MAY 12, 1999

I commend the Chairman for holding this hearing on the federal power marketing agencies, with an appropriate emphasis on the Tennessee Valley Authority and the Bonneville Power Administration.

Times have changed from the days when retail electric markets were served by a single supplier generating most of its own power. In that era, federal power marketers, like other supply monopolies, were assigned to serve a specific region and provided fine service. Consumers outside these special areas could only envy the low prices TVA and Bonneville offered, and the industries these low prices attracted to the region -- thanks to the generous financial backing of the federal government.

Today, however, these giant generators face a more complex world. Bonneville is trying to work off billions of dollars in nuclear-related stranded costs, and may be responsible in future years for significant new costs for fish and wildlife conservation measures. TVA also is trying to pay down billions of dollars in nuclear stranded costs, and neither of these suppliers is currently the cheapest in its region of the country.

This presents an interesting dilemma. Muni’s, rural coop’s, private utilities and industrial customers in these areas all express interest in the "benefits" of retail competition – so long as they retain an option to purchase this federal power, a first call if you will.

And who can blame them? Who wouldn’t like to have the best of both worlds: first call on a source of reliable, federally financed power as well as the right to purchase from other out-of-region sources, if that is more advantageous. That’s a sweetheart deal, and would provide a tremendous advantage to any state or region.

The question for this Subcommittee to consider, then, is what role should TVA, Bonneville and the other federal power agencies play in a more competitive electricity market? Should their regional customers have the best of both worlds -- a monopoly with respect to purchasing federal power, and the benefits of competition without risks? Is this progress, or is this simply a retooled version of the regional preferences that benefit the few courtesy of financial backing from the many?

I commend the Chairman, also, for his willingness to hold a hearing on the Administration bill, which appears at first glance to be very accommodating to the wishes of these regional interests. That may accurately reflect the path of least political resistance, but it also squarely raises questions about who would benefit from enactment of such legislation. These are the type of questions this Committee is responsible for thoroughly plumbing, and I look forward to doing so.

I thank the Chairman.