I was amused by your "Headlines" item on the Reason Foundation's study calling for privatization of TVA and the power marketing administrations due to government subsidization and poor management (May 15, 1996, p. 16). If those were the two overriding issues, one could argue in favor of swapping segments and doing something different with the segment that costs the government the most.
Investor-owned utilities (IOUs) have collected and retained taxes over the years to the tune of $60,075,724,000 (em an annual cost to taxpayers of $5,090,209,000, when figured at an 8.2-percent cost of money. Municipal subsidies enjoy tax-exempt bond issuance, which costs the government $1,172,888,000 per year in lost taxes and interest. Electric cooperatives receive interest-subsidized loans that cost the government the difference between the average rate of 4.3 percent and the 8.2-percent cost of money (em $469,300,000 annually.
The annual cost summary reveals that IOUs receive the largest block of government subsidies. Per customer, munis top out at $92.47, IOUs at $60.17, and cooperatives at $39.48.
Wright-Hennepin is a small electric and security cooperative located in Minnesota that serves nine customers per mile of line. Some of the nation's largest utilities (em including NRG, UtiliCorp, Duke Power, Western Resources, TVA, Oglethorpe, Enron, Minnesota Power, Iowa Electric Light and Power, Wisconsin Electric Power, Delmarva Power, New Hampshire Electric, Bangor Hydro, and Entergy (em have come to our shop to observe how we are attempting to position ourselves for open competition. One executive, employed by an IOU approximately 1,000 times larger than we are, commented that his organization wishes to be like us "when they grow up."
So it was with wonderment that I read the summary of the Reason Foundation's study of federal power. Just who did they base their study on, where, ... and maybe why?
David P. Larson, General Manager
Wright-Hennepin Coop. Electric Assoc.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.