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Preface Footnotes 1. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992). 2. Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999).
1. Primary energy is all energy consumed by end users, excluding electricity but including the energy consumed by electricity generators. 2. Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999). 3. Transformation refers to the production of electricity by transforming other forms of energy into electrical energy. End use refers to any application by which energy is consumed in the residential, commercial, industrial, and transportation sectors of the economy. 4. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992). 5. Summary tables presented in the Executive Summary and Chapter 5 of this report include only those programs that are specified in the 1999 request. The estimates have been adjusted as noted in order to facilitate comparisons with the 1992 EIA report. 6. At 18.4 cents per gallon, the motor gasoline portion alone would approach $21 billion, far offsetting all subsidies identified here. The 1992 EIA report applied only the 4.3 cents diverted to the General Fund, yielding an offset of $3.1 billion (1992 nominal dollars). Small portions of the excise go to the Leaking Underground Storage Tank Trust Fund, the Aquatic Resources Trust Fund, and the General Fund. 7. See C. Shoup, Public Finance (Chicago, IL: Aldine Publishing Company, 1969), p. 145. 8. For 1999, the Budget of the United States reports a loss of $87 billion associated with the exclusion of pension contributions and earnings; a loss of $76 billion associated with the exclusion of employer contributions for medical insurance premiums and medical care; and a loss of $53 billion resulting from the deductibility of mortgage interest on owner-occupied housing. See Office of Management and Budget, Budget of the United States Government, Fiscal Year 1999 (Washington, DC, 1998), Table 33-4. 9. "A subsidy can be almost anything a government does, if . . . a financial contribution is made . . . and a benefit is received." See web site www.ita.doc.gov/esel/e-splash.htm. 10. Shoup characterizes tax expenditure generally as an imputed subsidy but argues that the firm will respond similarly whether the subsidy takes the form of a direct cash transfer or a reduction in taxable basis. Both should be recorded as "explicit subsidies," as firms, in effect, exercise discretion over the amount of the transfer. C. Shoup, Public Finance (Chicago, IL: Aldine Publishing Company, 1969), pp. 145-151. 11. An important insurance provision, the Price-Anderson Act, was detailed in Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, p. 42. 12. C. Shoup, Public Finance (Chicago, IL: Aldine Publishing Company, 1969), p. 149. 13. Flood Control Act of December 2, 1944 (58 Stat. 887, 890; 16 U.S.C.A. 825s), Section 5. 14. Surplus power is made available to all consumers; investor-owned utilities also purchase it. 15. D.N. Hyman, Public Finance: A Contemporary Application of Theory to Policy (New York, NY: Harcourt Brace College Publishers, 1999), pp. 250-255. 16. Typically 100 percent debt financed, they bear no equity costs. 17. Estimated at $32.5 billion in 1999. Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), Table 5-1. 18. U.S. Congress, Joint Committee on Taxation, Federal Tax Issues Relating to Restructuring of the Electric Power Industry, JCX-72-99 (Washington, DC, October 15, 1999), pp. 26-27. 19. A wide variety of public utility property may be eligible for favorable depreciation allowances, including property used primarily in furnishing electrical energy, water, sewage disposal, gas or steam distribution, telephone services, other communications services if furnished or sold by the Communications Satellite Corporation, or transportation of gas or steam by pipeline under certain circumstances. See U.S. Congress, Joint Committee on Taxation, Federal Tax Issues Relating to Restructuring of the Electric Power Industry, JCX-72-99 (Washington, DC, October 1999), p. 31. 20. See Chapter 4, specifically the discussion of historical costs absent any tax obligation. 