05.17.19

Cantwell, Risch, Bipartisan Senators to Trump Administration: Selling Off BPA Assets Would Increase Rates for Consumers

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA), a senior Democrat on the Senate Energy and Natural Resources Committee, Senator Jim Risch (R-ID), and a bipartisan group of their colleagues wrote a letter to Director of the Office of Management and Budget (OMB) Mick Mulvaney to oppose a provision in President Trump’s Fiscal Year 2020 budget that would auction off the transmission assets of the Bonneville Power Administration (BPA) and other Power Marketing Administrations (PMAs) through the Department of Energy.

“We write to oppose the proposal in the Administration’s Fiscal Year 2020 Budget to sell off federal electric transmission assets and change cost-based rates of the federal Power Marketing Administrations,” said the senators in their letter.

The senators expressed concern that the proposal would hinder improvements to national infrastructure and increase rates for consumers and local business.

“Sale of the PMAs transmission facilities would not advance the President’s infrastructure objectives. In fact, privatization of existing assets will sideline capital that could be used 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,” added the senators.

At a hearing of the Senate Energy Subcommittee on Water and Power, Cantwell reiterated the economic impact selling BPA assets would have.

“It’s just a really loony idea, but behind the looniness is also a very big economic impact... The Northwest Public Power Conservation Council put that electricity rates could rise as high as 24% if this kind of concept were pursued,” Cantwell said during the hearing.

Dan James, the Deputy Administrator of the Bonneville Power Administration, testified at the hearing. In response to a question from Cantwell on how prices would be affected, James responded that a selloff would be disruptive.

“I know that it would be disruptive…there would be a lot of uncertainty. We assume that there would be costs associated with contract changes, breach of contract claims, and workforce issues, among many others,” James said.

  • A full transcript of Senator Cantwell’s questions at the Senate Energy Subcommittee on Water and Power hearing can be found HERE.

BPA markets and transmits power generated at 31 federal hydropower projects, the Columbia Generating Station, and several other non-federal power plants. It primarily provides power to rural electric cooperatives and public power utilities serving consumers throughout the Pacific Northwest. BPA also operates and maintains nearly three-fourths of the high-voltage transmission that takes place throughout Washington, Idaho, and Oregon, as well as parts of California, Nevada, Utah, Wyoming, and Montana.

In addition to Cantwell and Risch, the letter was also signed by U.S. Senators Martin Heinrich (D-NM), Amy Klobuchar (D-MN), Mike Crapo (R-ID), John Barrasso (R-WY), Tina Smith (D-MN), Martha McSally (R-AZ), Ron Wyden (D-OR), John Boozman (R-AR), John Hoeven (R-ND), Kyrsten Sinema (D-AZ), Catherine Cortez Masto (D-NV), Kevin Cramer (R-ND), Steve Daines (R-MT), Jeff Merkley (D-OR), Patty Murray (D-WA), Jacky Rosen (D-NV), Jon Tester (D-MT), and Kamala Harris (D-CA).

The full text of the letter can be found HERE and below.

Dear Director Mulvaney:

We write to oppose the proposal in the Administration’s Fiscal Year 2020 Budget to sell off federal electric transmission assets and change cost-based rates of the federal Power Marketing Administrations (PMAs).

The PMAs, the Southeastern Power Administration, the Southwestern Power Administration, the Western Area Power Administration, and the Bonneville Power Administration, market and transmit power generated at federal hydropower dams to rural electric cooperatives and public power utilities serving customers in 34 states. They have provided reliable and affordable electric service for decades and are crucially important to rural communities in our states.

Federal power marketing is one of the few federal programs that not only pays its way, but actually provides benefits to the Federal government’s balance sheet. PMA power rates are set to fully recover taxpayers’ investments in the power generating capability of the dams, which is repaid with interest. In addition, federal power rates financially support the flood control, navigation, irrigation, water supply, wildlife enhancement, recreation, and salinity control functions at these multipurpose federal dams. In many cases, Federal water projects would not have been built but for the anticipated revenue associated with the sale of the power that is generated.

The PMAs, except for the Southeastern Power Administration, also own and operate thousands of miles of high-voltage transmission lines. These transmission facilities serve as a backbone of the electric grid in our states. The sale of these PMA transmission assets would threaten the integration of these facilities with the PMAs’ power marketing responsibilities, raising rates and impairing grid reliability. 

Sale of the PMAs transmission facilities would not advance the President’s infrastructure objectives. In fact, privatization of existing assets will sideline capital that could be used 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.

Through the years, the PMAs adapted to changing market conditions and there remains room for continued improvement. We want to work with the Administration to ensure federal electric transmission and power marketing continue to deliver value to consumers and the federal government.

Sincerely,

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