The Reason Foundation, a public policy research organization, has issued a report, Federal Power: The Case For Privatizing Electricity, recommending privatization of the Tennessee Valley Authority (TVA) and the five power marketing administrations (PMAs). The report finds that those entities, along with federally subsidized cooperatives and municipal utilities, are poorly managed, inefficient, and at considerable risk in the emerging competitive environment (em even though the federal government is the nation's largest producer of electric power.
The United States lags behind many other countries in electric power privatization, the report says. In 1995, electricity made up the largest category of privatization worldwide, with two dozen countries launching ambitious privatization programs, usually 1) to raise capital to reduce national debts, and 2) to improve the efficiency and performance of the electric power industries. Although the Clinton Administration's fiscal 1996 budget called for privatizing the four smallest PMAs, that initiative stalled in the 104th Congress; congressional calls for privatization of TVA and the Bonneville Power Administration also were rebuffed.
Benefits realized from privatization of federal electricity include:
s Sale profits of $15 to $30 billion
s An end to government subsidies of about $7 to $10 billion
s Greater efficiency in competitive markets from the addition of TVA and PMA transmission grids.
"The primary reason to shift the assets of the five PMAs and the TVA into the private sector is to build them into energy organizations that cannot evade commercial accountability," said Dr. Douglas Houston, author of the study. "By delaying privatization and hiding behind fences, the TVA will not face a true market test to increase the value of its assets."
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