21. Investor-owned utilities also realize some reductions in their cost of capital by this means. The tax expenditure for certain energy facilities engaged in "local furnishings" is realized to some extent by investor-owned utilities. Along with other non-energy industries, investor-owned utilities benefitted from tax-exempt bonds issued in the 1980s for "pollution control devices"; the associated tax expenditure was valued at $440 million in 1999. See Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), Table 5-1. 22. The Treasury Department estimates that if taxable bonds were used by municipal utilities, the U.S. Treasury would realize an additional $1.69 billion in 1998. Correspondence, Office of Tax Analysis, U.S. Department of Treasury, January 27, 2000. 23. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992), Table 2, p. 12. 24. For example, the Rural Utilities Service appropriation for fiscal year 1998 was $67 million, some portion of which is applied to electricity programs (the agency's responsibilities also include water and telecommunications. See Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), p. 438. The Service either approved or guaranteed loans to distribution and power supply cooperatives in the nominal amount of $1.245 billion in 1998. See U.S. Department of Agriculture, Rural Utilities Service, 1998 Statistical Report, Rural Electric Borrowers, IP 201-1 (Washington, DC, August 1999), Table 1. 25. Two important contributions are J.E. Kwoka, Power Structure: Ownership, Integration, and Competition in the U.S. Electricity Industry (Boston, MA: Kluwer Academic Publishers, 1996), and L.L. Peters, "Non-Profit and For-Profit Electric Utilities in the United States: Pricing and Efficiency," Annals of Public and Cooperative Economics (1993), pp. 575-604. 26. This is the most recent year for which data are available. Energy Information Administration, State Energy Price and Expenditure Report 1995, DOE/EIA-0376(95) (Washington, DC, August 1998). 27. Federal rules also require outreach activities, coordination with DOE's Weatherization Assistance Program, and annual audits. Grantees decide the mix and dollar range of benefits, choose how benefits are provided, and decide what agencies will administer program components. In addition to funds used for heating and/or cooling assistance, a reasonable amount of the funds must be set aside by grantees for energy crisis intervention. Up to 15 percent of grantees' allotments (up to 25 percent with a waiver) may be used for low-cost residential weatherization or other energy-related home repair. 28. Information on LIHEAP is drawn from the following sources: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2000 (Washington, DC, 1999); CRS Issue Brief for Congress, 94-211: The Low-Income Home Energy Assistance Program: A Fact Sheet (updated October 23, 1998); Fax from Leon Litow, LIHEAP Home Energy Notebook, Fiscal Year 1997 (draft report, 1999); and material accessed from web sites www.acf.dhhs.gov/programs/liheap and www.ncat.org/liheap. 29. Home Energy Data, web site www.acf.dhhs.gov/programs/liheap. 30. Home Energy Data, web site www.acf.dhhs.gov/programs/liheap. 31. Information on the DOE Weatherization Assistance Program and the State Energy Program is drawn from Office of Management and Budget, Budget of the United States Government, Fiscal Year 2000 (Washington, DC, 1999), and U.S. Department of Energy, Fiscal Year 2000 Congressional Budget Request. 32. Some of the factors related to the two approaches are discussed in M. Feldstein, "A Contribution to the Theory of Tax Expenditures: The Case of Charitable Giving," in H.J. Aaron and M.J. Boskin, The Economics of Taxation (Washington, DC: The Brookings Institution, 1980), pp. 99-122. 33. Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), pp. 105-126. 34. These bonds are distinct from the tax-exempt bonds issued by State and municipal electric utilities to fund ordinary capital investments. 35. Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), p. 116. 36. Office of Management and Budget, Analytical Perspectives, 2000 (Washington, DC, 1999), p. 105. 37. Office of Management and Budget, Budget of the United States Government FY 2000: Historical Tables (Washington, DC, 1999), p. 159. 38. The general science funding is not included in the tables in this chapter or in the Executive Summary. This chapter focuses on applied energy research and development. 