United States General Accounting Office

GAO Report to Congressional Requesters

November 1998 FEDERAL POWER

Regional Effects of

Changes in PMAs’

Rates

GAO/RCED-99-15

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-281133 

November 16, 1998

The Honorable Don Young

Chairman, Committee on Resources

House of Representatives

The Honorable John T. Doolittle

Chairman, Subcommittee on Water and Power

Committee on Resources

House of Representatives

Since the New Deal, the federal government has established about 130

water projects that—in addition to promoting agriculture, flood control,

navigation, and other activities—produce electric power. To provide this

power to large portions of rural America, the government also created five

power marketing administrations (PMA), along with the Tennessee Valley

Authority (TVA).1

 These facilities have been part of the electrification of

America, especially rural America. In 1940, about 25 percent of all

households lacked electricity and 70 percent of farms, whereas today,

virtually all households have electricity.

Now that nearly all of America has electricity, some believe the PMAs have

completed their mission and should be divested, particularly since greater

competition exists in the electricity industry. Others suggest that the PMAs

be required to operate in ways more like private utilities’ practices, such as

charging market rates for power.2

 However, the PMAs currently sell

wholesale power to entities such as cooperatives and publicly owned

utilities, also known as “preference customers,” at average rates that, from

1990 to 1995, were from 40 to 50 percent below the rates nonfederal

utilities charged. Although preference customers generally buy most of

their power from sources other than the PMAs and, as a result, currently

pay market rates for that power, concerns have been raised that a change

in PMAs’ ownership or the means by which they establish rates could

increase rates and could adversely affect the rural or poorer areas they

serve. Those expressing such concerns believe that the PMAs should

1

TVA is a multipurpose independent federal corporation. Among its purposes is generating power,

which, like the PMAs, it markets. TVA sells power in nearly all of Tennessee, as well as parts of

Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Virginia. App. I presents a map of TVA’s

service territory.

2

Our report Federal Power: Options for Selected Power Marketing Administrations’ Role in a Changing

Electricity Industry (GAO/RCED-98-43, Mar. 6, 1998) identifies options that the Congress and other

policymakers could pursue to address concerns about the PMAs’ role in restructured markets or to

manage them in a more businesslike fashion. Among other options, the report discusses divestiture

and its potential impact on preference customers by individual PMA.

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B-281133 

continue to operate as they do now. To date, it has been difficult to

examine the possible impact of potential rate increases because few

analyses have identified the places that ultimately consume PMA power or

the characteristics of the households the preference customers serve.

To aid in congressional deliberations on the future role of the PMAs, as

requested we are providing a state-by-state analysis of the preference

customers who buy power from the Southeastern Power Administration

(Southeastern), the Southwestern Power Administration (Southwestern),

and the Western Area Power Administration (Western).3

 More specifically,

we identify (1) the extent to which preference customers’ rates may

change if market rates are charged, (2) the areas the three PMAs’

preference customers report serving, and (3) the incomes in these areas

and the extent to which they are rural or urban.

Background The Department of Energy’s (DOE) PMAs sell power primarily to preference

customers—cooperatives and public bodies, such as municipal utilities,

irrigation districts, and military installations—that are located in the PMAs’

service territories.4

 Many of these preference customers then resell the

power to industrial, commercial, and/or residential end-users.

To estimate any potential rate changes if market rates are charged (after a

divestiture of the PMAs or otherwise), we calculated how much, in cents

per kilowatthour (kWh),5

 each preference customer paid, on average, for

power purchased from (1) all sources, including the PMAs, and (2) sources

other than the PMAs, including the wholesale market, in 1995.6

 Then, we

took the difference between these two, considering the latter to be the

market rate. To map the areas that preference customers serve, we

3

In addition, the Bonneville Power Administration (Bonneville), the oldest PMA and the largest in

terms of total revenues, operates in the Pacific Northwest. Because you asked us to examine

Southeastern, Southwestern, and Western, Bonneville is not covered by this report. Finally, the

projects constituting the Alaska Power Administration, the smallest PMA, were fully divested in

October 1997 and August 1998.

4

Our analysis covers about 680 preference customers included in the Energy Information

Administration’s Form 861 database of electric utilities, which is a compendium of utilities in the

United States. As a result, we did not include other preference customers such as those owned by state

governments or the federal government—for example, hospitals and military facilities. App. II presents

a map of the PMAs’ service territories. As explained in app. III, we did not include TVA as a customer

of Southeastern.

5

A watt is the basic unit used to measure electric power. A watthour is equal to a watt of power applied

for 1 hour. A kilowatthour is 1,000 watthours. A megawatthour is a 1,000 kWh.

6

We based our work on an existing database developed for an earlier GAO report, which compiled

information on 1995 purchases. Comparable data for 1996 or later were not available.

Page 2 GAO/RCED-99-15 Federal Power
B-281133 

identified the counties and towns that the customers reported serving in

Electrical World: Directory of Electric Power Producers.

7

 It is important to

note that our analysis included only those customers that purchased

power directly from the PMAs and that our analysis shows higher rate

increases than would be likely if market rates decline. To develop

information on the characteristics of the areas that preference customers

reported serving, for each county and town we obtained data on 1989

household incomes and the extent to which the population is urban or

rural, as reported in the 1990 census, the latest data available. Appendix III

provides additional details on our scope and methodology.

Results in Brief Overall, slightly more than two-thirds of the preference customers that

purchase power directly from the Southeastern, Southwestern, and

Western Area power administrations may see relatively small or no rate

increases if these PMAs begin to charge market rates for the power they

produce. In particular, given our assumptions, almost all of Southeastern’s

preference customers would see average rate increases of up to one-half

cent per kWh on rates that in 1995 typically ranged from 3.5 to 6.0 cents

per kWh. Most of these preference customers would see increases of less

than one-tenth cent per kWh. If the preference customers served by

Southeastern pass the higher rates on proportionally to their residential

end-users, most end-users would see their monthly electricity bill increase

by less than $1, while the maximum increase would range in most states

between $1 and $8, depending on the state. Preference customers who

receive power from Western may see a variety of rate increases if market

rates are charged. In California, Colorado, and Nebraska, for example,

more than three-quarters of the preference customers may see relatively

small increases of less than one-half cent per kWh. However, in several

other states, such as South Dakota and Utah, a number of preference

customers may see average rate increases that exceed 1.5 cents per kWh.

These customers of Western typically paid relatively low rates ranging

from 1.5 to 3.0 cents per kWh and bought most of or all their power from

the PMA in 1995. In turn, residential end-users who receive power from

these utilities may see larger increases in their electricity bills. For

example, in states with larger rate increases, if a preference customer’s

7

Electrical World: Directory of Electric Power Producers is a standard reference for data on the

electricity industry. It compiles specific data on subjects such as individual utilities’ power production

capacities, power sales, sources of purchased power, distribution facilities, as well as the service

areas, which are provided by the utilities themselves. However, it is important to note that under the

directory’s reporting format, preference customers specify the counties and/or towns they serve,

which may not precisely portray the boundaries of their service areas. For example, although a

preference customer may report serving a particular county, it may actually serve a portion of the

county. Consequently, although our approach may somewhat overstate the areas preference

customers serve, it is based on the best data available.

Page 3 GAO/RCED-99-15 Federal Power
B-281133 

rate increases by 1.5 cents per kWh, residential end-users would pay about

$10 to $15 more per month for electricity, depending on the state. As a

group, Southwestern’s preference customers may see rate increases that

lie between those for Southeastern’s and Western’s customers. Most of

Southwestern’s preference customers may see relatively low rate

increases of up to one-half cent per kWh on rates that typically ranged

between 1.5 and 3.5 cents per kWh. However, almost all preference

customers in Oklahoma may see larger rate increases that exceed 1.5 cents

per kWh. For most of these customers, their residential end-users would

see monthly increases of about $22. In general, then, a preference

customer’s rate increase depends primarily on what portion of its total

power comes from the PMA and how close the PMA’s rate is to the market

rate.

Preference customers included in our analysis that purchased power

directly from the PMAs8

 serve varying portions of 29 states.9 In most states,

the areas that preference customers report serving cover less than half the

state. In several states—such as Illinois, Kentucky, and Montana, which

are served by fewer than five preference customers—the areas covered

are even smaller. In contrast, in several states, particularly Arizona,

Georgia, North Carolina, and South Dakota, preference customers report

serving most or almost all counties in the state. Except in Colorado, North

Dakota, and South Dakota, the preference customers provide less than

10 percent of the residential end-users’ electricity consumption.

The populations in the areas preference customers serve generally have

median incomes that are similar to the median income in the entire state.

In about two-thirds of the states we examined, the preference customers

serve counties and towns whose median household incomes are within

15 percent of the statewide median income. However, in some states, such

as Montana and Texas, preference customers primarily serve poorer areas

and households. Yet in other states, such as California, preference

customers sell PMA power to areas such as Orange County, where nearly

half of the households have incomes exceeding $50,000 a year—or at least

38 percent greater than the statewide median. Nationwide, about half of

8

We did not include in our analysis customers that receive PMA power indirectly, that is, through

direct preference customers of the PMAs—generation and transmission cooperatives and municipal

joint action agencies—because, with very few exceptions, the PMAs’ 1995 annual reports do not list

them.

9

These states are Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Iowa,

Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico,

Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah,

Virginia, Wisconsin, and Wyoming.

Page 4 GAO/RCED-99-15 Federal Power
B-281133 

the towns that preference customers serve are urban and about half are

rural. Most of the counties are “mixed” (neither urban nor rural), about

40 percent are rural, and the remainder are urban.

Most Rate Increases

May Be Relatively

Small, Although Some

May Be Larger

Overall, about 68 percent of Southeastern’s, Southwestern’s, and Western’s

preference customers may experience relatively small rate increases. In

our analysis, the increases that we considered relatively small (0.5 cent per

kWh or less), moderate (from greater than 0.5 cent up to 1.5 cents), and

relatively large (greater than 1.5 cents) represent amounts above the

average rates that preference customers paid for power from all sources

(both PMAs and others) in 1995. These base rates typically ranged in 1995

from 3.5 to 6.0 cents for Southeastern’s preference customers, from 1.5 to

3.5 cents for Southwestern’s preference customers, and from 1 to 4 cents

for Western’s preference customers. The increases represent the

difference between these average rates and what preference customers

would have to pay if they purchased all of their power at market rates. For

example, if a preference customer of Southeastern paid a combined 3.5

cents per kWh for power from the PMA and other sources in 1995 and paid

3.9 cents for power from non-PMA sources, we assumed the customer’s

rates would rise from 3.5 to 3.9 cents—a relatively small increase of 0.4

cent—if it had to pay market rates for all its power. Our calculation of the

increase in a residential end-user’s monthly electricity bill represents the

amount of the preference customer’s increase times the average monthly

consumption of electricity by residential end-users in the preference

customer’s state.

As shown in figure 1, 98 percent of Southeastern’s preference customers

may see relatively small rate increases of 0.5 cent per kWh or less if they

pay market rates for PMA power. For Western and Southwestern, about half

of their preference customers would see relatively small rate increases and

about 25 to 30 percent of the customers for each PMA would see relatively

large increases. Figure 2 breaks out these potential increases by state and,

of the total amount of power consumed in each state, indicates the

percentage provided by the PMA.

Page 5 GAO/RCED-99-15 Federal Power
B-281133 

Figure 1: Potential Changes in Preference Customers’ Rates If the PMAs Charge Market Rates

17%

68%

15%

Relatively small, 0.5 cent (or one-half cent) or less

Moderate, greater than 0.5 cent to 1.5 cents

Relatively large, greater than 1.5 cents

98%

1.15%

0.38%

51%

20% 29%

48%

27% 25%

Southeastern Southwestern Western

Percentage of Preference Customers for All Three PMAs

Estimated increase (cents/kWh)

(In 85 percent of the cases, this increase is between 1.5 cents and 3 cents.)

(Figure notes on next page)

Page 6 GAO/RCED-99-15 Federal Power
B-281133 

Note: Power from the preference customers represents about 2 percent of the total electricity

consumption for the 29 states in our analysis.

Sources: GAO’s analysis of data provided by DOE’s Energy Information Administration and

Southeastern’s, Southwestern’s, and Western’s 1995 annual reports.

Page 7 GAO/RCED-99-15 Federal Power
B-281133 

Figure 2: Potential Changes in Preference Customers’ Rates in Each State and the PMAs’ Shares of Total State Power

Consumption

Not in GAO's analysis

0-5%

>5% - 10% 

>10% - 20% 

>20% - 25%

8%

32%

60%

17%

39%

44%

79%

14%

7%

33%

35%

33%

43%

29%

29%

0% 100%

79%

15%

6%

44%

44%

12%

87%

13%

64%

27%

9%

89%

11%

Moderate, greater than 0.5 cent to 1.5 cents

33%

35%

33%

Estimated increase in preference customers' 

rates (cents/kWh)

Relatively small, 0.5 cent or one-half cent or less

Relatively large, greater than 1.5 cents

43%

43%

14%

16%

5%

79%

57%

29%

14%

100% 100%

100% 100%

100% 100%

31% 22%

46%

45%

20%

35%

99% 1%

96%

4%

87%

13%

80% 100% 100%

20%

75%

25%

67%

33%

CA

NV

UT

AZ

NM

TX

CO

OK

LA

MS

AL GA

FL

KS

NE

SD

MT

WY

ND

MN

IA

MO

AR

IL

KY

WI

NC

VA

SC

PMA's share of total state consumption

(Figure notes on next page)

Page 8 GAO/RCED-99-15 Federal Power
B-281133 

Note: We did not include Southeastern’s sales to TVA, as described in app. III. The figure also

excludes any power purchased from the Bonneville Power Administration.

