SENATE BILL REPORT

SJM 8001

BYSenator Rasmussen

Petitioning Congress and the President to deny a rate increase for the Bonneville Power Administration.

Senate Committee on Energy & Utilities

Senate Hearing Date(s):February 5, 1987

Majority Report:  That Substitute Senate Joint Memorial No. 8001 be substituted therefor, and the substitute memorial do pass.

      Signed by Senators Williams, Chairman; Owen, Vice Chairman; Benitz, Cantu, Nelson, Smitherman, Stratton.

Senate Staff:Glenn Blackmon (786-7455)

                  February 5, 1987

AS REPORTED BY COMMITTEE ON ENERGY & UTILITIES, FEBRUARY 5, 1987

BACKGROUND:

The Bonneville Power Administration is a federal power marketing agency that provides about one-third of the electricity consumed in Washington.  BPA has proposed to increase rates on October 1, 1987.  The proposed rate increases are 11.5 percent for municipal utilities and public utility districts, 15.4 percent for residential customers of private utilities, up to 16.7 percent for other customers of private utilities, 0.9-2.2 percent for the aluminum industry, and a 0.7 percent decrease for nonfirm sales, such as to California.  BPA's proposal also includes an additional 10 percent rate increase in 1988 if revenues are lower than expected.

Washington's per capita electricity use is more than twice the national average, in part because of historically low electric rates.  At current consumption levels, the rate increase would cost Washington residents an estimated $144 million per year, or about $85 per household. The 1988 increase would cost an additional $120 million per year, or $70 per household.

In the past year, retail oil prices in the Pacific Northwest have dropped about 30 percent, and retail natural gas prices have dropped 25-45 percent.

Electricity prices for customers of public utilities have increased at an average rate of 12 percent per year since 1979, after adjusting for inflation.  During this period, personal income in the region has increased by 0.2 percent per year, after adjusting for inflation.

SUMMARY:

The original memorial was not considered.

EFFECT OF PROPOSED SUBSTITUTE:

The Pacific Northwest congressional delegation is urged to carefully review BPA's proposed budget, requiring that BPA demonstrate that any rate increase is necessary, and consider an annual rate review process.

Fiscal Note:      none requested

Senate Committee - Testified: Senator Bauer; Ed McGuire, Washington State Energy Office; Terry Esvett, BPA; Senator Tanner; Chuck Moon, Snohomish PUD; Randy Scott, Seattle City Light; Joel Merkel, Northwest Irrigation Utilities; Marc Sullivan, NWCAC; Robert Taylor, Direct Service Industries