Support for WAPA

The Western Area Power Administration (WAPA) is one of four power marketing administrations (PMAs) that sell power from federal hydroelectric projects across the country. WAPA markets power generated at 55 dams operated by the U.S. Army Corps of Engineers,and the Bureau of Reclamation. Additionally, WAPA owns over 17,000 miles of high-voltage transmission lines to wheel that power to its customers.

The Pick-Sloan Missouri Basin Program, which was part of the Flood Control Act of 1944, set the plan for the development of the Missouri River. This Pick-Sloan Programnow has an installed capacity of 2981 MW that is sold to Mid-West Electric Consumers Association (Mid-West) preference utility members across nine states in the Upper Great Plains through WAPA.

WAPA has long-term contracts for the sale of federal hydropower with its firm power preference customers, some of which extend past 2050. In exchange for these long-term commitments to purchase WAPA power, Mid-West members pay rates that recover the capital costs of the federal investment (plus interest) in hydropower and transmission facilities, hydropower’s share of joint costs (dams, spillways, etc.) and other project purposes’ costs assigned by Congress to hydropower beneficiaries. WAPA’s rates also cover the annual operations and maintenance costs of hydropower facilities. PMA cost-based power rates are NOT subsidized by the U.S. Treasury.

Section 5 of the Flood Control Act of 1944 requires that the PMAs market federal power “in such a manner as to encourage the most widespread use thereof at the lowest possible rates to consumers consistent with sound business principles . . .” This provision means that PMAs sell power at cost-based rates. Congress has reaffirmed the use of cost-based rates for the PMAs for over a decade and has prohibited the Executive Branch from undertaking studies of any rates other than cost-based.

Past Administrations have proposed the sale of the PMA’s to the highest bidder or recommended raising the PMA rates to a market-based rather than a cost-based system. These ill-advised proposals would have a devastating impact on the rural economy of the Upper Great Plains.

Proposals to raise PMA rates to market levels will not assist in deficit reduction. Those monies will be used to repay the federal investment and operations and maintenance costs of the agencies. Raising PMA rates to market level will take millions of dollars out of fragile local economies. It is a bad idea that Congress has rejected numerous times over the last thirty years. It remains a bad policy initiative.

Mid-West urges you to oppose any proposed sale of the PMAs or imposition of market-based rates on the sale of federal hydropower.