Wed
Apr 10 2013
12:25 pm

The President’s budget includes a chapter entitled, “Creating a 21st Century Government.” In that chapter, TVA is highlighted.
Here’s the language:
• Reform TVA. Since its creation in the 1930s during the Great Depression, the Federally-owned and operated Tennessee Valley Authority (TVA) has been producing low-cost electricity and managing natural resources for a large portion of the Southeastern United States. TVA’s power service territory includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia, covering 80,000 square miles and serving more than 9 million people. TVA is a self-financing Government corporation, funding operations through electricity sales and bond financing. In order to meet its future capacity needs, fulfill its environmental responsibilities and modernize its aging generation system, TVA’s current capital investment plan includes more than $25 billion of expenditures over the next 10 years. However, TVA’s anticipated capital needs are likely to quickly exceed the agency’s $30 billion statutory cap on indebtedness. Reducing or eliminating the Federal Government’s role in programs such as TVA, which have achieved their original objectives and no longer requires Federal participation, can help put the Nation on a sustainable fiscal path. Given TVA’s debt constraints and the impact to the Federal deficit of its increasing capital expenditures, the Administration intends to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divestiture of TVA, in part or as a whole.

Goes right along with gutting Social Security and Medicare. Too bad Enron isn't around any more to 'sell" TVA to.

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R. Neal's picture

Wow. That's pretty huge. Good

Wow. That's pretty huge. Good catch.

Andy Axel's picture

Maybe the state of Georgia

Maybe the state of Georgia will buy them.

Rachel's picture

Well, TVA no longer gets any

Well, TVA no longer gets any Federal $$$. OTOH, the TVA act says TVA is a regional development agency, not a power company.

IMO, it should either go back to its mission, or be sold. There's no reason the Feds should manage a power company.

Guess which my preference is? And then guess how likely it is to happen?

gonzone's picture

FDR is currently spinning in

FDR is currently spinning in his grave. They say it took Nixon to go to China and I suppose it takes Obama to sell the people out. Corporate whores everywhere one looks.

Rachel's picture

FDR has been spinning in his

FDR has been spinning in his grave about TVA at least even since Craven Crowell decided to stop taking any Federal funds. And probably long before that as the agency devolved into a power company rather than what it was supposed to be.

R. Neal's picture

Not sure how I feel about all

Not sure how I feel about all this.

I guess it would be good to get them off the fence re. whether they want to be a government agency when it's convenient or a private corporation when it's more convenient.

I'm not sure if they have "achieved their original objectives," though. Still a lot of poverty and lack of economic development in the TVA region. On the other hand, should that even be their role?

As far as their environmental role, that's a pretty big deal. They're bad enough operating under the government's thumb. How much worse will it get when quarterly profits drive everything?

Also, I'm confused about the part where TVA is self sustaining but they are also a load on the federal deficit. So this is just an accounting thing to move their debt off the books, or what?

Rachel's picture

As far as their environmental

As far as their environmental role, that's a pretty big deal. They're bad enough operating under the government's thumb. How much worse will it get when quarterly profits drive everything?

You think that doesn't happen now?

And all the enivronmental programs except the ones necessary for compliance have pretty much been killed off over the last 20 years. Those compliance programs would still survive under privitization.

I'm not saying I'm a big fan of privitizing TVA. I'm just saying it's not what it's supposed to be, I doubt it's going back to what it's supposed to be, and if it's just gonna be another power company there's no reason to keep it Federal.

R. Neal's picture

In addition

In addition to cutting corners on emissions, safety etc. regulations, I'm also thinking about public recreation areas, boat launches, wildlife conservation areas, fisheries management, parks, etc. etc.

Stick's picture

21st Century Rip-Off

I'm thinking about soaring utility rates as the valley is Enron-ned. Going on 'the market' will raise rates and undermine 'development'.

By the way, this was the plan all along:

employee's picture

I'm confused about the part where TVA is self sustaining

They are self-sustaining, they do not get money from the taxpayer other than from electric cost, which is lower than any other company.

R. Neal's picture

P.S. Are TVA's bonds backed

P.S. Are TVA's bonds backed by the full faith and credit of the U.S. government? Would people still buy them if they weren't?

EDIT: The answer to the first question is "no": TVA debt securities are not obligations of the U.S. government and do not carry a government guarantee.

R. Neal's picture

P.P.S. Who would buy them and

P.P.S. Who would want to buy them and take on all that debt?

R. Neal's picture

Duke Energy serves 7.2

Duke Energy serves 7.2 million customers and has about $41 billion in debt and $19.2 billion in revenues. Duke's market cap is $51.6 billion.

TVA serves 9 million customers and has about $24 billion in debt and $11.2 billion in revenues (more than half of it in Tennessee).

(Clearly free market enterprises are more efficient!)

R. Neal's picture

Guess this will teach Corker

Guess this will teach Corker and Alexander not to block his board nominees.

R. Neal's picture

P.S Nice scoop gonzone.

P.S Nice scoop gonzone. Judging from timestamps, local media read it here first.

gonzone's picture

thanks. glad to help you

thanks. glad to help you sir.

