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Trade groups oppose Trump proposal to divest federal power transmission assets


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Trade groups oppose Trump proposal to divest federal power transmission assets

Two organizations representing public power utilities and electric cooperatives are voicing strong opposition to President Donald Trump's proposal to sell the transmission assets of three federal power marketing administrations, or PMAs.

In a joint letter to Energy Secretary Rick Perry dated June 6, Sue Kelly, president and CEO of the American Public Power Association, and Jim Matheson, CEO of the National Rural Electric Cooperative Association, said divesting the transmission assets of the Bonneville Power Administration, Southwestern Power Administration and Western Area Power Administration would cause electricity costs to go up for millions of people and businesses.

"History has demonstrated that initiatives to privatize all or part of the PMAs do not have strong support in Congress because they are both economically unjustified and politically unpopular," the letter said.

The PMAs, whose main customers are publicly owned utilities and electric cooperatives, are required by law to set cost-based rates to achieve the lowest possible power price for consumers. Taxpayers meanwhile bear little burden in funding PMAs. In a recent funding bill passed by Congress, Bonneville received no net appropriations for fiscal year 2017, after accounting for customer payments. That legislation provided about $11 million for the Southwestern Power Administration for fiscal year 2017.

But as part of his full fiscal-year 2018 budget request released May 23, Trump proposed to divest the transmission assets of all three PMAs that own such assets.

A group of legislators from Oregon and Washington subsequently urged the Trump administration not to pursue the sale, asserting that it would raise rates and threaten grid reliability for rural communities.

Kelly and Matheson similarly told Perry that they, on behalf of the APPA and NRECA, disagree with the proposal's assertion that "ownership of transmission is best carried out by the private sector where there are appropriate market and regulatory incentives." They noted that PMA costs are not borne by the federal government but instead are paid by customers. The heads of the two organizations also took issue with the administration's argument that increasing the role of the private sector would "encourage a more efficient allocation of economic resources and mitigate risk to taxpayers," insisting that private entities likely would try to charge customers substantially higher rates for the same service they have always received.

The arguments made in support of the proposal "are merely a pretext for actions that would raise electricity costs for millions of people and businesses," Kelly and Matheson said.