[House Report 104-187]
[From the U.S. Government Publishing Office]
104th Congress Rept. 104-187
HOUSE OF REPRESENTATIVES
1st Session Part 1
_______________________________________________________________________
ALASKA POWER ADMINISTRATION SALE ACT
_______
July 13, 1995.--Ordered to be printed
_______________________________________________________________________
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1122]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 1122) to authorize and direct the Secretary of Energy to
sell the Alaska Power Administration, and for other purposes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Alaska Power Administration Sale
Act''.
SEC. 2. DEFINITIONS.
For purposes of this Act:
(1) The term ``Eklutna assets'' means the Eklutna
Hydroelectric Project and related assets as described in
section 4 and Exhibit A of the Eklutna Purchase Agreement.
(2) The term ``Eklutna Purchase Agreement'' means the August
2, 1989, Eklutna Purchase Agreement between the Department of
Energy and the Eklutna Purchasers, together with any amendments
thereto which were adopted before the enactment of this Act.
(3) The term ``Eklutna Purchasers'' means the Municipality of
Anchorage doing business as Municipal Light and Power, the
Chugach Electric Association, Inc. and the Matanuska Electric
Association, Inc.
(4) The term ``Memorandum of Agreement'' means the Memorandum
of Agreement entered into between the State of Alaska, the
Eklutna Purchasers, the Alaska Energy Authority, and the
Federal fish and wildlife agencies regarding the protection,
mitigation of damages to, and enhancement of fish and wildlife,
dated August 7, 1991.
(5) The term ``Secretary'' means the Secretary of Energy
except where otherwise specified.
(6) The term ``Snettisham assets'' means the Snettisham
Hydroelectric Project and related assets as described in
section 4 and Exhibit A of the Snettisham Purchase Agreement.
(7) The term ``Snettisham Purchase Agreement'' means the
February 10, 1989, Snettisham Purchase Agreement between the
Alaska Power Administration of the Department of Energy and the
Alaska Power Authority and its successors in interest, together
with any amendments thereto which were adopted before the
enactment of this Act.
SEC. 3. SALE OF SNETTISHAM AND EKLUTNA ASSETS.
(a) Snettisham.--The Secretary is authorized and directed to sell and
transfer the Snettisham assets to the State of Alaska in accordance
with the terms of this Act and the Snettisham Purchase Agreement.
(b) Eklutna.--The Secretary is authorized and directed to sell and
transfer the Eklutna assets to the Eklutna Purchasers in accordance
with the terms of this Act and the Eklutna Purchase Agreement.
(c) Cooperation of Other Agencies.--Other departments, agencies, and
instrumentalities of the United States shall cooperate with the
Secretary in implementing the sales and transfers under this Act.
(d) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to prepare, survey, or
acquire Snettisham and Eklutna assets for sale and transfer under this
Act. Such preparations and acquisitions shall provide sufficient title
in the assets to ensure beneficial use, enjoyment, and occupancy
thereof to the purchasers.
SEC. 4. EXEMPTION.
Following completion of the sales authorized by this Act, the Eklutna
and Snettisham hydroelectric projects, including future modifications,
shall continue to be exempt from the requirements of the Federal Power
Act (16 U.S.C. 791a et seq.). The exemption provided by this section
shall not affect the Memorandum of Agreement, and nothing in this Act
or in the Federal Power Act shall preclude the State of Alaska from
carrying out the responsibilities and authorities of the Memorandum of
Agreement.
SEC. 5. GENERAL PROVISIONS.
(a) Judicial Review.--(1) The United States District Court for the
District of Alaska shall have jurisdiction to review decisions made
under the Memorandum of Agreement and to enforce the provisions of the
Memorandum of Agreement, including the remedy of specific performance.
(2) Any action seeking review of the Fish and Wildlife Program of the
Governor of Alaska under the Memorandum of Agreement or challenging
actions of any of the parties to the Memorandum of Agreement prior to
the adoption of such Program shall be brought 90 days after the date on
which such Program is adopted by the Governor of Alaska or be barred.