Source: GAO’s analysis of data provided by DOE’s Energy Information Administration and

Southeastern’s, Southwestern’s, and Western’s 1995 annual reports

As shown in figure 2, in virtually every state Southeastern serves, at least

85 percent of the preference customers may see relatively small rate

increases.10 Slightly more than half of the PMA’s preference customers may

see increases of less than 0.1 cent per kWh. If these preference customers

pass their rate increases through proportionally to the residential

end-users they serve, the residential end-users would see their average

monthly electricity bill increase by $1 or less. In most of Southeastern’s

states, the maximum increase that a preference customer would pass on to

its residential end-users ranges between $1 and $8 per month, depending

on the state. The only relatively large rate increase for a preference

customer served by Southeastern may be in Illinois, which has one

preference customer.

In states served by Western, preference customers may see a variety of

rate increases.11 For example, as shown in figure 2, over 75 percent of the

preference customers in California, Colorado, and Nebraska may

experience relatively small rate increases. In these three states, residential

end-users served by most preference customers would see less than $2.50

increases in their average monthly electricity bills. However, a significant

number of Western’s preference customers may see moderate increases.

As shown in figure 2, at least 25 percent of the preference customers in

many Western states, such as Iowa, Minnesota, and South Dakota, may

experience average rate increases from greater than 0.5 cent up to 1.5

cents per kWh. If these preference customers proportionally pass these

costs along to their residential end-users, the end-users would pay from $3

to $14 more in their average monthly electric bills, depending on the state.

Finally, in several states served by Western, a number of preference

customers may see average rate increases that exceed 1.5 cents per kWh.

10Southeastern’s preference customers are located in Alabama, Florida, Georgia, Illinois, Kentucky,

Mississippi, North Carolina, South Carolina, and Virginia. As mentioned, a map showing each PMA’s

service territory is included in app. II.

11Western’s preference customers are located in Arizona, California, Colorado, Iowa, Minnesota,

Montana, Nebraska, New Mexico, Nevada, North Dakota, South Dakota, Utah, Wisconsin, and

Wyoming. In Kansas, Missouri, and Texas, most preference customers purchase power from

Southwestern, although a few purchase power from Western.

Page 9 GAO/RCED-99-15 Federal Power
B-281133 

For example, 60 percent of the preference customers in South Dakota and

33 percent of the customers in Utah may see rate increases exceeding 1.5

cents per kWh. In turn, residential end-users who receive power from

these utilities would see larger increases in their electricity bills. For

example, in states with larger rate increases,12 if a preference customer’s

rate increases by 1.5 cents per kWh, residential end-users would pay about

$10 to $15 more per month for electricity, depending on the state.

Preference customers who may see these larger increases typically paid

relatively low rates, ranging from 1.5 to 3.0 cents per kWh and bought most

or all of their power from Western.

Taken together, Southwestern’s preference customers may experience

higher rate increases than Southeastern’s customers but lower increases

than Western’s.13 As shown in figure 2, in most of Southwestern’s states, a

majority of the preference customers may see relatively small increases of

0.5 cent per kWh or less on base rates that typically ranged from 1.5 to 3.5

cents. In turn, residential end-users that receive power from most of

Southwestern’s preference customers’ would see their electricity bills

increase by less than $3 a month. However, in Oklahoma, 79 percent of the

preference customers may see larger increases that exceed 1.5 cents per

kWh. Most of these customers paid less than 1.5 cents per kWh—less than

half the 1995 national average market rate—and purchased all of their

power from Southwestern. Residential end-users of these preference

customers typically would pay about $22 more in their average monthly

electricity bills.

As we discussed in our March 1998 report, it is important to remember

that in many cases where rate increases may be relatively large (greater

than 1.5 cents per kWh), the preference customers paid about 1 to 1.5

cents per kWh in 1995 for PMA power. These rates on average were about

2.5 to 3 cents per kWh lower than what utilities paid in the private market

nationwide. Conversely, in many cases where rate increases may be

relatively small, that is, 0.5 cent per kWh or less, preference customers

generally paid rates close to the market rates. If market rates are charged

(after a PMA divestiture or otherwise),14 preference customers would pay

the same rates as utilities that lack access to PMA power. As we discussed

12These are states where 33 percent or more preference customers may see rate increases of 1.5 cents

per kWh or greater.

13Southwestern’s preference customers are located in Arkansas, Kansas, Louisiana, Missouri,

Oklahoma, and Texas.

14In commenting on our draft report, DOE stated that market rates would not necessarily be charged if

a PMA is divested to a public utility.

Page 10 GAO/RCED-99-15 Federal Power
B-281133 

in our March 1998 report, if the Congress chose to change the status quo

regarding rates, it could mitigate the size of potential rate increases by

using several approaches, such as establishing rate caps.

A preference customer’s rate increase also depends on what portion of its

total power comes from the PMA. Generally, the less a preference customer

relies on a PMA’s power, the less the rate increase may be. Preference

customers in states served by Southeastern may experience small

increases because they purchase a small portion of their power from the

PMA. In 1995, 99 percent of Southeastern’s preference customers purchased

less than 25 percent of their power from the PMA. Overall, most preference

customers purchase a majority of their power from sources other than the

PMAs and, as a result, currently pay market rates for that power. In

contrast, preference customers that purchase a large portion of their

power from a PMA are more likely to experience larger increases. For

example, among the 60 percent of the preference customers in South

Dakota that may experience rate increases of at least 1.5 cents per kWh if

market rates are charged, most bought over 70 percent of their power

from the PMA in 1995. Overall, PMA power represented about 23 percent of

South Dakota’s total electricity consumption in 1995. Usually, preference

customers that rely on a PMA for most or all of their power are smaller

utilities that deliver 100,000 megawatthours or less to their end-users

annually.15

It is important to also note that because our estimates of potential rate

increases are based on market rates in 1995, our methodology is

conservative. If prices for wholesale power decline in the future, as many

industry analysts and DOE officials believe they will, customers’ rate

increases generally will be smaller than our estimates.

Finally, the likely rate increases we discuss—from relatively small to

relatively large, if the preference customers pay market rates for PMA

power—would usually affect a relatively small portion of the power

consumed in each state, as shown by the shading or patterns in the states

in figure 2. We found that the portion of the total power consumed in a

state that was provided by the three PMAs was generally relatively small.

For example, the PMAs provided 5 percent or less of the total power

consumption in 22 of the 29 states in our analysis. The average for the 29

states was 2 percent.

15For more information, see GAO/RCED-98-43, pp. 79-85.

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Preference Customers

Serve Varying

Portions of Many

States

As shown in figure 3, preference customers that are directly served by

Southeastern, Southwestern, and Western reported serving varying

portions of 29 states across the nation. We did not include customers that

receive PMA power indirectly, that is, through direct preference customers

of the PMAs—generation and transmission cooperatives and municipal

joint action agencies—because, with very few exceptions, the PMAs’ 1995

annual reports do not list them.

Page 12 GAO/RCED-99-15 Federal Power
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Figure 3: Potential Areas Directly Served by Preference Customers of Southeastern, Southwestern, and Western

Counties 

Towns

Potential service areas

CA

NV

UT

AZ NM

TX

CO

OK

LA

MS AL GA

FL

KS

NE

SD

MT

WY

ND MN

IA

MO

AR

KY

WI

NC

VA

SC

IL

Notes: Preference customers may actually provide power to only portions of the counties and/or

towns they report serving. Under the reporting format of Electrical World, preference customers

are asked to cite the counties and/or towns they serve, as opposed to the specific geographic

boundaries of their service areas. In many cases, several utilities report serving the same county

and the actual service area may be smaller than the areas they report serving. App. IV contains,

for each state, a map depicting the counties and towns reported by the customers that reported

receiving power directly from the PMA, followed by a complete list of those locations.

Our map includes only the counties and towns that preference customers serve directly and does

not include preference customers such as generation and transmission cooperatives or municipal

joint action agencies, who buy PMA power and then resell it to other publicly owned utilities. The

annual reports for Southeastern and Western do not include these utilities as customers, while

Southwestern’s does in two cases.

Sources: GAO’s analysis of data provided by Southeastern’s, Southwestern’s, and Western’s

1995 annual reports and Electrical World: Directory of Electric Power Producers (1997 ed.).

Page 13 GAO/RCED-99-15 Federal Power
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As the figure shows, in most states, the areas the preference customers

reported serving directly cover less than half the state. For example, very

small portions of Arkansas, Louisiana, and Missouri are served by

preference customers. In some cases, small areas are served in part

because only a few preference customers directly serve the state. For

example, Illinois and Wisconsin have only one preference customer to

serve residential end-users, while Kentucky and Montana have three.

Other states have more preference customers, but in some cases they

serve counties and towns that are concentrated in portions of the state.

For example, South Carolina’s 26 preference customers reported serving

areas almost exclusively in the northwestern corner of the state. The seven

preference customers in Wyoming reported serving four counties, which

are clustered in the southwestern and south central portions of the state

and two towns but no other areas in the rest of the state. Similarly, the

eight preference customers in Texas reported serving 17 counties in the

south central part of the state and five towns in eastern Texas but did not

serve the rest of the state.

Additionally, as depicted in figure 3, large portions of several of

Southeastern’s and Western’s states receive service directly from

preference customers. For example, preference customers reported

serving almost every county in Georgia and most of the counties in North

Carolina and Virginia. In these states, many counties received service from

two or more preference customers. In Nebraska, preference customers

reported serving over 130 towns located around the state.

Finally, regardless of their geographic coverage, we found, as shown in

figure 2, that the preference customers generally provided a relatively

small portion of the total power consumed in each state.

In Income, End-Users

Are Similar to the

Population of the

Entire State; Most

Service Areas Are

Either Urban or

“Mixed”

Although preference customers serve areas with incomes lower than the

national average, most of the households they serve have incomes that are

similar to those in the entire state. As shown in figure 4, in 21 of 28

states,16 households in the counties and towns preference customers

report serving had median incomes within 15 percent of the statewide

median income, as reported in the 1990 census.

16We did not include median income data for Wisconsin because the one preference customer in this

state does not provide retail service to residential end-users.

Page 14 GAO/RCED-99-15 Federal Power
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Figure 4: Proximity of Median Incomes in Preference Customers’ Reported Service Areas and the Entire State

Virginia

Wyoming

Illinois 

Missouri

Montana

Oklahoma

Texas

Alabama

Arkansas

Arizona

California

Colorado

Florida

Georgia

Iowa

Kansas

Kentucky

Louisiana

Minnesota

Mississippi

North Carolina

North Dakota

Nebraska

New Mexico

Nevada

South Carolina

South Dakota

Utah

75%

18%

7%

Statewide income is higher by more than 15 percent

The two incomes are within 15 percent of each other

Service areas' income is higher by more than 15 percent

Comparison of median household incomes 

(1) of service areas and (2) statewide 

Sources: GAO’s analysis of data provided by Southeastern’s, Southwestern’s, and Western’s

1995 annual reports; Electrical World: Directory of Electric Power Producers (1997 ed.); and 1989

data provided by the Census Bureau.

In some states, the median incomes of the end-users and statewide are

close because almost every county in the state receives power from

preference customers. For example, in Georgia, preference customers

Page 15 GAO/RCED-99-15 Federal Power
B-281133 

reported serving 151 of the state’s 159 counties. Furthermore, the

distribution of income for households receiving PMA power generally

mirrors the distribution of household income in the entire state. For

example, in Alabama, about 35 percent of the households in preference

customers’ service areas had annual incomes of less than $15,000 in 1989,

while 24 percent had incomes exceeding $40,000. Similarly, in the entire

state, 33 percent of the households had annual incomes under $15,000, and

26 percent had annual incomes exceeding $40,000. This compares with the

1995 national average household income of $35,004.

However, in a few cases, preference customers serve areas that are

significantly poorer than the remainder of the state. For example, in 1989

in Texas, the median income of the households preference customers

served was almost 40 percent lower than median household income of

$27,016 in the entire state. In preference customers’ service areas, over

45 percent of the households had annual incomes smaller than $15,000,

compared with 28 percent of the households in the entire state. Similarly,

in Montana, preference customers served households with median

incomes 20 percent, or about $4,500, below the state median of $22,988. In

commenting on our draft report, DOE officials noted that the PMAs also

provide a valuable service to Indian reservations, which are among the

poorest areas of the nation. Our analysis shows, for example, that about

53 percent of the households in Shiprock, New Mexico, which is located

on the Navajo Indian Reservation, had median incomes of less than

$15,000, compared with about 31 percent statewide.

In contrast, preference customers in some states send PMA power to a

number of counties and towns where a large portion of the households

have relatively high incomes. For example, in California, preference

customers reported serving areas in the southern part of the state such as

Orange County, where about 45 percent of the households had incomes in

1989 exceeding $50,000—at least 40 percent higher than the state median

income of $35,798. In the northern part of the state, preference customers

reported serving Palo Alto, where 55 percent of the households had

incomes exceeding $50,000. Throughout California, about 45 percent of

the households in areas preference customers reported serving had annual

incomes exceeding $40,000. Similarly, in Colorado, about 33 percent of the

households in Aspen had 1989 incomes that exceeded $50,000 or at least

65 percent greater than the state median income of $30,140.

