Electricity Markets

Lawmakers urged to drop plan to sell PMA, TVA grid assets

More than 60 House members on May 8 sent a letter to House Budget Committee leaders expressing opposition to President Donald Trump’s fiscal year 2020 budget proposal to sell the transmission assets of the power marketing administrations (PMAs) and the Tennessee Valley Authority and change the PMA’s rate structures from a cost-based structure to a market-based structure.

The letter, which was led by Reps. Paul Gosar, R-Ariz., Kurt Schrader, D-Wash., Dan Newhouse, R-Wash., Chuck Fleischmann, R-Tenn., and Rick Crawford, R-Arkansas, was sent to Reps. John Yarmuth, D-Arkansas, chairman of the House Committee on the Budget, and Steve Womack, R- Arkansas, and Ranking Member of the House Committee on the Budget.

This is not the first time that Trump has made such a proposal. His 2018 report on government reorganization proposed to divest the transmission assets held by TVA and three of the Power Marketing Administrations: Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration. Trump’s Fiscal Year 2018 and 2019 budget requests included the same proposal.

The group of 63 House members told Yarmuth and Womack that the sale of the PMA and TVA transmission assets “would result in the federal government abandoning a successful and efficient solution for providing affordable power to rural, urban and tribal communities, thereby creating more problems associated with energy production and delivery as well as retail customer rate changes than this one-time federal debt reduction move would solve.”

The lawmakers noted that the American Public Power Association, the National Rural Electric Cooperative Association and the Grand Canyon State Electric Cooperative Association “have come out against the plan to privatize these PMAs and TVA on account of the damaging consequences such action would have for power consumers and producers alike.”

At the American Public Power Association’s Legislative Rally in February, Desmarie Waterhouse, Vice President, Government Relations and Counsel at the Association, noted that among the Association’s six national priorities in 2019 is protecting the federal power program.

The group of House members said they are troubled that that the FY 2020 budget request seeks to sell the transmission assets of TVA and the PMAs. They said that the proposal to sell the PMA assets “appears to be based on two misguided notions – the first being the expectation of reduced costs with the private transmission and delivery of energy, and the second relating to which kinds of programs and assets serve as the proper targets for deficit reduction.”

They said that privatized versions of the PMAs and TVA “would not provide power at-cost, resulting in higher prices for preference customers, which include rural communities and tribes, while eliminating dependable annual sources of government revenue.”

As for the to proposal to switch the PMAs and TVA from at-cost to market-based pricing, the House members said that “because many of the areas in question are predominantly rural, the municipal utility pricing setup in which costs are recouped by the utility without attempting to generate surplus profit makes far more sense than a market-based alternative,” they wrote.

The group of House members also noted that federal power marketed by the PMAs benefits the U.S. Treasury as appropriations are repaid with interest and rates are set to fully recover taxpayer investments. “None of these costs are shouldered by ratepayers.”

They pointed out that the entire BPA transmission system has generated approximately $30 billion in payments to the treasury, while WAPA brought in more than $1.4 billion from fiscal year 2012 to fiscal year 2016.

Trump urged to drop plan for TVA transmission asset sale

Meanwhile, in early April, Sens. Lamar Alexander, R-Tenn. and Marsha Blackburn, R-Tenn., were joined by several House members representing districts in Tennessee in a letter to Trump in which the lawmakers said they strongly opposed the budget proposal to sell TVA’s transmission assets.

“Not only is TVA among the most reliable utilities, but TVA has among the lowest power rates in the country,” the lawmakers said in their letter. “TVA’s ability to provide reliable, affordable power is essential to the TVA region’s families and businesses. Over the last six years, TVA has supported the creation or retention of more than 450,000 jobs and more than $55 billion in new capital investment in our region.”

House members signing the letter were Reps. Steve Cohen and Jim Cooper, both Democrats, and Republicans Scott DesJarlais, Chuck Fleischmann, David Kustoff, David Roe and John Rose.