Privatising the Northwest’s transmission system
The most recent budget proposal produced by the Trump administration included plans to sell off the publicly-owned Bonneville Power Administration’s in the Pacific Northwest. Trump’s will be the fourth attempt to take it out of public hands, but will he succeed where others have failed?
The Bonneville Power Administration (BPA) is a non-profit federal marketing administration that provides 28% of all power provided to the US’s Pacific Northwest region. It was set up in 1937 following a presidential campaign promise by Franklin Roosevelt to build hydropower dams on the Columbia River; among other projects, it oversaw the construction of the Bonneville dam, which began operations in the 1940s. As time went on, the BPA was authorised to sell and deliver power from more federal dams in the area and currently controls 31 dams.
The BPA is currently publicly-owned, and has paid $185bn into the US Treasury since it was established. Power prices are kept cheap for those it serves throughout Idaho, Oregon, Washington, western and eastern Montana, California, Nevada, Utah and Wyoming, due to a rate system. All operations and maintenance is currently covered by the end users, with the aim of serving everyone rather than producing profit.
But now, the BPA’s transmission network, one of the biggest in the US, is being considered for privatisation. The network predominantly distributes hydropower along with small amounts of nuclear, and covers 75% of the high-voltage grid in the Pacific Northwest.
The Trump administration’s 2018 fiscal budget proposal, A New Foundation for American Greatness, was sent to Congress in May 2017 and includes a plan to sell off this transmission network to private companies.
The BPA privatisation plan is not a new idea; it is a concept that has repeatedly been put forward by presidents since Ronald Reagan. Bill Clinton proposed the sale in the 1990’s, and George W. Bush suggested that energy prices in the region should be raised to bring them in line with market rates, which was generally seen as a first step towards privatisation. All attempts have failed due to a lack of support in Congress and broad public opposition.
The supporters of privatisation promise improved efficiency and services. This includes Energy Secretary Rick Perry who claims that the move would allow for innovation at a speed impossible within a federal system, improving access to clean and secure energy supplies.
The key argument for the sale of the transmission network is the profit, as it is estimated that it would save the government about $4.9bn over 10 years in operations and management costs. Along with the BPA transmission network, the proposal recommends the sale of other assets, claiming a total $5.5bn could be saved.
A longstanding opposition
Opposition to the privatisation of BPA has been staunch, with many arguing it will increase energy prices for those living in the North West. One of the most vocal opponents is Oregon Senator Ron Wyden, who has fought against its privatisation before, most recently blocking privatisation overtures under George W. Bush in 2005. Once again, he intends to stand against the plans to privatise the transmission network under the Trump administration.
“Pacific Northwesterners have fought this battle before and we’re going to fight these malicious efforts again,” Wyden said. “BPA is a key part of Oregon’s economic future, and selling most of it off to the highest bidder would strangle the power supply for businesses and stretch the wages of working families in the Northwest.”
In June, 21 senators in Washington and Oregon signed a letter, sent to Secretary Perry and Office of Management and Budget Director Mick Mulvaney, arguing against the privatisation of the BPA transmission lines. They have argued that it will increase power prices, and put those in rural and unprofitable communities at risk of being overlooked as high-value lines may be sold while others servicing small groups of people may be abandoned.
“Selling off BPA’s transmission assets is bad public policy that undermines the President’s economic objectives and betrays a lack of understanding of the Northwest,” they wrote.
A further concern comes from the Native American communities who live along the Columbia River. During the building of the Grand Coulee and Bonneville Dams on the river, there were protests and complaints from these communities, which argued that the reservoirs the government created ruined their lands, and that the dams made salmon migrations difficult, affecting population size. But as the rights of these communities have expanded, a relationship between Native American communities and the federal-run BPA has become an intrinsic part of planning and operations. Following privatisation, there is no guarantee that they will be taken into account.
What’s next for BPA?
Lawmakers and politicians throughout the North West are gearing up for a fight, determined to beat the proposal as they have before. They remain hopeful that the plan will once again fail to make it through the Congressional vote required.
“Maintaining the integrity of BPA is an issue that unites our region,” said NW Energy Coalition executive director Nancy Hirsh in a recent statement. “Legislators from Washington, Oregon, Idaho and Montana have an understanding of BPA’s unique place in the economy and culture of the Northwest. That understanding sometimes isn’t shared by the authors of proposals such as this one. BPA manages the large majority of the transmission grid that distributes clean energy for the benefit of the entire Northwest. Selling off those assets is a bad idea that was rejected in past years and Congress should reject it again.”
There seems to be no more support for the proposal today than there has been in the past. During the 1980s the concept of privatising previously publicly-held and funded sectors took off, with over $185bn worth of state-owned enterprises sold off worldwide over the decade. Amidst the sales, the privatisation of BPA’s transmission network failed. It seems unlikely that the proposal will fare any better now.