39. In addition to directly funded R&D, the Natural Gas Policy Act of 1978 mandated the creation of a private sector natural gas research and development agency, the Gas Research Institute (GRI). Because the funding for GRI is collected from the industry and not provided by the Government, it is not a subsidy. The Electric Power Research Institute (EPRI) performs similar research for the electric power industry. The funding for EPRI comes from organizations that elect to participate, not from the Government, and thus is not a subsidy. 40. P. Stoneman, The Economic Analysis of Technology Policy (London, UK: Oxford University Press, 1987), p. 203. 41. Conservation programs are directed primarily at consumers of energy. End-use programs are oriented to the development and introduction of technologies for use in specific sectors. 42. Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999). 43. FEMP was initially included in end-use programs for budget purposes. Separate accounting for FEMP began in 1997. Details are provided in Appendix C of this report. 44. Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999), p. 33. 45. See Chapter 1 for additional discussion of subsidies. 46. The National Aeronautic and Space Administration allocated $768.9 million in fiscal year 1999 to Aeronautical Research & Technology and $5 million for "Global Observations to Benefit the Environment." See National Aeronautics and Space Administration Budget Summary. The Federal Aviation Administration requested $55 million for systems security research and $35 million for research in aircraft structures and materials in fiscal year 1999. The Federal Highway Administration requested $496 million for R&D in 1999, including $250 million for intelligent transportation systems. The Coast Guard received $12 million in fiscal year 1999 for technologies, materials, and human factors R&D. There are additional R&D programs requested by the National Highway Traffic Safety Administration ($53 million) for safety systems and data collection in fiscal year 1999. The Federal Transit Administration requested $44 million in fiscal year 1999 for methods and technologies for accessibility, hybrid electric buses, fuel cells, and battery-powered propulsion systems. The Federal Railroad Administration spending request for fiscal year 1999 included $21 million for safety-related R&D. An additional $4 million was requested for R&D by the Research and Special Programs Administration. See U.S. Department of Transportation, Office of the Secretary, Budget in Brief--FY 1999 and FY 2000 Budget in Brief. 47. See, for example, Congressional Budget Office, Should the Federal Government Sell Electricity? (Washington, DC, November 1997). Appendix A provides brief summaries of this study and others produced by the General Accounting Office and the Office of Management and Budget. 48. Energy Information Administration, Electric Power Annual 1998, Volume 2, DOE/EIA-0348(98/2) (Washington, DC, December 1999), p. 1. 49. Energy Information Administration, Financial Statistics of Major U.S. Publicly Owned Electric Utilities 1998, DOE/EIA-0437(98) (Washington, DC, December 1999), p. 3. 50. Federal utilities provide consolidated financial and operational data for their own operations as well as the operations of related Bureau of Reclamation and Army Corps of Engineers power facilities. 51. Energy Information Administration, Financial Statistics of Major U.S. Publicly Owned Electric Utilities 1998, DOE/EIA-0437(98) (Washington, DC, December 1999), p. 3. 52. Energy Information Administration, Financial Statistics of Major U.S. Publicly Owned Electric Utilities 1998, DOE/EIA-0437(98) (Washington, DC, December 1999), p. 3. 53. Energy Information Administration, Electric Sales and Revenue 1998, DOE/EIA-0540(98) (Washington, DC, October 1999), pp. 4 and 9. 54. U.S. General Accounting Office, Federal Electricity Activities: The Federal Government's Net Cost and Potential for Future Losses, GAO-AIMD-97-110A (Washington, DC, September 1997), Vol. 2, p. 18. 55. U.S. Department of Agriculture, Rural Utilities Service, 1998 Statistical Report, Rural Electric Borrowers, IP 201-1 (Washington, DC, August 1999), Preface and pp. 9-13. 56. U.S. Department of Agriculture, Rural Utilities Service, 1998 Statistical Report, Rural Electric Borrowers, IP 201-1 (Washington, DC, August 1999), pp. 9 and 13. 