(3) Any action seeking review of implementation of such Fish and
Wildlife Program shall be brought not later than 90 days after the
challenged act implementing such Program or be barred.
(b) Rights-of-Way and Other Lands for the Eklutna Project.--With
respect to Eklutna lands described in Exhibit A of the Eklutna Purchase
Agreement:
(1) The Secretary of the Interior shall issue rights-of-way
to the Alaska Power Administration for subsequent reassignment
to the Eklutna Purchasers at no cost to the Eklutna Purchasers.
(2) Such rights-of-way shall remain effective for a period
equal to the life of the Eklutna hydroelectric project as
extended by improvements, repairs, renewals, or replacements.
(3) Such rights-of-way shall be sufficient for the operation,
maintenance, repair, and replacement of, and access to, the
facilities of the Eklutna hydroelectric project located on
military lands and lands managed by the Bureau of Land
Management, including land selected by, but not yet conveyed
to, the State of Alaska.
(4) If the Eklutna Purchasers subsequently sell or transfer
the Eklutna hydroelectric project to private ownership, the
Bureau of Land Management may assess reasonable and customary
fees for continued use of the rights-of-way on lands managed by
the Bureau of Land Management and military lands in accordance
with applicable law.
(5) The Secretary shall transfer fee title to lands at
Anchorage Substation to the Eklutna Purchasers at no additional
cost if the Secretary of the Interior determines that pending
claims to and selections of those lands are invalid or
relinquished.
(6) With respect only to the Eklutna lands identified in
paragraphs 1. a., b., and c. of Exhibit A of the Eklutna
Purchase Agreement, the State of Alaska may select, and the
Secretary of the Interior shall convey, to the State, improved
lands under the selection entitlements in section 6 of the Act
of July 7, 1958 (Public Law 85-508) and the North Anchorage
Land Agreement of January 31, 1983. The conveyance of such
lands is subject to the rights-of-way provided to the Eklutna
Purchasers under paragraph (1).
(c) Lands for the Snettisham Project.--With respect to the
approximately 2,671 acres of Snettisham lands identified in paragraphs
1.a. and b. of Exhibit A of the Snettisham Purchase Agreement, the
State of Alaska may select, and the Secretary of the Interior shall
convey to the State, improved lands under the selection entitlement in
section 6 of the Act of July 7, 1958 (Public Law 85-508).
(d) Effect on State Selections.--Notwithstanding the expiration of
the right of the State of Alaska to make selections under section 6 of
the Alaska Statehood Act (Public Law 85-508; 72 Stat. 339), the State
of Alaska may select lands authorized for selection under this Act or
any Purchase Agreement incorporated into or ratified by this Act. The
State shall complete such selections within one year after the date of
the enactment of this Act. The Secretary of the Interior shall convey
lands selected by the State under this Act notwithstanding the
limitation contained in section 6(b) of the of the Alaska Statehood Act
(Public Law 85-508; 72 Stat. 339) regarding the occupancy,
appropriation, or reservation of selected lands. Nothing in this
subsection or in subsection (b)(6) or (c) of this section shall be
construed to authorize the Secretary of the Interior to convey to the
State of Alaska a total acreage of selected lands in excess of the
total acreage which could be transferred to the State of Alaska
pursuant to Act of July 7, 1958 (Public Law 85-508) and other
applicable law.
(e) Repeal of Act of August 9, 1955.--The Act of August 9, 1955 (69
Stat. 618), concerning water resources investigations in Alaska, is
repealed.
(f) Treatment of Asset Sale.--The sales of assets under this Act
shall not be considered a disposal of Federal surplus property under
the provisions of section 203 of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 484) or section 13 of
the Surplus Property Act of 1944 (50 U.S.C. App. 1622).
