WASHINGTON -- President Clinton is considering selling off five federal electric power agencies, a move that could result in increased tax-exempt bond issuance if public power utilities purchased the agencies.
But the American Public Power Association, which represents those utilities, told the White House this week it is opposed to such a sale, which it warned could result in increased rates for electric power and may even violate the law.
At issue is the future of the Bonneville Power Administration, Alaska Power Administration, Southeastern Power Administration, Southwestern Power Administration, and Western Power Administration. Power industry lobbyists said Clinton is contemplating the sale of the five as part of a larger plan to either eliminate or sharply streamline the Department of Energy. According to one estimate, selling the five could save the federal government $12 billion over five years.
Clinton is expected to reveal his decisions on the Energy Department and the power administrations in an address from the Oval Office scheduled for tonight.
Earlier this week, the power association's executive director, Larry Hobart, sent a letter to the president urging him to reject the idea of selling the five agencies.
"It is bad economics, bad social policy, and bad politics," Hobart said in his Dec. 12 letter.
For one, about 1,100 consumerowned electric systems have a financial stake in the five power agencies, Hobart said. Those systems paid a major part of the cost of building the agencies' power production facilities.
"Sale to private parties could wipe out this equity contribution while, simultaneously in some areas, significantly increasing electric bills at retail for homes, businesses, and industries," Hobart said.
In addition, in many cases the sale of power from the agencies' production facilities generates revenue which helps pay for such services as irrigation and flood control in many areas, Hobart said.
"No private party can step in and act as a surrogate for government in handling these functions," according to Hobart's letter.
Hobart also warned that a hurried sell-off of the agencies could result in fire-sale prices, which would defeat the purpose of getting rid of them.
"The government would be unable to recover the full cost of the facilities and would lose a major asset capable of creating a continuing cash flow," he said in his letter.
Another problem with the sale, according to Hobart, is that it may be illegal. "Congress has previously considered an attempt by the Reagan Administration to sell off federal hydropower resources, and promptly passed legislation making it illegal even to study the idea. That law is still in force," Hobart said.