Ernest Norsworthy
TVA’s 2010 budget – where’s the (cut) beef? November 6, 2009
Sometimes when you look at figures and they do not seem right or logical, it’s time to be asking some questions. And I have lots of questions for the TVA.
The 2009 year-end Statement of Operations (est.) shows the projected revenue figures for 2010 to be deeply cut from $13.5 billion in 2009 to $11 billion - and this after a 20% base rate increase.
The differences are stark and should be troubling to every buyer of TVA electricity in TVA’s seven-state territory. In government, when “sales” (revenues) go down, costs go up. In private industry, when sales are down, cuts are made to maintain profitability. And if not done so quickly enough, the company soon will be sold or inevitably go into bankruptcy.
Neither fleet afoot nor as adroit as an investor-owned utility, TVA, while trying to act like a stockholder owned electricity provider, today estimates an increase in operating expenses by almost half a billion dollars for 2010. And TVA is prone to shade figures in their favor.
“The 2010 operating budget includes $302 million in increased funding for the new “Valley Investment Initiative” among other increased budget items.
What is TVA’s Valley Investment Initiative? Plain and simple, it is a payoff to keep industries in place and to use TVA electricity. Bribes, if you will, by meeting criteria prescribed by TVA including an agreement to keep using TVA power, a “long-term commitment”.
This is troubling in several respects. The first is the use of federal funds in the restraint of trade, illegally interfering with free marketplace participation. TVA already holds a monopoly as electricity supplier in an 80,000 square-mile swath of the Southeast. Hapless TVA ratepayers, I call them TVA taxpayers, have no say in any of TVA’s budget increases, taxpayers have zero input. Still, they must pay for all of TVA’s schemes.
TVA does have in its 2010 budget $502 billion for “Tax Equivalent Payments”, a completely misleading heading for those payments that go into slush funds, as Alabama Gov. Bob Riley calls them, for politicians’ use. What better use for that money than to rebate it to customers who are more frugal in their electricity use?
And much better than the so-called time of day billing soon to come from TVA to force users to conform to TVA’s supply, not from a customer’s demand for it. How much electricity one uses still is a customers choice but TVA will be forcing another one.
The time of day billing says, in effect, that if everyone fires up their TVs at about the same time in the evening, they must be prepared to pay a premium for their electricity. That is not market driven electricity use; it does try to force a change in human behavior.
It is impossible to discern what the TVA budget actually is when only selected bits of information are supplied. I have requested line-item budget information from the TVA in order to make reasonable comparisons say, between the actual 2009 budget and the now approved 2010 budget. Ah, but they cut $1.9 billion in the budget for the period 2010 through 2012 (that’s three years). Yes, where? TVA does not say. I know there is an old game bureaucrats in Washington used to play (not so much anymore; there are no “cuts”) where “cuts” are merely reductions in increases. Is TVA too far away from Washington to play that game?
And yet TVA continues its merry way of borrowing and spending money it does not have. Extending the Kingston disaster expenses 15 years down the road does not eliminate the debt owed by TVA “taxpayers”. What it does mean is that TVA taxpayers will pay considerably more for rollover after rollover for the refinancing of debt.
But there are billions more dollars TVA is committed to pay (oops! TVA pays nothing; TVA taxpayers foot the entire bill) all under the guise of staying within TVA’s legally mandated cap of $30 billion borrowing authority.
It is not so. How they legally can do it, I don’t know, but TVA goes “off budget” to extend its monetary ventures. Maybe that is what CEO Tom Kilgore means when he says “debt-like” obligations.
The result is that TVA through sleight-of-hand, smoke and mirrors, now you see it or now you don’t trickery, TVA taxpayers must pay for all of TVA’s chicanery and wastefulness.
Question: Will all of the TVA taxpayers who accept the forced payment for TVA ineptitude and to pay for enormous salaries and bonuses please hold up your hand? (While TVA’s hand is in your pocket.)
TVA taxpayers pay without representation from elected local, state or federal representatives. They have no say whatsoever in the rules handed down by the TVA, a federal government agency. (Where’s that ad on solar powered generators?)
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA rides again!
November 1, 2009
Good, solid reporting by Scott Barker, Knoxville News Sentinel on dumping ash on Alabama.
But now I speak from the heart; how the big hand of government can squash a flea, can intimidate any community anywhere to carry out its bought-off schemes.
It makes me sick looking at the picture of yet another train load of toxic waste being hauled away, away from “my backyard”, say the people of Roane County to be dumped on the good people of Perry County Alabama. Good riddance!
I say good riddance to the TVA and to all of the decades of its federal dominance over a huge swath of sovereign state property in seven states.
The TVA believes it can silence criticism with money, from the so-called “bribes” in lieu of taxes to keep local politicians happy, to direct attempts to buy-off the people of Kingston with $40 million dollars. Shame, shame.
Shame on the political leaders who have succumbed to the “free” money while causing much grief to the TVA taxpayers (no, they are not just ratepayers; they pay money to a federal government agency, TVA. I call that a tax without representation.)
TVA’s cultural practices are just as evident in TVA’s workforce. Says a present employee, “Their typical method is intimidation of employees, and monetary incentives. By removing "trouble makers", they eliminate the potential threat - when an employee leaves for any reason, protocol is for the employee to sign a release / waiver stating that the employee will neither sue nor disclose any information which would damage the TVA. Further, most lawyers I've spoken to have been compromised in regard to involvement with the TVA - they have connections everywhere, and thus most attorneys do not want to engage in legal action against them.”
Rotten to the core.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
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
TVA’s head-rolling for Kingston disaster – not!