(g) Application of Certain Laws.--(1) The Act of July 31, 1950 (64
Stat. 382) shall cease to apply on the date, as determined by the
Secretary, when all Eklutna assets have been conveyed to the Eklutna
Purchasers.
(2) Section 204 of the Flood Control Act of 1962 (Public Law 87-874;
76 Stat. 1193) shall cease to apply effective on the date, as
determined by the Secretary, when all Snettisham assets have been
conveyed to the State of Alaska.
SEC. 6. TERMINATION OF ALASKA POWER ADMINISTRATION.
(a) Termination of Alaska Power Administration.--Not later than one
year after both of the sales authorized in this Act have occurred, as
measured by the Transaction Dates stipulated in the Purchase
Agreements, the Secretary shall--
(1) complete the business of, and close out, the Alaska Power
Administration;
(2) prepare and submit to Congress a report documenting the
sales; and
(3) return unobligated balances of funds appropriated for the
Alaska Power Administration to the Treasury of the United
States.
(b) DOE Organization Act.--Section 302(a) of the Department of Energy
Organization Act (42 U.S.C. 7152(a)) is amended as follows:
(1) In paragraph (1)--
(A) by striking out subparagraph (C); and
(B) by redesignating subparagraphs (D), (E), and (F)
as subparagraphs (C), (D), and (E) respectively.
(2) In paragraph (2), by striking out ``the Bonneville Power
Administration, and the Alaska Power Administration'' and
inserting in lieu thereof ``and the Bonneville Power
Administration''.
The amendments made by this subsection shall take effect on the date on
which the Secretary submits the report referred to in paragraph (2) of
subsection (a).
Amend the title so as to read:
A bill to authorize the Secretary of Energy to sell the
Snettisham and Eklutna hydroelectric projects administered by
the Alaska Power Administration, and for other purposes.
Purpose of the Bill
The purpose of H.R. 1122 is to authorize and direct the
Secretary of Energy to sell the Alaska Power Administration,
and for other purposes.
Background and Need for Legislation
The Federal Government markets power from its 129
hydroelectric projects throughout the United States through
five Power Marketing Administrations (PMAs). These multi-
purpose projects, constructed and owned by the Department of he
Interior's Bureau of Reclamation and the U.S. Army Corps of
Engineers for flood control, navigation, irrigation and more
recently, for recreational purposes, generate 45 percent of the
Nation's hydroelectric power as a by-product, which is sold by
the PMAs to local pubic, private and cooperative utilities at
cost. Supplemental power from these projects is provided to all
but 16 States.
Unique among the PMAs, the Alaska Power Administration
(APA), owns, operates and maintains two hydroelectric projects:
Eklutna and Snettisham. Not only are these two projects
confined to local Alaska markets, but, unlike the other PMAs,
the APA's single-purpose projects are not the result of a water
resource management plan nor were they intended to remain
indefinitely under Federal control. Instead, they were created
to encourage and promote economic development and to foster the
establishment of essential industries in Alaska by providing
and encouraging the most widespread use of hydroelectric power
at the lowest possible rates. It was for these purposes, rather
than flood control, navigation, irrigation and recreation, that
the 30 megawatt (MW) Eklutna Project was built in 1955 to serve
the Anchorage and Matanuska Valley Areas, and the 78MW
Snettisham project as constructed to serve Juneau in 1975.
To date, the two projects have served their original
purposes well. Findings indicate that not only have they
provided widespread, relatively low-cost, long-term supplies of
renewable energy to the areas served and recovered the Federal
costs as intended in the authorizing legislation, but economic
and industrial development has occurred to the point where
their role in the State as major providers of electric power
has greatly diminished. Together, these projects provide only
about eight percent of the total energy requirements of
Alaska's electric utilities. Individually, the Eklutna project
provides about five percent of the power needs in its market
area and Snettisham provides 80 percent of Juneau's power
requirements.
