take strong measures to assist with its recovery. The Bonneville Power administrator must now do the same: take the necessary actions to get to true zero — and preferably lower — for the benefit of the region.
Ed Hansen is general manager of the Snohomish County Public Utility
District. Scott Helker is mill manager at Kimberly-Clark. Ken Canon
is executive director of Industrial Customers of Northwest Utilities.
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