Electricity Markets

President Trump renews effort to sell grid assets of PMAs, TVA

As part of his $4.5 trillion budget proposal for fiscal year (FY) 2020, President Donald Trump has again proposed selling federal Power Marketing Administration (PMA) and Tennessee Valley Authority (TVA) transmission assets.

The PMAs that would be affected are the Southwestern Power Administration, Western Area Power Administration and Bonneville Power Administration.

Along with proposing to sell PMA/TVA transmission assets, Trump also renewed his plan to authorize the PMAs to charge market-based rates, rather than being limited to cost-based rates, for electricity. The summary for the proposed budget was released March 11.

In language that mirrors last year’s budget submission to Congress, Trump said that reducing or eliminating the federal government’s role in electricity transmission infrastructure ownership, “thereby increasing the private sector’s role, and introducing more market-based incentives, including rates, for power sales from Federal dams would encourage a more efficient allocation of economic resources and mitigate risk to taxpayers.”

However, Congress overwhelmingly rejected the proposal last year and is expected to do so again this year.

At the American Public Power Association’s recent Legislative Rally in late 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.

At the time, Waterhouse said that the Association would strongly oppose a FY 2020 budget proposal that called for the divestment of the transmission assets of the PMAs and TVA and moving the rates that the PMAs charge from cost-based rates to market-based rates.

On March 11, the Association said that it was once again disappointed to see that FY 2020 budget request released by Trump proposes to divest the transmission assets held by TVA and the PMAs.

"We will adamantly oppose any effort by the federal government to privatize TVA and PMA assets that have been paid for by electricity customers," the Association said in a news release.

The Association said it was also again disappointed to see that the FY 2020 budget request proposed to increase PMA rates by changing the current cost-based rate structure.

Last summer, the Association said it was disappointed to see that Trump’s report on government reorganization proposed to divest the transmission assets held by TVA and the PMAs.

Sue Kelly, president and CEO of the Association, noted at the time that 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.”

Trump also proposes to cut $3.8 billion from DOE budget

Meanwhile, the President is also proposing a cut of $3.8 billion (11 percent) to the Department of Energy’s budget compared to FY 2019.

With the National Nuclear Security Administration and Defense Environmental Clean Up slated to receive a more than $1 billion funding increase, funding for DOE’s defense site cleanup efforts and energy programs would have to be cut by $5.2 billion (36 percent).

At the same time, the budget would provide $156 million for cybersecurity, energy security and emergency response, a $10 million increase over the $146 million appropriated for FY 2019.