Budget proposal revives Arctic drilling, energy rates

WASHINGTON — Controversial proposals to drill for oil in the Arctic National Wildlife Refuge and raise energy rates for Bonneville Power Administration customers in the Northwest have resurfaced in President Bush's proposed 2007 budget.

Both measures have died in Congress in the past — and are likely to prompt a legislative fight again this year.

The budget released Monday resurrects the ANWR drilling proposal as a way to raise additional revenue.

The administration nearly tripled the projected amount of revenue it says it will raise from leases for drilling rights in ANWR from oil companies. An Interior Department spokesperson said the government expects to garner about $7 billion in lease fees by 2008; last year's budget forecast only $2.4 billion.

The measure to open ANWR to drilling failed in Congress just before Christmas. Interior Secretary Gale Norton said she and Sen. Ted Stevens, R-Alaska, the most tenacious proponent of ANWR drilling, intend to revisit the matter soon.

The president has also proposed a new way to boost energy rates for Bonneville Power Administration customers in the Northwest.

The initiative orders BPA to give surplus revenues over $500 million to the U.S. Treasury, to pre-pay BPA's debt, sidestepping the need for congressional approval.

Such surpluses are currently used to lower BPA's electricity rates. The change proposed in the 2007 budget could increase BPA users' rates by 10 percent.

"This administrative action will both reduce the federal deficit and provide BPA with needed financial flexibility to invest back into energy infrastructure and to pay down debt," the BPA said in a statement hailing the plan.

However, the plan provoked bipartisan opposition from Northwest politicians. Washington Sen. Maria Cantwell, a Democrat, called the proposal "a billion-dollar tax hike."

She said that in 2005, after Northwest senators beat back an attempt to raise BPA rates, Energy Secretary Sam Bodman pledged he would not circumvent Congress to change BPA's rate system.

Now, she said, Bodman is ignoring his promise: "I think they are trying to undo 70 years of a good, regional energy policy in the Northwest. Do they think that after all the planning we have done on energy costs, we won't miss a billion dollars?"

Rep. Doc Hastings, R-Pasco, also objected to the new BPA plan. In a letter co-signed by Reps. Peter DeFazio, D-Ore., and Greg Walden, R-Ore., Hastings asked the Office of Management and Budget to "suspend the pursuit of this ill-conceived plan."

He complained about the lack of consultation with the Northwest congressional delegation and added that BPA has traditionally repaid its debt on time or ahead of schedule.

"Under this direction, millions of dollars will be pulled out of our region's economy to pay a federal debt obligation that is already ahead of schedule for repayment," he wrote.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com