Trump and Transmission

The Trump administration's budget proposal includes selling Bonneville's transmission system and charging market rates for power.

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The president's budget proposal would sell federal transmission, including the system owned and operated by Bonneville.

The Trump Administration’s Fiscal Year 2019 budget calls for selling federally owned high-voltage electricity transmission systems to private buyers, including the system operated in the Northwest by the Bonneville Power Administration. Bonneville operates some 15,000 miles of high-voltage transmission in the Northwest, which is about 85 percent of all transmission.

The proposal also would authorize the federal power marketing authorities, which include the Southwestern Power Administration, Western Area Power Administration, and Bonneville, to charge rates for electricity based on comparable rates charged by for-profit, investor-owned utilities rather than the rates they charge now, which are based only on the cost of providing the power. This would mean power rates would go up, and the increased cost would inevitably be passed on to consumers.

According to language in the draft budget, “the vast majority of the nation’s electricity needs are met through investor-owned utilities; 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 taxpayers.”

In the Northwest, unlike the rest of the nation, most power is sold by public, not-for-profit utilities and not investor-owned utilities. The Trump Administration’s proposal is the latest attempt to change the way Bonneville sells power and transmission. Other efforts have been proposed as far back as 1986. Those proposals have ranged from selling the power marketing authorities to selling power at market rates to changing Bonneville’s debt structure and the way it pays off its debt to the federal Treasury. Past proposals to sell the power marketing authorities and sell federal power at market rates have been defeated in Congress.

Since its inception in 1937, Bonneville, the largest of the federal power marketing authorities, has sold electricity at the cost of its production with no markup for profit. Bonneville is self-financing, meaning that its customers, and not taxpayers, pay for the agency’s operation and the power and transmission services it sells. Bonneville’s rates for power have almost always been less than the rates in the wholesale market and much lower than the rates charged by for-profit utilities.

The next step for the budget is that various Congressional committees will review the proposals.

 

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