TVA unhappiness in Mudville
September 9, 2009
An Oak Ridger puff piece clearly favoring the TVA tries mightily to show a last gasp of false hope that TVA ratepayers could sometime, somehow, receive a break on their electricity bills. But the mighty TVA has struck out. http://www.oakridger.com/news/x1595424605/Electric-rates-could-drop-next-month
There is one basic reason the game is over for TVA. It’s their unwieldy and unsupportable financing scheme. Constrained on one side by TVA’s own laws and the fact of free-market economics on the other, TVA’s financial train wreck has already “struck out”.
There is no repairing a faulty system that from the start was a boxed-in plan that never could succeed in our free-market system of government. As FDR acknowledged, TVA along with many of his New Deal programs in the 30s were merely experiments and many of them were struck down by the Supreme Court. Unfortunately, a true case of TVA’s constitutionality never made it to the court.
The New Deal did prove one thing; government intervention in the U.S. economy extended the Depression by four years even after pouring billions into “recovery” programs that did not work. (See Amity Shlaes’ book, “The Forgotten Man”, for more details.)
Here’s where we are today. TVA continues to spend and to obligate billions of dollars it cannot finance even with short term loans from the Bank of America. That is a peculiar one, BAC received $45 billion in TARP (“troubled assets”) funds from the U.S. Treasury, so now BAC it is lending out some of that money back to the federal government through the TVA?
And irony of ironies, BAC wants to repay some of its TARP money and though miniscule, some of that repayment will be from TVA’s borrowed interest from the BAC. Who pays that interest? Ironically, it is the ratepayers.
With unsustainable obligations now well over $30 billion, obligations that fall on the shoulders of ratepayers, Congress still does not pay much attention to TVA because there are no appropriations involved. The Kingston disaster caused a brief ripple, a ripple now smoothed out without a sound compared with the crashing roar of the exploding force of the ash dam December 22, 2008.
Soon I will be publishing a speculative article about the TVA, which directions it may move – from its possible abolishment to conversion to a Department of Energy agency and some in-betweens.
Ernest Norsworthy
tva@norsworthyopinion.com
http://norsworthyopinion.com