TVA – bye, bye, stimulus energy money
October 29, 2009
Power companies are abuzz over getting “stimulus” money grants for so-called smart grids. Generally, these are huge amounts in the multi-millions and undoubtedly will help investor-owned utilities through hard financial times.
No such luck for the TVA and its TVA “taxpayers” who must foot all the bills for improvements to TVA’s power grid systems. TVA’s financial structuring will not permit TVA to receive other taxpayers’ money to assist the already subsidized TVA, a federal agency.
That is why it is highly questionable that TVA can borrow from a bank, Bank of America, when that bank has received billions in taxpayer funds. While the transaction is questionable, TVA’s action is typical. TVA chooses which laws it will accept, ignores those it won’t, and challenges anyone who would be so bold to sue the monolith.
A couple of recent challenges TVA lost, including a federally ordered mandate to clean up coal-fired plants near North Carolina, and the EPA takeover of the Kingston disaster cleanup, seem not to deter TVA from its own methods of management by chaos.
Some figures from TVA’s budgets of 2009 just ended and their budget forecast for 2010 have become available for analysis.
Tax Equivalent Payments (“payments in lieu of taxes”) for each of the years show a dramatic decline in estimated payments to state and local governments for FY 2010 by some $125 million and probably much more than that. State and local entities will have to do some severe belt tightening if they already have obligated the “free” money from the TVA.
Some counties in Alabama, for example, accustomed to receiving TVA money because they are dry counties and receive no liquor tax revenues, will be surprised at the steep drop in TVA’s largess. Alabama decided years ago to dole out some of the “free” TVA money to dry counties but the legislature is poised to take that money away and substitute general fund money for the difference.
The “root cause” of many problems in how the “extra” TVA money is distributed and redistributed by politicians in the affected states is endlessly discussed. Translated, who gets the money? Curiously, some of the TEP goes far from any TVA boundaries, for example, to the state of Illinois for coal purchases.
It is a crazy scheme and its root reason for being is an unethical payoff to states and localities, a kind of hush money to keep TVA in the good graces of the politicians. Receiving free money (no strings attached) is irresistible to petty politicians looking for their cut.
Weakly claiming it is trying to reduce electricity demand which would lead to lower revenues TVA is missing the obvious way to reduce power demand without ever charging customers for “smart meters”. TVA could take the approximately $500 million it pays out in TEP’s (payments in lieu of taxes) and offer incentives directly to customers with real money rebates. For example, since TVA through its distributors knows to the exact cent each customer pays for their electricity, it would be relatively easy month-to-month to see how much electricity use was voluntarily reduced.
On a sliding scale, every user of TVA electricity could see how much they could save by the number of kilowatts they use (review again, how to read a meter) and determine themselves how much they want to pay. Since the TEP pot is quite large, substantial money could be earned (saved) by each customer. Obviously, this would eliminate the political slush funds that have been out of the control and purview of local citizens.
TVA’s yo-yoing of rates immediately should be stopped; the frequent changes only confuse everyone. I have read how some distributors are at a loss to try and explain TVA’s machinations of how one part of the rate goes up while another is going down. All of this, of course, covers over the fact that TVA’s rates must skyrocket when all of TVA’s gross over spending and waste is taken into account. This includes the outrageous bonuses paid to the executives, about 51 of them.
To use an old analogy, the Obama administration should look under the hood and fix that poorly running engine, or maybe just trade in the old clunker for a new vehicle.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com