These findings indicate that the time for the Federal
Government's divestiture of these projects is ripe, since the
goals as originally intended have been met. It is no longer
necessary for the Federal Government to operate a small,
separate power program in Alaska because: (1) the projects fill
a small market niche; (2) economic and industrial development
of the regions served has evolved as planned; (3) other
providers have emerged that can provide and serve the region's
needs; and (4) the State and local electric utilities are
poised to manage the projects in a manner consistent with
Alaska's future energy and development needs.
Although informal discussions of divesture date back many
years, it was not until 1986 that a formal proposal first
appeared. Subsequent to this, a public comment process resulted
in invitations to purchase the projects being extended in the
spring of 1987 to electric utilities served by the APA
projects. In response to solicitation requests, the State of
Alaska proposed to purchase the Snettisham project, while three
utilities, the City of Anchorage, the Mantanuska Electric
Association and the Chugach Electric Association, submitted a
joint proposal to purchase Eklutna. Finding both perspective
purchasers well qualified to own, operate and maintain the
projects, the APA moved forward to draft purchase agreements.
The APA and the proposing parties negotiated the purchase
agreements which set forth the terms, conditions and
responsibilities of each party for the orderly sale and
transfer of the projects. The final agreements, signed in 1989,
have been amended twice to extend the purchase deadline. They
reflect great care and deliberation to incorporate and address,
to the extent possible, all views and concerns of interested
parties to ensure a balance between Federal taxpayers, affected
Federal agencies, State and local utilities, and retail
customers. As a result, the divesture proposal has widespread
support.
H.R. 1122 and separate formal agreements provide for the
full protection of fish and wildlife. The purchasers, the State
of Alaska, the U.S. Department of Commerce, the National Marine
Fisheries Service (NMFS) and the U.S. Department of the
Interior have entered into a formal agreement providing for
post-sale protection, mitigation and enhancement of fish and
wildlife resources affected by Eklutna and Snettisham. H.R.
1122 makes that agreement legally enforceable.
As a result of this formal agreement, the Department of
Energy, the Department of Interior and the Department of
Commerce all agree that the two hyrdoelectric projects warrant
exemption from the Federal Energy Regulatory Commission (FERC)
licensing under the Federal Power Act. The August 7, 1991,
formal purchase agreement states, in part, that:
NMFS, [the United States Fish and Wildlife Service] and
the State agree that following mechanism to develop and
implement measures to protect, mitigate damages to, and
enhance fish and wildlife (including related spawning
grounds and habitat) obviate the need for the Eklutna
Purchasers and [Alaska Energy Authority] to obtain FERC
licenses.
This agreed-upon exemption from the Federal Power Act
requirement to obtain a FERC license will save the purchasers--
and their customers--hundreds of thousands of dollars in annual
fees.
The Federal Government will be relieved of the
responsibility of owning and operating two small, isolated
hydroelectric projects in Alaska and any liabilities for future
maintenance, equipment replacement, and claims. Equally
important, proceeds from the sale will recover nearly 95% of
the present value of the original Federal investment in the APA
projects and prescribed interest (estimated between $73.5 and
$80.3 million, depending on certain conditions when the sale is
approved), and foregone annual revenues of approximately $10
million will be nearly off-set by the avoidance of annual
expenditures averaging $4 million for management and
operations, and $6 million in principal and interest on the
outstanding debt on these two projects.
The APA also has 34 employees in Alaska, and the purchasers
of the two projects have promised to hire as many of these
people as possible. For those not hired by the purchasers, the
Department of Energy (DOE) has pledged that it will hire them,
although the DOE jobs are expected to be in the lower 48
States.
In designing a ``break even'' or ``cost recovery'' sale of
these two projects, the Federal government meets two goals:
first, it optimizes the taxpayers' interests by recovering
nearly all of the original investment; and second, it addresses
the consumers' concerns that hydroelectric power continue to be
provided without a significant increase in rates.
