Electricity Markets

Associations urge Congress to reject budget plan to sell TVA/PMA assets

The American Public Power Association and the National Rural Electric Cooperative Association on Feb. 10 said that they were disappointed to see that the fiscal year (FY) 2021 budget request released by President Trump proposes to divest the transmission assets held by the Tennessee Valley Authority (TVA) and three of the Power Marketing Administrations (PMAs): Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration.

This is the fourth year in a row that the budget request makes the misguided proposal to divest their transmission assets, the associations said, adding that they will adamantly oppose any effort by the federal government to privatize TVA and PMA assets that have been paid for by electricity customers.

At the same time, APPA and NRECA said that they were also disappointed to see that the FY 2021 budget request again proposes to increase PMA rates by changing the current cost-based rate structure.

This is the third year in row that the federal budget request recommends moving the PMAs to market-based rates despite Congress’ resounding rejection last year and in years past, the trade groups said.

The associations urged Congress to reject the proposals.

“The partnerships between the PMAs, TVA, and the public power communities they serve with affordable and reliable power is an American success story that continues to work today,” said APPA President and CEO Joy Ditto. “Proposals like the ones included in this budget request are solutions in search of problems.” 

The president’s proposal to sell TVA and PMA transmission assets and switch the PMAs to market-based rates “would jeopardize affordable and reliable power for more than 100 million people across the nation,” said NRECA CEO Jim Matheson.

APPA and NRECA 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 public power utilities and rural electric cooperatives serving ten million people in seven states at no cost to taxpayers.

“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,” APPA and NRECA said in a news release.