The Tennessee Valley Authority fiefdom style of organization which consists of
cross-responsibilities, muddled lines of authority has now been “reorganized” according to TVA’s statement to the Securities and Exchange Commission on February 9. The heading of that
section of SEC’s report seems to ask for information on the “Departure of Directors or
Certain Officers” among other things. (See below Item 5.02 of the SEC report.)
(follow link)
Presidential prerogatives – forget TVA
December 27, 2008
Executive Orders of the President can and have had a pushing forward effect of an exiting administration which may block or thwart an incoming president all without the benefit of congressional action.
For example, President Bush issued EO 13406 which narrowed the meaning in the Constitution of “taking property” more closely to the founder’s original intent. The Tennessee Valley Authority had grossly misinterpreted that clause until EO 13406 was issued. TVA was the usurper of the right of the people to not expect the federal government to compete in the market place. TVA gleefully did this often and was paid hundreds of thousands of dollars in land sales and questionable land swaps. In addition, TVA is anti-competitive in the marketplace of electricity sales.
It would be reasonable for an incoming administration to put more meat on the bones of EO 13406 rather than trying to undo it.
Americans are undergoing a crisis of government credibility caused by the failure of several administrations to check the illegal piling up of debt in the trillions of dollars through federal government guarantees of worthless Fannie Mae and Freddie Mac paper.
Failure of the government to quell these loans has precipitated a world financial crisis the depth of which has not been reached.
In a much smaller but comparable way, the federal government has failed to stanch the flow of borrowed money by the Tennessee Valley Authority now at $25 billion with promises by TVA management to far exceed its statutory borrowing limit of $30 billion.
TVA, whose financing already is on the brink of collapse, has resorted to a one-year “bridge loan” of one billion dollars from the Bank of America. Not only is this outrageous, it is deceitful if not illegal for the federal government to borrow money from a private, stock-held banking source while propping up other financial institutions with a $700 billion “bailout”.
TVA’s books show assets well exceeding their debt but these probably are greatly overestimated based on TVA’s known experience to squeeze dollars the way they want them. Most of the coal-fired plants are over 50 years old and many of them may have reached their useful life. About 60% of TVA generated power comes from these plants.
Though not known until actual liquidation, a more reasonable estimate of TVA assets is probably no more than $15 or $20 billion if that much. Balance of the debt would inure to TVA bondholders or to the “ratepayers” since the federal government does not even guarantee its own money obligations of the TVA.
The TVA has muddled through mismanagement after mismanagement greatly underperforming its charge in the original 1933 legislation. Instead of being the innovator and facilitator of new and breakthrough technology, TVA lags behind the utility industry in every major area and has defaulted on its obligations in other areas.
One of the causes of TVA’s misguided ways is its system of performance bonuses. I have plenty of anecdotal evidence of where TVA either cut corners in maintenance or its failure to perform under duress for fear of affecting bonus amounts.
The failure of an earthen dam at the coal-fired Kingston Plant in Tennessee December 22, 2008, is an apt and recent exhibition of TVA’s dilatory actions. The dam blowout is of monumental proportions.
TVA’s 8K report to the Securities and Exchange Commission of this “incident” is so watered down as to be yet another confusing and ambiguous TVA statement. It seems clear the TVA does not want to rattle bondholders’ chains. My estimate is that this gross negligence of the TVA will cost a billion dollars over time with long years of litigation ahead.
Some have suggested the TVA as a model for “putting people to work” aping the old New Deal era. This would be a major tactical error resulting in the exacerbation of the problem. If, however, the great ingenuity and boundless energy of the free market were to be let loose on the major problems confronting today’s society, meaningful and real jobs would result, not the make-work kinds of jobs in the 1930s.
This approach would help re-build America’s industrial base and reverse the decline in job exportation. Americans can do it “better, faster, and cheaper” if the government stands aside to let Adam Smith’s “invisible hand” go to work.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA – shoveling out TVA management
December 23, 2008
Below is the 8K statement to the Securities and Exchange Commission signed by Kimberly Greene, CFO of the TVA dated December 23, 2008. A closer look at the statement reveals just how closemouthed the TVA is and always has been.
There never is a mea culpa from the TVA; the blame is always placed on something, somewhere else. Lately TVA blamed their problems on the drought, fuel prices or “bad weather”. Typically, TVA now blames the rain and freezing weather. TVA admitting to anything they may have done or not done is not in their lexicon.
In this disaster (TVA calls it an “incident”), their entire discussion in the report to the SEC is about ash and an ash slide. To an uninformed TVA bond buyer, that might not seem to be much of a big deal; ash? Everyone knows that ash typically is easily airborne but this resulting “ash slide”, umm, did a little damage, but no one was hurt. Next “incident”.
“Item 8.01 Other Events.
Sometime after midnight on December 22, 2008, a retention wall for an ash-containment area at TVA’s Kingston Fossil Plant (“KFP”), located near Kingston, Tennessee collapsed. The resulting ash slide impacted an area of approximately 250 acres to 400 acres on the north side of the plant. There were no reported injuries but approximately 15 homes were directly affected. The ash slide also interrupted utilities to nearby residents, blocked a local roadway, and a rail spur serving the site. The Environmental Protection Agency has been notified of the incident, and TVA is working with state and local agencies to respond to the situation and assist affected residents.
TVA is investigating the cause of the incident.
TVA currently has no estimates on the costs associated with this incident, nor sufficient information to reasonably develop such estimates.
With its nine units, KFP is one of the larger TVA fossil plants. It generates 10 billion kilowatt-hours of electricity a year, enough to supply the needs of about 670,000 homes in the Tennessee Valley. KFP is currently able to operate.