Committee Action
H.R. 1122 was introduced on March 3, 1995, by Chairman
Young of Alaska. The bill was referred to the Committee on
Resources, and within the Committee to the Subcommittee on
Water and Power Resources. The bill was also referred to the
Committee on Commerce. On March 15, 1995, the Subcommittee held
a hearing on H.R. 1122, where the State of Alaska, the
Administration and proposed purchasers testified in support. On
May 11, 1995, the Subcommittee met to mark up H.R. 1122. An
amendment in the nature of a substitute was offered by Chairman
John Doolittle, and adopted by voice vote. The bill was then
ordered favorably reported to the Full Committee in the
presence of a quorum. On May 17, 1995, the Full Committee met
to consider H.R. 1122. An amendment in the nature of a
substitute was offered by Chairman Young, and adopted by voice
vote. The bill was then ordered favorably reported to the House
of Representatives, in the presence of a quorum.
Section-by-Section Analysis
section 1. short title
The short title of the bill is the ``Alaska Power
Administration Sale Act''.
section 2. Definitions
This section defines certain terms for the purposes of the
Act.
section 3. Sale of Snettisham and Eklutna Assets
This section authorizes and directs the Secretary of Energy
to sell and transfer the Snettisham and Eklutna assets. It also
directs other Federal agencies to cooperate with the Secretary
of Energy in implementing the sales. It further authorizes to
be appropriated such sums as may be necessary to prepare the
assets for sale.
section 4. exemption
This section stipulates that after the sale, the Eklutna
and Snettisham projects will continue to be exempt from the
Federal Power Act.
section 5. general provisions
This section stipulates that the United States District
Court for the District of Alaska shall have jurisdiction to
review decisions made under the Memorandum of Agreement entered
into between the State of Alaska, the Eklutna Purchasers, the
Alaska Energy Authority and the Federal fish and wildlife
agencies regarding the protection, mitigation of damages to,
and enhancement of fish and wildlife. The section further
states that any action seeking review of the fish and wildlife
program under the memorandum of Agreement must be brought
within 90 days of the date of the adoption of the program or of
an challenged act implementing the program or be barred.
The section further states that the Secretary of the
Interior shall issue rights-of-ways to the APA for subsequent
reassignment to the purchasers, and to provide future access to
Federal lands in the event the assets of the projects are ever
resold. The section also stipulates that the Secretary of the
Interior can convey certain lands associated with the projects
to the State of Alaska under section 6 of the Alaska Statehood
Act and that the sale is not considered a disposal of assets
under the provisions of section 203 of the Federal Property and
Administrative Services Act of 1949.
As a housekeeping measure, this section also repeals the
Act of August 9, 1955, and clarifies that two other provisions
of Federal law would no longer apply to the sold projects.
section 6. termination of alaska power authority
This section stipulates that following the sale and
transfer of assets, the APA will cease to exist.
Committee Oversight Findings and Recommendations
With respect to the requirements of clause 2(l)(3) of rule
XI of the Rules of the House of Representatives, and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee on Resources' oversight findings and
recommendations are reflected in the body of this report.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that the
enactment of H.R. 1122 will have no significant inflationary
impact on prices and costs in the operation of the national
economy.
Cost of the Legislation
Clause 7(a) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in carrying out
H.R. 1122. However, clause 7(d) of that Rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
Compliance with House Rule XI
1. With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the Rules of the House of Representatives and
section 2308(a) of the Congressional Budget Act of 1974, H.R.
1122 does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in tax
expenditures. H.R. 1122 will provide an increase of $7 million
in revenues to the Federal Government, and a decrease of $3
million per year in revenues following the sale of the Eklutna
project.
2. With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 1122.
3. With respect to the requirement of clause 2(l)(3)(C) of
rule XI of the Rules of the House of Representatives and
section 403 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R.
1122 from the Director of the Congressional Budget Office.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 1, 1995.