Page 16 GAO/RCED-99-15 Federal Power
B-281133 

We estimate that, overall, about 53 percent of the towns that preference

customers reported serving are urban.17 States where most of the towns

are urban include California, Georgia, and North Carolina. In addition,

about 47 percent of the towns preference customers reported serving are

rural. States where large numbers of these towns are rural include Florida,

Iowa, and Nebraska. Less than 1 percent of the towns are “mixed”—that is,

they have populations that are neither urban nor rural. Most counties that

preference customers reported serving, or about 52 percent, are mixed.

Alabama and South Carolina, for example, have high percentages of mixed

counties. About 39 percent of the counties are rural, about 9 percent of the

counties are urban. North Dakota and South Dakota have large

proportions of rural counties.

Finally, although preference customers sell PMA power in many less

densely populated areas, most of the households they serve are located in

a small number of more urbanized places. This suggests that most PMA

power is consumed by customers in more highly urbanized places. For

example, although preference customers reported serving 150 counties in

Georgia, 11 of those counties contain over half of the households in the

areas preference customers reported serving.

Agency Comments We provided copies of a draft of this report to DOE for its review and

comment. We received comments from DOE’s Power Marketing Liaison

Office, which is responsible for Southeastern, Southwestern, and Western,

and have included its comments and our responses as appendix V.

DOE commented that our data sources were flawed because we relied on

incomplete and/or inaccurate data and that it was impossible to have

confidence in conclusions drawn from analysis of the data. To address

each of our objectives, our analyses used data reported by the PMAs and

their preference customers—data that we believe to be the best available.

DOE recognizes that obtaining complete data on the electric utility industry

is not easy. We believe that we used the data appropriately to satisfy the

objectives of our review and that our methodology is sound. However, we

agree that the data we used have limitations, and we have pointed out the

limitations in our report. Many of the concerns that DOE expressed do not

deal with the data we used but with the definition of a preference

customer of a PMA. DOE stated that our analyses omitted generation and

17We classified a county or town as urban or rural if at least 80 percent of its population is defined as

urban or rural by the Census Bureau. The Census Bureau generally considers an area to be urban if its

population is 2,500 or more. If a county or town is less than 80 percent urban or rural, we classified it

as “mixed.”

Page 17 GAO/RCED-99-15 Federal Power
B-281133 

transmission cooperatives, their members, and municipal joint action

agencies. For our analysis, we included only the preference customers

who purchased power directly from the PMAs—as listed in the PMAs’ 1995

annual reports. We did not include generation and transmission

cooperatives, their members, or municipal joint action agencies because

the annual reports of two of the three PMAs—Southeastern and

Western—do not include them in their lists of customers. Because

Southeastern and Western together represent over 90 percent of the total

preference customers of the three PMAs, we used their approach. If our

rate analysis had included the utilities that indirectly buy PMA power

through preference customers, the rate increases for these utilities would

have been, at most, the same as the increases for the preference

customers. For our analysis of urban/rural populations, we used the

counties and towns that the preference customers that were included in

our rate analysis reported to Electrical World: Directory of Electric Power

Producers. We acknowledge that the data in Electrical World may not

match the actual service territories. However, we used these data because

they were reported by the preference customers and were the best

available.

DOE also stated that using 1995 data does not reflect today’s market

situation. As the electricity market continues to evolve, many industry

experts believe that market rates for wholesale power have declined since

1995 and will fall farther. If market rates fall more than the PMAs’ rates, our

estimates of rate increases will prove to be overstated. We have seen no

evidence that the PMAs’ overall rates have fallen more than rates in the

wholesale market. DOE also commented that more balance was needed in

our report because the report goes beyond reporting data and does not

present all opposing points of view. We believe that our report is balanced

and that, throughout the report, we present a neutral description of our

objectives and findings. Nevertheless, we have added additional detail to

our report, such as including all options for the PMAs’ future role in the

changing electricity market and noting that a PMA provides power to Native

American households with low incomes.

We met with officials from the American Public Power Association18 and

National Rural Electric Cooperative Association,19 which are national

representatives of the PMAs’ preference customers, and discussed the

18The American Public Power Association is the national trade association representing over 2,000

municipal and other state and local government-owned electric utilities.

19The National Rural Electric Cooperative Association is the national service organization that

represents the national interests of cooperative electric utilities and the consumers they serve.

Page 18 GAO/RCED-99-15 Federal Power
B-281133 

methodology we used to perform our analysis and the results we obtained.

On our rate analysis, the officials commented that certain preference

customers may see larger rate increases than what we estimated because,

to replace the power they buy from the PMAs, they would pay more than

what they paid for non-PMA power in 1995. The officials also commented

that, although we classified many of the rate increases as relatively small,

these increases could nonetheless have significant economic impacts on

preference customers or their end-users. However, these officials said that

they could not provide more detailed comments until they and the

members of their organizations had an opportunity to review the final

report and its appendixes.

We also met with representatives of the Edison Electric Institute20 and

discussed the methodology we used to perform our analysis and the

results we obtained. They commented that our analysis was credible,

although they suspected that it could have overstated the rate increases

that may occur because competition is increasing and market rates for

electricity have been declining. They believe that the impact of the

preference customers’ paying market prices for power would be quite

modest. They also commented that, if the wholesale rate impacts were

translated to the prices that the ultimate consumer would see, the impacts

would be even less.

We conducted our review from May through November 1998 in

accordance with generally accepted government auditing standards.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies to appropriate House

and Senate committees and subcommittees; interested Members of the

Congress; the Administrators of Southeastern, Southwestern, and Western;

and other interested parties. We will also make copies available to others

upon request.

20The Edison Electric Institute is the association of investor-owned electric utilities in the United

States and industry affiliates and associates worldwide.

Page 19 GAO/RCED-99-15 Federal Power
B-281133 

If you have any questions or need additional information, please contact

me on (202) 512-3841. Major contributors to this report are listed in

appendix VI.

Susan D. Kladiva

Associate Director, Energy,

 Resources, and Science Issues

Page 20 GAO/RCED-99-15 Federal Power
Page 21 GAO/RCED-99-15 Federal Power
Contents

Letter 1

Appendix I 

Tennessee Valley

Authority’s Service

Area

26

Appendix II 

Power Marketing

Administrations’

Service Areas

28

Appendix III 

Objectives, Scope,

and Methodology

29

Estimating Preference Customers’ Potential Rate Changes 29

Estimating Changes in Residential Customers’ Electricity Bills 32

Defining Preference Customers’ Service Areas 32

Characterizing Incomes and Urban and Rural Populations in

Preference Customers’ Service Areas

33

Appendix IV 

State-Specific Data on

Potential Rate

Impacts and Service

Area Demographics

35

Appendix V 

Comments of the

Department of

Energy’s Power

Marketing Liaison

Office

94

GAO’s Comments 99

Page 22 GAO/RCED-99-15 Federal Power
Contents

Appendix VI 

Major Contributors to

This Report

106

Related GAO Products 108

Tables Table IV.1: Potential Rate Impacts and Demographic Data -

Alabama

37

Table IV.2: Potential Rate Impacts and Demographic Data -

Arizona

39

 Table IV.3: Potential Rate Impacts and Demographic Data -

Arkansas

41

Table IV.4: Potential Rate Impacts and Demographic Data -

California

43

Table IV.5: Potential Rate Impacts and Demographic Data -

Colorado

45

Table IV.6: Potential Rate Impacts and Demographic Data -

Florida

47

Table IV.7: Potential Rate Impacts and Demographic Data -

Georgia

49

 Table IV.8: Potential Rate Impacts and Demographic Data -

Illinois

51

Table IV.9: Potential Rate Impacts and Demographic Data - Iowa 53

 Table IV.10: Potential Rate Impacts and Demographic Data -

Kansas

55

 Table IV.11: Potential Rate Impacts and Demographic Data -

Kentucky

57

 Table IV.12: Potential Rate Impacts and Demographic Data -

Louisiana

59

 Table IV.13: Potential Rate Impacts and Demographic Data -

Minnesota

61

 Table IV.14: Potential Rate Impacts and Demographic Data -

Mississippi

63

 Table IV.15: Potential Rate Impacts and Demographic Data -

Missouri

65

 Table IV.16: Potential Rate Impacts and Demographic Data -

Montana

67

 Table IV.17: Potential Rate Impacts and Demographic Data -

Nebraska

69

Page 23 GAO/RCED-99-15 Federal Power
Contents

 Table IV.18: Potential Rate Impacts and Demographic Data -

Nevada

71

Table IV.19: Potential Rate Impacts and Demographic Data - New

Mexico

73

 Table IV.20: Potential Rate Impacts and Demographic Data -

North Carolina

75

Table IV.21: Potential Rate Impacts and Demographic Data -

North Dakota

77

 Table IV.22: Potential Rate Impacts and Demographic Data -

Oklahoma

79

 Table IV.23: Potential Rate Impacts and Demographic Data -

South Carolina

81

 Table IV.24: Potential Rate Impacts and Demographic Data -

South Dakota

83

 Table IV.25: Potential Rate Impacts and Demographic Data -

Texas

85

 Table IV.26: Potential Rate Impacts and Demographic Data -

Utah

87

 Table IV.27: Potential Rate Impacts and Demographic Data -

Virginia

89

 Table IV.28: Potential Rate Impacts and Demographic Data -

Wisconsin

91

 Table IV.29: Potential Rate Impacts and Demographic Data -

Wyoming

93

Figures Figure 1: Potential Changes in Preference Customers’ Rates if the

PMAs Charge Market Rates

6

Figure 2: Potential Changes in Preference Customers’ Rates in

Each State and the PMAs’ Shares of Total State Power

Consumption

8

Figure 3: Potential Areas Directly Served by Preference

Customers of Southeastern, Southwestern, and Western

13

Figure 4: Proximity of Median Incomes in Preference Customers’

Reported Service Areas and the Entire State

15

Figure I.1: Map of TVA’s Service Area 27

Figure II.1: The Service Areas of the PMAs 28

Figure IV.1: Potential Service Areas - Alabama 36

Figure IV.2: Potential Service Areas - Arizona 38

Figure IV.3: Potential Service Areas - Arkansas 40

Figure IV.4: Potential Service Areas - California 42

Figure IV.5: Potential Service Areas - Colorado 44

Page 24 GAO/RCED-99-15 Federal Power
Contents

Figure IV.6: Potential Service Areas - Florida 46

Figure IV.7: Potential Service Areas - Georgia 48

Figure IV.8: Potential Service Areas - Illinois 50

Figure IV.9: Potential Service Areas - Iowa 52

Figure IV.10: Potential Service Areas - Kansas 54

Figure IV.11: Potential Service Areas - Kentucky 56

Figure IV.12: Potential Service Areas - Louisiana 58

Figure IV.13: Potential Service Areas - Minnesota 60

Figure IV.14: Potential Service Areas - Mississippi 62

Figure IV.15: Potential Service Areas - Missouri 64

Figure IV.16: Potential Service Areas - Montana 66

Figure IV.17: Potential Service Areas - Nebraska 68

Figure IV.18: Potential Service Areas - Nevada 70

Figure IV.19: Potential Service Areas - New Mexico 72

Figure IV.20: Potential Service Areas - North Carolina 74

Figure IV.21: Potential Service Areas - North Dakota 76

Figure IV.22: Potential Service Areas - Oklahoma 78

Figure IV.23: Potential Service Areas - South Carolina 80

Figure IV.24: Potential Service Areas - South Dakota 82

Figure IV.25: Potential Service Areas - Texas 84

Figure IV.26: Potential Service Areas - Utah 86

Figure IV.27: Potential Service Areas - Virginia 88

Figure IV.28: Potential Service Areas - Wisconsin 90

Figure IV.29: Potential Service Areas - Wyoming 92

Abbreviations

DOE Department of Energy

EIA Energy Information Administration

GAO General Accounting Office

kWh kilowatthour

MEA municipal energy agency

PMA power marketing administration

TVA Tennessee Valley Authority

Page 25 GAO/RCED-99-15 Federal Power
Appendix I 

Tennessee Valley Authority’s Service Area

The Tennessee Valley Authority (TVA) sells power to 159 municipal and

cooperative distributors and to a number of directly served large industrial

customers and federal agencies. As shown in figure I.1, TVA sells power to

customers located in Tennessee and parts of six other states in the

Southeast. According to the Southeastern Power Administration

(Southeastern), TVA purchased nearly 1.9 billion kilowatthours (kWh) of

electricity from the PMA in fiscal year 1995 and over 2.9 billion kWh of

electricity in fiscal year 1996 for resale to TVA’s municipal and cooperative

distributors. However, as described in appendix III, we did not include

Southeastern’s sales to TVA in our analysis.

Page 26 GAO/RCED-99-15 Federal Power
Appendix I 

Tennessee Valley Authority’s Service Area

Figure I.1: Map of TVA’s Service Area

Tennessee

Mississippi Alabama

Kentucky

Georgia

Virginia

North 

Carolina

Source: TVA’s 1996 annual report.

Page 27 GAO/RCED-99-15 Federal Power
Appendix II 

Power Marketing Administrations’ Service

Areas

As figure II.1 shows, according to the Department of Energy (DOE), its

power marketing administrations (PMA) serve preference customers

located in all or parts of 34 states.