KFP is located on the Emory River, a tributary of the Tennessee River, and steps are being taken to reduce the movement of ash downstream on the Tennessee River. There are no expected impacts to other TVA facilities which are located on, and draw their cooling water from, the Tennessee River.
For information on this incident, go to http://www.tva.com/emergency/ashslide_kingston.htm.”
Here’s what the TVA did not tell you:
· The breach of the earthen dam at the Kingston plant was, is, a disaster of several magnitudes, not merely an “ash slide”.
· “Sometime after midnight on December 22, 2008…” the TVA report says, and it shows just how sloppy the TVA is in reporting*, after all, the steam plant units usually are operational 24/7, didn’t someone there immediately know about the breach? What time was it? One eyewitness homeowner reported of a horrendous noise, tornado-like. Did anyone in the control room notice anything different?
· The map locator more appropriately would be Harriman, TN, which was not mentioned in the TVA report to the SEC.
· TVA leaves the door open to a lesser impact on the area by stating “The ash slide impacted an area of approximately 250 acres to 400 acres…” This is so broad an estimate as to be meaningless, but it does confuse and obfuscate. The gunk reportedly is 5' to 6' thick.
· “Approximately 15 homes were directly affected” which is so vague, again, and leaves more questions. Confuse and obfuscate, a TVA criterion.
· The ash slide “interrupted utilities” to residents, blocked a local roadway, and a rail spur serving the site. (Ital. furnished) That, perhaps, is the most significant event in the continuing operation of the Kingston plants. Reports are that about a “two-week supply of coal” is on site. Of course, coal and tons and tons of it, are critical to the operation of these electricity producers. This is a disaster site and it is not at all likely that the railroad track will again become operational in fourteen days.
· EPA has been notified; so? Is it possible the EPA will have to study the site carefully, and, as some have suggested, turn it into a Superfund site? That might even call for shutting down the entire site including electricity production for a long period. It seems to me that if the TVA were to be perfectly honest with the people, it would tell of that possibility.
· “Steps are being taken to reduce the movement of the ash downstream on the Tennessee River”. With the Genie out of the bottle, it will not be possible to rid the waters of the Kingston ash; much of it will settle to river bottoms and will stay there to be released bit by bit.
· TVA does not mention anything about the toxicity of the ash but it is known to contain some toxic materials. Shouldn’t the TVA tell the people what TVA already knows about the ash and how it might affect drinking water supplies? It’s not just about some dead fish.
· Hopefully with this most recent TVA fiasco, TVA’s days of confusion and obfuscation are over. All Americans have the right to know what is going on inside the TVA because the TVA is the federal government. Every move they make affects us one way or another.
* Some financial reports to the SEC have been in the past (going back to 2006) grossly in error, one report was off by over $200,000,000. Along with several other reporting mistakes, these and the former are now supposedly correct to the SEC.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA – a water, oil mixture
December 17,2008
Some people would swear that the English game of Cricket is very similar to America’s Baseball. The pitcher hurls the ball toward the batter who then strikes or misses it. But a peek at the rules of both games reveals they are much more different than similar.
Many people also do not understand how and why the Tennessee Valley Authority, a federal government agency, cannot be run like a private enterprise utility. The basic problem is that they do not understand that the hybridization of public/private businesses would violate basic principles of the U.S. Constitution.
TVA management, of course, does not see it that way because they are trying to rationalize that their management pay should be comparable to the executive pay of investor-owned utilities. Pure hogwash.
TVA employees work for the federal government and are paid at a much higher scale than the average government worker who may be responsible for a hundred-fold more federal funds.
Now, according to an article in the Chattanooga Times Free Press December 17, 2008, TVA’s CEO Tom Kilgore whines that the drought and higher commodity prices “hurt” in 2008. But it is clear that the CEO was not “hurt” with his $500,000 a year raise in pay.
Conveniently, the whopper 20 percent rate increase falls in FY 2009 and with sales about 4 percent lower than average, the new year promises to see rises in costs and decreasing revenues.
TVA’s finances are in disarray, they would have to be deemed so, when TVA, an agency of the U.S. Government, has to borrow one billion dollars from the Bank of America for a yearlong “bridge loan”. Apparently this does not count, somehow, against TVA’s statutory $30 billion debt limit. TVA already is in debt for about $25 billion. But the very fact that the federal government has to borrow money from a private company is enormously disturbing.
Presently, I am reviewing TVA’s 10K annual report to the Securities and Exchange Commission for the year ending September 30, 2008. I fully expect to find some startling revelations. I believe it is with this SEC report that the TVA will have finally “corrected” all of the financial errors going back to 2006.
And it appears that TVA’s gambit to stop their weed controls and offer instead their piece of weed cutting equipment and half the cost of weed cutting was flatly rejected by Alabama representatives.
State Rep. Jeff McLaughlin, D-Guntersville, and Sen. Lowell Barron, D-Fyffe, said the compromise is unacceptable. McLaughlin described TVA's offer as pitiful. He and Barron said they want TVA to continue the weed control program without any cuts. (Huntsville Times David Brewer 12/17/08).
Why does it have to take 200 people at a meeting with the TVA to make them budge? (Maybe)
The sooner the realization that oil and water do not mix the sooner we can move to liquidating TVA’s assets and return the Tennessee Valley somewhat back to normalcy where the people’s representatives obtain, where state sovereignty is re-established.
TVA is not playing “Cricket” with the American people by pretending it is something it is not.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
“Car Czar” modeled after TVA?
