SEI`s Dawson says SEPA could bring taxpayers millions

Southern Electric International Vice President Bob Dawson today told members of the Senate Committee on Energy and Natural Resources that the Clinton administration undervalues the Southeastern Power Administration, and the government could earn taxpayers millions of dollars by selling it in an open, competitive bid.

Dawson made his remarks during testimony on the Clinton administration’s proposed privatization of power marketing administrations, called “PMAs,” which are government-run hydroelectric facilities. Dawson, who oversees Southern Electric operations in Latin America and the Caribbean, has observed similar privatization efforts in other countries.

Dawson said SEPA, if sold in an open, competitive bid, should bring the government far more than the administration currently values the PMA. In addition, federal, state, and local governments would receive millions more in tax revenue, and investors in the stocks and bonds supporting such a purchase would pay additional millions of dollars in taxes.

“I am responsible for four major projects, three of which are the result of power privatization efforts in other countries,” Dawson said. “I think it is safe to say that these privatization efforts have been highly successful and clearly demonstrate that privatization of generation, transmission, and distribution facilities can be done in a fashion that brings a significant return to the government while protecting consumer interests.”

Southern Electric, a unit of The Southern Company, develops, builds, owns, and operates power production facilities and provides a broad range of technical services to industrial companies and utilities in the U.S. and international markets.

The Southern Company (NYSE: SO) is also the parent firm of five electric utilities: Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric. Other subsidiaries include Southern Nuclear and Southern Company Services. Together, these companies make up one of the largest investor-owned electric utility groups in the United States.

Dawson spoke on behalf of the Alliance for Power Privatization, a coalition of independent power producers, investment banks, utilities, and trade associations seeking the privatization of federally owned electricity assets in an open, competitive bidding process.

Dawson also addressed the fears of current customers of the Southeastern Power Administration, who have been led to believe they will see large increases in electricity rates if SEPA is privatized. He noted that 70 percent of SEPA customers receive no more than 5 percent of their power from SEPA.

“Our analysis shows that 98 percent of the customers will see rate increases of less than one-half of 1 percent per year until the SEPA power reaches market,” Dawson said. “Fifty percent of the customers would see rate increases of three-tenths of 1 percent. For that tiny percentage of customers who receive a larger percentage of their power from SEPA, reasonable rate caps at the meter could be instituted, such as one-half of the percentage increase in the Consumer Price Index.”

Dawson urged Congress to follow three principles in PMA privatization:

· First, the generation and transmission facilities should be sold in an open, competitive bidding process. Such a process would maximize return for taxpayers, who all have subsidized a system that provides only 6 percent of the nation’s electricity.

· Second, the PMAs should be sold with appropriate protections for the customers so rate shock can be avoided.

· Third, the Federal Energy Regulatory Commission should issue licenses to purchasers of dams at the time of purchase, to avoid unresolved operating conditions after the sale.

“It would be easy for Congress to weigh the mail that public power has generated through scare tactics from its ratepayers and conclude that there is no public will to end this particular government subsidy,” Dawson said. “We ask you, however, to recognize that the vast majority of Americans do not realize that they are paying to send subsidized PMA power to their neighbors.”