Figure II.1: The Service Areas of the PMAs

WA

ID

OR

CA

NV

AZ

UT

TX

NM

CO

WY

MT ND

SD

NE

KS

MN

IA

MO

AR

OK

LA

WI

IL IN

MI

OH

PA

NY

VT

NH

ME

MA

CT RI

NJ

FL

SC

MS AL GA

NC TN

KY

WV

VA

MD DE

BPA

WAPA

SWPA SEPA

BPA Bonneville Power Administration

SEPA Southeastern Power Administration

SWPA Southwestern Power Administration

WAPA Western Area Power Administration

Both Western and Southwestern market power in Kansas.

KS

Note: We included Wisconsin in our analysis because it has one preference customer, although

this customer does not sell power at the retail level.

Source: Developed by GAO from data provided by DOE and the PMAs.

Page 28 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

Since the New Deal, the federal government has established about 130

water projects that—in addition to promoting agriculture, flood control,

navigation, and other activities—produce electric power. To sell this

power to large portions of rural America, the federal government created

five PMAs and TVA.

Now that nearly all of America has electricity, some believe the PMAs have

completed their mission and should be divested. Others suggest that the

PMAs be required to charge market rates for power. However, since PMAs

have historically served rural areas, concerns have been raised that a

change in PMAs’ ownership or the means by which they establish rates

could adversely affect the rural or poorer areas they serve. Yet few

analyses to date have identified the places that ultimately consume PMA

power or the characteristics of the households the preference customers

serve.

To aid in congressional deliberations on the future role of the PMAs, you

requested that we provide a state-by-state analysis of the preference

customers who buy power from Southeastern, Southwestern, and

Western. More specifically, you asked that we identify (1) the extent to

which preference customers’ rates may change by state if market rates are

charged, (2) the areas the three PMAs’ preference customers report serving,

and (3) the incomes in these areas and the extent to which they are urban

or rural.

Estimating Preference

Customers’ Potential

Rate Changes

To estimate how much preference customers’ rates may change if the

customers paid market rates for the power they currently purchase from

the PMA, we calculated the average rates that each PMA preference

customer1

 paid for wholesale power from (1) all sources, including the

PMAs, and (2) sources other than the PMA, including the wholesale market,

in 1995.2

 Then, we took the difference between these two rates,

considering the latter to be the market rate.

Estimating the potential changes required several steps and assumptions.

First, to calculate how much preference customers paid for the PMAs’

1

For our analysis, we considered preference customers who are included in the Energy Information

Administration’s Form 861 database of electric utilities. As a result, we did not include retail customers

that are owned by state or federal governments, such as hospitals or military installations.

2

As agreed with your offices, we used 1995 data to conform with analyses we performed in preparation

of a previous report, GAO/RCED-98-43.

Page 29 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

power, we obtained data from Southeastern’s,3 Southwestern’s, and

Western’s fiscal year 1995 annual reports. Then, to learn how much each

preference customer paid for the power it purchased from other sources,

we used the “sales for resale” databases compiled by the Energy

Information Administration (EIA).4

 We found that for about one-third of the

three PMAs’ preference customers, EIA’s data lacked the volumes of

wholesale power the customers purchased from non-PMA sources, the

amounts the customers paid for power, or both.5

 In these cases, we

assumed the customer paid a rate equal to the average market rate paid by

customers of the same type (for example, municipal utilities and

cooperatives) for wholesale power in the customer’s state. We then

combined each preference customer’s purchases of PMA power and

non-PMA power to estimate how much the customer paid for wholesale

power from all sources in 1995.

Second, to estimate how each preference customer’s rates would change if

it paid market rates for PMA power, we assumed that the customer would

pay a rate equal to the average rate it paid for wholesale power from

sources other than the PMA(s) in 1995. We used this assumption because

it is likely that in the period immediately after a divestiture, the new

owners of the PMAs’ assets would charge the prevailing market rates for

wholesale power in the area.6

 We also took this approach because we

were unable to obtain forecasts of future wholesale rates. Although EIA

used its National Energy Modeling System to forecast future electricity

3

We did not include TVA in our rate analysis because we believe it is different from other preference

customers in ways that made our method of estimating rate changes inapplicable, for two reasons.

First, our methodology calculated the average rate each preference customer paid in 1995 for its

purchases of power from all sources. However, unlike other preference customers, TVA generated

over 97 percent of the power that it sold. Because TVA purchases so little of the power it sells, we did

not believe that it was appropriate to apply this approach. Second, in our analysis, we used the Energy

Information Administration’s data to determine the state in which each preference customer primarily

sells retail power. Each preference customer and its total sales were assigned to one state. The Energy

Information Administration’s state designation for TVA was Alabama. However, since TVA sells large

quantities of power to distributors in seven states, we did not believe that it was appropriate to assign

the entire 1.9 billion kWh that Southeastern sold to TVA in 1995 to Alabama. Also, TVA did not report

the counties and towns in its service territory in Electrical World: Directory of Electric Power

Producers. We, therefore, did not include TVA’s service territory in our state maps. (A less detailed

map of TVA’s territory is included in app. I.) We also could not analyze the income and urban/rural

characteristics associated with the area served by TVA.

4

Specifically, we used EIA’s PURCH.Y95 and SALES.Y95 databases, which contain utilities’ purchases

and sales of wholesale power to other utilities.

5

EIA officials stated that the data were missing for several reasons, including that the PMAs’ customers

were so small that they did not have to file the reports EIA uses to compile the “sales for resale” data

(the Federal Energy Regulatory Commission’s Form 1 and EIA’s Form EIA-412).

6

In commenting on our draft report, DOE stated that market rates would not necessarily be charged if

a PMA is divested to a public entity.

Page 30 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

rates,7 according to agency officials, its projections are only for retail

rates.8

 Others’ projections of future wholesale rates are proprietary.

Finally, we compared the average rate each preference customer paid for

all its power in 1995 with the rate the customer paid for the power it

purchased from sources other than the PMA. The difference in these two

rates represents our estimates in cents per kWh of each customer’s

potential increase in average rates if it paid market rates for the power it

currently purchases from the PMA.

9

After estimating how much preference customers’ rates may change, we

analyzed the rate changes by state. To do this, we had to determine the

state in which each preference customer primarily sells power. We

obtained state designations for each preference customer from EIA’s Form

861 database of utilities for 1995. However, in cases where the preference

customer did not sell retail power, EIA did not provide a state designation.

In these instances, we consulted EIA’s PURCH and SALES databases of

wholesale electricity transactions in 1995 and assigned the preference

customer to the state where it sold most of its wholesale power.10 In the

few cases where the preference customer did not sell a large majority of

its power to a single state, we assigned the preference customer to the

state where it is listed in the Electrical World: Directory of Electric Power

Producers (1997 ed.).11

Because we assumed that, after a divestiture, each customer would pay a

rate for power that equals what the preference customer paid for non-PMA

7

See Electricity Prices in a Competitive Environment (DOE/EIA-0614, Aug. 1997).

8

We attempted to derive forecasts of wholesale prices from EIA’s retail price forecasts by subtracting

distribution costs from EIA’s projections. We found, however, that our results were much higher than

the national average rates for wholesale power that EIA reports in Financial Statistics of Major U.S.

Investor-Owned Utilities. After consulting with EIA officials, we chose not to use EIA’s retail price

forecasts because they are based on the agency’s judgmental assignment of electricity generators’

costs to services, such as generation, transmission, and distribution, rather than actual sales data.

9

We do not report our estimates as percentages: Since many preference customers paid relatively low

base rates for power in 1995 (e.g., between 1 and 2 cents per kWh), smaller increases measured in

cents would result in seemingly large percentage increases. For example, if a preference customer in

1995 paid an average of 1.5 cents per kWh for power, a relatively small increase of 0.5 cent per kWh

would produce a seemingly large increase of 33 percent. In addition, if we expressed the rate increases

as percentages, the same increase measured in cents per kWh would be reported as different increases

for two customers with different base rates. For these reasons, we believe that reporting rate changes

in cents per kWh better portrays the true impact of the change.

10According to EIA, as of November 1998, these data had not been released for 1996.

11Electrical World: Directory of Electric Power Producers is a standard reference for data on the

electricity industry. It compiles specific data on subjects such as individual utilities’ power production

capacities, power sales, sources of purchased power, distribution facilities, as well as the service

areas, which are provided by the utilities themselves.

Page 31 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

power in 1995, our methodology is conservative. If prices for wholesale

power decline in the future, as many industry analysts and DOE officials

believe they will, customers’ rate increases would be smaller than our

estimates.

It is important to note that we estimated potential rate increases for the

preference customers that the PMAs listed in their 1995 annual reports.

These customers buy power directly from the PMA. We did not include

utilities that indirectly buy PMA power through direct preference customers

such as generation and transmission cooperatives and municipal joint

action agencies. We did not include these indirect customers because,

with very few exceptions, the PMAs did not count them as customers in

their 1995 annual reports.

Estimating Changes in

Residential

Customers’ Electricity

Bills

To estimate how each preference customer’s rate change would affect the

rates paid by its residential end-users, we assumed that (1) the preference

customer would pass the rate change on proportionally to its end-users

and (2) that each state’s residential end-users would consume a quantity of

electricity equal to the average residential consumption for that state in

1995, according to EIA. The monthly increase in a residential end-user’s

electricity bill equals the preference customer’s rate increase after the PMA

begins charging market rates (in cents per kWh) times the residential

end-user’s average annual electricity consumption for the appropriate

state (in kWh), divided by 12.

Defining Preference

Customers’ Service

Areas

To define the preference customers’ service areas, we identified the

counties and/or towns in Electrical World: Directory of Electric Power

Producers (1997 ed.) that each of the customers in our analysis reported

serving. As was true with our rate analysis, we included only the

preference customers that purchased power directly from the PMAs—that

is, those customers the PMAs listed in their 1995 annual reports. If we had

included utilities that indirectly purchase PMA power (through direct

preference customers), such as generation and transmission cooperatives

and municipal joint action agencies, more counties and towns would be

shown on our state service territory maps. According to DOE officials,

many additional counties would be shaded in, among other states,

Montana, South Carolina, and Wyoming.

Page 32 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

Characterizing

Incomes and Urban

and Rural Populations

in Preference

Customers’ Service

Areas

To examine the incomes in areas that ultimately consume PMA power, we

obtained 1990 census data (based on calendar year 1989) from the Census

Bureau on household incomes in each county and town the preference

customers reported serving in Electrical World.

To determine the degree to which preference customers’ service areas

were urban or rural, we obtained 1990 census data from the Census

Bureau on the urban and rural populations in each county and town the

preference customer reported serving. We classified a county or town as

urban or rural if at least 80 percent of its population is urban or rural as

defined by the Census Bureau.12 If the county’s or town’s population is less

than 80 percent urban or rural, we classified it as “mixed.”

Because the PMAs historically are believed to have served areas that had

lower median incomes and were less urbanized, our use of census data

from 1990 yields conservative results, as income and urban populations

generally increase over time.

We conducted our review from May through November 1998 in

accordance with generally accepted government auditing standards.

We provided a draft of this report to DOE’s Power Marketing Liaison Office,

which represents the views of Southeastern, Southwestern, and Western.

Its comments and our responses are included in appendix V. We also met

with representatives of the American Public Power Association, the

Edison Electric Institute, and the National Rural Electric Cooperative

Association—national organizations representing groups concerned with

the pricing of power provided by the PMAs, among other things—to discuss

our methodology and the results of our review.

12The Census Bureau generally considers a place to be urban if its population is 2,500 or more.

Page 33 GAO/RCED-99-15 Federal Power
Appendix III 

Objectives, Scope, and Methodology

Page 34 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

This appendix provides, for each state that receives PMA power from

Southeastern, Southwestern, and/or Western, (1) the counties and towns

that the preference customers included in our analysis report serving and

a map showing these areas and (2) the estimated rate changes if market

rates are charged, by number and percentage of preference customers;

household incomes in areas potentially receiving power; the extent to

which these areas are urban or rural; and the extent to which the

individual state’s total power consumption is provided by the PMA(s)

through the preference customers included in our analysis.

To define the preference customers’ service areas, we identified the

counties and/or towns in Electrical World: Directory of Electric Power

Producers (1997 ed.) that each of the customers considered in our analysis

reported serving. As was true with our rate analysis, we included only the

preference customers that purchased power directly from the PMAs—that

is, those customers that the PMAs listed in their 1995 annual reports. If we

had included utilities that indirectly buy PMA power (through direct

preference customers), such as generation and transmission cooperatives

and municipal joint action agencies, more counties and towns would be

shown on our state service territory maps. According to DOE officials,

many additional counties would be shaded in, among other states,

Montana, South Carolina, and Wyoming.

