Electricity Markets

Association opposes new push to divest TVA, PMA assets

The American Public Power Association is disappointed to see that President Trump’s report on government reorganization proposes to divest the transmission assets held by the Tennessee Valley Authority and three of the Power Marketing Administrations: Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration, said Sue Kelly, president and CEO of the Association.

Trump’s Fiscal Year 2018 and 2019 budget requests included the same proposal, “both of which were wisely and widely rejected by a broad coalition of members of the House and Senate. The Association will continue to adamantly oppose any effort by the federal government to privatize TVA and PMA assets that have been paid for by electricity customers,” Kelly said in a statement released by the Association on June 22.

She noted that the PMAs provide millions of Americans served by not-for-profit public power and rural electric cooperative utilities with cost-based hydroelectric power produced at federal dams. “PMA rates are set to cover all generation and transmission costs, as well as repayment, with interest, of the federal investment in these hydropower projects. None of the costs are borne by taxpayers. Similarly, TVA provides affordable electric power to more than nine million people in seven states at no cost to taxpayers,” said Kelly.
Selling TVA and PMA transmission assets and/or increasing PMA rates by changing the current cost-based structure would threaten the ability of the PMAs to provide reliable, cost-based power to the approximately 1,200 public power systems and rural electric cooperatives in 33 states and the millions of customers they serve, Kelly pointed out.

The Association is urging Congress “to reject these misguided proposals,” Kelly said.

TVPPA weighs in

The Tennessee Valley Public Power Association on June 21 said that it was disappointed and frustrated at the provision of the Office of Management and Budget's reorganization plan that reiterates the proposal to sell TVA transmission assets. 

“These assets have already been paid for by customers, and any sale to a private entity would amount to a transfer of wealth from those customers,” TVPPA said.

It noted that the idea of selling TVA assets has been rejected by previous administrations after independent studies showed the current public power model best serves customers in the Valley.

Lawmakers oppose proposal

U.S. Sens. Lamar Alexander, R-Tenn., and Maria Cantwell, D-Wash., on June 21 said the Administration’s plan to sell the federal electric transmission assets of TVA and the PMAs will increase electric bills for ratepayers.

“TVA’s continued success and ability to provide low-cost power is vital to the TVA region’s families and businesses,” said Alexander. He said the idea of selling TVA and TVA’s transmission lines “seems to keep popping up regardless of who is president, and each of those proposals have all been soundly rejected by Congress.”

"The Trump Administration's proposal to privatize BPA is a terrible idea,” said Cantwell. “Replacing cheap cost-based power with more expensive ‎energy is bad for consumers and bad for business. Our cheap hydro system has been the backbone‎ of our economy for decades, allowing many industries to flourish because of low electricity rates. This is a bad idea that has been soundly rejected before and will be again.‎"

In April, Alexander sent a letter to the president signed by every member of the Tennessee delegation urging the Administration to reconsider its budget proposal to sell TVA’s transmissions assets.

In March, Cantwell, who is Ranking Member of the Senate Energy and Natural Resources Committee, Sen. Patty Murray, D-Wash., and a bipartisan group of their colleagues wrote a letter to Director of the Office of Management and Budget Mick Mulvaney to oppose the provision in Trump’s Fiscal Year 2019 budget that called for selling the transmission assets of BPA and the other PMAs.

Budget proposal

The Association in February Association on Feb. 12 expressed disappointment that the Fiscal Year 2019 budget request released by Trump proposed to divest the transmission assets held by TVA, Southwestern Power Administration, Western Area Power Administration and BPA. At the time, the Association said that it would “adamantly oppose any effort by the federal government to privatize TVA and PMA assets that have been paid for by electricity customers.” 

The Association also said it was disappointed to see that the FY 2019 budget request proposed to change the current cost-based rate structure for the PMAs to market-based rates.

Moody’s Investor’s Service said in a Feb. 14 report that the Trump proposal was “likely to raise transmission rates for BPA and TVA customers because the new private owners would have higher capital costs that would need to be recovered in rates.”