Federal Power Marketing Administrations

The federal government operates four Power Marketing Administrations (PMAs) that sell electricity generated at federal dams to utilities, cooperatives, and other customers — transmitting some of the cheapest, cleanest power in America. The PMAs are: the Bonneville Power Administration (BPA), serving the Pacific Northwest; the Western Area Power Administration (WAPA), serving 15 Western states; the Southwestern Power Administration (SWPA), serving parts of 6 states; and the Southeastern Power Administration (SEPA), serving 11 Southeastern states. Together, the PMAs market power from 130+ federal hydroelectric projects with a combined capacity of approximately 38,000 megawatts — enough to serve millions of homes. By law, PMAs must give preference in selling federal power to public bodies (municipal utilities, public power districts) and rural electric cooperatives, delivering electricity at cost-based rates that are typically well below market.

Current Law (2026)

Legal Authority

• 16 U.S.C. § 832 — Bonneville Project Act (authorizes completion and operation of the Bonneville Dam and associated power generation facilities on the Columbia River)
• 16 U.S.C. § 832a — General administrative provisions (assigns an administrator to manage the sale and distribution of Bonneville power; administrator appointed by and reports to the Secretary of Energy)
• 16 U.S.C. § 832c — Distribution of electricity; preference (administrator must give first priority to public bodies and cooperatives; at least 50% of power must be reserved for preference customers)
• 16 U.S.C. § 832d — Contracts for sale of electricity (administrator makes wholesale electricity contracts with public bodies, cooperatives, private utilities, and federal agencies; non-public-serving private buyers restricted)
• 16 U.S.C. § 832e — Rate schedules (administrator creates electricity rate schedules that take effect after approval by the Secretary of Energy; rates must recover costs)
• 16 U.S.C. § 832f — Elements in determining rates (rates must be based on the principle that power comes from water — the cheapest and most renewable source — and must cover all costs while keeping rates as low as practicable)

How It Works

The preference principle is the defining feature of PMA power. By law, public bodies (municipal utilities, public power districts, county power authorities) and rural electric cooperatives receive first priority in purchasing federal hydropower. This "preference power" typically costs far less than market rates because it's priced at cost — reflecting the low marginal cost of hydroelectric generation (no fuel costs) plus debt service, transmission, and environmental obligations. For BPA, preference rates have historically been 30–50% below market. This preference system, rooted in the New Deal vision of public power, means that millions of households in the Pacific Northwest, the rural West, and the Southeast receive some of the cheapest electricity in America.

Bonneville Power Administration is by far the largest PMA. BPA markets power from 31 federal dams on the Columbia River and its tributaries (operated by the Army Corps of Engineers and Bureau of Reclamation) — licensed under the Federal Power Act, operates 15,000 miles of high-voltage transmission lines covering the Pacific Northwest, and generates approximately $3.5–4 billion in annual revenue. BPA is unique among the PMAs in that it is self-financing — it receives no annual appropriations but must repay the federal investment in its infrastructure through its rates. BPA also carries major environmental obligations, particularly for salmon and steelhead recovery, spending hundreds of millions annually on fish passage, habitat restoration, and spill operations at federal dams.

Western Area Power Administration markets hydroelectric power from 57 power plants in 15 states, from the Missouri River dams (operated by the Corps of Engineers) and Bureau of Reclamation projects across the West. WAPA serves approximately 700 wholesale customers, primarily preference customers.

Rate setting at PMAs follows a cost-based model. Rates must recover the full cost of power generation, transmission, operation and maintenance, environmental mitigation, and repayment of the federal investment (with interest) to the U.S. Treasury. The Secretary of Energy must approve all PMA rate schedules. Because hydro has no fuel cost, PMA rates are inherently lower than thermal generation — but they fluctuate with water conditions (drought years mean less generation and potentially higher rates).

Environmental obligations are substantial, particularly for BPA. The Columbia River hydroelectric system has severely impacted salmon and steelhead runs that are listed under the Endangered Species Act. BPA spends over $700 million annually on fish and wildlife mitigation — including fish ladders, juvenile fish transportation, spill programs at dams, and habitat restoration throughout the basin. These costs are embedded in BPA's rates.

How It Affects You

If you receive electricity from a municipal utility, public power district, or rural electric cooperative served by a PMA, you are likely paying some of the cheapest electricity rates in America — a direct benefit of 80+ years of federal investment in hydroelectric infrastructure. By law, PMAs must give preference customers first priority in purchasing federal hydropower at cost-based rates that typically run 30–50% below market. For a Pacific Northwest household on a BPA-served utility, average residential rates are approximately $0.09–0.12 per kWh, compared to national averages of $0.16–0.17/kWh — saving the typical household $300–$600 per year. For agricultural users running irrigation pumps or industrial customers with large loads, the savings are proportionally much larger. The critical policy moment: BPA is renegotiating its provider-of-choice contracts through 2028, which will determine the terms under which preference customers receive federal power for the next 20 years. Your utility's board or cooperative membership meeting is the place to engage — ask what contract terms they're negotiating with BPA and how rate changes will be passed to ratepayers. The American Public Power Association (publicpower.org) and National Rural Electric Cooperative Association (electric.coop) track PMA rate negotiations and advocacy.