Page 35 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.1: Potential Service Areas - Alabama

Autauga Covington Monroe

Baldwin Crenshaw Montgomery

Barbour Dale Perry

Bibb Dallas Pike

Bullock Elmore Randolph

Butler Etowah Russell

Calhoun Geneva Shelby

Chambers Henry St. Clair

Chilton Houston Talladega

Clarke Lamar Tallapoosa

Clay Lee Washington

Coffee Lowndes Wilcox

Conecuh Macon

Coosa Marion

Chatom Millry

Coffeeville Opelika

Dothan Orange Beach

Evergreen Piedmont

Fairhope Robertsdale

Foley Sylacauga

Gulf Shores Troy

Hartford Tuskegee

Lafayette

Lanett

Luverne

McIntosh

Counties (potential service areas) Towns (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 36 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.1: Potential Rate Impacts and

Demographic Data - Alabama Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 25 92.6%

>0-0.5 1 3.7%

>0.5-1.0 1 3.7%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 27 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 217,255 34.4%

>$15,000-$20,000 63,400 10.0%

>$20,000-$25,000 58,969 9.3%

>$25,000-$30,000 52,706 8.4%

>$30,000-$35,000 46,989 7.4%

>$35,000-$40,000 39,021 6.2%

>$40,000 152,904 24.2%

Median income $22,686 631,244 households

Statewide median income $23,597 1,506,009 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 40 2.5% 20.0% 77.5%

Towns 20 35.0% 65.0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 604,309,000 70,007,000,000 0.9%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 37 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.2: Potential Service Areas -

Arizona

Cochise Page

Coconino Safford

Graham Thatcher

Greenlee Wellton

Maricopa Wickenburg

Mohave Yuma

Pima

Pinal

Santa Cruz

Yavapai

Yuma

Counties Towns (potential service areas)

(potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 38 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.2: Potential Rate Impacts and

Demographic Data - Arizona Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 2 12.5%

>0-0.5 5 31.3%

>0.5-1.0 6 37.5%

>1.0-1.5 1 6.3%

>1.5-2.0 0 0%

>2.0 2 12.5%

Total 16 100.1%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 323,654 24.7%

>$15,000-$20,000 131,773 10%

>$20,000-$25,000 126,112 9.6%

>$25,000-$30,000 114,836 8.7%

>$30,000-$35,000 105,223 8.0%

>$35,000-$40,000 90,724 6.9%

>$40,000 419,774 32.0%

Median income $28,031 1,312,096 households

Statewide median income $27,540 1,371,885 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 11 0% 36.4% 63.6%

Towns 6 16.7% 83.3% 0%

State electricity consumption

PMA-provided

in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,114,981,000 48,589,000,000 2.3%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 39 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.3: Potential Service Areas -

Arkansas

Bentonville

Clarksville

Jonesboro

Paragould

Paris

Piggott

Towns (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties (none)

Page 40 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.3: Potential Rate Impacts and

Demographic Data - Arkansas Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 4 57.1%

>0.5-1.0 2 28.6%

>1.0-1.5 0 0%

>1.5-2.0 1 14.3%

>2.0 0 0%

Total 7 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 12,506 35.4%

>$15,000-$20,000 4,170 11.8%

>$20,000-$25,000 3,576 10.1%

>$25,000-$30,000 3,202 9.1%

>$30,000-$35,000 2,570 7.3%

>$35,000-$40,000 2,065 5.9%

>$40,000 7,202 20.4%

Median income $21,262 35,291 households

Statewide median income $21,147 891,665 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 0 0% 0% 0%

Towns 6 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,387,014,000 34,671,000,000 4.0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 41 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.4: Potential Service Areas -

California

Lassen Alameda Gridley Sacramento

Los Angeles Anaheim Healdsburg Santa Clara

Orange Azusa Isleton Ukiah

Plumas Banning Lodi Vernon

Riverside Biggs Lompoc Wilton

San Bernardino Burbank Needles

San Diego Colton Palo Alto

Sierra Elk Grove Pasadena

Stanislaus Folsom Redding

Ventura Galt Riverside

Glendale Roseville

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 42 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.4: Potential Rate Impacts and

Demographic Data - California Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 3 9.1%

>0-0.5 23 69.7%

>0.5-1.0 4 12.1%

>1.0-1.5 1 3.0%

>1.5-2.0 1 3.0%

>2.0 1 3.0%

Total 33 99.9%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 1,126,506 18.5%

>$15,000-$20,000 445,498 7.3%

>$20,000-$25,000 464,619 7.6%

>$25,000-$30,000 443,741 7.3%

>$30,000-$35,000 449,468 7.4%

>$35,000-$40,000 398,025 6.5%

>$40,000 2,756,712 45.3%

Median income $36,233 6,084,569 households

Statewide median $ income 35,798 1 0,399,700 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 10 70% 10% 20%

Towns 27 92.6% 7.4% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 6,126,098,000 212,605,000,000 2.9%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 43 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.5: Potential Service Areas -

Colorado

Adams Aspen Julesburg

Arapahoe Burlington Lake City

Bent Center Lamar

Clear Creek Colorado Springs Longmont

Delta Crested Butte Loveland

Douglas Delta Manitou Springs

Eagle Estes Park Mount Crested Butte

El Paso Fleming Oak Creek

Elbert Fort Collins Security-Widefield

Fremont Fort Morgan Wiley

Garfield Frederick Wray

Gunnison Glenwood Springs Yuma

Hinsdale Granada

Jefferson Green Mountain Falls

Mesa Hartman

Park Haxtun

Pitkin Holyoke

Prowers

Saguache

Teller

Counties (potential

 service areas)

Towns (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 44 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.5: Potential Rate Impacts and

Demographic Data - Colorado Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 5 20.8%

>0-0.5 16 66.7%

>0.5-1.0 2 8.3%

>1.0-1.5 1 4.2%

>1.5-2.0 0 0%

>2.0 0 0%

Total 24 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 132,548 18.3%

>$15,000-$20,000 61,389 8.5%

>$20,000-$25,000 64,832 9.0%

>$25,000-$30,000 61,348 8.5%

>$30,000-$35,000 61,493 8.5%

>$35,000-$40,000 53,809 7.4%

>$40,000 288,071 39.8%

Median income $33,116 723,490 households

Statewide median $ income 30,140 1 ,285,119 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 20 25.0% 35.0% 40%

Towns 29 48.3% 51.7% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 3,966,983,000 35,317,000,000 11.2%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 45 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.6: Potential Service Areas -

Florida

Alachua Leon Chattahoochee

Calhoun Levy Esto

Citrus Liberty Grand Ridge

Columbia Madison Noma

Dixie Okaloosa Quincy

Gadsden Santa Rosa Sneads

Gilchrist Suwannee Wausau

Hamilton Taylor Westville

Holmes Wakulla

Jackson Walton

Jefferson Washington

Lafayette

Counties 

(potential service areas)

Towns (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 46 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.6: Potential Rate Impacts and

Demographic Data - Florida Estimated rate changes if PMAs charge market rates

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 7 87.5%

\ 0.5-1.0 1 12.5%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 8 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 125,369 31.6%

>$15,000-$20,000 44,180 11.2%

>$20,000-$25,000 39,821 10.1%

>$25,000-$30,000 33,380 8.4%

>$30,000-$35,000 29,762 7.5%

>$35,000-$40,000 24,335 6.1%

>$40,000 99,402 25.1%

Median income $23,421 396,249 households

Statewide median income $27,483 5,138,360 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 23 8.7% 39.1% 52.2%

Towns 8 25.0% 75.0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 466,648,000 167,492,000,000 0.3%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 47 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.7: Potential Service Areas - Georgia

Acworth Covington Hogansville Sandersville

Adel Dalton Jackson Snellville

Albany Doerun La Fayette Sylvania

Barnesville Douglas La Grange Sylvester

Blakely East Point Lawrenceville Thomaston

Brinson Elberton Mansfield Thomasville

Buford Ellaville Marietta Warner Robins

Cairo Fairburn Monroe Washington

Calhoun Fitzgerald Monticello West Point

Camilla Forsyth Moultrie Whigham

Cartersville Fort Valley Newnan

Centerville Grantville Norcross

College Park Griffin Palmetto

Commerce Hampton Quitman

Appling Charlton Early Haralson Lumpkin Polk Tift

Atkinson Chatham Echols Harris Macon Pulaski Toombs

Bacon Chattahoochee Effingham Hart Madison Putnam Treutlen

Baker Cherokee Elbert Heard Marion Quitman Troup

Baldwin Clarke Emanuel Henry McDuffie Rabun Turner

Banks Clay Evans Houston McIntosh Randolph Twiggs

Barrow Clayton Fannin Irwin Meriwether Richmond Upson

Bartow Clinch Fayette Jackson Miller Rockdale Walton

Ben Hill Cobb Floyd Jasper Mitchell Schley Ware

Berrien Coffee Forsyth Jeff Davis Monroe Screven Warren

Bibb Colquitt Franklin Jefferson Montgomery Seminole Washington

Bleckley Columbia Fulton Jenkins Morgan Spalding Wayne

Brantley Cook Gilmer Johnson Murray Stephens Webster

Brooks Coweta Glascock Jones Muscogee Stewart Wheeler

Bryan Crawford Glynn Lamar Newton Sumter White

Bulloch Dawson Gordon Lanier Oconee Talbot Wilcox

Burke DeKalb Grady Laurens Oglethorpe Taliaferro Wilkes

Butts Decatur Greene Lee Paulding Tattnall Wilkinson

Calhoun Dodge Gwinnett Liberty Peach Taylor Worth

Camden Dooly Habersham Lincoln Pickens Telfair

Candler Dougherty Hall Long Pierce Terrell

Carroll Douglas Hancock Lowndes Pike Thomas

Counties (potential service areas)

Towns (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 48 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.7: Potential Rate Impacts and

Demographic Data - Georgia Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 1 1.1%

>0-0.5 87 97.8%

>0.5-1.0 1 1.1%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 89 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 577,644 25.3%

>$15,000-$20,000 201,191 8.8%

>$20,000-$25,000 200,454 8.8%

>$25,000-$30,000 189,455 8.3%

>$30,000-$35,000 179,938 7.9%

>$35,000-$40,000 154,562 6.8%

>$40,000 782,527 34.2%

Median income $29,237 2,285,771 households

Statewide median $ income 29,021 2 ,366,575 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 151 8.0% 37.1% 55.0%

Towns 52 86.5% 13.5% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,664,101,000 96,192,000,000 1.7%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 49 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.8: Potential Service Areas -

Illinois

Counties 

(potential service areas)

Alexander Karnak

Johnson

Massac

Pope

Pulaski

Union

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Towns (potential service areas)

Page 50 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.8: Potential Rate Impacts and

Demographic Data - Illinois Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 0 0%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 1 100.0%

Total 1 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of Households

<=$15,000 10,721 41.8%

>$15,000-$20,000 2,649 10.3%

>$20,000-$25,000 2,446 9.5%

>$25,000-$30,000 2,114 8.2%

>$30,000-$35,000 1,845 7.2%

>$35,000-$40,000 1,391 5.4%

>$40,000 4,515 17.6%

Median income $18,845 25,681 households

Statewide median $ income 32,252 4 ,197,720 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 6 50% 50% 0%

Towns 1 0% 100% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 41,675,000 126,231,000,000 0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 51 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.9: Potential Service Areas - Iowa

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Akron Fonda Laurens Primghar

Alta Fontanelle Lenox Remsen

Alton Glidden Manilla Rock Rapids

Anita Graettinger Manning Sanborn

Anthon Harlan Mapleton Shelby

Atlantic Hartley Milford Sibley

Aurelia Hawarden Muscatine Sioux Center

Breda Hinton Neola Spencer

Coon Rapids Kimballton Onawa Stanton

Corning Lake Park Orange City Villisca

Denison Lake View Paullina Wall Lake

Woodbine

Counties (none) Towns (potential service areas)

Page 52 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.9: Potential Rate Impacts and

Demographic Data - Iowa Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 3 6.1%

>0-0.5 19 38.8%

>0.5-1.0 2 4.1%

>1.0-1.5 8 16.3%

>1.5-2.0 6 12.2%

>2.0 11 22.5%

Total 49 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of Households

<=$15,000 9,087 31.1%

>$15,000-$20,000 3,276 11.2%

>$20,000-$25,000 3,180 10.9%

>$25,000-$30,000 2,756 9.4%

>$30,000-$35,000 2,555 8.7%

>$35,000-$40,000 2,048 7.0%

>$40,000 6,333 21.7%

Median income $23,476 29,235 households

Statewide median income $26,229 1,065,243 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 0 0% 0% 0%

Towns 45 22.2% 77.8% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,179,844,000 34,301,000,000 3.4%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 53 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.10: Potential Service Areas -

Kansas

Douglas Anthony

Jackson Augusta

Osage Coffeyville

Pottawatomie Kansas City

Shawnee

Wabaunsee

Counties Towns (potential service areas)

(potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 54 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.10: Potential Rate Impacts and

Demographic Data - Kansas Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 8 88.9%

>0.5-1.0 0 0%

>1.0-1.5 1 11.1%

>1.5-2.0 0 0%

>2.0 0 0%

Total 9 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 50,588 28.3%

>$15,000-$20,000 18,132 10.1%

>$20,000-$25,000 17,305 9.7%

>$25,000-$30,000 16,008 9.0%

>$30,000-$35,000 15,761 8.8%

>$35,000-$40,000 12,371 6.9%

>$40,000 48,567 27.2%

Median income $25,967 178,732 households

Statewide median income $27,291 946,253 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 6 33.3% 33.3% 33.3%

Towns 4 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 767,850,000 30,357,000,000 2.5%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 55 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.11: Potential Service Areas -

Kentucky

Counties (none) Towns (potential service areas)

Henderson

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Page 56 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.11: Potential Rate Impacts and

Demographic Data - Kentucky Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 2 66.7%

>0-0.5 1 33.3%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 3 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 3,771 35.9%

>$15,000-$20,000 1,067 10.2%

>$20,000-$25,000 840 8.0%

>$25,000-$30,000 919 8.8%

>$30,000-$35,000 788 7.5%

>$35,000-$40,000 576 5.5%

>$40,000 2,539 24.2%

Median income $22,085 10,500 households

Statewide median income $22,534 1,379,610 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 0 0% 0% 0%