December 9, 2008
If the nationalization of private companies, for example, some insurance and financial institutions and soon the U.S. auto industry, can other private companies be far behind?
Some have suggested as a model, the Tennessee Valley Authority. The TVA has been “nationalized” since 1933 under the TVA Act. It has been a thorn in the side of the U.S. Constitution for 75 years and hardly can be called the epitome of good management and cost-effectiveness.
So the Congress will insist the Big-3 auto makers cut costs, manage better, and produce the American “Yugo”, a car nobody wanted that continually was falling apart. Who would be in charge? A federal “Car Czar” according to House Speaker Pelosi.
This whole issue is not just ironic, it is hypocrisy squared. The U.S. Congress has ignored the TVA for decades, allowing it to make serious mistake after mistake with no penalties. Today the TVA is wallowing in a $25 billion debt, debt that is not reasonably expected to be under control anytime soon. And TVA wants to spend billions more on nuclear plants, again, money that would have to be borrowed and that would exceed TVA’s statutory limit of $30 billion. Meanwhile, TVA has a deal with the Bank of America for a paltry one billion dollar “bridge loan” for a year. The U.S. borrowing from the BOA? How absurd.
The Congress managing a business-like enterprise? What a hoot!
No one even whispers “socialism”, or dares to call it nationalization of the American economy.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA as cost cutter? Not!
December 6, 2008
As one contributor puts it “…I think TVA has adequately proven that P. T. Barnum's observation on the birth rate was accurate - and that was before the population explosion.” For an interesting wrinkle on the famous quote attributed to Barnum, “There’s a sucker born every minute”, see www.historybuff.com/library/refbarnum.html
But this question must be asked; if TVA’s objective is to reduce by 1400 megawatts of power through “conservation” in about the same timeframe as its desire to increase by 2000 megawatts of “clean” energy from outside TVA’s territory, what’s the sense in that?
The purchase of 2000 megawatts of “outsourced” power is analogous to “renting” instead of “buying” and is somewhat similar to the economic state of America today. Too much spending for unaffordable things such as mortgages backed up with “no job, no money, no income” owners when they should have been renters.
When it all settles out, it will devolve to the Fannie Mae Freddie Mac debacle whose organizations, backed by the good faith and credit of the United States government, pawned off trillions of dollars of worthless paper. Who caused the world financial crisis? We did.
The TVA is a bit player in this huge financial whirlpool of bad debt and bad loans. Ironically, the buyers of TVA bonds may be reading the fine print more closely – those bonds are not guaranteed by the government. They are backed only by the ability of the TVA to repay them and that is looking more dubious every day.
The $25 billion TVA debt plus their “debt-like” obligations place the TVA in a perilous financial position. And unbelievably, the TVA has floated a one-year loan of a billion dollars from the Bank of America.
Something is terribly wrong with TVA’s financial structure and the time for a “bailout” or a “buyout” is rapidly approaching.
The congress already has its hands full with beggars at the door for bailout money (money we do not have), most recently the American auto industry. Perhaps a better explanation of TVA’s serious financial condition will be forthcoming in TVA’s next board meeting December 11 in Chattanooga.
As one knowledgeable sage put it, 2000 megawatts of power (equivalent to almost two nuclear plants) in such a short time span, i.e. by 2011, would practically be impossible. And if that is so, apparently there is some skullduggery going on at this federal agency.
Another observer said, “Why is it that in this country we hold college football coaches more accountable for their performance than company CEO’s? Nowadays a college coach that has more than a two year losing season is dismissed while company CEO’s are allowed to remain in their positions and are given unbelievable salaries and bonus packages regardless of their performance. TVA is certainly no exception. Electric rates up plus operational and fiscal performance down equals a $3.27 million compensation package for Tom Kilgore. Unbelievable!!!! What are our congressmen doing about it? We all know the answer to that question.” Tim Gilbert
And so it goes; only this time TVA has a coterie of 8.8 million customers awaiting the next huge rate increase in their electricity.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA ball back in congress’ court
December 3, 2008
Reeling from setback after setback, the Tennessee Valley Authority may have revealed its own exit strategy from the electricity production business.
In an astonishing move, TVA has issued a request for proposals outside TVA’s 80,000 square-mile territory to provide the TVA grid with 2000 megawatts of so-called clean energy by 2011. This would be much sooner than TVA’s ability to supply it themselves. TVA then merely becomes a broker of electricity, kind of Enronesque-like.
This strategy opens the door for negotiations to begin the selloff of TVA’s existing coal, gas, nuclear, and hydro production plants. Sale of these units could liquidate much of TVA’s $25 billion debt. The remainder would rest on the shoulders of TVA’s stakeholders. That means the users of TVA electricity.
In an apparent act of desperation, TVA raised its rates 20% on October 1 (followed by the CEO raise) in a declining economy and “flat” revenues, as TVA calls it, for the coming year.
In this latest unpredictable tack of the TVA, they tacitly admit that private enterprise can do the job faster, cheaper and better than the federal government ever could.
In a serious blunder, the TVA board of directors authorized a salary increase of $500,000 for CEO Tom Kilgore who accepted it unconditionally. This brings his potential yearly earnings to over $3.27 million much higher than the president of the United States receives.
TVA’s financial structure is teetering to the point of collapse. A recent note with the Bank of America for up to one billion dollars for one year very much spells why TVA cannot continue to borrow itself out of debt. Just the financing of its debt eats up a large portion of TVA’s income.
