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Show Western Resources PMA revolving fund bills ByHeleneC.Monberg krton-Due to bitter opposition ''1 Sments of the power in-'3 in-'3 8 L Senate Energy Committee 'shelved an Administration to , put four federal power agencies, including Western ministration (WAPA), self-financing basis. !-"nnuse Interior Committee may Ss on similar legislation ;iSaTethisfall, but it won't take m at this time either on the r,J ntroversial measure. :r Midwest Electric Consumers i lion (Midwest) representing 300 ectric cooperatives and publicly '"'af nower systems in nine Western l ;tiestern states is so outraged "administration bill that it had its ' ,,'ev former Interior Solicitor - " !d Weinberg, draft an alternative "-hichSen. John Melcher, D-Mont., 'ied (S 1440) on June 27 at the : tVo( public power groups. It is co-;';red co-;';red by five other Senators, from the Midwest. ietter which Energy Assistant etary George S. Mclsaac sent to ' senate Energy Committee on July r indicated generally the Adoration Ad-oration could not buy the Melcher . And as both the public and private '.nents of the power industry won't t(ft the Administration measure, Mexican standoff. West is particularly affected v-iuse the legislation would have a Ljjor impact on WAPA, headquarter! headquar-ter! Golden, Colo., which operates f - all or parts of 15 states in the West -Midwest outside of the Pacific ! :!hest. WAPA operates and Jains about 16,000 miles of tran--..sion lines thruout the West and litest and 208 substations and , sled power facilities in a 1.3 million '.are-mile area in all or parts of ' "ilifornia, Arizona, Nevada, New -dco, Texas, Colorado, Utah, aing, Montana, North and South jiula, Nebraska, Kansas, Iowa and taota. It took over the power reeling functions of the Bureau of Mamation under the law which Hied the Department of Energy in C II markets and transmits federal )ier to 426 wholesale preference f.ilimers including rural electric curatives, municipally-owned ,i'ier plants, public power districts rfttral and state power agencies. HPA markets hydro-electric power waled by the Bureau of Mamation, the U.S. Army Corps of E-aineers. and the International Jry and Water Commission in f'S, which operate 46 hydro-power fwting plants with an installed Jity of 7,700,000 kilowatts. WAPA markets the federal entitlement ; the Navajo coal-fired power plant Page. Ariz. It expects to sell about vllion kilowatt hours of energy this T-..J .... "imimstraion revolving fund bill i would give revolving fund '""ty to the Alaska Power Adoration; Ad-oration; Southwestern Power ration headquartered in J Okla., which markets federal , "'"Arkansas, Kansas, Louisiana, ".""Oklahoma and Texas; and Astern Power Administration wd inElberton, Ga., which , fls federal power in 10 tern states. Mclsaac testified before the rgy Committee on June 28 i' as "fundamentally a single , Proposal," neither the private . futilities (iou's) nor the : Cer ut'ities saw it in that "t fa Said il would authorize ,2?nent of a revolving fund .fauthrityforeachofthe Jer marketing agencies Put them " on a self- g and businesslike basis." iis means the four will no )ect t0 'he Congressional , l"a 'ws process .The Bonneville ration (BPA( has had , n,y since 19?1 s 734 (;.sts borrowing authority from , ,'Teury in the following 1 nC ' $30 million; South-: South-: v,:,;lhon; Alaska $3 million; '"eastern $100,000. "ha,t Battle is About testified S 734 represented 'w ,h; fst step in nf the (electric power) nt L?UM Put the federal i J ' drect competition with ' 0 T operatives in the I'ine-M "!Lnancin8" or :t"v n .hhei0U's claimed- SZ PMA'S int0 com- 'Jtiliu authorities 1 -Matter "S'b'lity in each ; vrc JnoM 0 be taken lightly, " ;fiXk.n June 28 Tey :lrpred 'he b,n would open the ,' Vtiv (1 generate electric 'il,titoSrfby encO"raging ''otildhav pubIic Pwer- 'ebapuLa Chain reaction and :rJ2boneof' systems," r randVPueSident ot Kansas t the ;vlghtCo- testified. He slernh!HPKanfi0nist Plans that I'.'mstrator in the late Bern's rl0n?ress had revoked "devolving fund in 195i on grounds it was exceeding its authority by law. The IOU's said they did not want PMA's to get revolving fund authority again in light of that experience. "The concept of revolving funds for PMA's has been rejected and revoked by Congress as a matter of policy," the IOU statement concluded. Other objections were raised to the bill on more narrow grounds. Edward R. Osann of the National Wildlife Federation said the Federation feels that "mismanagement of water project repayment is in effect a multi-billion dollar scandal of sorts. We would urge that these accounts be brought into balance prior to proceeding with the authorizing legislation for a revolving fund." He observed that Department of Interior audits had found "several major WAPA accounts have been. . .running massive deficits or have departed from sound business practices." prac-tices." He also stated the PMA'S should be required to push for the commercial development of solar energy and other types of renewable energy. Myron B. Holburt, chief engineer of the Colorado River Board of California, and testifying on behalf of California and Arizona water interests, said, in effect, they did not want the WAPA revolving fund to include revenues from Hoover dam on the Colorado River. Nevada reserved the right to testify on this proposal or to send in written comments. None had come in as of