Misguided Federal Hydropower Proposals Included in President’s Budget

(Washington, DC) — Energy Fairness Executive Director,  Paul Griffin, made the following statement regarding Monday’s release of President Trump’s FY 2021 Budget request to Congress:  

“While the Trump Administration’s FY2021 budget request to Congress proposes many positive measures, it also includes changes to the Federal Hydropower program that could hurt the availability of affordable and reliable energy. We urge the president and lawmakers to reconsider these changes and to ensure that electricity customers, especially low-income, aren’t hurt by changes to our nation’s Federal hydropower policy.”

Specifically,  the Budget request calls for the four Federal Power Marketing Administrations (Bonneville Power Administration, Western Area Power Administration, Southwestern Power Administration, Southeastern Power Administration) to charge market rates for the affordable, clean and renewable hydropower they sell to not-for-profit electric cooperatives and municipal utilities.  Currently these Federal utilities (PMAs) charge cost-based rates — meaning they charge the customer the same price that it costs to produce the electricity.   

In response to this proposal, Energy Fairness Chairman and Executive Director of the Tennessee River Valley Association, Cline Jones, said “Whether it’s a Democrat or Republican Administration, there’s a common misperception that the taxpayer is subsidizing the operation and maintenance of Federal Hydropower facilities.  Nothing could be further from the truth.  Not only has the cost of constructing these facilities been repaid to Federal Treasury with interest, but the costs of operating and maintaining these facilities continues to be recovered solely from the PMA ratepayer.”

Also in the President’s Budget was a similar request included in last year’s budget calling for sale of all the PMAs’ transmission assets.  Last year, this proposal was soundly rejected by Congress.  

Background

Electric cooperative and municipal utility consumers nationwide use electricity generated by hydroelectric dams operated by the U.S. Army Corps of Engineers and Bureau of Reclamation.  This clean, renewable, and affordable hydropower is sold or marketed to these not-for-profit utilities by one of the four Federal power marketing administrations. Unfortunately, every 10 to 15 years, presidential administrations of both parties, or even the U.S. Congress, fail to acknowledge the history and facts behind the creation of the Federal Power Program by proposing to sell the assets of the program or charge market rates for the power they produce.

In 1995, the Clinton Administration tried to sell the U.S. Army Corps of Engineers dams and lakes producing power for Southeastern Power Administration. Through opposition from a bipartisan group of lawmakers in the U.S. House, the proposal failed.

 In 2005, bipartisan opposition in Congress also sunk the Bush Administration’s proposal for all PMAs to charge market-based rates.