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  • Chu Uses Power Marketing Administrations to Implement Green Agenda

    When it comes to finding alternate pathways to force their green agenda onto Americans, President Obama and his Administration know how to dream up creative solutions. In this latest installment, Energy Secretary Steven Chu is directing Power Marketing Administrations (PMAs) to invest in a smart electrical grid that also serves as test bed for cybersecurity technologies.

    PMAs are federal agencies within the Department of Energy (DOE) that distribute and sell electricity from federal hydroelectric dams at cost-based prices, which allows them to sell the electricity at below-market rates. There are four PMAs split up by region: the Bonneville Power Administration, the Western Area Power Administration, the Southeastern Power Administration, and the Southwestern Power Administration. In the past, PMAs have relied heavily on taxpayer money to finance their capital investments.

    In his March 16 memo, Chu instructs the PMAs to upgrade their transmission infrastructure, in part to enable more intermittent and unreliable “alternative” energy sources to travel over the grid. Chu also requests rate structure changes that provide incentives for energy efficiency programs, demand response programs, integration of variable resources, and preparation for electric vehicle deployment.

    If the PMAs need such investments, then they should be made because it makes business sense—and funded through PMA revenues—not with taxpayer dollars because the President is running out of more transparent ways to advance his green energy agenda.

    None of these are inherently bad ideas, if they were undertaken by the private sector on its own accord. Secretary Chu instructing the PMAs to “to take a leadership role in transforming our nation’s electric sector,” however, seems like a backdoor move to work toward the Administration’s agenda of incorporating more alternative energy sources in the power grid. This approach is bad policy for several reasons:

    • Without a law by Congress requesting that PMAs sell electricity at market prices, PMA customers will see their rates go up, while distortions in the price of electricity between PMA and market-based rates would continue to persist. PMAs should not exist to subsidize customers’ energy use through below-market rate electricity sales. However, raising these rates to bankroll the President’s economically unsustainable green agenda is also bad policy. Instead, the PMAs should simply sell their electricity at market rates and make whatever investments will help them meet their customers’ demands.
    • Taxpayers will likely be on the hook to subsidize the PMA spending on smart grid and cybersecurity technologies. In the memo, Chu announces reforms “necessary to ensure the borrowing authority programs are building the infrastructure this Nation needs while protecting and providing value to the taxpayer,” which suggests that taxpayers will subsidize the upgrades in one form or another.
    • The role of PMAs is to distribute and sell hydroelectric energy, not to be used as test beds for new grid technologies. They should make the upgrades necessary to allow proper functioning but should not serve as a testing ground.

    Chu’s directing the PMAs to help carry out this Administration’s green energy aspirations on taxpayers’ and ratepayers’ dime is bad policy. Smart-grid initiatives should be led by the private sector—if they make sense—and the role of government should be in identifying and removing regulatory barriers to private-sector investments. PMA infrastructure that needs upgrading or replacing should be paid for by bringing MPA rates in line with market rates for electricity, instead of burdening taxpayers with additional spending.

    Posted in Energy [slideshow_deploy]

    5 Responses to Chu Uses Power Marketing Administrations to Implement Green Agenda

    1. Stirling says:

      The fear I have here is that the PMA's would eventually turn into the only Energy Source availible (after this administration regulates the fossil fuels out of existance. Thus you would have the government in control of the power grid, prices, and complete control of it's resources.

      I've read that early in the 1930's the Tennessee Valley Authority http://en.wikipedia.org/wiki/Tennessee_Valley_Aut

      "The concept of government-owned generation facilities selling to publicly owned distribution utilities was controversial and remains so today."

      Considering the over-reach of the government to control vital parts of the Economy (Autos, Banking, Healthcare, Education, Agenda 21, etc) It's not a stretch to see the power grab of the private sector industries going on. In every case the government also uses the taxpayer to subsidize the agenda.

    2. Stella says:

      The average person has no idea of what the government does to soak them, under the guise of saving the earth…a United Nations agenda. I would be willing to bet 9 1/2 out of ten people don't have a clue as to what this article is about and that's exactly the way government wants to keep it.

    3. Jimmy Glotfelty says:

      Romina: Secretary Chu is doing the right thing with the PMAs. Section 1222 of the Energy Policy Act of 2005 was proposed by Republicans in Congress in 2003 and 2005 and was ultimately included in the 2005 Energy Bill and unanimously supported and signed by the President. The 1222 provision, authorizes the PMA's to accept private sector dollars to build out the transmission system. This is exactly how we in the Bush Administraiton fixed Path 15 in 2003 in record time and with private dollars.

      My company is the only one that has an applicaiton pending before DOE for utilizing Section 1222 authority. We are all privately funded and are eager to develop a partnership with DOE. It is private sector funding and federal authority…this is a great way to develop interstate transmission since there is no federal siting regime as in natural gas pipelines.

      I have tried to come breif the Heritage Foundation numerous times on this subject, but never seem to get a response. If you want to understand and learn why this is good policy, I am happy to come visit with you and your colleagues.

    4. Elaine says:

      The average American has no idea about the scope of involvement the federal government has, it seems, in everything. The extent of the federal government's power and reach goes so far beyond the limited authority of the Constitution, it will never be possible to stop its continuing interference in human lives, let alone end it. I consider myself well informed but am amazed at how little I really know about the involvement of the government as I had no idea there was such a thing as PMA's. It seems, we the people, are doomed to a future of slavery under unfettered government control.

    5. Audrey says:

      You're all correct – most people don't know anything about PMAs. Taxpayers don't pay for power generated by the facilities operated by PMAs, the user of the power does – this includeds EVERYTHING. I'd like to see how negative opinions change when the following is understood:

      In accordance with the Recalamation Project Act of 1939, the Western PMA states, in part, that "Sales of electric power repay all costs associated with power generation. Western must establish power rates sufficient to recover operating, maintenance and purchase power expenses and repay the Federal government's investment in building these generation and transmission facilities within 50 years. Rates must also be set to cover certain non-power costs Congress has assigned to power users to repay, such as irrigation costs in excess of water users' ability to repay, interest expenses on the unpaid balance of power-related principal and replacement of power facilities within the expected service life of the replacement. "

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