If you live in the Pacific Northwest, BPA's low-cost hydropower is one of the region's most significant economic advantages — embedded in everything from manufacturing competitiveness to data center economics to household electricity bills. Oregon, Washington, Idaho, and Montana have built industrial and commercial bases partly on cheap electricity. The aluminum smelting industry was historically concentrated in the Pacific Northwest because of BPA power; data center investment today follows the same logic. The risk: drought years directly reduce hydroelectric generation and increase rates. The 2021 Pacific Northwest drought — one of the worst on record — required BPA to purchase expensive replacement power on wholesale markets, pushing costs upward. Climate change projections show reduced snowpack and earlier peak runoff in the Columbia Basin, meaning BPA's hydroelectric generation capacity will likely decline over the coming decades, gradually eroding the region's electricity cost advantage. Track BPA's Integrated Resource Plan at bpa.gov for long-term projections.

If you're a commercial fisherman, tribal member, or conservation advocate in the Columbia Basin, the PMA system's environmental obligations are as significant as its power generation mission. BPA spends over $700 million annually on fish and wildlife mitigation — fish ladders, juvenile fish transportation around dams, spill operations (releasing water over dams to help juvenile fish pass rather than through turbines), and habitat restoration throughout the Columbia-Snake Basin. Fourteen Columbia and Snake River salmon and steelhead runs are listed as threatened or endangered under the Endangered Species Act; the litigation over dam operations, water allocation, and fish flows has shaped Columbia River policy for 30+ years. Despite the fish and wildlife spending, salmon populations remain at a fraction of historical levels, and tribal nations — many of which hold treaty-protected fishing rights that predate the dams — have pressed for Snake River dam removal. The 2023 Columbia Basin Partnership framework is the current federal effort to balance power generation, irrigation, and fish recovery. Follow the ongoing litigation and agency negotiations at columbiariverkeeper.org and BPA's Environmental Resources publications at bpa.gov.

If you're a private utility, renewable energy developer, or energy policy analyst, PMA power and transmission create the backbone of the Western grid — with significant implications for your operations. WAPA operates the transmission network across 15 Western states that integrates federal hydro with private wind, solar, and thermal generation. Access to WAPA and BPA transmission is critical for renewable developers in the West — open access transmission requirements under FERC Order 888 apply to PMA transmission systems, but capacity can be constrained. For BPA specifically: surplus federal power (beyond preference obligations) is available to private utilities and the wholesale market, but BPA's hydroelectric output varies significantly with water years — in wet years, BPA floods the market with cheap surplus power, depressing wholesale prices; in drought years, BPA buys expensive replacement power. If you're modeling energy costs or revenues in the Western interconnection, BPA's Forecast of Power Supply and Demand (published annually) and WAPA's capacity auction data are essential inputs. The periodic proposal to privatize BPA — selling the transmission system to private investors — resurfaces in budget debates; it has never advanced, but it represents a long-term policy risk for utilities that depend on PMA power and transmission.

State Variations

PMAs are exclusively federal, but state and local entities are the primary customers:

• Public power utilities (over 2,000 nationwide) and rural electric cooperatives are the primary preference customers
• State utility regulation generally does not apply to PMA wholesale rates (set by the federal administrator)
• State renewable portfolio standards interact with PMA power (hydroelectric power qualifies as renewable in most states)
• State water law affects PMA operations, particularly regarding water allocation and minimum flow requirements
• Regional transmission organizations (RTOs) and wholesale electricity markets interact with PMA transmission systems

Implementing Regulations

• 10 CFR Part 903 — Power and Transmission Rates: establishes the procedural framework by which the four Power Marketing Administrators (BPA, WAPA, SWPA, SEPA) develop and revise wholesale electricity and transmission rates. The ratesetting process is public and participatory but ultimately culminating in FERC approval. Key provisions:

  • § 903.11 — Advance announcement: the Administrator publishes advance notice before initiating a formal rate adjustment, giving stakeholders early warning; preference customers (public utilities, co-ops, municipalities) and transmission customers are the primary audience
  • § 903.13 — Notice of proposed rates: formal notice must include the proposed rates, the effective date, the procedure for written comment, and the date of any public forums; notice is published in the Federal Register
  • § 903.14 — Consultation and comment period: any interested person — including preference customers, industrial users, states, tribes, and environmental groups — may submit written comments; for major adjustments, the comment period is a minimum of 45 days; the PMA must respond to substantive comments in its final rate documentation
  • § 903.15–903.16 — Public information and comment forums: for major rate adjustments (general rate increases), the PMA must hold at least one public information forum (presenting the analysis) and one public comment forum (taking oral testimony); these forums give co-ops, municipal utilities, and large industrial customers a direct channel to contest proposed rate increases; informal public meetings suffice for minor adjustments (§ 903.17)
  • § 903.18 — Revision of proposed rates: after reviewing comments, the Administrator may revise the proposed rates; material changes restart a new comment period; the Administrator then issues final proposed rates and submits them to FERC for approval; FERC reviews whether the rates are consistent with applicable law and will recover costs (the "cost-plus" standard that governs federal power pricing)

  The Part 903 process is distinctive from utility ratemaking before state public utility commissions in that (a) there is no adversarial hearing with cross-examination — the process is notice-and-comment rather than adjudicatory; (b) preference customers have statutory priority in rate design; (c) FERC reviews PMA rates on an administrative record and does not conduct its own hearing; and (d) cost recovery — not market pricing — governs the rate standard. BPA's rates are set through a separately structured public process that satisfies both Part 903 and the specific BPA Act requirements.

