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For Immediate Release:  March 18, 2005
Contacts: Tim Sweeney, Washington Utilities and Transportation Commission, phone (360) 664 1116; and Patricia Van Gerpen, South Dakota Public Utilities Commission, phone (605) 773 3201

50 Commissioners Oppose PMA Proposal to Increase Electric Rates

 Public utility commissioners from around the country have united to oppose President Bush's proposal to require that federal power marketing administrations charge market rates for electricity.

Fifty public utility commissioners authored a letter to the administration calling on it to withdraw the proposed 2006 budget provisions which would require the Bonneville Power Administration, the Western Area Power Administration, the Southeastern Power Administration and the Southwestern Power Administration to move to "market-based rates."

As regulators responsible for setting utility rates in their respective states, these commissioners want to draw attention to the fact that such a transition will substantially increase wholesale power costs in their respective regions.  Moreover, it would dramatically restrain the ability to expand transmission capacities necessary to accommodate growth.

The letter is addressed to Office of Management and Budget Director Joshua Bolten and to Secretary Samuel Bodman of the U.S. Department of Energy.  Copies of the letter have been sent to congressional leaders.  The commissioners expressed their appreciation to the respective chairs of the U. S. House and Senate budget committees for not including  savings from the proposal in their respective mark-ups of the budget reconciliation resolutions this week. 

The commissioners acted on a voluntary basis in deciding to sign the letter after reviewing the background and facts of the administration's proposal, and the economic impact it would have on their respective regions.  The leaders in this initiative are Commissioners Dustin Johnson of South Dakota and Patrick Oshie and Philip Jones of Washington.

"Market rates will have a devastating impact on the economy of South Dakota and the central Plains states.  A rapid increase in power costs could bring great hardship to family farms and small communities.  The concept of cost-based rates from the federal power system is a sound one and has served our region well for decades.  The Western Area Power Administration, along with the other three power marketing administrations, is meeting its federal obligations to repay its debt.  Now is not the time to make such a change, and that is why I have contacted fellow commissioners from around the country to express our strong concern about this proposal," said Johnson.

"This ill-advised proposal to move to "market-based rates" will have an especially adverse impact on the economy of the state of Washington and of all of our electric utilities in this region, both private and public.  People and businesses must have certainty in planning their economic futures, especially as our farms and resource-based industries emerge from the economic slowdown.  This proposal puts a brake on economic growth, and would halt the economic recovery we have achieved to date," said Oshie.

"Bonneville is repaying its debt on time, and at an interest rate that is substantially above short-term borrowing rates for similar government sponsored enterprises.  I am especially troubled by the administration's proposal to restrict Bonneville's borrowing authority to invest in innovative public-private partnerships to build much-needed transmission capacity in the Pacific Northwest.  Since the administration is prohibited from "privatizing" Bonneville, it appears to be trying to restrict the growth of Bonneville by limiting its capacity to build new transmission facilities," said Jones.

The 50 commissioners come from the following states:  Alabama, Kansas (3), Kentucky, Montana (3), Nebraska (5) New Mexico, North Carolina (6), North Dakota (3), Oklahoma (2), Oregon (3), South Carolina (7), South Dakota (3), Tennessee (2), Utah (3), Washington (3) West Virginia (2) and Wyoming (2).