5.4. ERMUSR 03-20-2007 - Laserfiche WebLink

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~I. ~ w'~~ pp~~ ^ ~~ American Public Power Association i91 FEBRUARY 2007 ~ The U.S. Federal Power Program '~ , . ~~~ The federal Power Marketing Administrations (PNLAs) provide millions of Americans scr<~ed by public power and rural cooperative elecMc systems with lowcost hydroelectric power produced at federal dams operated by the U.S. ;~rTny Corps of Engineers and the Bureau of Reclamation. The PMAs were specifically created to market federally-generated hydropower with a right of first refusal granted to not-for-profit entities including public power systems and rural electric cooperatives. The rates paid to the PMAs by their public power and rural electric cooperative customers cover all of the costs of generating and transmitting electricity and of repayment ruith interest of the federal investment in these hydropower projects. None of the costs are borne try taxpayers. Power rates also help to cover the costs of other activities authorized by these multipurpose projects such as navigation, flood control, water supply, environmental programs and recreation. Because the PMAs are part of the U.S. electricity market and because they are federal entities, ,~ congressional and administrative action has in the last 10 years primarily addressed increased federal oversight of PMA facilities and potential ways in which the U.S. Treasury could receive additional funding from the PMAs and their customers. :~ 1 1 There are four Power Marketing Administrations -Bonneville Power Administration (BPA), Western Area Power Administration (WAPA), Southwestern Power Administration (SWPA) and Southeastern Power Administration (SPPA). These entities market wholesale electric power to approximately 1,200 public power systems and rural electric cooperatives in 33 states.t They also sell power to a number of other public agencies and federal installations as well as to for-profit, investor-owned utilities in years with high water flows. In accordance with federal law, PMA rates are set at the levels needed to recover the costs of the initial federal investment (plus interest) in the hydropower and transmission facilities. The PMAs annually review their rates to ensure full-cost recovery. If a deficit is projected, rates are adjusted to eliminate any deficit. PMA power is generally low-cost in relation to other sources of electricity because hydropower is a renewable resource and most dams were constructed long ago when material and labor costs were much lower than today. Private utilities that generate electricity predominantly with hydropower also enjoy similarly low rates. As one of the few providers of cost-based wholesale power, the PMAs serve as a yardstick against which consumers, regulators, and policymakers can measure the profit margin embedded in the cost of power from other sources. This is a key piece of market information needed to www.APPAnet.arg t The following states receive a portion of their power from the PMAs. I3PA: Washington, Oregon, Idaho, Montana (part). WAPA: Arizona, California, Colorado, Iowa, Kansas (part), Minnesota, Montana (part), North Dakota, Nebraska, New Mexico, Nevada, South Dakota, Texas (part), Utah, Wyoming. SWPA: Arkansas, Kansas (part), Louisiana, Missouri, Oklahoma, Texas (part). SL;PA: Alabama, Florida, Georgia, Illinois, Kentuck}', Mississippi, North Carolina, South Carolina, "Tennessee, Virginia. continued 33