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AMERICAN
<br /> PUBLIC
<br /> ��TM
<br /> ASSOCIATION
<br /> Powering Strong Communities
<br /> ISSUE BRIEF January 2017
<br /> U.S. Federal Power Program
<br /> Summary and Southeastern Power Administration(SEPA).These entities
<br /> The federal Power Marketing Administrations (PMAs)provide market wholesale electric power to approximately 1,200 public
<br /> power systems and rural electric cooperatives in 33 states.'They
<br /> millions of Americans served by not-for-profit public power and
<br /> rural cooperative electric utilities with cost-based hydroelectric also sell power to a number of other public agencies and federal
<br /> installations,as well as to for-profit,investor-owned utilities in
<br /> power produced at federal dams operated by the U.S.Army
<br /> years with high water flows or in special circumstances.
<br /> Corps of Engineers and Bureau of Reclamation.The PMAs
<br /> market federally generated hydropower,with a statutory right of In accordance with federal law,PMA rates are set at the levels
<br /> first refusal granted to not-for-profit entities,including public needed to recover the costs of the initial federal investment(plus
<br /> power utilities and rural electric cooperatives(called"preference interest) in the hydropower and transmission facilities.The
<br /> customers"),at rates set to cover all of the costs of generating PMAs annually review their rates to ensure full cost recovery.
<br /> None of the costs are borne by taxpayers.Power rates also help
<br /> and transmitting the electricity as well as repayment,with
<br /> interest,of the federal investment in these hydropower projects. to cover the costs of other activities authorized by these multi
<br /> Because the PMAs are part of the U.S.electricity market and purpose projects such as navigation, flood control,water supply,
<br /> are also federal entities,congressional and administrative action environmental programs,and recreation.The annual appro
<br /> in the last 20 years has primarily addressed increased federal priations process is also important to the PMAs.Although the
<br /> oversight of PMA facilities and potential ways in which the U.S. customers pay all of the PMA costs through their power rates,as
<br /> Treasury could receive additional funding from the PMAs and mentioned above,for WAPA,SEPA,and SWPA,those monies
<br /> their customers. flow back to the U.S.Treasury and then must be appropriated
<br /> Another important aspect of the federal power program is the by Congress. (BPA's governing statute,amended in the 1980s,
<br /> federally owned Tennessee Valley Authority(TVA). Congress allows for a"revolving fund"so ratepayer money goes directly to
<br /> established TVA in 1933 in the states of Tennessee,Alabama, BPA rather than to the Treasury.) In addition,the PMAs must
<br /> North Carolina,Kentucky,Virginia,Mississippi,and Geor- receive yearly funding levels from Congress for purchasing and
<br /> gia.TVA's authorizing statutes cite rural electrification,flood wheeling(transmitting)power in a drought situation or when
<br /> control,and navigation along the Tennessee River as reasons for the water at the dams is used for purposes other than for elec-
<br /> its creation.Today,TVA is a robust public power partnership, tricky production (i.e.,recreation and environmental mitiga-
<br /> providing low-cost electric power to more than nine million tion).This money for"purchase power and wheeling"will then
<br /> people in an 80,000 square mile territory.President Obama's be paid for by the PMA customers through their rates.
<br /> Fiscal Year(FY)2014 and 2015 budget proposals contained Ian- As one of the few providers of cost-based wholesale power,
<br /> guage directing the Office of Management and Budget(OMB) the PMAs serve as a yardstick against which consumers,regula-
<br /> to examine ways to reform,and possibly eliminate TVA or sell tors,and policymakers can measure the profit margin embedded
<br /> its assets.The American Public Power Association(Association in the cost of power from other sources.This is a key piece of
<br /> or APPA) opposed these proposals. market information needed to further the goal of a healthy and
<br /> 1 The following states receive a portion of their power from the PMAs.BPA:
<br /> Washington,Oregon,Idaho,and Montana(part).WAPA:Arizona,California,
<br /> Background Colorado,Iowa,Kansas(part),Minnesota,Montana(part),North Dakota,Ne-
<br /> There are four Power Marketing Administrations—Bonneville braska,New Mexico,Nevada,South Dakota,Texas(part),Utah,and Wyoming.
<br /> Power Administration(BPA),Western Area Power Administra- SWPA:Arkansas,Kansas(part),Louisiana,Missouri,Oklahoma,and Texas
<br /> tion(WAPA),Southwestern Power Administration(SWPA), (part).SEPA:Alabama,Florida,Georgia,Illinois,Kentucky,Mississippi,North
<br /> Carolina,South Carolina,Tennessee,and Virginia.
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