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Power hearing airs easterners' anger

MARK WIGFIELD

WASHINGTON -- A hearing on electric power Thursday turned into a war between the states.

But this time, it was the Northeast and Midwest against the South and West.

The issue is a perennial: cheap electric power in the West and South. Power costs far less in those regions, the Northeasterners said, because U.S. taxpayers are helping pay for it through quasi-federal agencies such as the Bonneville Power Administration.

Bonneville markets about half of the electric power consumed in the Northwest. In Jackson County, the city of Ashland buys power directly from Bonneville.

Bonneville is one of five so-called power marketing administrations, creations of the New Deal. They built huge hydroelectric dams and transmission lines to electrify the rural South and help develop the West.

But in 1998, their continued existence is indefensible, fumed Rep. Rodney Frelinghuysen, R-N.J.

Private utilities in New Jersey continually raise electric rates for his constituents, Frelinghuysen said. So they're not happy that federal taxes go toward cheap electricity in the Northwest and South.

According to the General Accounting Office, the agencies cost the government $3.5 billion between 1992-96. And the Congressional Budget Office found they sold electricity at $200 million less than its market value.

Bonneville's supporters say it no longer costs the government anything. But even if that's true, the government could earn between $1.4 billion to $6.7 billion from selling it, according to the CBO.

The power agencies respond that they are returning revenue to the government through power sales. And they are paying off their debt to the government for construction of huge hydroelectric dams, nuclear power plants and other facilities.

Thursday's hearing was before a spending panel that can exert considerable power over the agencies.

Unlike the other four agencies, Bonneville no longer gets an annual stipend from Congress. But it must assure the panel that it can continue to pay back the huge federal investment and that it can remain competitive if electric power is deregulated.

If it fails to do so, Congress could force the agencies to go private, said Dick Munson, who lobbies for Northeastern states. And a profit-making utility may be more likely to raise rates.