Required now to report its financial dealings to the Securities and Exchange Commission, the TVA seems unable to get their numbers straight and will resubmit the corrected reports dating back to 2006 “at some time in the future”. (My quotes)
The question becomes why would TVA want to buy 2000 new megawatts of renewable energy from outside sources? It is only speculation, because TVA is never forthcoming nor straightforward, that TVA’s hidden strategy is to prepare for yet another immediate shift in direction, viz, privatizing the TVA.
Bidders to supply the TVA with 2000 new megawatts of electricity might also believe they would have a leg up in possible bids for TVA’s remaining assets when that occurs.
The next on-again, off-again TVA board meeting now is rescheduled for December 11 in Chattanooga. We can hope that the video of this meeting will not take a month to be posted for view. The October 30 video finally is now available according to TVA.
The golden parachutes are in place (for TVA’s CEO and about 145 others); let the games begin.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA dictating its own rules
November 27, 2008
The more I read and write about the TVA the more I am convinced that formerly independent thinking Southerners in TVA’s massive 80,000 square-mile territory have all but given up their sovereignty and independence by relying too much on the federal government.
As an anomalous appendage of the U.S. Constitution, the TVA rules. It not only is self-regulating it also is the enforcer of its own rules. If that does not sound like the style of a dictatorship I do not know what else does.
A 20 percent TVA rate increase followed by a $500,000 salary increase for TVA’s CEO smacks of greed and contempt of the people it is supposed to serve. Then comes the great compromise – a 6 percent reduction in the “fuel” charge come January 1, 2009.
Recently TVA’s CFO Kimberly Greene stated that “their crystal ball is not working”. The only thing I get from that is that TVA management has no idea of how to manage a $10 billion agency in reliance only on a “crystal ball”. Of course, the federal government never has managed well any kind of economic enterprise and the TVA stands out as the perfect example.
Editorially and in some news reporting, many writers have succumbed to the spell of TVA’s “crystal ball” economics and seem to joy in self-flagellation, in hat-in-hand obeisance.
“Oh, it’s the drought that’s causing all the problems; those profiteering suppliers raised their costs more than we anticipated; and our operation and maintenance budget keeps climbing”. All typical TVA management excuses.
So TVA wants to cut its weed clearance costs, but by doing so TVA violates its stewardship charge to maintain all of the rivers, lakes and tributaries it owns. One solution would be for the TVA to return all such properties to the states’ in which they reside; the states then would become stewards of the “weeds”.
A reasonable good faith effort for TVA management would be to cut the half-million dollar raise to CEO Tom Kilgore (voluntarily) and to cut out all bonuses to TVA employees for at least the next year.
TVA is reacting to our present economic downturn which affects practically everyone in America just like any other government bureaucracy – raise taxes and salaries too.
TVA was supposed to be as nimble as a business in responding to the crises that come from time to time. Far from it, the TVA hunkers down and tries to protect its own existence at the cost of representing the people.
The callous 20 percent raise in TVA rates is a recent example; there are many others. TVA cannot get its financial reporting straight even while paying top dollar for its own internal and two external auditors. TVA’s financial reporting to the Securities and Exchange Commission dating back to 2006 cannot be relied upon according to the TVA; management does not know when the updated reports will be submitted.
In an obvious attempt to keep information from the public by not posting its video of its October 30 board meeting, the TVA appears to be hiding something, and is not forthcoming.
In addition, the previously scheduled TVA board meeting of December 2 has been cancelled.
I have contended for a long while that the TVA has grossly been mismanaged and that drastic steps must be taken soon to prevent its entire collapse under a huge $25 billion debt and error after error in management judgments.
For a compilation of my articles on the TVA see http://norsworthyopinion.com also see http://norsworthyattheshoals.blogspot.com
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA – too big to fail?
November 16, 2008
When the TVA decides to “cut” the cost of de-weeding, a relatively minor cost in their $10 billion budget, you know there’s trouble right here in River City and the Music Man is standing in the wings ready to serve the papers.
If the suddenly cost-conscious TVA budgeteers want to cut out some fat, especially after raising rates by 20 percent in October (more than 30 percent this year), they can start with the $500,000 raise for CEO Tom Kilgore. And add all of the lesser bonuses and raises the Board authorized in October.
TVA management claims it is supposed to operate the Tennessee Valley Authority like it was a business. And that has been a fallacy for 75 years. The TVA cannot ever be something other than a federal government agency with supra authority (no other federal agency has as much latitude) and it never can operate with a “profit and loss” statement. The federal government is not supposed to operate at a profit, it is supposed to “break even”, income and expenses being equal.
But it certainly can operate at a loss with a $25 billion debt. Besides being anti-free enterprise, TVA gets other perquisites such as low bond rate financing. But maybe not as competitive as a triple “A” rating anymore. Credit markets are sucking wind after the Fannie Mae and Freddie Mac debacles, those two mortgage backing government sponsored enterprises (GSE’s) that have broken world financial markets. By a trillion dollars? No, let’s make it trillions of dollars of worthless (toxic) paper.
But these sterling examples of government sponsorship carry the good faith and credit of the federal government, in other words, American taxpayers are left holding a bag full of worthless paper.
Not so with TVA; in an oddity of financial sleight of hand the U.S. Government explicitly does not guarantee TVA’s bond financing. Up until now, the buyers of such bonds have indicated they do not believe what their agreements say in very plain English – no guarantees – even if it is the federal government.
As an indication of TVA’s very weak financial situation, they have entered into an agreement with the Bank of America to borrow at prime rate $1 billion for one year. The cost of this money can fluctuate according to the market.
A most unusual part of the agreement is the clause “Now, therefore, In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged …” This is boilerplate language in securing a loan. Can the TVA put the U.S. Government in hock?
