Federal Electric Power:

Views on the Sale of Alaska Power Administration Hydropower Assets

RCED-90-93: Published: Feb 22, 1990. Publicly Released: Mar 26, 1990.

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Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) proposed sale of the Alaska Power Administration's (APA) assets, focusing on whether the APA divestiture method would: (1) allow the government to fully recover APA costs; and (2) reveal the full value of APA assets to potential purchasers.

GAO found that: (1) APA sales agreements benefited APA ratepayers at the expense of taxpayers; (2) the bids that APA received probably did not reflect the full market value of its assets, since APA limited the sale to current purchasers of APA power, and to certain state and local concerns; (3) the APA present-value pricing method limited taxpayers' cost recovery by not assuming the assets' residual value following federal loan repayment; (4) the pricing method did not consider that the Department of the Treasury would not recover all interest costs of its loan to APA, since federal power interest rates were usually below the Treasury's borrowing rates; and (5) unresolved possible costs included obtaining rights-of-way across private and Native American lands, and $5.8 million for the completion of a construction project.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: DOE and APA actions are complete. A divestiture bill (H.R. 5516) was introduced to Congress in June 1992, but no action was taken on it. Further actions to cause divestiture of APA resources are not expected.

    Matter: If Congress wishes to pursue the divestiture of APA assets and believes the sale of APA assets should be accomplished through a balancing of ratepayers' and taxpayers' interests, it should reject the administration's proposal and direct DOE to identify sales proposals that better balance ratepayers' and taxpayers' interests.

 

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