Hon. Don Young,
Chiarman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1122, the Alaska
Power Administration Sale Act.
Enacting H.R. 1122 would affect direct spending. Therefore,
pay-as-you-go procedures would apply to the bill.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
June E. O'Neill, Director.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
1. Bill number: H.R. 1122.
2. Bill title: The Alaska Power Administration Sale Act.
3. Bill status: As ordered reported by the House Committee
on Resources on May 17, 1995.
4. Bill purpose: This bill would authorize the sale of the
Alaska Power Administration (APA) in accordance with the terms
of the purchase agreements negotiated in 1989 between the U.S.
Department of Energy and the proposed purchasers of the APA.
The APA consists of two hydroelectric projects, Eklutna and
Snettisham. The sale of the Snettisham project, however, would
be conditional on the enactment of legislation allowing the
Snettisham purchasers to issue tax-exempt debt to finance the
acquisition of that hydroelectric project. The bill also would
terminate the APA upon completion of the sales.
5. Estimated cost to the Federal Government: H.R. 1122
would authorize and direct the Secretary of Energy to sell the
Alaska Power Administration's Eklutna project. Enacting this
bill would not result in the sale of the Snettisham project
because the purchase agreement calls for the enactment of
subsequent legislation allowing tax-exempt financing. Sale of
the Eklutna project would result in the budgetary impacts
summarized in the following table.
------------------------------------------------------------------------
1996 1997 1998 1999 2000
------------------------------------------------------------------------
Asset sale receipts:
Estimated budget
authority............. -7 0 0 0 0
Estimated outlays...... -7 0 0 0 0
Direct spending:
Estimated budget
authority............. 0 3 3 3 3
Estimated outlays...... 0 3 3 3 3
Authorizations of
appropriations:
Estimated authorization
level................. 5 -2 -2 -2 -2
Estimated outlays...... 4 -1 -2 -2 -2
------------------------------------------------------------------------
The costs of this bill fall within budget functions 270 and
950.
The above table does not include potential budgetary
impacts for the sale of APA's Snettisham project because that
sale would be contingent on future legislation allowing the use
of tax-exempt financing. If such additional legislation is
enacted, the sale of the Snettisham project would yield
additional asset sale receipts of about $70 million, and the
government would forgo annual receipts (direct spending) of $8
million, but could save annual operating costs (subject to
appropriations) of about $5 million.
CBO estimates that sale of the Eklutna project in
accordance with the terms and conditions of a negotiated
purchase agreement would result in receipts to the government
of about $7 million near the end of fiscal year 1996. Unlike
the sale of the Snettisham project, selling the Eklutna project
is not contingent upon enactment of any additional legislation.
Under the purchase agreement, the sales price would be
determined by calculating the net present value of the
remaining debt service payments that the Treasury would receive
if the federal government retains ownership of Eklutna, plus an
additional payment of $1 million. The purchase agreement
specifies a discount rate for this calculation of 9 percent.
Consistent with the Balanced Budget and Emergency Deficit
Control Act of 1985 and the 1995 budget resolution (H. Con.
Res. 218), receipts from selling the Eklutna project would be
considered the proceeds of a nonroutine asset sale and would
not be credited as a reduction in the deficit for pay-as-you-go
purposes or Congressional scorekeeping.
After the sale is completed, the government would no longer
receive income from producing electric power at Eklutna's
facilities--approximately $3 million annually. The bill would
authorize appropriations of sums necessary to prepare both APA
projects for sale. Based on information from DOE, we estimate
the agency would need to spend about $5 million in 1996 to
conduct land surveys, obtain appraisals and legal services, and
obtain power line and substation rights-of-way. Finally, when
the sale of Eklutna is completed, the agency's need for
appropriated funds to pay operations and maintenance expenses
of the Eklutna project would be reduced by about $2 million
annually.