August 28, according to Committee Com-mittee sources. (See WRW, Series XVI, No. 27, dated 7-5-79, on this development.) develop-ment.) Public Power Objections to Bill The American Public Power Association (APPA) and Midwest were very specific in outlining the objections of public power to the Administration's bill. Perhaps their biggest complaint was over two provisions in S 734 limiting purchases of . power by the PMA's to "short-term" duration and limiting any "rental or lease of new (transmission) facilities. ..to no more than five years." Mclsaac explained in his letter of July 27 that both were intended in-tended "to prevent the PMA's from signing leases which would, in effect, give a federal guarantee to the financing of non-federal transmission lines." BPA already has such authority. On policy grounds the Administration Ad-ministration does not want to extend it to other PMA's, Mclsaac has twice recently notified Congress. Speaking as Midwest's attorney, Weinberg said these two provisions alone made S 734 unacceptable to Midwest. "What it really means is wheeling contracts. There is no way the Columbia River treaty with Canada on building additional hydro capacity, the third power house at Grand Coulee (on the Columbia River) or the (Northwest-Southwest) (Northwest-Southwest) inter-tie could have been built, nor the Pick-Sloan plan could operate in the Missouri River Basin, on a five-year contract," Weinberg testified. If such a provision stayed in the bill, it would result in either sharply higher wheeling rates or make it "impossible to negotiate wheeling contracts" at all, he predicted. The Administration has indicated it would be willing to try to work out new language on these provisions to make them more palatable to public power, Mclsaac stated in his July 27 letter to the Senate Energy Committee. Limitations on the borrowings of the PMA's from Treasury and on the short-term short-term investments that PMA's make in Treasury obligations as to interest rates are onerous to the public power people. Midwest said they could cost the PMA's millions of dollars a year. Larry Hobart of APPA testified on June 28, "The bill (S 734) provides that borrowing from the Treasury by the PMA's must be at a rate of interest equal to triple A-rated non-government utility bonds. This provision appears to us to penalize unfairly the PMA's, who, as an arm of the federal government, will be forced to pay more for the money than the Treasury itself. This result is especially inequitable given the fact that the bill prohibits federal PMA's from investing money with the federal Treasury at a rate of interest higher than the interest rate applicable to (their repayment) costs or loans from the Treasury." Failure to limit the interest rate on revolving fund investments "would result in hidden subsidies to consumers and costs to the taxpayers," Mclsaac wrote the Committee. S 734 allows the PMA's to use revenues for financing construction "only if the PMA payments due to the... Treasury are current." It also contains a 2'i percent increase in the interest rate on PMA loans if federal repayment studies "show repayment criteria not being met." Midwest called such provisions "a drastic change in present Congressionally approved policy that repayment is to be accomplished ac-complished over a period of 50 years with periodic review of rates to allow for adjustments." Another bone of contention is the provision in the Administration bill giving the Energy Secretary the authority to determine when to establish separate revolving funds for each PMA. He would do so after studies had determined that a PMA's "revenue levels are sufficient," to repay costs including those applicable to reclamation projects. Midwest was defiant about this. "Any substantial changes in federal power repayment and rate policies should come from Congress and not (be) ordained by administrative fiat," it stated. The revolving funds would go into effect on April 1, 1980 under the Melcher bill. The Administration bill defines major transmission facilities "as those whose cost estimate exceeds 5 percent of the total assets of the PMA." The Melcher bill (S 1440) raised the limitation to 8 percent. Mclsaac protested the change in his July 27 letter. "In the case of WAPA, this would permit the construction of a $64 million transmission line without the line being considered 'major.' We believe this would result in the limitation on WAPA being virtually meaningless," he said. The Administration Ad-ministration bill requires a Congressional okay prior to construction con-struction of a "major" line. The Administration opposes a provision in the Melcher bill which gives a broad interpretation to construction con-struction and acquisition of tran- smission lines by WAPA to benefit existing reclamation projects. It takes the position that such construction or acquisition should be undertaken only in accordance with specific reclamation laws. The Administration bill limits borrowing authority for each PMA to a specified amount. If it is exhausted, the PMA must come back to Congress to get additional borrowing authority, under S 734. The Melcher bill (S 1440) contains no such curb on the PMA's borrowing authority. Such a restriction "is essential for effective (Congressional) oversight of PMA's activities," Mclsaac emphasized in his letter to the Senate Energy Committee on July 27. So the PMA revolving fund issue is stalemated at this point. |