A report from the Northeast-Midwest Institute has found that the Tennessee Valley Authority, Bonneville Power Administration, and the three other power marketing administrations must relinquish their preferential treatment and subsidies if consumers are to enjoy the rewards of electric competition.
Federal Power Dinosaurs - Reforming TVA and PMAs in a Competitive Electricity Environment said that as electric industry competition is introduced, lawmakers cannot ignore public or government-owned power companies. These entities supply electricity to about 25 percent of the nation's electric consumers. Lawmakers should not exempt those companies or consumers from competition, according to the report. The institute criticized taxpayer subsidies to TVA and PMAs from several angles, claiming they distort the market, discourage efficiency, waste taxpayer dollars and pit regions against each other.
Reform options include allowing the federal government to maintain control of its hydroelectric assets and sell only the power to the highest bidder, perhaps even allowing munis and coops the right of first refusal for that power at market-based rates. The federal government could lease the hydro assets to the highest bidder. Other options are the open sale of federal electricity, as well as privatization.
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