6. Comparison with spending under current law: For 1995,
the APA has appropriations of $6.5 million and will have
estimated outlays of about $6 million. The two APA projects
generate about $11 million annually in offsetting receipts from
the sale of power. To prepare for the sale of the APA projects,
H.R. 1122 would authorize additional sums necessary to prepare
for the sale, and CBO estimates $5 million would be needed for
this purpose. Following the sale of Eklutna, the APA's
operating costs would decline by about $2 million annually. In
addition, once the Eklutna project is sold, offsetting receipts
would decline by $3 million per year.
7. Pay-as-you-go considerations: Section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985 sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts through 1998. CBO estimates that enactment
of H.R. 1122 would affect direct spending by reducing
offsetting receipts. Therefore, pay-as-you-go procedures would
apply to the bill.
------------------------------------------------------------------------
1996 1997 1998
------------------------------------------------------------------------
Change in outlays...................... 3 3 3
Change in receipts..................... (\1\) (\1\) (\1\)
------------------------------------------------------------------------
\1\ Not applicable.
While this bill would authorize the sale of both APA
hydroelectric projects, sale of the Snettisham project could
not occur under the existing purchase agreements without
enactment of legislation that would allow Alaska to issue tax-
exempt debt for the purchase of the Snettisham project. Any
subsequent legislation that allowed Alaska to issue tax-exempt
debt for this purpose would have a pay-as-you-go cost of $8
million annually over the 1996-1998 period.
8. Estimated cost to State and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: On March 22, 1995, CBO prepared
a cost estimate for S. 395, a bill to authorize and direct the
Secretary of Energy to sell the Alaska Power Administration,
and for other purposes, as ordered reported by the Senate
Committee on Energy and Natural Resources on March 15, 1995. S.
395 would not allow the sale of either APA hydroelectric
project until legislation is enacted that would allow tax-
exempt financing for the Snettisham purchase. Consequently, CBO
estimated that enacting S. 395 would not affect offsetting
receipts for either APA project, and hence, pay-as-you-go
procedures would not apply to Title I of S. 395. Title II of S.
395 would, however, increase offsetting receipts by allowing
the export of Alaskan North Slope oil. That provision is not
included in H.R. 1122.
11. Estimate prepared by: Kim Cawley.
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italics, existing law in which no change is proposed
is shown in roman):
ACT OF AUGUST 9, 1955
AN ACT To authorize the Secretary of the Interior to investigate and
report to the Congress on projects for the conservation, development,
and utilization of the water resources of Alaska.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, [That, for
the purpose of encouraging and promoting the development of
Alaska, the Secretary of the Interior (hereinafter referred to
as the ``Secretary'') is authorized to make investigations of
projects for the conservation, development, and utilization of
the water resources of Alaska and to report thereon, with
appropriate recommendation, from time to time, to the President
and to the Congress.
[Sec. 2. Prior to the transmission of any such report to the
Congress, the Secretary shall transmit copies thereof for
information and comment to the Governor of Alaska, or to such
representative as may be named by him, and to the heads of
interested Federal departments and agencies. The written views
and recommendations of the aforementioned officials may be
submitted to the Secretary within ninety days from the day of
receipt of said proposed report. The Secretary shall
immediately thereafter transmit to the Congress, with such
comments and recommendations as he deems appropriate, his
report, together with copies of the views and recommendations
received from the aforementioned officials. The letter of
transmittal and its attachments shall be printed as a House or
Senate document.
[Sec. 3. There are hereby authorized to be appropriated not
more than $250,000 in any one fiscal year.]
