<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=192888919167017&amp;ev=PageView&amp;noscript=1">
Thursday, March 28, 2024
March 28, 2024

Linkedin Pinterest

Trump once again proposes selling BPA electric grid

Infrastructure plan, budget contains revived proposal

By Ted Sickinger, The Oregonian
Published: February 13, 2018, 11:05pm

Tucked into the budget and infrastructure plan released this week by the White House was a renewed proposal to sell one of the most critical pieces of the Northwest’s economic infrastructure: the electrical grid operated by the Bonneville Power Administration.

The Trump administration is proposing — as it did last year — to divest the transmission assets operated by all three federal power marketing administrations, including Bonneville, the Southwestern Power Administration and Western Area Power Administration, as well as the Tennessee Valley Authority.

In the Northwest, Bonneville operates about three-quarters of the high voltage electrical grid, which spans 300,000 square miles, and includes more than 15,000 miles of lines and 299 substations that deliver electricity to some 12 million people. The operation is self-funded by customers, though it leans heavily on borrowing from the U.S. Treasury.

The administration figures it could bring in $5.2 billion by selling the BPA’s transmission assets, and another $4.2 billion from selling the other three entities’ assets. It also estimates another $1.9 billion in revenue during the next decade by authorizing the three power marketers to charge market-based rates for electricity, similar to for-profit investor-owned utilities, rather than being limited to cost-based rates.

“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 taxpayer,” the budget narrative said.

The privatization proposal is just that, an idea that Congress is free to disregard. And its release prompted an immediate backlash.

“The bottom line is this budget proposes to raise an extra $5 billion to $7 billion on the backs of Northwest electricity customers over the next 10 years without any added benefit,” said Scott Corwin, executive director of the Public Power Council, which represents the BPA’s public utility customers.

The council said the proposal would significantly increase costs to local residents and businesses; eliminate regional control over the system; potentially lead to the neglect of remote areas, and impact reliability.

Politicians immediately joined in. Members of the Northwest delegation, including Rep. Peter DeFazio, D-Oregon, Sen. Ron Wyden, D-Oregon and Sen. Maria Cantwell, D-Wash., denounced the proposal.

“This is not a real infrastructure plan,” DeFazio said a statement. “It is simply another scam, an attempt to sell our nation’s infrastructure and create windfall profit for Wall Street while rolling back environmental protections.”

The idea will also face Republican opposition from the heart of Trump country. “This looney idea of selling TVA’s transmission lines seems to keep popping up regardless of who is president,” said Sen. Lamar Alexander, R-Tenn., in a statement. “It has zero chance of becoming law.”

Indeed, many say the proposal is neither legally feasible nor economically practical as a means of funding new infrastructure.

Bonneville sells its power under long term contracts that expire in 2028, and any proposal to unilaterally raise rates would trigger “contract-locks” that have been built into those documents since the mid-nineties specifically to prevent such maneuvers.

Randy Hardy, an energy consultant and former administrator at Bonneville, said any attempt to sell the transmission assets would likely trigger a default on billions of dollars in outstanding Bonneville debt.

“These are complete show stoppers,” Hardy said. “This is a typical administration exercise. It’s a budget scoring exercise where you sell a bunch of assets to make the deficit look a little less. It has no practical significance. It’s undoable.”

Nor is the proposal to allow Bonneville to charge market base rates particularly practical. Bonneville just unveiled a five-year strategic plan, a big part of which is to limit rate increases to the rate of inflation to stay competitive with the market.

“If they want to charge market rates, they’ll be losing money,” Hardy said. “It just underscores the point that this is just a scoring exercise. [Senate Majority Leader Mitch] McConnell and [House Speaker Paul] Ryan wouldn’t touch this.”

mobile phone icon
Take the news everywhere you go.
Download The Columbian app:
Download The Columbian app for Android on Google PlayDownload The Columbian app for iOS on the Apple App Store
Loading...