1986

-- The 1984 Grace Commission Report recommended selling the federal Power Marketing Administrations (PMAs) to help ease the federal deficit, and President Reagan actively pursued that goal. Reagan’s OMB director, David Stockman, proposed that BPA be placed on a fixed debt repayment schedule to accelerate its payments to the Treasury. Senator Dan Evans (D-WA) argued that it was a misguided effort to wring as much money as possible out of the Northwest ratepayers. He also argued that any increase in money flowing to the Treasury would be offset by the loss of tax revenue from a damaged Northwest economy. As a result, Stockman’s proposal was not enacted.

The Reagan Administration’s FY 1987 budget proposed selling the PMAs. But  Congress enacted a provision in the Urgent Supplemental Appropriations Act of 1986, P.L. 99-349 (see Section 201, Page 100 Stat. 748), authored by Senator Hatfield (R-OR) that prohibits the executive branch from soliciting proposals, preparing or reviewing studies or drafting proposals designed to transfer out of Federal ownership, management or control in whole or in part the facilities and function of the Federal power marketing administrations and TVA, until such activities have been specifically authorized and in accordance with terms and conditions established by an Act of Congress hereafter enacted.

1988

-- The FY 1989 Energy and Water Development Appropriations Act, P.L. 100-371, included section 506 (Page 100 STAT Page 874) which prohibited the expenditure of federal funds for the purposes of conducting any studies relating or leading to the possibility of changing Federal power marketing administration electricity rates from cost-based to market-based. Although the provision was written as permanent law, it was repeated several times in subsequent Energy and Water Appropriations Acts. The provision was enacted in reaction to efforts by regions of the country not served by a power marketing administration (the Northeast and Midwest regions, in particular).

1995

-- President Clinton’s FY 1996 budget proposed selling all the PMAs except BPA. Vice President Al Gore’s 1993 National Performance Review recommended the sale of the Alaska Power Administration, and “increased revenues from hydroelectric power operations.” Congress did agree to sell Alaska, but efforts to sell SEPA, SWPA, and WAPA failed. During the Senate debate over the sale of Alaska, Senator Daschle offered an amendment making it clear that its sale was a special case and had no relevance with respect to authorizing the sale of the other PMAs. The Administration sent legislative language to Congress to authorize the sale of the four PMAs, and bills were introduced in the House (H.R. 310 and H.R. 1801) to sell all the PMAs. Neither bill passed.

1996

-- During his last year in the Senate, Senator Hatfield introduced legislation to refinance BPA’s federal Treasury debt. The underlying purpose of the proposal was to eliminate the perception that BPA was subsidized by U.S. taxpayers. The legislation, which was passed as part of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 , P.L. 104-134 (See Page 110 STAT. 1321–350) called for refinancing BPA’s appropriated debt at current market interest rates. BPA also paid the Treasury a $100 million fee to handle the refinancing. BPA refinanced its old debt at 1997 market rates averaging 7.3 percent and any new debt is issued at prevailing market rates.

2005

-- The Bush Administration’s FY 2006 budget made two proposals affecting BPA: 1) require BPA to sell electricity at market rates, and 2) require BPA to count any new private, third party debt under its federal Treasury borrowing cap. The Council analyzed each proposal and prepared papers for the Northwest congressional delegation.

With regard to the market rates analysis, the Council determined that electricity rates would have increased by 39 percent for customers of publicly owned utilities and 13 percent for IOU customers. In total, the proposal would have resulted in an increase in BPA revenues of $1.4 billion. Fortunately, the proposal was not enacted.

The proposal to place BPA’s third party debt under its federal Treasury borrowing cap was very curious. It appears that its purpose was to require BPA to increase its electricity rates in order to raise revenues in an amount sufficient to accelerate its Treasury debt repayment. At that time, BPA’s borrowing cap was $4.45 billion, and it was carrying $2.9 billion of Treasury debt, leaving only $1.55 billion remaining under the cap. Had the proposal been enacted, it would have seriously hampered BPA’s capital investment needs which were focused primarily on improvements and upgrades to hydroelectric and transmission systems.

2006

-- The Bush Administration’s FY 2007 budget included two provisions affecting BPA:  1) requiring a portion of secondary sales revenue to be applied to debt reduction, and 2) repeating the previous year’s proposal of requiring third-party debt to be counted under its federal Treasury borrowing cap.

The proposal to use BPA’s secondary revenues for accelerated debt reduction would apply in years where secondary revenues exceed $500 million. In effect, all secondary revenues beyond $500 million would be swept into the federal Treasury in the form of advance amortization payments on BPA’s bonded federal debt. The Council’s analysis of the proposal for the period FY 2007-09 indicated that the proposal would result in a $145 million average increase in the annual cost of power, which would translate into a rate increase of 6.6 percent (about $2.18 increase in the monthly bill of a public utility customer).

The Council also stated that the two proposals, taken together, appeared to be inconsistent with one another. On the one hand, the secondary revenue proposal would have the effect of lowering BPA’s total amount of federal debt. On the other hand, placing third party debt under the borrowing cap could restrict BPA’s access to raise money for its capital program.

Neither proposal was approved by Congress.