Towns 1 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 568,750,000 74,548,000,000 0.8%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 57 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.12: Potential Service Areas -

Louisiana

Lafayette

Minden

Natchitoches

Towns 

(potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties (none)

Page 58 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.12: Potential Rate Impacts and

Demographic Data - Louisiana Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 4 80%

>0.5-1.0 1 20%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 5 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 17,816 38.1%

>$15,000-$20,000 4,421 9.4%

>$20,000-$25,000 3,977 8.5%

>$25,000-$30,000 3,248 6.9%

>$30,000-$35,000 3,008 6.4%

>$35,000-$40,000 2,640 5.6%

>$40,000 11,709 25.0%

Median income $21,322 46,819 households

Statewide median income $21,949 1,498,371 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 0 0% 0% 0%

Towns 3 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 514,521,000 72,827,000,000 0.7%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 59 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.13: Potential Service Areas - Minnesota

Counties 

(potential service areas)

Aitkin Stearns Ada Granite Falls Mountain Lake St. James

Becker Swift Adrian Grove City New Prague St. Peter

Blue Earth Wadena Alexandria Halstad Newfolden Staples

Carver Waseca Austin Hawley Nielsville Stephen

Cass Barnesville Henning North Branch Thief River Falls

Chippewa Benson Hutchinson Olivia Tyler

Clearwater Blooming Prairie Jackson Ortonville Wadena

Dakota Breckenridge Lake City Owatonna Warren

Hennepin Brewster Lake Park Preston Waseca

Hubbard Darwin Lakefield Princeton Wells

Itasca Detroit Lakes Litchfield Redwood Falls Westbrook

Kandiyohi East Grand Forks Luverne Rochester Willmar

Le Sueur Elbow Lake Madison Sauk Centre Windom

Rice Fairfax Marshall Shelly Worthington

Scott Fairmont Melrose Sleepy Eye

Sibley Fosston Moorhead Spring Valley

St. Louis Grand Marais Mora Springfield

Towns (potential service areas)

Notes: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

According to DOE, no preference power is sold to customers in eastern Minnesota, 

although some customers have their headquarters offices in that part of the state. 

Page 60 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.13: Potential Rate Impacts and

Demographic Data - Minnesota Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 2 3.7%

>0-0.5 10 18.5%

>0.5-1.0 10 18.5%

>1.0-1.5 7 13.0%

>1.5-2.0 14 25.9%

>2.0 11 20.4%

Total 54 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 194,109 21.9%

>$15,000-$20,000 75,428 8.5%

>$20,000-$25,000 74,782 8.5%

>$25,000-$30,000 71,901 8.1%

>$30,000-$35,000 70,148 7.9%

>$35,000-$40,000 64,012 7.2%

>$40,000 334,807 37.8%

Median income $31,678 885,187 households

Statewide median income $30,909 1,648,825 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 21 9.5% 28.6% 61.9%

Towns 65 52.3% 47.7% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 2,258,841,000 53,959,000 4.2%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 61 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.14: Potential Service Areas -

Mississippi

Attala De Kalb

Clarke

George

Greene

Hancock

Harrison

Jackson

Jasper

Kemper

Lauderdale

Neshoba

Newton

Noxubee

Pearl River

Perry

Wayne

Winston

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Towns (potential service areas)

Counties 

(potential service areas)

Page 62 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.14: Potential Rate Impacts and

Demographic Data - Mississippi Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 3 60%

>0-0.5 2 40%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 5 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 83,478 37.2%

>$15,000-$20,000 24,709 11.0%

>$20,000-$25,000 21,708 9.7%

>$25,000-$30,000 19,389 8.6%

>$30,000-$35,000 15,925 7.1%

>$35,000-$40,000 12,951 5.8%

>$40,000 46,120 20.6%

Median income $20,824 224,280 households

Statewide median income $20,136 910,574 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 17 11.8% 47.1% 41.2%

Towns 1 0% 100% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 323,164,000 37,868,000,000 0.9%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 63 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.15: Potential Service Areas -

Missouri

Greene Carthage

Fulton

Hermann

Higginsville

Kennett

Lamar

Malden

New Madrid

Nixa

Poplar Bluff

Sikeston

Springfield

Thayer

West Plains

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 64 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.15: Potential Rate Impacts and

Demographic Data - Missouri Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 1 6.3%

>0-0.5 11 68.8%

>0.5-1.0 2 12.5%

>1.0-1.5 2 12.5%

>1.5-2.0 0 0%

>2.0 0 0%

Total 16 100.1%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 56,101 33.6%

>$15,000-$20,000 18,480 11.1%

>$20,000-$25,000 18,018 10.8%

>$25,000-$30,000 15,471 9.3%

>$30,000-$35,000 12,932 7.7%

>$35,000-$40,000 9,975 6.0%

>$40,000 36,000 21.6%

Median income $22,256 166,977 households

Statewide median income $26,362 1,961,364 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 1 0% 0% 100%

Towns 14 92.9% 7.1% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 2,559,565,000 62,259,000,000 4.1%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 65 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.16: Potential Service Areas -

Montana

Note: The areas the preference customers actually served may be smaller than the areas they 

reported serving. This may be particularly true for counties.

Big Horn Lodge Grass

Counties Towns (potential service areas)

(potential service areas)

Page 66 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.16: Potential Rate Impacts and

Demographic Data - Montana Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 2 66.7%

>0.5-1.0 1 33.3%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 3 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 1,594 44.8%

>$15,000-$20,000 306 8.6%

>$20,000-$25,000 387 10.9%

>$25,000-$30,000 247 7.0%

>$30,000-$35,000 251 7.1%

>$35,000-$40,000 183 5.2%

>$40,000 587 16.5%

Median income $18,461 3,555 households

Statewide median income $22,988 306,919 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 1 0% 0% 100%

Towns 1 0% 100% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 401,022,000 13,419,000,000 3.0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 67 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.17: Potential Service Areas - Nebraska

Ainsworth Callaway Gering Kearney Oakland Schuyler Valley

Alma Cambridge Gibbon La Vista Ogallala Scottsbluff Wahoo

Ansley Central City Gordon Laurel Omaha Scribner Wakefield

Arapahoe Chadron Gothenburg Lexington Ord Seward Wauneta

Arlington Cozad Grand Island Lincoln Oshkosh Shelton Waverly

Arnold Crawford Gretna Lodgepole Oxford Shickley Wayne

Ashland Creighton Harbine Louisville Papillion South Sioux City Weeping Water

Atkinson Crete Hartington Loup City Pawnee City Spalding West Point

Auburn Curtis Harvard Lyons Pender Spencer Weston

Aurora Dakota City Hastings Madison Peru Springfield Wilber

Bassett David City Hebron Maywood Pierce Steele City Winside

Beatrice De Witt Hemingford McCook Plainview Stuart Wisner

Beaver City Deshler Henderson Milford Plattsmouth Superior Wood River

Bellevue Elkhorn Holdrege Minden Ponca Sutherland Wymore

Bennington Fairbury Hooper Nebraska City Ralston Sutton York

Blair Foster Humboldt Neligh Randolph Syracuse Yutan

Bloomfield Franklin Indianola Norfolk Ravenna Tecumseh

Blue Hill Fremont Inglewood North Bend Red Cloud Tekamah

Broken Bow Friend Jansen North Platte Rushville Tilden

Burwell Geneva Juniata O'Neill Sargent Valentine

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Gage

Jefferson

Towns (potential service areas)

Counties 

(potential service areas)

Page 68 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.17: Potential Rate Impacts and

Demographic Data - Nebraska Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 5 8.9%

>0-0.5 39 69.6%

>0.5-1.0 8 14.3%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 4 7.1%

Total 56 99.9%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 78,732 26.8%

>$15,000-$20,000 30,595 10.4%

>$20,000-$25,000 29,891 10.2%

>$25,000-$30,000 26,495 9.0%

>$30,000-$35,000 25,004 8.5%

>$35,000-$40,000 20,649 7.0%

>$40,000 82,095 28.0%

Median income $26,294 293,461 households

Statewide median income $26,016 602,858 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 2 0% 0% 100%

Towns 135 31.1% 68.9% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 2,003,579,000 20,892,000,000 9.6%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 69 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.18: Potential Service Areas -

Nevada

Towns (potential service areas)

Elko Boulder City

Eureka

Nye

White Pine

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties 

(potential service areas)

Page 70 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.18: Potential Rate Impacts and

Demographic Data - Nevada Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 3 100%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 3 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 5,753 20.7%

>$15,000-$20,000 2,396 8.6%

>$20,000-$25,000 2,408 8.7%

>$25,000-$30,000 2,185 7.9%

>$30,000-$35,000 2,442 8.8%

>$35,000-$40,000 1,975 7.1%

>$40,000 10,654 38.3%

Median income $32,039 27,813 households

Statewide median income $31,011 467,513 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 4 0% 25.0% 75.0%

Towns 1 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,460,461,000 20,659,000,000 7.1%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 71 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.19: Potential Service Areas -

New Mexico

Counties 

(potential service areas)

Chaves Aztec Navajo

Curry Bloomfield Santa Rosa

DeBaca Farmington Shiprock

Eddy Fort Sumner Tatum

Lea Gallup Truth or Consequences

Los Alamos Logan Williamsburg

Otero Lovington

Roosevelt Melrose

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Towns (potential service areas)

Page 72 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.19: Potential Rate Impacts and

Demographic Data - New Mexico Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 7 63.6%

>0.5-1.0 1 9.1%

>1.0-1.5 2 18.2%

>1.5-2.0 1 9.1%

>2.0 0 0%

Total 11 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 40,998 31.7%

>$15,000-$20,000 14,466 11.2%

>$20,000-$25,000 13,364 10.3%

>$25,000-$30,000 10,802 8.4%

>$30,000-$35,000 9,811 7.6%

>$35,000-$40,000 8,254 6.4%

>$40,000 31,724 24.5%

Median income $23,254 129,419 households

Statewide median income $24,087 543,825 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 8 25.0% 12.5% 62.5%

Towns 12 58.3% 41.7% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 981,002,000 16,416,000,000 6.0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 73 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.20: Potential Service Areas - North Carolina

Counties (potential service areas)

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Towns (potential service areas)

Alamance Durham Mitchell Warren

Alexander Edgecombe Montgomery Washington

Alleghany Franklin Moore Watauga

Anson Gaston Nash Wayne

Ashe Gates Northampton Wilkes

Beaufort Granville Onslow Wilson

Bertie Greene Orange Yadkin

Bladen Halifax Pamlico Yancey

Brunswick Harnett Pender

Buncombe Haywood Perquimans

Burke Hertford Person

Cabarrus Hoke Pitt

Caldwell Hyde Polk

Carteret Iredell Randolph

Caswell Jackson Richmond

Catawba Johnston Robeson

Chatham Jones Rowan

Chowan Lee Rutherford

Cleveland Lenoir Sampson

Columbus Lincoln Scotland

Craven Macon Stanly

Cumberland Madison Transylvania

Dare Martin Union

Davie McDowell Vance

Duplin Mecklenburg Wake

Albemarle Hamilton Selma

Alexander Mills Hertford Sharpsburg

Apex Hobgood Shelby

Ayden Hookerton Simpson

Bath Huntersville Smithfield

Belhaven James City Statesville

Benson Kings Mountain Tarboro

Bostic Kinston Trent Woods

Cherryville La Grange Wake Forest

Clayton Landis Washington

Concord Laurinburg Washington Park

Cornelius Lincolnton Waynesville

Dallas Louisburg Wilson

Drexel Lumberton Windsor

Edenton Maiden Winterville

Elizabeth City Monroe

Enfield Morganton

Falkland New Bern

Farmville Newton

Fayetteville Pikeville

Forest City Pineville

Fremont Red Springs

Gastonia Robersonville

Granite Falls Rocky Mount

Greenville Scotland Neck

Page 74 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.20: Potential Rate Impacts and

Demographic Data - North Carolina Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 21 26.3%

>0-0.5 59 73.8%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 80 100.1%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 556,427 27.3%

>$15,000-$20,000 205,785 10.1%

>$20,000-$25,000 198,689 9.8%

>$25,000-$30,000 179,980 8.8%

>$30,000-$35,000 170,539 8.4%

>$35,000-$40,000 140,325 6.9%

>$40,000 583,240 28.7%

Median income $26,407 2,034,985 households

Statewide median income $26,647 2,517,098 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 83 3.6% 43.4% 53.0%

Towns 65 72.3% 27.7% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 377,403,000 104,673,000,000 0.4%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 75 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.21: Potential Service Areas -

North Dakota

Burleigh Grafton

Cavalier Hillsboro

Emmons Hope

Grant Lakota

Kidder Maddock

Logan Northwood

McIntosh Park River

McLean Sharon

Mercer Valley City

Morton

Oliver

Ramsey

Sheridan

Sioux

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 76 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.21: Potential Rate Impacts and

Demographic Data - North Dakota Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 3 16.7%

>0.5-1.0 5 27.8%

>1.0-1.5 2 11.1%

>1.5-2.0 4 22.2%

>2.0 4 22.2%

Total 18 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 19,180 30.4%

>$15,000-$20,000 7,031 11.1%

>$20,000-$25,000 6,826 10.8%

>$25,000-$30,000 5,498 8.7%

>$30,000-$35,000 4,898 7.8%

>$35,000-$40,000 4,388 7.0%

>$40,000 15,317 24.3%

Median income $23,761 63,138 households

Statewide median income $23,213 241,802 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 14 7.1% 71.4% 21.4%