The question is, does this commit the federal government to give up the “premises” if the loan is not paid (in default)?
In light of TVA’s stated financial situation that sales of electricity are declining and probably will do so the next year, where is the money coming from to repay this Bank of America loan and any other bond payments that may come due.
TVA management should come clean and state clearly how they plan to not only reduce their $25 billion debt which they have pledged to do numbers of times but also how will they repay the billion dollars they borrow from the Bank of America in one year?
The creaking ship known as the “TVA on the Shoals” has come to its inglorious end and should be scuttled before it crashes in on itself.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
P.S.
Why wait until January 1 to reduce the “fuel charge” by 6 percent? Why not now?
EN
TVA's weeds of destruction November 14, 2008
Time, tide and weeds wait for no one, particularly those weeds in Alabama’s Guntersville Lake. Weeds will not wait for a meeting with the TVA two months from now (changed to December 17) only to be “urged” to take responsibility for its mandate of stewardship of the lake which it owns.
The real issue is not whether but when will the TVA do its required job of maintaining the ecological health of all of the rivers and tributaries it owns and for the health and safety of citizens in the federal territory it controls.
It takes only a spark to start a wildfire that is uncontrollable such as the one today in Santa Barbara, California. A hundred homes are gone with a thousand more in danger.
Maybe it’s weeds that spark a bonfire of opposition to the TVA and its heavy-handed policies that are approved by not a single elected state or local government body in seven Southeastern states. TVA’s rule is absolute.
TVA management has made many grievous and costly mistakes over the years and maybe the last straw was when after boosting electricity rates by 20 percent the Board-of-Seven gave TVA CEO Tom Kilgore a $500,000 raise. Ah, but the sop will be a 6 percent rate reduction (“fuel adjustment”) come January. Talk about a straw man to knock down.
I believe the people are beginning to see behind TVA’s dissembling weeds of destruction and are ready stand up against their own government (“We the people . . .”) and to kill the weeds that have us in a stranglehold.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA weeds hide real financial problems
November 13, 2008
Where there are weeds, there usually are lost golf balls; in this case, the TVA seems lost in a sea of irate lake dwellers at Guntersville Lake in Alabama. They are demanding that TVA not “cut” its weed reduction on the lake.
Alabama state senator Lowell Barron, ready to fight for his constituents, has formed a committee and promises “to urge” the TVA next January not to stop its weed largess program. Weeds do not wait, not that Barron’s committee could change TVA’s monolithic mind unless it wanted to, a very rare occurrence.
That’s the problem with a federal agency, there’s no way you can make it change its own tune without making a “federal case” out of it. And everyone knows the TVA marches to a different drum beat.
So don’t “cut” the weed cutting money? Why not get at the root of the matter and “cut out” the TVA entirely?
That agency has so dominated the Southeast that their paternalistic handouts seem normal.
TVA is a federal agency in deep financial trouble and weed whacking from here to Columbus (any Columbus) only pricks at their bottom line.
Wouldn’t a better question be to ask the TVA; “who owns Guntersville Lake?” If TVA owns it (I believe they do), they should maintain it. Period. They’re acting like a golfer looking for a lost ball in deep weeds.
For some time, I have advocated the abolition of the TVA; it has failed its mission many times over and it is the epitome of a government agency where no one is held to account for its many misdeeds. There is no “local control” or federal oversight either. Even some TVA-congressmen seem aghast that TVA’s CEO would receive a half-million dollar raise on the heels of a 20% rate increase (about $2 billion). Glad they finally noticed.
The niggling weed problem is nothing in TVA’s 80,000 square-mile federal domain but it may be symptomatic of a deeply in debt agency. For example, TVA just signed an agreement with Bank of America for a potential “bridge loan” of one billion dollars for one year. A peek beyond the weeds reveals what the real problem is. TVA already has a $25 billion debt.
I have recommended that TVA congressional oversight committees investigate a number of areas of TVA’s mismanagement and plain incompetence.
See http://norsworthyopinion.com for a short list of them.
Ernest Norsworthy
emnorsworthy@earthlink.net
An open letter to TVA Congressional oversight committees
Visalia, California
November 6, 2008
The Honorable Barbara Boxer, Chairman
The Honorable James M.Inhofe, Ranking Member
U.S. Senate Environment and Public Works Committee
The Honorable James L. Oberstar, Chairman
The Honorable John L. Mica, Ranking Member
U.S. House of Representatives Transportation and Infrastructure Committee: Subcommittee on Water Resources and Environment
Suggested areas for Congressional investigation:
· Salary increase of the Tennessee Valley Authority (TVA) CEO based on false assumptions
· Explain TVA’s unsubstantiated 20 % rate increase while increasing the CEO’s pay by $500,000
· Failure of TVA management to adequately protect TVA’s electricity grid from potential cyber-hackers
· Explain why Congressional oversight of the TVA has been woefully lacking for decades
· Explain why the Congress and Administration have failed to appoint and confirm the TVA Board’s full complement of nine members
· Explain why the supposedly independent TVA Office of the Inspector General (TVAOIG) is paid from TVA funds
· Clarify why and how the TVA could lose track of 550 computers; how security measures were maintained
· Explain why the TVA consistently fails to reduce its $25 billion debt and how and why that debt soon will exceed its statutory limit of $30 billion
· Explain the TVA delay in providing latest-technology scrubbers for coal-fired power plants
· Explain the rationale of TVA giving cash to industrial customers to retain their business
· Explain how a consortium of buyers of TVA electricity can finance new power plants that are partially owned by the consortium and by the TVA, an agency of the federal government
· Explain why TVA management receives bonuses when gross management errors go unpunished
· Investigate circumstances where it appears that bonuses override safety rules
· Executive Order 13406 appears to have been violated recently in favor of a congressman
· Recommend legislation that would correct the many problems of the TVA; explore the possibility of privatizing the TVA sooner rather than at some distant time. Cheaper, non-subsidized electricity already is available nearby for some customers
TVA is an overleveraged federal government agency that has no possibility of becoming the “break even” agency mandated by federal law. Unlike government sponsored entities such as Fannie Mae and Freddie Mac, TVA purportedly is a self-supporting and financially viable agency of the federal government but without government guarantees.
