Letter to the Honorable Mitch Daniels

February 25, 2003
 
The Honorable Mitch Daniels
Director, Office of Management and Budget
725 17th Street Northwest
Washington, DC 20503
 
Dear Director Daniels,
 
We write regarding statements included in the Fiscal Year 2004 budget that grossly mischaracterize the role of the Bonneville Power Administration (BPA) in the Western energy industry, as well as its financial relationship to the United States Treasury.

In particular, the Performance and Management Assessment included in the Fiscal Year 2004 budget suggests that BPA's functions "could be performed under contract or through non-federal ownership" of the Federal Columbia River Power System (FCRPS). Further, the Administration states that "statutory application of preference of power…restricts market activity," and further advocates the "market pricing of power."

These assertions not only ignore statutes in existence for decades, but they are inconsistent with Energy Secretary Spencer Abraham's own pledge—offered at his confirmation hearing before the Senate Energy and Natural Resources Committee—to uphold the system of regional preference and cost-based rates that has long formed the basis of the Northwest economy, particularly in our states' most rural areas.

We are also concerned with the erroneous suggestion that BPA should "recover subsidies…incurred during construction of hydropower facilities," and that the agency has somehow benefited from "debt forgiveness" that "places part of the cost of the construction of the FCRPS on the general taxpayer." As you likely know, it is Northwest ratepayers—rather than taxpayers—who continue to repay the U.S. Treasury for the federal government's investment in the FCRPS. The principal on all BPA capital-borrowing costs is fully repaid to the U.S. Treasury, with legally-required, market-based interest. In fact, when BPA's debt was last refinanced—as part of the Omnibus Consolidated Recissions and Appropriations Act of 1996—it resulted in a $100 million benefit to Treasury and U.S. taxpayers in general, a fact confirmed by the Congressional Budget Office and scorekeepers at the Office of Management and Budget.

We thus reject the Administration's suggestion that BPA should somehow seek to recover these phantom "subsidies." Any effort to do so would only result in further rate increases for our region's consumers and businesses, which are already among those hit the hardest by the general downturn in our nation's economy—a reality further exacerbated by the continuing fallout from the Western energy crisis. Given the fact that Northwest states already suffer from the nation's highest rates of unemployment, this proposal is simply unacceptable.

We remain committed to protecting and preserving the benefits of the Federal Columbia River Power System, including the preference-centered system of reliable, cost-based power that is the bedrock of our regional economy. We hope you will give serious consideration to amending the mischaracterization of the Bonneville Power Administration contained in the Fiscal Year 2004 budget.
Sincerely,
 
Maria Cantwell, U.S. Senator, Peter DeFazio, Member of Congress, Patty Murray, U.S. Senator, Norm Dicks, Member of Congress, Larry Craig, U.S. Senator, Gordon Smith, U.S. Senator, Ron Wyden, U.S. Senator, Rick Larsen, Member of Congress, David Wu, Member of Congress, Brian Baird, Member of Congress, Jay Inslee, Member of Congress, Adam Smith, Member of Congress, Jim McDermott, Member of Congress, Earl Blumenaur, Member of Congress, George Nethercutt, Member of Congress, Jennifer Dunn, Member of Congress, Mike Simpson, Member of Congress, Butch Otter, Member of Congress, Denny Rehberg, Member of Congress, Greg Walden, Member of Congress, Darlene Hooley, Member of Congress  

cc: Secretary Spencer Abraham