Towns 9 22.2% 77.8% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,316,823,000 7,883,000,000 16.7%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 77 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.22: Potential Service Areas -

Oklahoma

Comanche Ryan

Copan Skiatook

Duncan Spiro

Eldorado Walters

Goltry Wetumka

Granite Yale

Hominy

Lexington

Manitou

Olustee

Purcell

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties (none) Towns (potential service areas)

Page 78 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.22: Potential Rate Impacts and

Demographic Data - Oklahoma Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 3 15.8%

>0.5-1.0 0 0%

>1.0-1.5 1 5.3%

>1.5-2.0 0 0%

>2.0 15 79.0%

Total 19 100.1%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 8,012 41.6%

>$15,000-$20,000 1,882 9.8%

>$20,000-$25,000 1,659 8.6%

>$25,000-$30,000 1,635 8.5%

>$30,000-$35,000 1,235 6.4%

>$35,000-$40,000 1,038 5.4%

>$40,000 3,778 19.6%

Median income $19,161 19,239 households

Statewide median income $23,577 1,207,235 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 0 0% 0% 0%

Towns 17 23.5% 76.5% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,367,314,000 41,392,000,000 3.3%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 79 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.23: Potential Service Areas -

South Carolina

Abbeville Abbeville McCormick

Anderson Bamberg Newberry

Cherokee Bennettsville Orangeburg

Chester Buffalo Prosperity

Greenville Clinton Rock Hill

Lancaster Cordova Seneca

Laurens Due West Union

McCormick Easley Westminster

Newberry Gaffney Winnsboro

Oconee Georgetown

Pickens Greenwood

Spartanburg Greer

Union Laurens

York Lowndesville

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 80 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.23: Potential Rate Impacts and

Demographic Data - South Carolina Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 8 30.8%

>0-0.5 18 69.2%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 26 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 134,906 27.5%

>$15,000-$20,000 48,670 9.9%

>$20,000-$25,000 45,648 9.3%

>$25,000-$30,000 43,252 8.8%

>$30,000-$35,000 41,486 8.4%

>$35,000-$40,000 35,209 7.2%

>$40,000 142,343 29.0%

Median income $26,739 491,514 households

Statewide median income $26,256 1,258,783 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 14 0% 7.1% 92.9%

Towns 23 73.9% 26.1% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 632,749,000 65,074,000,000 1.0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 81 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.24: Potential Service Areas -

South Dakota

Bennett Meade Arlington Langford

Brown Mellette Aurora Madison

Butte Pennington Badger McLaughlin

Campbell Perkins Beresford Miller

Corson Potter Big Stone City Parker

Dewey Shannon Brookings Pierre

Edmunds Spink Bryant Plankinton

Fall River Stanley Burke Sioux Falls

Faulk Sully Colman Tyndall

Gregory Todd Estelline Verdon

Haakon Tripp Faith Vermillion

Harding Walworth Flandreau Volga

Jackson Zeibach Fort Pierre Watertown

Jones Groton Wessington Springs

Lawrence Hecla White

Lyman Howard Winner

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 82 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.24: Potential Rate Impacts and

Demographic Data - South Dakota Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 3 8.1%

>0.5-1.0 2 5.4%

>1.0-1.5 10 27.0%

>1.5-2.0 12 32.4%

>2.0 10 27.0%

Total 37 99.9%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 38,768 33.6%

>$15,000-$20,000 14,172 12.3%

>$20,000-$25,000 12,651 11.0%

>$25,000-$30,000 10,586 9.2%

>$30,000-$35,000 9,495 8.2%

>$35,000-$40,000 6,947 6.0%

>$40,000 22,631 19.6%

Median income $21,678 115,250 households

Statewide median income $22,503 260,059 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 29 3.5% 65.5% 31.0%

Towns 32 21.9% 78.1% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,726,801,000 7,414,000,000 23.3%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 83 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.25: Potential Service Areas -

Texas

Atascosa Jasper

Brooks Liberty

Dimmit Livingston

Duval Plains

Edwards Vinton

Frio

Jim Hogg

Kinney

La Salle

McMullen

Medina

Real

Starr

Uvalde

Webb

Zapata

Zavala

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 84 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.25: Potential Rate Impacts and

Demographic Data - Texas Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 1 14.3%

>0-0.5 2 28.6%

>0.5-1.0 3 42.9%

>1.0-1.5 0 0%

>1.5-2.0 1 14.3%

>2.0 0 0%

Total 7 101.0%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 49,140 46.2%

>$15,000-$20,000 11,494 10.8%

>$20,000-$25,000 9,796 9.2%

>$25,000-$30,000 7,189 6.8%

>$30,000-$35,000 6,595 6.2%

>$35,000-$40,000 4,825 4.5%

>$40,000 17,344 16.3%

Median income $16,598 106,383 households

Statewide median income $27,016 6,079,341 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 17 11.8% 23.5% 64.7%

Towns 5 60% 40% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,435,629,000 263,279,000,000 0.6%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 85 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.26: Potential Service Areas -

Utah

Daggett Beaver Kaysville Roosevelt

Duchesne Blanding Lehi Salem

Garfield Bountiful Levan Spanish Fork

Iron Brigham City Logan Spring City

Kane Charleston Manti Springville

Millard Duchesne Meadow St. George

Piute Enterprise Midway

Sevier Ephraim Monroe

Uintah Escalante Morgan

Wasatch Fairview Mount Pleasant

Washington Fillmore Murray

Wayne Heber Nephi

Helper Oak City

Holden Parowan

Hurricane Payson

Hyrum Price

Kanosh Provo

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 86 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.26: Potential Rate Impacts and

Demographic Data - Utah Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

0-0.5 13 32.5%

0.5-1.0 5 12.5%

1.0-1.5 9 22.5%

1.5-2.0 1 2.5%

2.0 12 30%

Total 40 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 19,182 26.9%

>$15,000-$20,000 8,238 11.5%

>$20,000-$25,000 7,815 10.9%

>$25,000-$30,000 7,027 9.8%

>$30,000-$35,000 6,793 9.5%

>$35,000-$40,000 5,270 7.4%

>$40,000 17,118 24.0%

Median income $25,312 71,443 households

Statewide median income $29,470 537,196 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 12 0% 33.3% 66.7%

Towns 40 47.5% 52.5% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 1,567,177,000 18,460,000,000 8.5%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 87 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.27: Potential Service Areas - Virginia

Albemarle Cumberland Loudoun Rockbridge Bedford

Alleghany Dinwiddie Louisa Rockingham Blackstone

Amelia Essex Lunenburg Shenandoah Culpeper

Amherst Fairfax Madison Southampton Danville

Appomattox Fauquier Mecklenburg Spotsylvania Elkton

Augusta Fluvanna Montgomery Stafford Franklin

Bath Giles Nelson Surry Harrisonburg

Bedford Goochland Northumberland Sussex Martinsville

Botetourt Greene Nottoway Westmoreland Petersburg

Brunswick Greensville Orange Radford

Buckingham Halifax Pittsylvania Richlands

Campbell Hanover Powhatan Salem

Caroline Highland Prince Edward Suffolk

Charlotte Isle of Wight Prince George Wakefield

Chesterfield King George Prince William

Clarke King William Rappahannock

Craig King and Queen Richmond

Culpeper Lancaster Roanoke

Note: The areas the preference customers actually served may be smaller than the 

areas they reported serving. This may be particularly true for counties.

Counties (potential service areas) Towns (potential service areas)

Page 88 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.27: Potential Rate Impacts and

Demographic Data - Virginia Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 12 52.2%

>0-0.5 11 47.8%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 23 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 165,313 15.9%

>$15,000-$20,000 67,824 6.5%

>$20,000-$25,000 72,452 7.0%

>$25,000-$30,000 73,548 7.1%

>$30,000-$35,000 75,054 7.2%

>$35,000-$40,000 70,738 6.8%

>$40,000 513,395 49.4%

Median income $39,552 1,038,324 households

Statewide median income $33,328 2,294,722 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 63 4.8% 68.3% 27.0%

Towns 14 78.6% 14.3% 7.2%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 209,466,000 85,162,000,000 0.3%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 89 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.28: Potential Service Areas -

Wisconsin

Note: The one preference customer in Wisconsin does not sell power at the retail level 

and therefore does not serve any counties or towns.

Counties (none) Towns (none)

Page 90 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.28: Potential Rate Impacts and

Demographic Data - Wisconsin Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 1 100%

>0.5-1.0 0 0%

>1.0-1.5 0 0%

>1.5-2.0 0 0%

>2.0 0 0%

Total 1 100%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 n/a n/a

>$15,000-$20,000 n/a n/a

>$20,000-$25,000 n/a n/a

>$25,000-$30,000 n/a n/a

>$30,000-$35,000 n/a n/a

>$35,000-$40,000 n/a n/a

>$40,000 n/a n/a

Median income n/a n/a

Statewide median income $29,442 1,824,252 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties n/a n/a n/a n/a

Towns n/a n/a n/a n/a

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 2,411,000 57,967,000,000 0%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 91 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Figure IV.29: Potential Service Areas -

Wyoming

Carbon Gillette

Lincoln Torrington

Sweetwater

Uinta

Note: The areas the preference customers actually served may be smaller than 

the areas they reported serving. This may be particularly true for counties.

Counties Towns (potential service areas)

(potential service areas)

Page 92 GAO/RCED-99-15 Federal Power
Appendix IV 

State-Specific Data on Potential Rate

Impacts and Service Area Demographics

Table IV.29: Potential Rate Impacts and

Demographic Data - Wyoming Estimated rate changes to preference customers if market rates are charged

Cents per kWh

Number of preference

customers

Percent of preference

customers

<=0 0 0%

>0-0.5 3 42.9%

>0.5-1.0 1 14.3%

>1.0-1.5 1 14.3%

>1.5-2.0 2 28.6%

>2.0 0 0%

Total 7 100.1%

Incomes of households in preference customers’ reported service areas

Household income Number of households Percent of households

<=$15,000 7,297 20.3%

>$15,000-$20,000 2,708 7.6%

>$20,000-$25,000 3,076 8.6%

>$25,000-$30,000 2,922 8.1%

>$30,000-$35,000 3,175 8.9%

>$35,000-$40,000 2,779 7.6%

>$40,000 13,920 38.8%

Median income $32,809 35,877 households

Statewide median income $27,096 169,309 households

Urban/rural classification of preference customers’ reported service areas

Total Percent urban Percent rural Percent mixed

Counties 4 25.0% 0% 75.0%

Towns 2 100% 0% 0%

State electricity consumption

PMA-provided

(in kWh)

State total

(in kWh)

Percent of state

total from PMA

Consumption 169,990,000 11,199,000,000 1.5%

Note: The areas the preference customers actually served may be smaller than the areas they

reported serving. This may be particularly true for counties. Consequently, preference customers

actually may have served fewer households than we calculate.

Sources: Developed by GAO from data provided by the PMAs, Electrical World, and the Census

Bureau.

Page 93 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

See comment 2.

Page 94 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

See comment 3.

Now on p. 66.

Now on p. 14.

See comment 4.

Now on p. 4.

See comment 5.

Page 95 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

See comment 6.

See comment 7.

See comment 8.

See comment 9.

See comment 10.

Page 96 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

See comment 11.

See comment 12.

Now on pp. 10 and 11.

Now on pp. 10 and 11.

See comment 13.

See comment 14.

Now on p. 4.

See comment 15.

Page 97 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

See comment 16.

See comment 17.

Page 98 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

The following are GAO’s comments on the Power Marketing Liaison

Office’s letter dated October 30, 1998.

GAO’s Comments 1. DOE comments that our data sources are flawed because we relied on

incomplete and/or inaccurate data and that it is impossible to have

confidence in conclusions drawn from the data’s analysis. To address each

of our objectives, our analyses used data reported by the PMAs and their

preference customers—data that we believe to be the best available. DOE

recognizes that obtaining complete data on the electric utility industry is

not easy. We believe that we used the data appropriately to satisfy the

objectives of our review and that our methodology is sound. However, we

agree the data we used have some limitations and we have noted the

limitations in our report. Many of the concerns that DOE expresses do not

deal with the data we used but with the definition of a preference

customer of a PMA. For our analysis, we included only the preference

customers who purchased power directly from the PMAs—as listed in the

PMAs’ 1995 annual reports. We did not include utilities that indirectly

purchase PMA power because the 1995 annual reports of two of the three

PMAs do not include them in their customer lists. Southwestern’s 1995

annual report states that two of its customers also serve a number of

municipal utilities and includes these municipal utilities in the total

number of customers. The annual reports of Southeastern and Western,

however, list only the customers that buy power directly from those PMAs

and do not include the municipal utilities that purchase power from

generation and transmission cooperatives or municipal joint action

agencies. Because Southeastern and Western together represent over

90 percent of the total preference customers of the three PMAs included in

our analysis, we used their approach. However, to address DOE’s concerns,

we added statements to the report in several places explaining that our

analysis did not include utilities that indirectly purchase PMA power.

