(Washington, D.C.) – This morning, U.S. Senator Patty Murray (D-Wash) stood up for Washington’s ratepayers and refuted the White House budget director’s assessment that yearly electrical rate increases of 20 percent would be “modest.” Murray vowed to “fight back” against this proposal, which would nearly double electric power rates charged by the Bonneville Power Administration (BPA), and cripple a Washington state economy that has been hit hard by energy crises in recent years.
Josh Bolten, the Director of the Office of Management and Budget (OMB), appeared before the Senate Budget committee to defend the Administration’s recently released budget plan.
Under direct questioning by Murray, Bolten defended President Bush’s proposal to levy what is essentially a $1 billion tax on Northwest ratepayers over the next two years alone. “I think particularly the customers of BPA will find that we’re talking about a very modest increase in the subsidized rates that they now enjoy,” Bolten said.
Senator Murray defended Washington ratepayers and told Bolten that there was nothing “modest” about the effects this plan would have on Washington families and businesses.
“A twenty percent increase in the cost of heating our homes, providing electricity to many businesses who rely on it, is going to cripple the economy in the Pacific Northwest,” Senator Murray said. “We pay the rates for our electricity out there. And I’ll tell you what, the Northwest is not going to stand there and take this. We are going to fight back.”
The proposal, which is part of the Bush Administration’s Fiscal Year 2006 budget, would increase the Northwest’s power rates by 20 percent a year until they are equivalent with market rates throughout the country. The plan would upend the half-century old policy that Northwestern power should be cost-based – rather than market-based – to ensure that the public benefits of the Columbia River are shared.
Altering BPA’s current rate structure would take an additional $1.05 billion from the wallets of regional ratepayers during the first two years, and more than $2 billion over a four year period. Northwestern ratepayers, who are still hurting from the energy crisis of 2000-2001, cannot afford to take on the additional costs this proposal would incur. This is especially true for the families that are eligible for assistance in paying their energy bills through the federal Low Income Home Energy Assistance Program (LIHEAP).
“I want you to know that our region does not want to see this budget balanced on the back of our ratepayers,” Murray said.
Senator Murray has consistently fought for legislation to punish companies that engage in energy market manipulation, and has stood up against attempts by federal regulators to impose a Standard Market Design on the Northwest energy system.
A transcript of the exchange follows:
(unofficial transcript by Murray’s office)
Senator Murray: “Well, thank you very much, Mr. Chairman, and Mr. Director, I appreciate your being here today. You know, I listened to the President’s State of the Union address last week, and he told us he was going to send the budget, and would focus on essential priorities, so I was looking forward to seeing it. I guess I was really disappointed to find out what was not essential priorities – things like veterans, and students, and securing our ports and borders, and affordable health care, and nuclear waste cleanup, and I think that sends a very bad message to our country right now.
I don’t know how we can maintain a strong defense if we’re going to cut veterans access to health care, or how we can make sure we have strong Homeland Security if we’re eliminating funding for our port security grants, and I don’t believe we can strengthen our economy if we’re going to reduce our investments in education, and job training, and infrastructure.
At a time when everyone is asking, “How can we be secure,” I think this budget really undermines that security. And I echo the comments of Senator Conrad on what this budget really is, how real it is, and masking it.
But let me, for this time, since my time is short, focus on a very parochial issue. Actually, it’s not real parochial, it’s the Pacific Northwest, which you should know is up in arms over your proposal to force our Power Marketing Administration to charge market-based rates for electricity. I think there’s eight senators on this committee alone who are going to be affected by that. And I want you to know that our region does not want to see this budget balanced on the back of our rate payers.
But that’s not the only legislative proposal in your budget that is going to undercut the Bonneville Power Administration. You also proposed to hold certain financial transactions, such as third party financing, against BPA’s borrowing authority. And I have to tell that that is really rich with irony because for two years, OMB opposed our efforts to raise BPA’s borrowing authority in order to make necessary investments in transmission and other capital projects that were needed. And in 2003, OMB finally supported half of BPA’s needed borrowing authority, but said that they should use other financing means, like third party financing, to meet the remainder of its investing needs.
So here we are, a couple of years later, and you are proposing to undercut the ability of BPA to use third party financing by holding these, and other types of transactions, against their borrowing authority limit. These kinds of proposals are going to cripple BPA’s ability to meet their investment needs. You know, Mr. Bolten, President Bush came out to my home state, Washington state, in July of 1999. And he came out again in 2003, and stood at Ice Harbor Dam, and he promised to save the dams. I cannot believe that this budget is making two different proposals that is going to severely undermine the value of those very dams that he promised he was going to save. So, my question to you this morning is, is it the intention of President Bush to privatize BPA and other PMAs?”
Mr. Bolten: “No, that’s not reflected in these proposals, and I don’t think these proposals in any respect undermine the value of the dams out there. All that we are asking in these proposals is that the Power Marketing Authorities charge their customers a reasonable market rate – not a subsidized rate for which the rest of the taxpayers in this country are paying…”
Senator Murray: “The rest of the taxpayers are not subsidizing Bonneville. We pay the rates.”
Mr. Bolten: “I think we have a disagreement on facts on that, and CBO has found that the most of the PMAs in fact do receive a subsidy from the federal government. But even beyond that, when the government is engaged in a commercial venture, I think using assets created with federal taxpayers’ dollars, I think especially in these times it’s reasonable to expect that those commercial ventures charge their customers a reasonable market rate. That’s all we’re asking, and I think…”
Senator Murray: “No, no….”
Mr. Bolten: “…I think particularly the customers of BPA will find that we’re talking about a very modest increase in the subsidized rates that they now enjoy.”
Senator Murray: “A twenty percent increase in the cost of heating our homes, providing electricity to many businesses who rely on it, is going to cripple the economy in the Pacific Northwest. We are just beginning to drag out of the economic damages from the last four years, which started with an electricity crisis, which I won’t go into, it had to do with Enron. I believe there are a number of other members on this committee who share that viewpoint with me. But we cannot cripple the Pacific Northwest. These are not subsidized rates. We pay the rates for our electricity out there. And I’ll tell you what, the Northwest is not going to stand there and take this. We are going to fight back. Mr. Chairman, I know I’m out of time. I have a number of other questions for you, including the proposed cuts to Hanford nuclear reservation cleanup, and you’ll be hearing more from me on that in the next round. Thank you, Mr. Chairman.”
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