57. Although there is some overlap between the ownership and the beneficiaries of Federal utility power, many taxpayers do not benefit from low-cost Federal utility power. For instance, most of the Midwest and all of New England derive no benefit from low-price Federal utility power sales, even though as citizens of the United States they are in part owners of the power. It should be noted, however, that not all Federal power is low cost, as explained later in this chapter. 58. Compiled from data provided by the Federal Energy Regulatory Commission, FERC Form 1. 59. The comparison prices are the average prices of utilities operating in nearby States. For TVA, a comparison was made against prices of utilities operating in all the States in the SERC region. For BPA, the comparison States were Idaho, Oregon, and Washington. For the Southeastern Power Administration, the comparison States were Alabama, Florida, Georgia, Kentucky, Missouri, North Carolina, South Carolina, Tennessee, and Virginia. For the Southwestern Power Administration, the comparison States were Arkansas, Kansas, Louisiana, Missouri, Oklahoma, and Texas. For the Western Area Power Administration, the comparison States were Arizona, California, Colorado, Iowa, Minnesota, North Dakota, Nebraska, New Mexico, South Dakota, Utah, and Wyoming. 60. Energy Information Administration, Financial Statistics of Major U.S. Publicly Owned Electric Utilities 1998, DOE/EIA-0437(98) (Washington, DC, December 1999), Table 36. 61. "S&P Rates Tennessee Valley Authority $1 Billion Global Power Bonds AAA," Business Wire (November 2, 1998). 62. The Treasury can decide, and recently has decided, to retire high-priced debt early; however, it must pay the market value of the debt and not its face value. 63. U.S. General Accounting Office, Power Marketing Administrations: Cost Recovery, Financing, and Comparison to Nonfederal Utilities, GAO/AIMD-96-145 (Washington, DC, September 1996), p. 7. 64. A basis point is one-hundredth of a percentage point. 65. Energy Information Administration, Financial Statistics of Major U.S. Publicly Owned Electric Utilities 1998, DOE/EIA-0437(98) (Washington, DC, December 1999), p. 457. 66. D. Shapiro, "Public Power Policy: The Controversial Origins," in Generating Failure (New York, NY: University Press of America, 1989). 67. U.S. General Accounting Office, Power Marketing Administrations: Cost Recovery, Financing, and Comparison to Nonfederal Utilities, GAO/AIMD-96-145 (Washington, DC, September 1996). 68. Tennessee Valley Authority, Annual Report 1999 (2000), p. 42. 69. Western Area Power Administration, Annual Report 1998 (1999), Appendix, p. 23. Excludes project use and interdepartmental and interproject exchanges. 70. Bonneville Power Administration, web site www.bpa.gov/corporate/kc/who/watsbpax.shtml. 71. U.S. Department of Agriculture, Rural Utilities Service, 1998 Statistical Report, Rural Electric Borrowers, IP 201-1 (Washington, DC, August 1999), Table 3. 72. U.S. House of Representatives, Subcommittee on Water Resources and Environment, "TVA: Electricity Restructuring and General Oversight," web site www.house.gov/transportation/water/09-22-99/09-22-99memo.html. 73. Tennessee Valley Authority, Annual Report 1998 (1999), p. 3. 74. Tennessee Valley Authority, Annual Report 1998 (1999), p. 42. 75. According to Moody's: "Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues." Source: Moody's Investors Service Ratings and Ratings Action, web site www.moodys.com/ratings/ratdefs.htm. 76. "S&P Rates Tennessee Valley Authority $1 Billion Global Power Bonds AAA," Business Wire (November 2, 1998). 77. U.S. General Accounting Office, Tennessee Valley Authority: Financial Problems Raise Questions About Long-Term Viability, GAO/AIMD/RCED-95-134 (Washington, DC, August 1995), p. 57. 78. As long as the power is to be consumed inside TVA's territory. 79. Federal regulatory support lies outside the framework of this report's analysis. 80. U.S. General Accounting Office, Tennessee Valley Authority: Financial Problems Raise Questions About Long-Term Viability, GAO/AIMD/RCED-95-134 (Washington, DC, August 1995), pp. 17 and 18. 81. Compiled from data provided by the Federal Energy Regulatory Commission, FERC Form 1. 82. Tennessee Valley Authority, Annual Report 1998 (1999), p. 26. 83. Tennessee Valley Authority, Annual Report 1998 (1999), p. 1. 