• 10 CFR Part 904 — General Regulations for the Charges for the Sale of Power from the Boulder Canyon Project: governs the rates and billing for power generated at Hoover Dam (Boulder Canyon Project) and marketed by the Western Area Power Administration (WAPA). Hoover Dam, operated by the Bureau of Reclamation, generates up to 2,074 megawatts of capacity — one of the largest hydroelectric facilities in the United States. WAPA markets the power to long-term contractors (principally the Metropolitan Water District of Southern California, Nevada Power/NV Energy, Arizona Public Service, and other Southwest utilities) under 50-year contracts authorized by the Hoover Power Plant Act (43 U.S.C. § 618):

  • § 904.1 — Authority: the Secretary of Energy, acting through the WAPA Administrator, is authorized to set charges for Boulder Canyon Project power; rates must recover costs of operating and maintaining the project and amortizing federal investment over the contract term; Part 904 implements the Hoover Power Plant Act's requirement that WAPA establish regulations governing power charges
  • § 904.3 — Definitions: Part 904 establishes a precise technical vocabulary: "Firm Energy" is the contracted energy that WAPA commits to deliver regardless of hydrologic conditions; "Excess Energy" is energy available beyond firm commitments when hydrology permits higher generation; "Capacity" is the committed megawatts reserved for contractor use; "Project Use Energy" is power consumed in operating the dam and appurtenant works (pumping, lights, navigation equipment)
  • § 904.10 — Excess energy: when excess energy beyond firm commitments is available (wet water years, periods of high snowmelt), WAPA makes it available to contractors in priority order under § 105(a)(1)(C) of the Hoover Power Plant Act; excess energy is priced at a different rate than firm energy, reflecting its interruptible nature; contractors who receive excess energy in one billing period cannot claim it as a basis for adjusting their firm allocation
  • § 904.11 — Lay-off of energy: if a contractor temporarily cannot use its firm or excess energy allocation, WAPA will attempt to "lay off" (resell) the energy on the contractor's behalf; the lay-off mechanism avoids energy waste when a contractor faces a temporary demand reduction — it prevents energy from being spilled at the dam (producing nothing of value) by finding alternative purchasers; the revenue from a lay-off goes to the contractor, not WAPA
  • § 904.12 — Payments to contractors: if contractors advanced funds for the Hoover Uprating Program (a 1980s capital improvement that increased Hoover Dam's capacity), WAPA returns those advances with interest through offsetting credits on power bills; this unusual payment flow reflects the cooperative capital investment model where preference customers co-invested in federal hydropower improvements in exchange for long-term access to expanded capacity
  • § 904.13 — Disputes: disputes about power charges are resolved administratively through WAPA; the Administrator's decisions are final unless overturned through the applicable review process; disputes involving interpretation of a power sales contract's terms proceed under the contract's dispute clause, not the regulatory dispute mechanism

  Hoover Dam's power allocation is a case study in the economics of long-term federal power contracts. The 1984 contracts governing the current allocation period were structured to recover Hoover Dam's construction costs (including the Uprating Program) over 50 years — meaning the power rate includes a fixed amortization component regardless of current market prices. Contractors in the Southwest who hold Hoover Dam power allocations receive power at rates well below market, representing a continuing economic benefit from the federal investment made beginning in the 1930s. When these contracts expire, the terms of renewal — including how future capital costs (dam safety upgrades, turbine replacements) are allocated between the federal government and contractors — will be one of the most consequential power contract negotiations in the Western United States.

Pending Legislation

No standalone PMA reform bills have been introduced in the 119th Congress. Related energy and hydropower provisions appear in broader legislation — see Federal Power Act & Hydroelectric Licensing and Tennessee Valley Authority.

Recent Developments

BPA's long-term provider-of-choice contracts (through 2028) are being renegotiated, determining the terms under which preference customers will receive federal power for the next 20 years — one of the most consequential power supply negotiations in the country. Drought conditions and climate change are reducing hydroelectric generation capacity across the West, pressuring PMA rates upward. BPA and WAPA have invested in transmission modernization and grid integration to accommodate growing renewable energy (wind and solar) on the Western grid. The economic value of hydropower's dispatchability — its ability to ramp up and down quickly to balance variable renewables — has increased substantially. Congressional proposals to privatize or divest the PMAs surface periodically but have not advanced.