For our analysis of urban/rural populations, we used the counties and

towns that the preference customers included in our rate analysis reported

to Electrical World: Directory of Electric Power Producers. In connection

with identifying the areas that preference customers report serving, we

acknowledge that the data in Electrical World may not match the actual

service territories because utilities report to Electrical World the counties

and/or towns they serve without specifying the exact service boundaries

within these counties and towns. However, we used these data because

they (1) were reported by the preference customers and (2) were the best

available. We believe this approach adequately addresses our objective of

Page 99 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

identifying the areas that the three PMAs’ preference customers report

serving and does not affect our primary objective, to estimate potential

rate impacts by state.

2. DOE states that we omitted from our analysis generation and

transmission cooperatives and municipal joint action agencies that

purchase power from the PMAs. We did not exclude them. We estimated a

potential rate change for every generation and transmission cooperative

and municipal joint action agency that purchased wholesale power from

Southeastern, Southwestern, and Western in 1995. We also attempted to

include them in our maps and urban/rural analysis. However, in many

cases, the generation and transmission cooperatives and municipal joint

action agencies sell only wholesale power to other utilities and do not

provide retail service and, thus, do not report serving any counties or

towns. As a result, we were unable to reflect such service territories on

our maps. Similarly, since our urban/rural analysis relied on the Census

Bureau’s data of populations in the counties and towns that the preference

customers report serving, we did not include in our analysis the service

territories of the utilities that purchase power from the generation and

transmission cooperatives and municipal joint action agencies.

As we noted in comment 1, we did not include the generation and

transmission cooperatives or municipal joint action agencies in our

analysis because the PMAs’ annual reports, with very few exceptions, do

not include them either.13 However, it is important to note that if our rate

analysis had included the municipal utilities that buy from preference

customer generation and transmission cooperatives and municipal joint

action agencies, we believe that the rate increases for many of these

utilities would have been very small: If a municipal utility purchased all its

power from a direct preference customer of the PMA, the municipal utility’s

rate increase would equal the increase we estimated for the direct

preference customer. If the utility purchased a portion of its power from

sources other than the preference customer, its rate increase would be

lower. For example, according to Southwestern’s fiscal year 1995 annual

report, Kansas Municipal Energy Agency (Kansas MEA) purchased power

from Southwestern and transmitted it to 24 municipal utilities. We

estimate that if the Kansas MEA paid market rates for the power it

purchased from the PMA, its average rate would rise by 0.22 cent per kWh,

a relatively small increase. If a municipal utility purchased all its power

from the Kansas MEA, its rate would also rise by 0.22 cents per kWh. If a

13Southwestern’s 1995 annual report includes 2 (of more than 60 customers reported), and

Southeastern’s and Western’s, none.

Page 100 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

municipal utility purchased half of its power from the Kansas MEA, its rate

increase would be 0.11 cents per kWh. Municipal utilities’ increases would

often be small because the direct preference customers who sell them

power often purchase a small percentage of their total power from the

PMA.

3. DOE states that our maps do not show the service areas of the customers

of the generation and transmission cooperatives and municipal joint action

agencies. We agree. However, to be consistent with our rate analysis, we

included only the counties and towns that the preference customers

(those that purchase power directly from the PMAs) report. If we had

included the service territories of the utilities that purchase power from

preference customers as DOE suggests, our state maps would have had

more shadings for counties and/or dots for towns. However, it is important

to note that, in many cases, the additional counties and towns in our maps

would receive relatively small portions of their power from the PMA. For

example, Southwestern’s 1995 annual report states that the PMA sells

power to the Louisiana Energy and Power Authority, which, in turn, serves

nine municipal utilities. We estimate that Louisiana Electric and Power,

purchased 8.15 percent of its power from the PMA in 1995. This means that

the nine municipal utilities received, at most, 8.15 percent of their power

from Southwestern. If the municipal utilities purchased portions of their

power from other sources, the counties and towns they serve would

consume a smaller portion of PMA power. Our analysis shows that many of

the preference customers that sell power to other utilities purchase less

than 10 percent of their power from the PMA. Moreover, regardless of how

many utilities buy PMA power indirectly through preference customers, the

portion of a state’s electricity consumption that comes from the PMA

remains the same—for example, 0.7 percent in Louisiana.

4. In its comments, DOE states that our analysis shows that Southwestern is

serving 14 towns and one county in the State of Missouri, with 93 percent

of PMA power going to urban areas of the state. We believe that DOE

misinterpreted our analysis. Our analysis does not show that 93 percent of

Southwestern’s power in Missouri goes to urban areas. Our analysis does

show that of the 14 towns that preference customers who buy directly

from the PMA report serving, 13, or 93 percent, have populations that are at

least 80 percent urban, as defined by the Census Bureau. DOE states that

Associated Electric Cooperative has a “PMA power allocation [that] serves

rural areas throughout the State of Missouri.” However, this power is

distributed to these areas by the utilities that purchase power from

Associated Electric, not Associated Electric itself. Associated Electric did

Page 101 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

not report serving any counties or towns to Electrical World, the source of

our data. Moreover, Southwestern, in its 1995 annual report, does not

include the utilities that purchase power from the Associated Electric

Cooperative in its total count of customers. Therefore, neither did we.

5. DOE states that using 1995 data compromises our rate analysis because

(1) PMAs’ rates have recently declined and (2) prices for power purchased

during periods of peak use have recently increased. These two factors

would increase potential rate increases, but only if market rates remain

the same. However, according to officials of the Edison Electric Institute,

market rates for wholesale power have also declined since 1995. As the

market continues to evolve, many industry experts believe these rates will

fall farther. If market rates fall more than the PMAs’ rates, our estimates of

rate increases will prove to be overstated. We have seen no evidence that

the PMAs’ rates have fallen more than rates in the wholesale market.

6. DOE maintains that power from the Pick-Sloan project will be reallocated

to 25 Native American tribes and 11 other new customers in the Upper

Midwest in 2001 and that, as a result, our analysis will be “even further

outdated.” However, we were asked to examine the three PMAs’ sales,

based on the most recent data—1995, not their sales in the future. In

addition, although Western may be reallocating its power, this does not

necessarily mean that the new allocation would appreciably change the

profile of the service areas (in terms of the extent to which they are urban

or rural and in terms of their household income). This profile would

change only if the areas losing Western’s power are more urban or rural or

different in income than the areas that would gain access to Western’s

power. Moreover, although Pick-Sloan sold more power than other of

Western’s projects, it nonetheless represented about only about one-third

of Western’s total sales in 1995. Consequently, the reallocation would have

to be very large to significantly change the overall profile of Western’s

preference customers’ service territories.

7. DOE states that average rates are not a good proxy for specific power

services from PMAs. We acknowledge that average revenue per kWh (total

revenues/total electricity sales) is an imperfect indicator of electricity

rates because it combines the costs of several types of services, such as

capacity, peak service, and off-peak service. However, as we have stated in

several past reports, we believe it is a strong, broad indicator of the

relative power production costs of the PMAs compared to those of

investor-owned utilities and publicly owned generators. We agree that

preference customers would likely pay higher than the average rate per

Page 102 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

kWh in replacing the portion of PMA power that is used during periods of

peak demand.

8. DOE states that in many parts of the Upper Midwest and Southeast, it is

typical for towns in a county to be served by an investor-owned utility

while the remaining parts of the county are served by a rural electric

cooperative. Thus, DOE believes that our analysis is flawed if the data do

not account for this difference. We agree this may be an issue. However, as

stated previously, we relied on the set of counties and towns that the

preference customers reported serving to Electrical World. The preference

customers did not specify which portions of a county they served when

they reported serving a county. Also, in Midwestern states, such as Iowa,

Missouri, and Nebraska, preference customers primarily reported their

service areas as towns rather than counties. Thus, the problem concerning

counties that DOE identified would not arise there. In addition, even if,

within a particular county, an investor-owned utility serves a town, it may

not follow that the area outside the town has lower household incomes.

9. DOE states that we omitted state/federal agencies. We excluded state and

federal agencies because, with a few exceptions, they are not utilities and

thus are not in EIA’s Form 861 or “sales for resale” databases. As a result,

we could not perform calculations on potential rate impacts with the

approach we used for preference customers who are utilities. We excluded

state and federal agencies from other analyses because (1) they do not

provide retail service to residential end-users and (2) we wanted to keep

the group of customers consistent across the analyses. In addition, DOE

provides no economic analysis that the PMAs’ sales to these agencies

provide a “large benefit to the state they are located in.” In most cases,

even if the sales to these agencies were included in the analysis, the PMAs’

portion of a state’s total electricity consumption would be relatively small.

We agree that some indirect economic impact may be attributable to the

lower price of the power—relative to other retail prices—consumed by the

preference customers not included in our analysis, but its measurement is

uncertain.

10. DOE states that TVA is omitted. We agree that if we had been able to

include the 160 distributors that received TVA power in 1995 in our

analysis, the percentages of PMA power provided to the seven states served

by TVA would have increased. However, because of data limitations, such

as EIA’s designating TVA as an Alabama utility in its Form 861 database and

TVA’s not reporting a service territory in Electrical World, we could not

apply the methodology used in our analysis and were unable to develop

Page 103 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

and implement a methodology to appropriately incorporate TVA. However,

our draft explained that Southeastern sells power to TVA, provided

information on the amount of power that Southeastern sold to TVA in 1995

and 1996, and provided a map of TVA’s service territory. In addition, we

have added a more detailed explanation of our methodology concerning

TVA in appendix III.

11. DOE believes that Wisconsin should not be included in our analysis

because Wisconsin Public Power received only “nonfirm” (interruptible

during peak periods) power from Western. However, Western listed

Wisconsin Public Power as one of its customers for 1995, and we believe

that it was appropriate to include this customer in our rate analysis

because we did not differentiate between firm (always available) and

nonfirm power sales. Also, because Wisconsin Public Power sells only

wholesale power and did not report serving any counties or towns in

Electrical World, we could not include it in our other analyses.

12. DOE states that our report does not maintain a neutral description of

the findings because the report goes beyond data reporting and does not

present all opposing points of view. It cites as an example our observation

that in cases where potential rate increase may be relatively large, PMAs

currently sell power at relatively low rates and rate caps could be used to

mitigate these increases. We believe that our report is balanced and that,

throughout our report, we present a neutral description of our objectives

and findings. We mention that PMAs’ rates are relatively low to provide

context for the relatively large rate increases. It is easier to understand the

significance of a rate increase that exceeds 1.5 cents per kWh if the reader

understands the base rate upon which the increase is calculated. On the

issue of rate caps, we did not intend for our discussion to be a

recommendation. We included it because, as in previous reports, this issue

has been an important consideration in other deregulatory initiatives.

13. DOE states that our classifications of rates are subjective. We agree.

However, we devised the parameters of these classifications on the basis

of our examination of all the rate changes in our analysis. Moreover, we

explicitly describe the values attached to each of these classifications in

our report. We used these categories to simplify the discussion, not as a

definitive statement.

14. With regard to selling power to high-income areas, DOE misinterprets

our analysis. In the examples cited, we refer to the percentage of

households with higher incomes, not the median income. More generally, a

Page 104 GAO/RCED-99-15 Federal Power
Appendix V 

Comments of the Department of Energy’s

Power Marketing Liaison Office

county may have a median that is relatively close to the statewide median,

yet still have a large portion of households with higher incomes. We agree

with DOE’s comment regarding Native Americans’ receiving PMA power and

have added an example for balance.

15. With regard to our not reporting rate increases as percentages, we

made a subjective judgment not to do so. As we stated in appendix III, we

believe that reporting rate changes in cents per kWh more accurately

portrays the true value of the changes. In addition, the base rates

preference customers paid in 1995 differ greatly from customer to

customer. As a result, if we expressed the rate changes as percentages, the

same increase measured in cents per kWh would be reported as different

increases for two customers with different base rates.

16. In response to DOE’s assertion that our methodology is not

conservative, we disagree. We believe our methodology is conservative

because we assume no changes in wholesale market prices. If wholesale

prices decline in the future, as many industry experts predict, our

estimates of rate increases will prove to be overstated. Because we could

not incorporate forecasts of wholesale prices, we believe our approach is

conservative.

17. DOE states that our urban/rural terminology may be misleading. As

suggested, we have included the Census Bureau’s definition of urban in

the body of our report and appendix III.

Page 105 GAO/RCED-99-15 Federal Power
Appendix VI 

Major Contributors to This Report

Resources,

Community, and

Economic

Development Division

Steve Brown

Lynne Goldfarb

Charles Hessler

Mitchell Karpman

Peg Reese

John Skeen

Daren Sweeney

Office of the General

Counsel

Doreen Feldman

Page 106 GAO/RCED-99-15 Federal Power
Appendix VI 

Major Contributors to This Report

Page 107 GAO/RCED-99-15 Federal Power
Related GAO Products

Federal Power: Options for Selected Power Marketing Administrations’

Role in a Changing Electricity Industry (GAO/RCED-98-43, Mar. 6, 1998).

Federal Electricity Activities: The Federal Government’s Net Cost and

Potential for Future Losses (GAO/AIMD-97-110 and 110A, Sept. 19, 1997).

Federal Power: Issues Related to the Divestiture of Federal Hydropower

Resources (GAO/RCED-97-48, Mar. 31, 1997).

Power Marketing Administrations: Cost Recovery, Financing, and

Comparison to Nonfederal Utilities (GAO/AIMD-96-145, Sept. 19, 1996).

Federal Electric Power: Operating and Financial Status of DOE’s Power

Marketing Administrations (GAO/RCED/AIMD-96-9FS, Oct. 13, 1995).

(141155) Page 108 GAO/RCED-99-15 Federal Power
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