TVA’s mission is so greatly changed since its 1933 incipience it is difficult to match the law with its activities.
I would be glad to assist in the development of the above points into suitable categories for committee review.
Ernest Norsworthy
Visalia, California 93291
emnorsworthy@earthlink.net
For further review: http://norsworthyopinion.com
TVA Report . . . October 7, 2008
Can the TVA survive the market credit crunch?
The failure of major financial institutions in America was caused by overleveraging below prime market assets, some even to an unsustainable 100 to 1 ratio. As long as the subprime market paper bubble was being stuffed by these worthless mortgages, no one had to pay them off.
But inevitably, the market always tries to correct itself. And when these worthless mortgages could not be paid off when due (that is, the debt was higher than income) there were few options. To be taken over by a stronger financier at a loss? Bankruptcy? Or simply to close the business and wait for the hyenas to devour the remaining carcass.
Apparently many large companies bought into the subprime scam, some were bailed out by the government. Your government and mine now own 80 percent of the private AIG insurance company among other bailouts.
Then the rush by the Treasury secretary to throw another $700 billion into that black hole with another $100 billion in pork did nothing to stanch the bleeding. The following Monday, October 6, 2008, came the lowest one-time drop in the market of 800 points before recovering to about a negative 350 points.
World markets are shaky and the free flow of market credit liquidity has all but ceased. Lenders are not sure they will get their money back.
It appears that this whole series of dominoes falling started with the out of control government sponsored enterprises, Fannie Mae and Freddie Mac. Their catastrophic impact on financial markets in the United States was forewarned three years ago and if heeded, this severe crisis could have been avoided.
How does the failure of those two GSE’s affect TVA’s financing? First, TVA is part of the federal government, not just sponsored by it. The buyers of the worthless mortgage paper knew that it was backed up by the federal government and that they had nothing to lose.
Buyers of TVA bonds have no such guarantee; in fact, the government explicitly states that it does not back TVA’s bonds. But the buyers of TVA bonds discreetly have stated they do not believe the federal government would let one of its agencies go bankrupt. This is confirmed by the rating companies (AAA).
TVA is coming to a place this fall in its financing scheme where it will have to float bonds to pay off existing debt interest. (“Rolling over”, refinancing debt).
The question then is, in light of the present turmoil in financial markets, will TVA still receive favorable interest rates? Or worse, no buyers of their financial instruments?
TVA’s declining sales (their only source of debt refinancing besides borrowing more money) combined with increases in TVA’s expenses do not bode well for the agency in its ambitious plant expansion scheme.
Borrowing more money up to about the $5 billion statutory cap set by Congress just to finance debt would mean fewer dollars available to complete its multi-billions of new construction now planned. And this does not take into account the huge costs of refurbishing and updating fossil fueled plants to reduce excessive air pollution.
The reasonable course for the present Administration would be to liquidate TVA’s assets; to turn over the hundreds of thousands of unneeded acres of TVA land to the Department of Interior for further disposition; for the Corps of Engineers to assume complete responsibility for the Tennessee River and its tributaries (an agency with the longest and most capable experience in the history of the United States); and to return appropriate government functions to others including the Small Business Administration in the Commerce Department and the Fish and Wildlife bureau in the Interior Department..
Future construction, maintenance and financing of new power plants of all description would then be in the hands of the free, competitive market, a place it never should have been wrested from by an anti-competitive government in 1933.
In a timely (but maybe later judged very untimely), the TVA submitted to the Securities and Exchange Commission a report, “Other Events”, dated October 6, 2008. www.sec.gov
This report briefly outlines TVA’s stated procedure for selling off part of a power plant in Mississippi totally owned by the TVA to a subsidiary of the Seven States Power Corporation its wholly-owned subsidiary, Seven States Southaven LLC (“SSSL”). SSSL paid TVA approximately $325 million and purchased an undivided 69.69 percent interest in the facility. Funding for the purchase was provided through loans obtained by SSSL. The loans (collateralized?) were provided by JPMorgan Chase Bank, N.A., CoBank, ACB, and Branch Banking and Trust Company.
The SSPC exercised an option to buy almost 70 percent of the power plant with a further option to acquire up to 90 percent by next May. TVA will in turn lease back SSSL’s interest in the plant. www.tva.gov
The obvious questions are:
· Can the federal government (TVA) sell just a part of a total entity (a power plant) they presently own? This would be comparable to selling off say, one-inch squares of the Washington Monument. A hefty amount probably could be raised; the buyers would own a “Piece of the Rock”.
This puts TVA back into the “leaseback” position they were in previously but now considerably muddies up ownership even more.
· What would TVA’s lease payments be? Enough for the SSSL to pay off its loans?
· How would this unsavory and overleveraged arrangement affect ratepayers? Do they become “part owners” also?
· Do affected citizens (all 8.4 million of them) get a chance to vote on whether their rates are increased because of a “partial ownership” of the Mississippi plant and if so, by how much? A proration?
