Trade groups, lawmakers oppose Trump proposal to sell transmission assets
On June 6, the American Public Power Association and the National Rural Electric Cooperative Association sent a letter to Energy Secretary Rick Perry expressing “our strong opposition” to the proposal in President Trump’s fiscal year 2018 budget request to sell the transmission assets of three power marketing administrations, or PMAs.
The budget request, released on May 23, proposes to divest the transmission assets of the Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration.
The joint letter from the Association and NRECA focuses on the long partnership between the PMAs and preference customers (public power utilities and rural electric cooperatives) and notes that PMA costs are paid by the customers – not the federal government or taxpayers.
“Approximately 1,200 public power utilities and rural electric cooperatives in 34 states purchase cost-based power produced at federal hydropower projects from the PMAs,” the trade groups told Energy Secretary Perry. “Through long-term contracts, PMA customers have repaid all power program expenses, plus the interest on any capital projects, and have ensured continued investment in the federal infrastructure. For many decades, this arrangement has been a win-win for the federal government and for public power and rural electric cooperative utilities, their retail customers and their communities.”
“Given the long and productive history between the PMAs and their customers, we were very disappointed to see the administration’s FY 2018 budget request proposal to divest the transmission assets,” wrote APPA and NRECA. “We strongly disagree with the rationale provided in the proposal that ‘ownership of transmission is best carried out by the private sector where there are appropriate market and regulatory incentives’ and that increasing ‘the private sector’s role would encourage a more efficient allocation of economic resources and mitigate risk to taxpayers.’” They noted that PMA costs “are paid by customers and not the federal government; none of the costs are borne by taxpayers.”
In addition, “there is no factual evidence that selling the transmission assets of the PMAs would result in a more efficient allocation of resources,” the two electricity groups wrote. “Rather, it is much more likely that any sale of these assets to private entities would result in attempts by the new owners to charge substantially increased transmission rates to the PMA customers for the same service they have historically received.”
“History has demonstrated that initiatives to privatize all or part of the PMAs do not have strong support in Congress because they are both economically unjustified and politically unpopular,” they said. “We respectfully urge you to reconsider this proposal.”
21 US senators say ‘no’ to proposal to sell PMA assets
On June 7, a bipartisan group of 21 senators sent a letter to Energy Secretary Perry expressing opposition to the Trump budget proposal to sell the PMA transmission assets.
“This is not the first time this short-sighted proposal has come up and, as usual, it is being opposed on a bipartisan basis,” the senators said.
The PMAs “market and transmit power generated at federal hydropower dams primarily to rural electric cooperatives and public power utilities serving consumers in 34 states,” the senators wrote. “They have provided reliable and affordable electric service and are crucially important to rural communities in our states.”
The PMAs are “one of the few federal programs that not only fully pays its way, but actually provides benefits to the federal government’s balance sheet,” said the group of senators.
Sale of the PMAs’ transmission facilities “would not advance the President's infrastructure objectives,” they continued. “In fact, privatization of existing assets could affect opportunities for new infrastructure investments. Moreover, any private entity buying PMA assets will want to recover their investment. The resulting rate increases would take money out of the pockets of consumers and businesses in our states.”
“There are improvements that can and should be made to the operations of some PMAs, but the dismantling of' them is simply not sound governmental policy,” they concluded. “Instead, we look forward to working with you to make needed investments in PMA infrastructure and ensuring the future value of this important federal asset.”
The letter was signed by Sens. Maria Cantwell, D-Wash., John Barrasso, R-Wyo., Michael Bennet, D-Colo, John Boozman, R-Ark., Catherine Cortez Masto, D-Nev., Mike Crapo, R-Idaho, Steve Daines, R-Mont., Dianne Feinstein, D-Calif., Al Franken, D-Minn., Kamala Harris, D-Calif., Martin Heinrich, D-N.M., Heidi Heitkamp, D-N.D., John Hoeven, R-N.D., Amy Klobuchar, D-Minn., Claire McCaskill, D-Mo., Jeff Merkley, D-Ore., Patty Murray, D-Wash., Jim Risch, R-Idaho, Mike Rounds, R-S.D., Jon Tester, D-Mont. and Ron Wyden, D-Ore.
Northwest lawmakers oppose sale of PMA transmission assets
In a June 5 letter to Energy Secretary Perry and Mick Mulvaney, director of the federal Office of Management and Budget, more than a dozen members of Congress from the Pacific Northwest also voiced their concern with the proposal to sell the transmission assets.
“We believe divesting BPA's transmission assets will harm individuals and businesses, divert capital needed for further infrastructure investment in the Northwest, and undermine regional utility coordination,” they wrote.
BPA “has a fundamental role in our region that dates back decades,” they explained. “Established by Congress in 1937 as a nonprofit federal power marketing administration, BPA was tasked with helping to manage and sell power generated by the newly constructed Bonneville Dam on the Columbia River. Eighty years later, BPA has helped to develop and administer the complex electrical system that powers the Northwest, now providing affordable and reliable power to over 12 million people and the businesses that help the region thrive.”
“Importantly, BPA is self-funding, and is of no cost to the taxpayer,” the lawmakers continued. “The entire BPA transmission system—both the capital investment and operation and maintenance—is fully paid by the users of the system. In fact, it has benefitted U.S. taxpayers by providing more than $32.5 billion in payments to the U.S Treasury. Divesting these assets to the highest bidder could transfer the benefit and equity of these investments from the Northwest consumers, who have financed the system, to distant investors.”
The proposal to sell these assets would lead to a rate increase for consumers and could jeopardize BPA’s ability to repay the costs of the Federal Columbia River Power System, they said.
“We are also concerned that the divestiture would put rural communities in the Pacific Northwest at increased risk,” the members of Congress wrote. Privatization also “could lead to the division of the regional grid, with high-value assets sold off for a premium and lines that serve rural areas and grid reliability abandoned.”
Bonneville owns 75 percent of the transmission in the Pacific Northwest, and “all Northwest utilities and the customers they serve depend on BPA's grid to access affordable and reliable power,” the lawmakers wrote. “Selling off BPA's transmission assets is bad public policy that undermines the President's economic objectives and betrays a lack of understanding of the Northwest. We oppose this proposal, and instead urge you to work with us to support the continued health of BPA, which has been central to the economic vitality of the Northwest.”
The letter was signed by Reps. Jaime Herrera Beutler, R-Wash., Earl Blumenauer, D-Ore., Derek Kilmer, D-Wash., Cathy McMorris Rodgers, R-Wash., Pramila Jayapal, D-Wash., Peter DeFazio, D-Ore., Suzan DelBene, D-Wash., Dennis Heck, D-Wash., Dave Reichert, R-Wash., Dan Newhouse, R-Wash., Suzanne Bonamici, D-Ore., Rick Larsen, D-Wash., Greg Walden, R-Ore., Adam Smith, D-Wash., and Kurt Schrader, D-Ore.
By: Jeannine Anderson
Source: American Public Power Association