84. Energy Information Administration, Electric Power Annual 1998, Volume 2, DOE/EIA-0348(98/2) (Washington, DC, December 1999), p. 26. 85. According to Moody's: "Although TVA's debt is not an obligation of the U.S. government, the company's status as an agency and the fact that the government is TVA's only shareholder, indicates strong `implied support' [that] would afford assistance in times of difficulty." 86. Moody's Investor Service, Utility Manual 1998, p. 4665. 87. Tennessee Valley Authority, Annual Report 1998 (1999), p. 33. 88. Tennessee Valley Authority, Annual Report 1998 (1999), p. 27. TVA's Federal Finance Bank loans were not rated. 89. Tennessee Valley Authority, Annual Report 1999 (2000), p. 36. 90. For this period, the average spread between the Aaa rate and the Aa rate equaled 33 basis points. Source: Standard and Poor's DRI database. This spreadsheet can be made available from EIA upon request. 91. The operating return on assets measures were chosen, rather than the more familiar net income or return on equity, in order to abstract from the differing roles of debt for public-sector versus private-sector utilities. Public-sector utilities sometimes have debt that equals or exceeds their assets, and they set prices so that there is little or no net income remaining after interest payments. 92. Compiled from data provided by the Federal Energy Regulatory Commission, FERC Form 1. Note: Regulatory assets are mainly deferred expenses that appear as assets on the balance sheet in return for the regulatory promise that the utilities will be allowed to recover them in the future. See Energy Information Administration, The Changing Structure of the Electric Power Industry: An Update, DOE/EIA-0562(96) (Washington, DC, December 1996), p. 78. 93. Tennessee Valley Authority, Annual Report 1998 (1999), p. 24. 94. Assuming that no loss of sales resulted from the increase in prices. 95. Bonneville Power Administration, web site www.bpa.gov/corporate/kc/who/watsbpax.shtml. 96. Bonneville Power Administration, web site www.bpa.gov/corporate/kc/who/watsbpax.shtml. 97. BPA's 1998 power production was obtained via a phone conversation with BPA's Accounting Department. 98. Bonneville Power Administration, Annual Report 1998 (1999), p. 52. 99. Bonneville Power Administration, Annual Report 1991 (1992), pp. 26-32. BPA did not guarantee the debt issued to pay for two plants (WNP-4 and WNP-5), and bondholders lost their investments in those plants. 100. Bonneville Power Administration, Annual Report 1998 (1999), p. 38. 101. BPA borrows at a rate on its appropriated debt that is slightly above the Treasury rate. BPA's Annual Report 1998, p. 37, lists its outstanding long-term debt and respective interest rates. A spread was calculated between those rates and the corresponding Treasury rates to provide an estimate of BPA's Treasury premium, which was estimated at 78 basis points in 1998. 102. U.S. General Accounting Office, Federal Electricity Activities, The Federal Government's Net Cost and Potential for Future Losses, GAO/AIMD-97-110 (Washington, DC, September 1997), p. 108. 103. Bonneville Power Administration, Annual Report 1998 (1999), p. 36. 104. U.S. General Accounting Office, Federal Electricity Activities, The Federal Government's Net Cost and Potential for Future Losses, GAO/AIMD-97-110 (Washington, DC, September 1997), p. 109. 105. Bonneville Power Administration, Annual Report 1998 (1999), p. 29. 106. Bonneville Power Administration, Annual Report 1998 (1999), p. 22. 107. Bonneville Power Administration, Annual Report 1998 (1999), p. 22. 108. Bonneville Power Administration, Annual Report 1998 (1999), p. 29. 109. A basis point is one-hundredth of a percentage point. Source: Compiled from data appearing in Federal Reserve, Form H15, and Standard and Poor's DRI database. 110. Bonneville Power Administration, Annual Report 1998 (1999), p. 22. 111. Bonneville Power Administration, Annual Report 1998 (1999), p. 29. Debt equals Federal appropriations, long-term debt, and non-Federal projects debt. 112. Energy Information Administration, Electric Power Annual 1998, Volume 2, DOE/EIA-0348(98/2) (Washington, DC, December 1999), p. 27. 