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Issues >
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> Printer Version Unplug the Subsidies $N/A
In recent years, BPA’s financial stability has deteriorated. Poor fiscal management and planning, drought conditions, volatile energy markets, and a history of extremely low rates and special deals with preferred customers have created more than a $1 billion shortfall in BPA’s budget. The shortfall is forcing BPA to reevaluate its electricity rates set in 2001, fish and wildlife funding, and annual payment to the federal treasury. Green Scissors Proposal Deny BPA additional access to taxpayer dollars until the completion of an independent financial audit. Current Status In February 2003, Congress passed the fiscal year 2003 Omnibus Appropriations bill (H.J. Res. 2) that contained $700 million in additional borrowing authority for BPA. On passage of the borrowing authority, Senator John McCain (R-Ari.) announced the need to seek an independent audit of BPA finances. In March 2003, Representatives David Hobson (R-Ohio) and Peter J. Visclosky (D-Ind.), chairman and ranking member of the House Appropriations Subcommittee on Energy and Water Development, requested a General Accounting Office review of BPA’s finances. Project Hurts Taxpayers BPA imposes a significant financial burden on U.S. taxpayers. According to its 2002 Annual Report, BPA currently has more than $13.6 billion in debt, including over $7.4 billion owed directly to the federal treasury and an additional $6.2 billion in liability for debt to non-federal bondholders of failed nuclear power plants. Despite this contribution from federal taxpayers, the benefits of BPA’s federal hydropower accrue to only one region of our country. BPA is in a financial crisis. After accounting for taxpayer subsidies and debt restructuring, over the past two years, BPA has lost more than $1 billion. The financial shortfalls have lead BPA to project a 36 percent probability that it will make the agency’s annual payment, and only a 2.4 percent chance of meeting all its payments through fiscal year 2006 to the federal treasury and other creditors. Like other power marketing administrations, BPA sells power at cost, primarily to customers (public utilities, investor-owned utilities, and the direct service industry) in the Northwest. At cost power is often a benefit for Northwest utilities, though surplus power is regularly sold outside the region at market based rates. The federal dams that generate electricity for BPA are the primary cause of decline of endangered salmon in the Columbia and Snake rivers, inflicting approximately 80 percent of human-caused mortality for lower Snake River runs. Should the dams force salmon into extinction, federal taxpayers could be liable for billions of dollars in legal settlements with the Columbia River Basin treaty tribes and Canada. A recent report by the Government Accounting Office found “little conclusive evidence” that current efforts were helping to recover fish. BPA’s salmon funding cuts will only make a bad situation worse. Project Hurts the Environment BPA has cut the budgets for energy efficiency and renewable energy programs. Power rates must be sufficient to allow BPA to meet all its environmental and legal obligations. BPA relies too heavily on environmentally destructive forms of electricity generation. Increasing non-hydroelectric renewable generation, efficiency measures, energy conservation, and other demand-side management programs can reduce the burden on the Columbia and Snake Rivers. BPA cut more than $40 million in vital salmon restoration funds in fiscal year 2003 to help alleviate financial shortfalls due to poor fiscal management. More drastic cuts are likely in fiscal years 2004-2006. The 2001 juvenile salmon migration suffered the poorest survival rate since salmon were listed for protection under the Endangered Species Act — due in part to BPA’s refusal to abide by the river operation requirements set forth in the current federal salmon recovery plan for those fish. Contacts Erich Pica, Friends of the Earth, (202) 783-7400 x229 Autumn Hanna, Taxpayers for Common Sense, (202) 546-8500 x112 Dick Munson, Northeast-Midwest Institute, (202) 544-5200 |
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