If the Bonneville Power Administration is forced to sell electricity at average wholesale market rates, as the Bush Administration proposed last month, Bonneville's rates would jump up 65 percent and cost the region's ratepayers about $1.3 billion, according to an analysis by the Northwest Power and Conservation Council.
"The impacts would be similar to those of the West Coast energy crisis of 2000 and 2001, and those rate increases bludgeoned the Northwest economy," Council Chair Melinda Eden of Oregon said. "Our regional demand for electricity today is about the same as it was in 1989, reflecting lower use than was expected after 2001. Our economy simply has not rebounded, and to impose a rate increase that amounts to a penalty on Northwest ratepayers would be ill-advised and unfair."
Bonneville, a division of the federal Department of Energy, sells electricity generated at 31 federal dams and one non-federal nuclear plant. The power is sold at a price equal to the cost of its generation. The Bush Administration's proposal would force Bonneville, a self-financing agency, to raise its rates to nearly the wholesale market price of electricity. The additional revenue would flow to the U.S. Treasury to help balance the federal budget, according to Energy Secretary Samuel W. Bodman in testimony before the House Energy and Commerce Committee on Feb. 9.
According to the Council's analysis, a 65 percent increase in the price of electricity sold by Bonneville translates to an average 39 percent increase in the rates paid by consumers. That is because electricity is just one component of electricity rates, and there is no similar proposal to raise the cost of other components, such as the cost of power transmission.
The 39 percent increase for consumers translates to an average increase of $24 per month in residential electricity bills for customers of public utilities that buy their power from Bonneville and $10 per month for customers of investor-owned utilities that generate some of their own power and buy the remainder from Bonneville, according to the analysis.
The result would be a $1.7 billion increase in the cost of Bonneville's power. Other effects include the potential loss of 13,000 jobs in energy-intensive industries, particularly the aluminum industry. Because of high energy prices and low metal prices, only three Northwest smelters are operating currently, and those are at limited production.
The Northwest Power and Conservation Council was created by Congress to give citizens of Oregon, Washington, Idaho, and Montana a stronger voice on issues related to power generation in those states.
The analysis is based on calculations of the increased cost of electricity and calculations of how changes in expenditures for electricity filter through the economy.