Rep. John Spratt, D-S.C., has released a General Accounting Office report raising questions about the sale to the private sector of the Energy Department's Power Marketing Administrations.
Spratt said in a statement that the report suggests that relying on the sale of PMAs to raise revenue for closing the deficit would be unwise; Congress in recent years has considered several proposals to sell off federal PMAs as part of budget balancing plans.
PMAs sell power generated at federally operated hydroelectric dams, often below rates charged by other utilities, in the Southeast, Southwest, Northwest and Alaska.
The sale of PMAs also has become an issue in electricity deregulation, with private power providers claiming they would have trouble competing with federally provided power. Members of Congress representing areas served by PMAs have met proposals to sell the entities with suspicion, fearful of higher electricity rates for their constituents.
The GAO said that, in selling PMAs, Congress would have to address contractual obligations and liabilities incurred by the Army Corps of Engineers, the Bureau of Reclamation and the PMAs related to the allocation of water. In addition, Native American tribes often have claims to the water used to generate power.
Congress also would have to decide how the private sector would comply with regulations to protect the environment and endangered species, the report said. Divestiture also could severely impact wholesale and retail electrical rates, it suggested.
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