R. Neal's picture

Alexander pissed, calls for

Alexander pissed, calls for big federal government program to keep providing essential services at low cost.

(link...)

rht's picture

Debt and Duty

True that TVA debt is technically not a U.S. obligation and not guaranteed by U.S., but there has been a perception that U.S. would in fact step in anyway to protect bondholders if need be.

Also true that raising TVA's $30B debt ceiling (which i believe would take act of Congress) would technically not add to U.S. debt. So you can question Obama's statement about TVA having an "impact to the Federal deficit." Although possibly there might be an indirect impact since i think TVA still does owe money to the U.S. from long ago and the worse financial shape TVA gets in the less likely it can pay that back.

As to TVA having become more or less just an electric utility, there is at least theoretically still some value in having it be a quasi-govt entity rather than investor owned. Part of the intent from way back when was to have TVA be a "yardstick" or benchmark to help show the price at which electricity could be produced and marketed, so as to help keep investor owned utilities in line. That might still be a useful function if you If you could sort through all the accounting apples to oranges complexities.

metulj's picture

I love this. Who is going to

I love this. Who is going to be the Bereshnovsky of People's Republic of Tennessee? Buy it the for few rubles! Sell for the many!

gonzone's picture

Craig's List or eBay? Where

Craig's List or eBay? Where shall we put it out for bids?

Hey! Psst! Wanna buy a good used government agency? Give you a great deal!

michael kaplan's picture

The vintage architecture

The vintage architecture might do well at Sotheby's

Mike Cohen's picture

EconDev

I haven't been working in government for several years (probably a good thing for me and for government) but I will say this: TVA was terrific partner in economic development. Every time there was a prospect, TVA would be at the table, doing what they could to help make the deal work.

Rachel's picture

Was that before or after they

Was that before or after they downsized the economic development group and moved them all to Nashville (which is out of the Tennessee Valley, I might add)?

Roscoe Persimmon's picture

Would like to get Jimmy Duncan's take on TVA for sale

seeing how he was asleep at the switch while the bulk of the good paying jobs and the bulk of the operations of TVA mysteriously moved right out of Knoxville and the 2nd Congressional District right downstream to downtown Chattanooga and the heart of the 3rd District.

There are no empty towers in downtown Chattanooga as monuments to the TVA that was.

Rachel's picture

Ummm... TVA moved out of a

Ummm... TVA moved out of a lot of bldgs in Chattanooga and consolidated in the complex. I believe it's now not entirely filled by TVA.

Cutbacks happened everywhere. There's hardly anybody left in Norris and Muscle Shoals employment is WAY less than it used to be.

michael kaplan's picture

Has there been any discussion

Has there been any discussion about what will happen to the nuclear plants?

metulj's picture

Comrade Oilgarsky says

Comrade Oilgarsky says "PROFIT!"

Mary Wilson's picture

The 2008 Spill disaster exposed mismanagement...

Big Time. Note in last week's NS that the mediation of the lawsuits against TVA's coal ash spill are now being given XXX amount more days to come to an agreement...tells it all. TVA stopped being a responsible 'power company' when it was taken over by the Coal industry, the 'American Coal Ash Association' and the Nuclear power conglomerate. Kilgore was paid $6 million for all he "did to help TVA get past the worst national disaster in America after Katrina". And he did it by refusing to help the VICTIMS.
How many of its 13 nuke plants are fully operational? Poor ole Alexander wants our government to help fund 100 more just like TVA's because 'wind power would ruin his view of the Smokies'. If I did not misread a tiny article months ago, any solar company that wants to start up operation as a 'power source' has to get "TVA's permission".
And for years, TVA has been bipolar about whether or not it is operating as a Federal Agency. That depends on whether it wanted to be inspected and regulated (never, of course), or whether it wanted to be just a little ole private entity with the power to choose its own Board members.
What about that tiny County in Alabama where it shipped all that coal ash, toxic sludge? How many down there are now sick? Where did it ever decide to ship the nuke waste from the nuke plants, one never completed, one perpetually "offline", etc??
It definitely will be a good thing for the Federal government to shed its connection to TVA.

employee's picture

one never completed, one perpetually "offline"

Might want to check now, ones almost complete and the other will be next.

Lisa Starbuck's picture

Shoreline Development

Selling TVA would be an invitation to developers everywhere to acquire and develop thousands of acres of public land and shoreline now managed by TVA. I think it's a terrible idea.

Local Citizen's picture

ALCOA

Submitted by Mike Cohen on Wed, 2013/04/10 - 4:44pm.

I haven't been working in government for several years (probably a good thing for me and for government) but I will say this: TVA was terrific partner in economic development. Every time there was a prospect, TVA would be at the table, doing what they could to help make the deal work.

I bet ALCOA would disagree with this statement.

Local Citizen's picture

GOLDWATER

I think Goldwater is still alive and well!

gonzone's picture

Retail Power

With TVA gone, all the local utilities would become easy prey to the large retail power companies. Under TVA, they're pretty secure.

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