113. The operating return on assets measures were chosen, rather than the more familiar net income or return on equity, in order to abstract from the differing role of debt for public-sector versus private-sector utilities. Public-sector utilities usually have debt that equals or exceeds their assets, and they set prices so that there is little or no net income remaining after interest payments. 114. Compiled from data appearing in Federal Energy Regulatory Commission, FERC Form 1. 115. Western Area Power Administration, Annual Report 1998 (1999), p. 9. 116. Southeastern Power Administration, Annual Report 1998 (1999), p. 6. 117. Southeastern Power Administration, Annual Report 1998 (1999), p. 18. 118. Southeastern Power Administration, Annual Report 1998 (1999), p. 17. 119. Southeastern Power Administration, Annual Report 1998 (1999), p. 1. 120. Southwestern Power Administration, Annual Report 1998 (1999), pp. 24 and 25. Excludes losses, interchange, and contract exchange. 121. Western Area Power Administration, Annual Report 1998 (1999), p. 23. Excludes project use and interdepartmental and interproject exchanges. 122. The Reclamation Project Act of 1939, the Flood Control Act of 1944, and the Department of Energy Reorganization Act of 1977. 123. Southwestern Power Administration, Annual Report 1998 (1999), p. 6. 124. Rural Utilities Service, web site www.rurdev.usda.gov/rd/index.html. 125. Before the amendment of the Rural Electrification Act in 1973, hardship loans were made at an interest rate of 2 percent and had maturities up to 35 years. 126. For more information on the specifics of RUS electricity program loan conditions see Code of Federal Regulations, 7 CFR 1714. 127. This information was requested from the RUS but was not provided in time to be used in this report. 128. The RUS provided EIA with the total quantity of debt issued each year for the past 30 years. The weighted average rates were derived by calculating the average rate on the remaining balance of 30-year Treasury bonds and 30-year utility bonds issued at the same time as the RUS electricity loans. 129. This 1998 balance value was calculated by assuming that the loans advanced by RUS each year over the past 30 years were issued at the 30-year Treasury rate. The data on loans advanced each year come from the statistical yearbook for rural electric borrowers published annually by the U.S. Department of Agriculture. 130. U.S. General Accounting Office, Rural Development: Financial Condition of the Rural Utilities Service's Loan Portfolio, GAO/RCED-97-82 (Washington, DC, April 1997). 131. Wall Street Journal (October 3, 1996), p. A3. 132. Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999). 133. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992). 134. In preparing this update, values for a few previously reported fiscal year 1992 items were amended: LIHEAP received an additional appropriation of $357 million, and R&D final outlays for fiscal year 1992 were used. 135. There are several exemptions from motor fuel excise taxes dedicated to the Highway Trust Fund, including fuel used by State and local governments or nonprofit educational institutions. Fuel used by certain buses, including school buses, may be either exempt or taxed at reduced rates. There are minor exemptions from aviation fuel taxes. Currently, no estimate exists of the value of these primary energy exemptions. Source: Correspondence, Office of Tax Analysis, U.S. Department of the Treasury, January 27, 2000. 136. Refers to the electricity-related component of LIHEAP funding and the tax expenditure for "certain energy facilities." Three types of projects are eligible for this tax exemption: facilities for the local furnishing of gas and electricity; district heating and cooling facilities; and certain environmental facilities located at hydroelectric dam sites. Thus, the characterization of this tax expenditure as "electricity" is somewhat arbitrary. 137. An additional $73 million subsidy to electricity--$33 million for Advanced Turbine systems and $40 million for New Technology Credit--was treated as primary energy in EIA's September 1999 report. See also Table 25. 138. "End use" includes all itemized R&D programs in this report and one tax expenditure for clean fuel vehicles. 139. "Conservation" refers to three program elements, two sponsored by DOE's Office of Energy Efficiency, the Weatherization Assistance Program and the State Energy Program, and a tax expenditure for utility-sponsored conservation. 