Trump’s Budget Proposal Divests Transmission Assets of Power Marketing Administrations

May 25, 2017
Southwestern Power Administration, the Western Area Power Administration, and the Bonneville Power Administration would all be affected.

President Trump's proposed budget for fiscal year 2018 (released this week) proposes to divest the transmission assets of the federal power marketing administrations.

In a May 23 statement, the American Public Power Association said it is disappointed to see that the budget request to Congress for proposes to divest the transmission assets of three power marketing administrations, or PMAs: the Southwestern Power Administration, the Western Area Power Administration, and the Bonneville Power Administration.

“The PMAs provide millions of Americans served by not-for-profit public power and rural cooperative electric utilities with cost-based hydroelectric power produced at federal dams,” the Association said. “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.”

Selling the PMA transmission assets “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,” the public power group said, urging Congress “to reject this misguided proposal.”

“We’ll want the details, but the effect appears to be a transfer of value from the people of the Northwest to the U.S. Treasury,” said Scott Corwin, executive director of the Public Power Council. “Electricity consumers in the West have paid to construct and maintain a system that would be sold off to fund the federal government.”

The Public Power Council represents about 100 consumer-owned electric utilities in the Pacific Northwest on issues regarding the Federal Columbia River Power System. In a May 23 news release, the PPC pointed out that BPA operates 15,000 miles of transmission lines and noted that the costs of operating these lines are paid for through the electricity rates Bonneville charges to its customers.

Budget summary documents from the Trump administration show almost $5 billion attributed to divesting the BPA transmission assets between 2018 and 2027, with nearly $1.8 billion of that amount listed as being collected in fiscal year 2019, Corwin said.

“Electric utilities here are already working with BPA toward evolution and modernization of the transmission system,” he said. “These efforts are best handled in-region where the expertise lies with the parties who pay for the system.”

President Trump’s budget request to Congress for FY 2018 proposes cutting federal spending by $24 billion in 2018 and by $3.6 trillion over the next decade, while boosting federal revenues by $2.7 trillion over the same period, to bring the federal budget into balance by 2027.

Overall, non-defense Department of Energy programs would be cut by $3 billion (17.5 percent) in 2018. That average, though, masks massive cuts to specific DOE offices. For example, the budget proposes cutting the Office of Energy Efficiency and Renewable Energy by $1.4 billion, a 69 percent reduction from fiscal year 2016 funding levels.

Likewise, the Office of Electricity Delivery and Energy Reliability would be cut by $389 million (42 percent) including the assumed elimination of $5 million in funding for “cyber and cyber-physical solutions for advanced control concepts for distribution and municipal utility companies,” a program used to fund cybersecurity cooperative agreements that DOE has with APPA and the National Rural Electric Cooperative Association.

The budget would extend for an additional two years the sequestration of mandatory spending programs, including payments to issuers of Build America Bonds. The budget provides no specific rationale for this proposal, which would extend payments cuts to BABs issuers through 2027.

Overall, the scope of changes proposed in the budget would be historic if enacted. For example, non-defense discretionary spending would be cut by 42 percent by 2027, putting non-defense spending at its lowest level, as a percentage of GDP, since before World War II.

-American Public Power Association

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