In March of 2012, Secretary of Energy Steven Chu sent a memo to the federal Power Marketing Administrations (PMAs) laying the groundwork for new policies, including new transmission policies, that could alter the historic arrangement that has guaranteed affordable electric power for rural co-ops.
Created by Congress to administer the nation’s large federal dams, PMAs provide affordable power for more than 600 rural electric cooperatives in 34 states.
The PMAs are founded on a partnership between electric co-ops and the federal government. The government invested in dams for flood control, recreation, and electricity generation. Co-ops agreed to buy the electric power at above market rates in exchange for a guarantee of continued access to power and a promise of lower rates over the long term.
This partnership, which remains intact today, helps co-ops keep electric bills affordable for consumer-members. At the heart of this agreement is an understanding that those who pay for the federal investment will be the beneficiaries of that investment.
Proposed Changes by the Department of Energy (DOE) Would
- Unfairly target rural consumers: the DOE proposal would use revenue from one segment of electric consumers to pay for benefits to others. It’s simply a tax on existing customers. When co-ops agreed to repay the federal investment in hydropower, it was with the understanding that those who benefit from the various services provided by the federal investments – such as flood control and recreation opportunities – would pay for them.
- Increase cost for consumers: the memo turns PMAs into expensive laboratories to test Washington’s fluctuating energy initiatives; co-op consumers would bear the burden of these new costs.
- Undermine Congress’s oversight role. Any change in the purpose of the PMAs should be decided by the body that has authored, expanded, and refined the PMAs’ governing statutes.
A Solution in Search of a Problem
The PMAs’ partnership with co-ops works. PMAs and their federal power customers have already been successfully integrating new energy sources without these changes.
There is an opportunity for PMAs to be strengthened and improved. For example, Congress and this Administration can commit to the capital improvements needed to maintain federal dams.