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White House Wants to Sell BPA

July 1, 2017

Sale of the BPA transmission system would harm co-op members

This Bonneville Power Administration’s substation in Redmond is one of 260 owned and operated by the Northwest’s power marketing agency. These substations are the interconnection points between the agency’s many utility customers and its high-voltage transmission system.
This Bonneville Power Administration’s substation in Redmond is one of 260 owned and operated by the Northwest’s power marketing agency. These substations are the interconnection points between the agency’s many utility customers and its high-voltage transmission system.

By Jeff Beaman

As the old saying goes, “It keeps showing up like a bad penny.” In this case, it is a proposal to sell the Bonneville Power Administration’s massive transmission system to fund the federal government.

The idea now proposed by President Donald Trump first surfaced during the Ronald Reagan administration. It has resurfaced at different times since then under both Democratic and Republican administrations. The idea is equivalent to trillions of bad pennies and one we hope disappears once again.

BPA’s transmission system delivers electricity from the Columbia River system’s hydroelectric dams to Wasco Electric, Oregon’s electric cooperatives and every consumer owned utility in the Northwest. All stand strongly against this idea.

Our region is not alone in this stance. BPA is one of three power marketing agencies, or PMAs, in the sights of the president’s budget.

Electric cooperatives across the country are equally alarmed because many are served by either the Tennessee Valley Authority in the Midwest or the Western Area Power Administration serving the Southwest. Those PMAs also would see their transmission systems sold. “America’s electric cooperatives are deeply concerned about proposals in the budget that would undermine the vital power marketing administrations,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association.

More than 600 rural electric cooperatives in more than 30 states receive their electricity from a PMA.

They oppose “any effort that would negatively impact the PMAs and threaten coop communities with potential rate increases and uncertainty,” said Matheson.

The proposed BPA sale creates alarm for several reasons, including:

  • Loss of regional control and value.
    Northwest utilities continually work with BPA to modernize the transmission system. This challenge is best handled by those who know the system—both BPA and the utilities it serves. It also appears the value of the system would transfer from the people of the Northwest to the U.S. Treasury. Electricity consumers in the region have paid to build and maintain a system that would be sold to fund the federal government.
  • Risk of increased costs to consumers.
    Divesting the system would add great uncertainty and likely cause higher rates. Even if the system sold at cost—unlikely, since the president’s objective is to raise money—the buyer would expect a return on the investment. This would require a rate increase because BPA charges only to manage the system and recover the initial investment plus interest payments to the Treasury. BPA customers’ equity also could be lost because there are many questions and challenges concerning how they would recover the investment they made in the BPA system through rates.
  • Impact to remote areas.
    New ownership would want to make the most from its investment. Remote, rural areas are more expensive to serve. Would they receive adequate maintenance or have stable rates? These major unknowns cause great concern over potential impacts to rural communities.
  • Reliability of the integrated system.
    BPA integrates power sales activities with the transmission system—an activity that requires balancing many different demands. Privatization threatens effective integration and, therefore, reliability.

What’s next?

The proposal is just that. It is one part of a White House recommendation for a massive, complicated federal budget. It is acted on by both the U.S. House of Representatives and Senate, along with their respective committees and subcommittees. Congress ultimately sets the budget.

“As it has in the past, I am certain the Northwest congressional delegation will oppose this part of the president’s budget proposal,” said Wasco Electric General Manager Jeff Davis. “We are letting them know that we are opposed to this proposal, and we hope you will as well.”

The Proposal

Summary documents of the president’s proposal show almost $5 billion attributed to the sale of the BPA transmission system. The sale would take place between 2018 and 2027, with $1.8 billion of the amount collected in 2019.

What Can You Do to Help?

Let your congressional representative know you oppose the sale of the Bonneville Power Administration’s transmission system. Join our political grassroots network, ORECA-Action, and you link directly to them through the Take Action function. Enroll at www.oreca-action.org through the Join Us link in the upper right corner.

BPA Facts

  • 300,000-square-mile service area.
  • 15,238 circuit-miles of transmission lines.
  • 260 substations.
  • 3,100 employees.
  • 511 transmission customers.
  • 31 federal hydroelectric projects provide power.
  • 1 nuclear plant provides power.
  • 2016 operating revenues of $3.4 billion.
  • 2016 net revenues of $277.2 million.