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The Feds Try Yet Again To Sell Off BPA And TVA

This article is more than 4 years old.

The new DOE 2021 Federal budget request came out last week at $35.4 billion, down from 2020’s $38.5 billion.

There were some nice surprises, but also some same old stupid ideas.

Good surprises included increased funding for advanced reactors, reprocessing of spent fuel (but then why did we kill the MOX facility that could help with this?), looking at alternative waste disposal strategies, accelerating development of artificial intelligence, providing $5.8 billion for the Office of Science for basic research, strengthening nuclear engineering and weapons stockpile maintenance without explosive testing, strengthening nuclear Navy propulsion systems, enhanced cybersecurity, and $2.8 billion for the Applied Energy Office for next generation energy technologies and grid modernization.

The budget included $27.5 million to develop and implement a robust spent fuel interim storage program, and continue oversight of the Nuclear Waste Fund. There were no funds for Yucca Mountain licensing. This latter decision might change if Trump doesn’t win Nevada in November, but for now it stands.

But a bad idea resurfaced again as it has so many times in the past – to privatize federally-owned power projects like the Tennessee Valley Authority and the Bonneville Power Administration.

This is a horrible idea.

Private industry has often lobbied lawmakers to sell off these assets, wrongly asserting it would make or save the government money. They never mention that it would cost taxpayers and customers much much more, and would disproportionately hurt the poorest Americans.

Almost 20 million electricity customers are served by BPA in the Pacific Northwest and TVA in the Southeast. We get the nation’s cheapest and most reliable power from these not-for-profit government agencies that get no government funding but exist solely on their sales. Privatizing them would be a huge mistake, although it might make a few new American billionaires.

Privatization of government entities has never worked. It has only made a handful of businessmen very rich and has cost taxpayers a lot more money. Whether it’s prisons or the militaryprivatization almost always increases costs, decreases quality and services, and encourages corruption because profit, not serving the public good, is the driving force behind private industry.

The myth that private companies are better than governments at building and operating things doesn’t hold water either, according to William Lazonick, an economist at the University of Massachusetts. He attributes this to the general misunderstanding of how the United States built the largest economy in the world.

Our economic system did not originate with the iconic visionary entrepreneur or the courageous industrialist, but rather was a product of the collective efforts of the people through their government.

America became great by huge government infrastructure builds and government R&D that was often freely given to the private sector. NASA, DOE, USGS, ARS, DOT and other agencies paved the way for industry and gave away the fruits of taxpayer dollars for almost nothing.

Whether it was the railroads, the oil industry, universities, or the Golden Gate Bridge, government provided bonds, land grants, R&D or other kinds of support that never made it into the public eye.

It is not coincidental that when privatization took off in the 1980s, our economy and wages began to stagnate.

Which brings us to TVA and BPA, two entities that have always been seen as hugely successful. Hydropower was an amazing new thing a hundred years ago and was one of those little-known factors that won WWII.

Hydropower was the main reason that TVA and BPA and other agencies were formed, and they provided much of the power to make enormous amounts of aluminum for airplanes, nitrates for traditional munitions and fertilizers, and plutonium for the Bomb.

TVA also has a unique charter to support national defense. They could burn weapons-grade plutonium in their nuclear reactors and can make tritium for the NNSA – something private companies can’t do and don’t want to.

After WWII, BPA and TVA took the long-view of generating and transmitting electricity in their regions, at as low a cost as possible, while generating no profit. TVA and BPA had greater flexibility than private entities to try new things and move quickly. As citizens, we paid for it all over the decades.

The undeclared falsehood in this privatization argument is that the government owns these assets in the traditional sense. TVA’s and BPA’s assets were paid for by the electric bills of customers over 80 years. These are government-controlled but publically-owned assets.

So is it fair for the Federal Government to sell these assets to private companies just because they can?

TVA and BPA have a host of regional economic development functions separate from their energy side, including navigation, flood control, reforestation, agricultural improvements, recreation, water and air quality improvement, science and technology R&D, and even malaria prevention in its early days. These are also not activities private companies do or want to do. They would have to be outsourced, at elevated cost to taxpayers and customers.

As government agencies, TVA and BPA can have higher debt ratios and can borrow money at lower interest rates than private entities. Privatizing them would mean having to deal with that debt immediately, something a private company would also not want, meaning taxpayers would be stuck paying for it right now.

But the big reason for keeping BPA and TVA, as they are, is that they are not-for-profit. This is a huge advantage.

Fortunately, selling these assets off requires Congressional approval, and every time it comes out, there is immediate condemnation from members of Congress, especially those in the regions served by them.

Indeed, the idea of selling off BPA and TVA is nothing new - for either party. Both the Clinton Administration and the Obama Administration floated this idea as well, which correctly got torpedoed by Congress.

The American Public Power Association, which represents nonprofit, community-owned utilities, calls this idea “misguided” and said it would “adamantly oppose” any effort to privatize TVA and other public power assets like BPA, Southwestern Power Administration or Western Area Power Administration.

According to the independent, non-profit Economic Policy Institute, privatization of TVA would divide its electric power system into independent, and no longer accountable or coordinated, component parts. The new private owners of these assets would immediately raise electric power rates claiming there would be additional cost – yes, like profits and more managers. Right now, BPA and TVA sell power at cost. You can’t get better than that.

The TVA’s and BPA’s reliability record—providing consistent, uninterrupted electric power—could be adversely affected as responsibility for system maintenance and decisions about expansion, upgrades, management, and repairs would shift from a single body to multiple independent private utilities.

Destroying these proven American assets for some misguided idea of a free market would be criminal. I hope Congress does not succumb to the allure.

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