McSally, Bipartisan Senators to Trump Administration: Selling Off BPA Assets Would Increase Rates for Consumers

Press Release

U.S. Senator Martha McSally (R-AZ) joined Senator Maria Cantwell (D-WA), Senator Jim Risch (R-ID), and a bipartisan group of their colleagues in writing a letter to Director of the Office of Management and Budget (OMB) Mick Mulvaney to oppose a provision in President Trump's Fiscal Year 2020 budget that would auction off the transmission assets of the Bonneville Power Administration (BPA) and other Power Marketing Administrations (PMAs) through the Department of Energy.

"We write to oppose the proposal in the Administration's Fiscal Year 2020 Budget to sell off federal electric transmission assets and change cost-based rates of the federal Power Marketing Administrations," said the Senators in their letter.

The senators expressed concern that the proposal would hinder improvements to national infrastructure and increase rates for consumers and local business.

"Sale of the PMAs transmission facilities would not advance the President's infrastructure objectives. In fact, privatization of existing assets will sideline capital that could be used for new infrastructure investments. Moreover, any private entity buying PMA assets will want to recover their investment. The resulting rate increases would take money out of the pockets of consumers and businesses in our states," added the Senators.

At a hearing of the Senate Energy Subcommittee on Water and Power, McSally reiterated the importance of keeping electric bills affordable for Arizonans.

"The affordable hydropower delivered by WAPA [Western Area Power Administration] to our cooperative and municipal utilities has helped keep power bills low and allowed for our economy and population to grow," McSally said. "But, as with all long relationships, there are often rough patches and disagreements. I'm sure this is true at all of the PMAs, but we've certainly had some unique issues arise in Desert Southwest. While we don't always see eye-to-eye with WAPA, we've shown how to work through the differences and things have improved in recent years. Can each of you talk a little about where PMA hydro in your regions sits in the overall market, and efforts underway to ensure that the federal hydropower resources remain competitive?"

WAPA Administrator and CEO Mr. Mark Gabriel responded: "We've had--certainly in the past six years that I've been administrator--making sure that we maintain our costs in line with what's happening in the industry...The good news for us, with the exception of the California system, our rates are significantly below those in the market. In fact, we are often the price-maker in a market."

Click HERE to download McSally's opening statements.

Click HERE to download McSally's questioning.

BPA markets and transmits power generated at 31 federal hydropower projects, the Columbia Generating Station, and several other non-federal power plants. It primarily provides power to rural electric cooperatives and public power utilities serving consumers throughout the Pacific Northwest. BPA also operates and maintains nearly three-fourths of the high-voltage transmission that takes place throughout Washington, Idaho, and Oregon, as well as parts of California, Nevada, Utah, Wyoming, and Montana.

In addition to McSally, Cantwell and Risch, the letter was also signed by U.S. Senators Martin Heinrich (D-NM), Amy Klobuchar (D-MN), Mike Crapo (R-ID), John Barrasso (R-WY), Tina Smith (D-MN), Ron Wyden (D-OR), John Boozman (R-AR), John Hoeven (R-ND), Kyrsten Sinema (D-AZ), Catherine Cortez Masto (D-NV), Kevin Cramer (R-ND), Steve Daines (R-MT), Jeff Merkley (D-OR), Patty Murray (D-WA), Jacky Rosen (D-NV), Jon Tester (D-MT), and Kamala Harris (D-CA).

The full text of the letter can be found HERE and below.

The Honorable Mick Mulvaney

Director

Office of Management and Budget

725 17th Street NW

Washington, DC 20503

Dear Director Mulvaney:

We write to oppose the proposal in the Administration's Fiscal Year 2020 Budget to sell off federal electric transmission assets and change cost-based rates of the federal Power Marketing Administrations (PMAs).

The PMAs, the Southeastern Power Administration, the Southwestern Power Administration, the Western Area Power Administration, and the Bonneville Power Administration, market and transmit power generated at federal hydropower dams to rural electric cooperatives and public power utilities serving customers in 34 states. They have provided reliable and affordable electric service for decades and are crucially important to rural communities in our states.

Federal power marketing is one of the few federal programs that not only pays its way, but actually provides benefits to the Federal government's balance sheet. PMA power rates are set to fully recover taxpayers' investments in the power generating capability of the dams, which is repaid with interest. In addition, federal power rates financially support the flood control, navigation, irrigation, water supply, wildlife enhancement, recreation, and salinity control functions at these multipurpose federal dams. In many cases, Federal water projects would not have been built but for the anticipated revenue associated with the sale of the power that is generated.

The PMAs, except for the Southeastern Power Administration, also own and operate thousands of miles of high-voltage transmission lines. These transmission facilities serve as a backbone of the electric grid in our states. The sale of these PMA transmission assets would threaten the integration of these facilities with the PMAs' power marketing responsibilities, raising rates and impairing grid reliability.

Sale of the PMAs transmission facilities would not advance the President's infrastructure objectives. In fact, privatization of existing assets will sideline capital that could be used for new infrastructure investments. Moreover, any private entity buying PMA assets will want to recover their investment. The resulting rate increases would take money out of the pockets of consumers and businesses in our states.

Through the years, the PMAs adapted to changing market conditions and there remains room for continued improvement. We want to work with the Administration to ensure federal electric transmission and power marketing continue to deliver value to consumers and the federal government.

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