Senate Committee Blasts Proposal to Sell Federal Hydro and Increase Rates

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Members of the Senate Committee on Energy and Natural Resources recently blasted the Trump Administration’s proposal to charge market-based rates and sell the transmission assets of the four federal power marketing administrations (Bonneville Power Administration, Southwestern Power Administration, Southeastern Power Administration and Western Area Power Administration) and the Tennessee Valley Authority.   

The Committee’s Subcommittee on Water and Power, chaired by Senator Martha McSally (R-AZ), held an oversight hearing regarding the proposal included in the President’s FY 2020 budget request. Testifying at the hearing were the administrators of WAPA, SEPA, SWPA and the deputy administrator of BPA. Nikki Fuller, representing the SWPA customer group – the Southwestern Power Resources Administration (SPRA) – also testified at the hearing.

While she did not explicitly single out the Trump Administration’s proposals, Senator McSally did reinforce that the main responsibility of the PMAs is to provide cost-based power to its wholesale customers (electric cooperatives and municipal utilities and other entities eligible for federal power). From her perspective, they should not engage in ancillary services that would depart from the crucial mission of keeping rates affordable. She said they also shouldn’t take on additional activities that would distract from an important core function – maintaining reliability throughout their respective service territories. 

The senior Democratic member on the subcommittee, Senator Catherine Cortez-Masto (D-NV), was unsurprisingly more pointed in her criticism of President’s proposal for the PMAs, stating that “these assets are a valuable public good and it would be unwise and shortsighted to privatize or sell them off to the highest bidder.”

Senator Maria Cantwell (D-WA) reinforced Senator Cortez-Masto’s opposition by noting that she, along with Senator Jim Risch (R-ID), were going to send a bipartisan letter to the President’s Director of the Office of Management and Budget, Nick Mulvaney, expressing their strong opposition to the proposal.  

Not surprisingly, the sole customer representative on the witness panel, SPRA Executive Director Nikki Fuller, voiced not only her federal power customer group’s opposition to the proposal, but the opposition of all the PMA customer groups to the President’s budget proposals. Fuller stated, “Throughout history…administrations of both parties have had the misguided idea that selling the PMAs or its assets would generate cost savings. However, through education by the federal hydropower customers, administrations have come to understand the fallacy in this idea and the importance of the continuation of the PMA program.”

Fuller is right. The PMAs pay for themselves and are an example of a successful federal program that provides affordable and reliable energy to many communities throughout the nation. As Energy Fairness noted back in April, the Trump Administration’s proposal is simply déjà vu all over again.    

Successive administrations, Republican or Democrat, have attempted to sell or change the rate structure of the PMAs and upend their mission of providing affordable and reliable cost-based energy to millions of Americans. And, over the past 25 years, each misguided proposal has been beaten back through bipartisan congressional opposition in the U.S. House and Senate.  Given what was stated at this hearing, one can only hope the Trump Administration’s proposal will suffer the same fate.