Budget Distractions Won’t Help Energy Infrastructure

Trading Away Common Sense
February 2, 2018
Tax Extenders Will Make Plant Vogtle More Affordable
February 22, 2018

Earlier this week, the Office of Management and Budget released the Administration’s Fiscal Year 2019 budget proposal. As with any massive federal government document, there’s a mixture of good and bad ideas. Stakeholders and media are still reading to find both. To be sure, there are highlights, such as forward-thinking ideas on cybersecurity, expanding broadband access, and energy research and development. PACE will highlight some of these in the weeks to come.

However, one bad idea was easy to find since it appears to have been copied and pasted from several past Administration proposals, both Republican and Democrat. Once again, the budget proposes selling federal energy assets, focusing particularly on the transmission systems operated by the Tennessee Valley Authority and the Power Marketing Administrations.

TVA and the PMAs were created by Congress, in partnership with citizens, to ensure that light and power reached every corner of our vast nation. Eighty-five years ago, many rural citizens read by candlelight and carried water by hand. As generating stations and transmission lines sprang up, quality of life increased for formerly isolated communities. Urban people and businesses benefited too, from more abundant food and commodity supplies produced in rural America.

“That’s a nice history lesson,” a budget author might say from deep inside the OMB offices, “but today we need to streamline and modernize and nobody does that better than the private sector.” However, the facts are with the PMAs and TVA and with their customers.

Congress established the PMAs and TVA, but the customers provide the funding to operate the utilities. So, residential and industrial customers who are ultimately served by these transmission assets have already paid for them over decades.

If the private sector bought the transmission lines, the purchaser’s check would go to the Treasury, rather than to those customers. Then, the citizens in dozens of states served by TVA and the PMAs would get charged all over again. The private sector would then likely try to bring these areas the benefits of competitive wholesale and retail markets, so they too can pay higher electricity costs. Neither dog hunts.

The PMAs and TVA are an American success story. Millions of people receive low-cost power drawn from a portfolio with impressive ratios of clean renewables and efficiency measures. All five organizations are supported and close-questioned by an array of lawmakers, citizens and stakeholder groups. When there’s a misstep (can you name a private sector utility that’s never had one?), it quickly comes to light and gets corrected.

Since the PMAs and TVA are creatures of Congress, the Administration isn’t the decider. Once again, bipartisan voices have spoken up to criticize the Administration for trying this one again, as though nobody was watching. Sen. Ron Wyden (D-OR) and Sen. Lamar Alexander (R-TN) have widely divergent voting records, but here they agree, in quite colorful language. Sen. Alexander said “looney” with “zero chance” while Sen. Wyden called it “another broken promise to rebuild America’s aging infrastructure.”

Privatization always sounds so good. As a talking point, it polls well, just like deregulation or patriotism. But the details matter. By dredging up tired arguments about privatizing federal transmission assets, the Administration is missing the point and distracting energy leaders who it should be engaging for real work needed to strengthen our nation’s energy infrastructure.