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SECTION 302 OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT
transfers from the department of the interior
Sec. 302. (a)(1) There are hereby transferred to, and vested
in, the Secretary all functions of the Secretary of the
Interior under section 5 of the Flood Control Act of 1944, and
all other functions of the Secretary of the Interior, and
officers and components of the Department of the Interior, with
respect to--
(A) the Southeastern Power Administration;
(B) the Southwestern Power Administration;
[(C) the Alaska Power Administration;
[(D)] (C) the Bonneville Power Administration
including but not limited to the authority contained in
the Bonneville Project Act of 1937 and the Federal
Columbia River Transmission System Act;
[(E)] (D) the power marketing functions of the Bureau
of Reclamation, including the construction, operation,
and maintenance of transmission lines and attendant
facilities; and
[(F)] (E) the transmission and disposition of the
electric power and energy generated at Falcon Dam and
Amistad Dam, international storage reservoir projects
on the Rio Grande, pursuant to the Act of June 18,
1954, as amended by the Act of December 23, 1963.
(2) The Southeastern Power Administration, the Southwestern
Power Administration, [the Bonneville Power Administration, and
the Alaska Power Administration] and the Bonneville Power
Administration shall be preserved as separate and distinct
organizational entities within the Department. Each such entity
shall be headed by an Administrator appointed by the Secretary.
The functions transferred to the Secretary in paragraphs
(1)(A), (1)(B), (1)(C), and (1)(D) shall be exercised by the
Secretary, acting by and through such Administrators. Each such
Administrator shall maintain his principal office at a place
located in the region served by his respective Federal power
marketing entity.
* * * * * * *
DISSENTING VIEWS OF HON. GEORGE MILLER
My objections do not stem from doubts about whether the
Alaska Power Administration (APA) should be sold; instead, my
concern is how the sale is authorized by this legislation to
proceed.
Simply put, this a lousy deal for the Federal taxpayers and
a sweetheart deal for the private utilities in Anchorage and
the State of Alaska. They will be allowed to purchase the APA
assets at bargain prices which do not reflect fair market
value.
Under the terms of the agreement negotiated with the
Department of Energy (DOE), the purchasers will pay about $75
million to the Treasury. However, this price is $9 million
below the net present value of $84 million which would be
received if the APA were to be retained in Federal ownership.
Morever, the purchase price fails to adequately recover the
value of the Federal investment in the APA assets. A 1994 audit
by DOE calculated that 206 million Federal taxpayer dollars
have been invested in the APA. A 1986 study by Coopers and
Lybrand valued the APA assets at $319.5 million when
considering replacement cost new less depreciation.
Adding insult to taxpayer injury, the bill has an open-
ended authorization for additional Federal dollars to purchase
private lands necessary to effectuate the transfer of the APA
facilities. It is estimated to cost $500,000 just to survey the
lands to identify what property needs to be purchased.
In the 103d Congress, the House passed legislation which
directed DOE to assess alternative options for maximizing the
return to the Treasury from the sale of the APA. As the
committee report stated, ``[t]he clear intent of this subtitle
is for DOE to proceed cautiously on the APA divestiture * * *
the Committee expects that GAO's concerns about the DOE's
limitation on bidders and failure to receive fair market value
in the negotiated agreements (``Views on the Sale of the Alaska
Power Administration Hydropower Assets'' (GAO/RCED-90-93) will
be carefully evaluated.'' See: H. Rept. 103-366, Part 5.
Yet DOE's response to my questions for the hearing record
on H.R. 1122 makes it clear that they did absolutely no
additional review of the APA purchase agreement in response to
the 1993 House directive to consider alternatives.
The APA divestiture resembles a going-out-of-business sale
in more ways than one. For only $75 million, the APA purchasers
are receiving Federal facilities worth $200 to $300 million,
yet the purchase price is below even the net present value of
the income to be derived if the assets were retained by the
DOE. It's as if a landlord gave a tenant the keys to an
apartment building for free, failed to seek bids to test the
fair market value and accepted a purchase price which is even
less than the income which would be received if the landlord
kept ownership of the building. Anyone in the private sector
would soon be bankrupt if they did business that way.
This legislation sets a very poor precedent for the
Administration's proposed sale of power marketing
administrations in other areas of the nation.
George Miller.