140. "Renewables" refers only to that portion of LIHEAP electricity consumption attributable to renewable generation sources, in this case, wood. 141. See Chapter 4 for details concerning these estimates. 142. There are some inherent difficulties in making these comparisons between Federal programs and private suppliers of electricity. Consequently, the values developed by these methods are presented only as a rough indication of magnitude and are withheld from summary tables. 143. Energy Information Administration, State Energy Price and Expenditure Report 1995, DOE/EIA-0376(95) (Washington, DC, August 1998), Table 5. 144. The summary estimates shown here are for subsidies in a single year, fiscal year 1999. Comparisons with EIA's 1992 report rely on data for two years, fiscal year 1992 and fiscal year 1999. Consequently, comparisons across energy sources and uses may not adequately describe cumulative or historical effects, for which the allocations could differ. 145. In 1992, EIA reported the following summary statistics (nominal 1992 billions): $4.88 billion for total subsidy, which included $1.409 billion for electricity budget outlays, against which an offset of $3.132 billion was taken for excise taxes (primarily, motor gasoline taxes directed to the Highway Trust Fund). No offset is taken in this report. Federal excises on petroleum products in 1998 may be as much as $30 billion (nominal dollars), of which motor gasoline accounts for more than two-thirds. With a short-run elasticity of around -0.05, the effect of the excise tax is negligible in reducing overall subsidy. In this report, electricity supports are analyzed separately, and no offset is made for excise taxes. Also, three 1992 values were adjusted--an additional $357 million was appropriated to LIHEAP in fiscal year 1992 and regulatory elements of two R&D items (Buildings Research and Standards and FEMP) were excluded from program costs, about $7 million in total. After applying these adjustments, the comparable total subsidy would be $6.431 billion in nominal 1992 dollars or $7.335 billion in 1999 dollars, as opposed to the $6.198 billion reported in 1999. See Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992), Table 1, and Table 25 in this report. 146. Estimates for 1990 were recalculated in this report in order to facilitate valid comparison. See Chapter 4. 147. The inclusion or exclusion of deferred assets and tax liability affected the Federal utilities differently as they were compared to privately owned utilities. See Chapter 4 for details. 148. Most dollar values in the electricity analysis were converted to 1999 dollars using the Gross Domestic Product (GDP) deflator. The GDP deflator was applied to companies' prior year loan and interest data. Although the values on the companies' balance sheets and income statements do not change from year to year, the purpose of the calculation was to estimate Federal Government support in a consistent framework. The framework chosen was the value of Federal Government support in terms of its 1999 purchasing power. The 1999 GDP deflator was 22 percent higher than the 1990 value and 1 percent higher than the 1998 value. 149. Alaska Power Administration, included in the 1992 report, has since been sold and is therefore not included in these estimates. See Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992), Table 17, p. 60. 150. The value of Federal interest rate support depends on the benchmark bond series chosen for comparison. See Chapter 4. 151. See Chapter 4 for additional details. 152. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992), Table 14, p. 57. Because a new methodology is introduced in this report, RUS is not included in Table 26. Comparisons between 1990 and 1998 should be treated cautiously. 153. Neither EIA's September 1999 report nor EIA's report of November 1992 evaluated the full costs of trust fund programs because of the difficulty in determining the actuarial sufficiency of the excise taxes. 154. Energy Information Administration, Federal Energy Subsidies: Direct and Indirect Interventions in Energy Markets, SR/EMEU/92-02 (Washington, DC, November 1992). 155. The source for the comparison was Form EIA-861, "Annual Electric Utility Report." 156. Phased out by the Tax Reform Act of 1986. 