TVA – is it Republican or Democrat?
January 15, 2009
The best question is why partisan politics should be involved at all in the supply of electricity. TVA began in 1933 as part of FDR’s plethora of government programs, New Deal, they were called. Some argue these government interventions actually delayed the recovery from the Great Depression. Many of them were ruled unconstitutional in the 1930s but a constitutional ruling was never made on the TVA. One is needed now.
For most of TVA’s 75 years it was ruled by a triumvirate of presidential appointees with powers unequaled by any other federal government agency. In essence, TVA is a separate federal government, making and playing by its own rules, setting electricity rates without the approval of anyone - state, federal, or local. TVA’s territory is huge, covering 80,000 square-miles in parts of seven Southeastern states.
During TVA’s evolution the congress decided to reorganize the TVA by establishing a nine-member part-time board that would set policy. Each board member is an appointee of the president, with “Advice and Consent” of the senate. The board appoints a chief executive officer who reports to the board.
And it is there where partisanship recently reared its ugly head. Squabbling over whether the board appointees were Democrat or Republican the board still is missing two members. Not that a full complement of directors would make that much difference because CEO Tom Kilgore runs things his way, the TVA way.
The board almost always defers to him. His hand clearly is seen in TVA’s latest “strategic plan” 2007 which is so ambiguous and open ended that it permits the CEO to move in almost any direction. All without any other approvals from any other governing body.
TVA has a production plan that emphasizes cost-cutting at the expense of safety and long-term maintenance. It is built around a culture of bonuses. An analysis of nearly any of TVA’s mismanagements leads to the money factor – bonuses. And TVA employees are some of the highest paid in the federal government. The CEO for example is on target for a possible $3.7 million annual income. About $500,000 of that came on the heels of a 20% rate increase.
Those two factors alone are enough for calling the CEO to resign. There are other factors, one in which I called for the resignation of the CEO and board members because of their sheer incompetence in failing to realize the grave danger the TVA was placed by their policy of mixing computerized production data with the executive computer system. There were many holes in their plan as pointed out by the GAO; the TVA grid and most of the rest of the eastern electricity grid was put in jeopardy of cyber-hacking.
The electrical utility business is heavily regulated but the federal TVA is exempt from many of those same requirements because it is a creature of the U.S. Government authorized in the TVA Act of 1933.
Although subsequently amended by legislation to eliminate the need for congressional appropriations, the TVA still racks up expenditures through the back door. Right now, the TVA is $26 billion in debt and is struggling just to pay rollover expenses of current borrowing. Unbelievably, the TVA has negotiated a “bridge loan” of one year from the Bank of America for one billion dollars.
Prudent management would not continue to force more debt to build or complete more frightfully expensive nuclear plants when there presently is a surplus of capacity and demand is dropping. TVA also has a plan to reduce consumption of electricity by about 1400 megawatts while striving to go billions of more dollars in debt. It is difficult to understand TVA’s business model, investor-owned utilities would have to call that excessively risky.
Under TVA’s financing structure, it is the ratepayers who must pay for TVA’s folly and excesses – with no oversight from anyone. And consumers hundreds of miles away in TVA’s territory will have to pay for it.
Giving the TVA the authority to run anything was the initial mistake. This is a market-driven entrepreneurial society; after the seed money from the government, the government should have stepped out of the way. TVA has now metamorphosized into a mutant form no one can live with and it is headed toward bankruptcy. The federal government must now step in and auction off its assets (TVA’s) to pay off as much as possible of its $26 billion debt.
Given that three TVA disasters have occurred in less than three weeks, action immediately should be taken to wrest TVA management control from them and given to a special but temporary task group to supervise the accommodations of injured parties, to expedite the huge cleanup, to prepare a TVA dissolution plan with a completion date certain, and to transfer surplus federal properties to appropriate federal and state agencies.
It is preposterous to think that the federal government through the separate entity of the TVA has total and sole control of electricity in parts of seven Southeastern states for 8 million customers all on its 17,000 miles of transmission lines. It is even more preposterous to believe there should be Democrat or Republican electricity.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
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