Privatization Issues | |
Selling Federal Power |
The federal government should sell its three power marketing administrations
(PMAs), concludes a new study. The PMAs were established in the 1930s to
generate, distribute and sell low-cost power to impoverished rural areas;
but the study points out that many of these areas are no longer rural or
underdeveloped.
The three PMAs targeted for privatization are the Southeastern Power Administration,
Southwestern Power Administration and Western Area Power Administration.
Administered by the Department of Energy, their hydroelectric power plants,
locks and dams are operated by the U.S. Army Corps of Engineers and the
Bureau of Reclamation.
While all taxpayers subsidize the capital costs of PMAs, only some consumers
receive the benefits in the form of lower electricity rates -- including
residents of relatively wealthy communities such as Santa Clara and Palo
Alto, Calif.
According to researchers, privatization could include current beneficiaries
of subsidized PMA power receiving a portion of the money generated from
their sale, offsetting any potential rate increases. Similar transition
plans have been used successfully in Great Britain and the Czech Republic
to sell off state-owned power plants.
Source: Michael K. Block and Rep. John Shadegg (R-AZ), "Lights Out
on Federal Power: Privatization for the 21st Century," August 9, 1996,
Progress and Freedom Foundation, 1301 K Street, NW, Suite 650, Washington,
DC 20004, (202) 289-8928.
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