157. Two projects have not operated as designed, the Russell project and the Truman project. Two other projects, Washoe and Mead-Phoenix, are in financial danger, and a transmission line was abandoned. According to GAO, the Pick-Sloan irrigation project will probably not be completed, preventing the recovery of those costs in the absence of Congressional action. Certain environmental mitigation costs incurred at Shasta dam and Glen Canyon dam have also been excluded from rate recovery. 158. "Cumulatively," apparently, means "over the past 30 years." 159. GAO suggested that the cumulative financing subsidy could be "in the billions." 160. Munson attributed that estimate to EIA (1992), summing the $1.2 billion from the interest rate subsidy and another $2 billion from the market price subsidy, which was illustrated but not included in the total. In the 1992 report, EIA quantified the subsidy at $1.4 billion, based on Federal budget information and net outlays. 161. Congressional authority for the refinancing was included in the 1999 Treasury and General Government Appropriations Act. 162. U.S. Department of Health and Human Services, web site www.acf.dhhs.gov/programs/opa/facts/heapfs.htm. 163. B.M. Bird, S.M. Platau, and A. Warren, "Excluding Utility Rebates from Gross Income," The CPA Journal (March 1993), p. 56. 164. A vehicle for any model year in a class or category of vehicles that has been certified to meet the clean-fuel standards of CAAA90 applicable for that model year is considered a clean-fuel vehicle. 165. A hybrid vehicle has an on-board electrical generating system (excluding fuel cell technology). A series hybrid system involves an internal combustion engine generating electricity to directly charge the batteries that propel the vehicle; a parallel hybrid system involves both the batteries and the internal combustion engine propelling the vehicle and recharging the batteries. 166. Energy Information Administration, Annual Energy Outlook 2000, DOE/EIA-0383(2000) (Washington, DC, December 1999). 167. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Building Technology, State and Community Sector. 168. Energy Information Administration, Annual Energy Outlook 2000, DOE/EIA-0383(2000) (Washington, DC, December 1999), Tables A2 and A19. 169. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Building Technology, State and Community Sector. 170. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Building Technology, State and Community Sector. 171. U.S. Department of Energy, Energy Efficiency and Renewable Energy Network, web site www.eren.doe.gov/femp/aboutfemp/ fempoverview.html. 172. U.S. Department of Energy, Energy Efficiency and Renewable Energy Network, web site www.eren.doe.gov/femp/aboutfemp/ fempoverview.html. 173. The ATS program is discussed under the classification of an electric utility-oriented research program on page 33 and page 95 in Federal Financial Interventions and Subsidies in Energy Market 1999: Primary Energy, SR/OIAF/99-03 (Washington, DC, September 1999). Commercialization of the ATS is projected for 2001. 174. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Industry Sector. 175. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Industry Sector. 176. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Energy Conservation, Transportation Sector. 177. U.S. Department of Energy, U.S. Department of Energy Fiscal Year 2000 Congressional Budget Request, DOE/CR-0059 (Washington, DC, May 21, 1999), Energy Efficiency and Renewable Energy, Energy Conservation, Transportation Sector. 178. U.S. General Accounting Office, Federal Electricity Activities: The Federal Government's Net Cost and Potential for Future Losses, GAO/AIMD-97-110 (Washington, DC, September 1997). 179. U.S. Department of Agriculture, "1999 Budget Summary," web site www.usda.gov/agency/obpa/Budget-Summary/1999/text.html. 180. Energy Information Administration, Electric Sales and Revenue 1998, DOE/EIA-0540(98) (Washington, DC, October 1999). 181. Financial data from Energy Information Administration, Financial Statistics of Selected Investor-Owned Utilities, DOE/EIA-0437(90/1) (Washington, DC, 1992). 182. U.S. General Accounting Office, Tennessee Valley Authority, Assessment of the 10-Year Business Plan, GAO/AIMD-99-142 (Washington, DC, April 1999). 183. W.U. Chandler, The Myth of TVA (Cambridge, MA: Ballinger, 1984), p. 26. |