· How does this new financial arrangement affect payments in lieu of taxes?
· Since TVA will include electricity produced by this plant on their grid, it becomes fungible and inseparable from any other power flowing through TVA’s 17,000 miles of transmission lines. Does this mean the SSSL would own a fraction of TVA’s total production by virtue of SSSL’s ownership of 70 percent of the Mississippi plant?
· Is this TVA’s way of selling off assets by relieving it of debt without relinquishing the power to maintain and operate those assets?
Clearly, this is nothing more than a scam by the TVA to take the Mississippi plant and possibly many others from a debt position that would affect its $30 billion cap and put it under “long term liabilities”. In this case, another $325 million to play with, all without congressional oversight or approval.
For these reasons and many others the SEC should immediately launch an investigation into the practices of the TVA to determine if the TVA is operating within the law, and whether or not TVA’s actions are designed to subvert the law.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . September 21, 2008
TVA bailout could jumpstart Valley economy
To be fair, while the federal government is bailing out every failed government agency and many private ones, isn’t it time for the government to bailout the Tennessee Valley Authority?
TVA is in an impossible financial position that time and again after many promises says it will change its irresponsible financial ways.
In 1997 when their bold ten-year plan was announced, TVA said it would reduce its $27.6 billion debt by half by 2007. And, oh yes, it said it would reduce electricity rates by 15 percent by the same time.
Today, TVA’s debt is $25 billion with stated plans to increase it by billions more, perhaps as much as $7 billion more. It is not the first commitment TVA has broken. And interest on that debt is about to eat up much of its revenues, revenues coming from the electricity users in the Tennessee Valley.
The latest 20 percent increase in rates to consumers is due October 1 in a time where gas and other energy costs are crippling many American families. Folks inside TVA’s 2500-mile fence (the kilowatt curtain) just took another hit with the increase and the realization that TVA’s bailout takes that huge $25 billion debt off of their backs.
The quickest and surest way to be released from the federal yoke is for the feds to liquidate TVA, pay off as much of its debt as possible and to return the business of operating and maintaining electricity plants to the private sector.
If the TVA becomes the responsibility of the federal government of which it already is a part, it would relieve the ratepayers of the responsibility of paying off any remaining debt owed by the TVA which could be considerable. Even though TVA is a federal agency and the federal government explicitly does not put the full faith and credit behind TVA bonds, it would be doing so in a bailout.
Better start ringing the bailout button now for a chance for the TVA to be included in today’s bailout fury.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA Report . . . September 19, 2008
“FOR SALE - overleveraged public utility – great stock potential if managed well – large customer base – growth possibilities exceed surrounding competition when not under federal control”
This ad or something similar could appear in business want ad sections if the federal government follows through on its stated plan to liquidate inefficient, costly and poorly managed government supported entities.
For too long Fannie Mae and Freddie Mac were allowed by the congress to continue their irresponsible and wildly costly ways which ultimately could cost American taxpayers untold billions of dollars. But TVA is not a sponsored government enterprise; it actually is part of the federal government. (TVA Act 1933)
Other major private companies also have been bailed out by the federal government which, of course, is broke and must pay those bills with fiat money by simply printing more and more of it. The dire result is abundantly clear by looking at what happened to the German and Italian economies as precursors to WW II. No patch up jobs here, the federal government must be reorganized head-to-foot.
If the TVA continues its parlous present direction, it will require the congress to raise TVA’s debt limit from $30 billion to a much higher figure. The critical problem today is that the finance charge on $25 billion rapidly is eating up TVA’s liquidity.
Raising TVA rates this year by more than $2 billion dollars only pays for the increases in fuel and other costs. It is not at all clear that TVA factored in a larger than normal voluntary electricity usage reduction because of the imposed higher rates but also did not sufficiently consider overall usage reductions from a declining economy.
TVA’s own prediction of “flat” revenues next year should be enough warning that TVA’s financial system could collapse on itself sooner than later. Then another “bailout” cry would be heard.
TVA today still suffers from egg-on-the-face poor management decisions in the 1980s and true-to-form, appears to be headed toward another layer of egg facial.
It also is interesting to note that the TVA has some of the highest paid federal employees in government with more than adequate “golden parachutes”.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . September 11, 2008
TVA – a little Fannie Mae/Freddie Mac? (Where’s the lipstick?)
The federal government has placed Fannie Mae and Freddie Mac into conservatorship and has fired the two executives in charge of them (they still will get a $24 million “golden parachute”). It is not bankruptcy but it is “similar to a condition of Chapter 11 bankruptcy”. (NPR 9/7/08)
It also is a clear example of the government’s inability to run things, any kind of business. And every time the government overlays its federal mentality over private enterprise activities the result is just another bailout by federal taxpayers.
There is some discussion in Washington that Fannie Mae/Freddie Mac financing should be like the TVA, except placing some parts of it under direct appropriations and the rest secured by mortgages. Squeezing a balloon only moves the air to a different part of it; the amount of air remains the same. All of the debt is still there but mostly “off budget”. More smoke and mirrors.
TVA is moving to an unsustainable financial condition where financing its debt consumes far too much of its revenues and by necessity TVA must increase its rates more and more. Already other utilities with lower rates than TVA’s are Georgia Power, Ohio Power, Kentucky Utilities, and Louisville Gas and Electric. (TVA report 8/20/08) Many other utility rates were not that much higher than TVA’s.
For the government to say there is comfort in TVA’s financing model is the same as saying the Emperor does wear clothes. The TVA is not a stable financial entity.
The movement should be toward the liquidation of federal agencies such as the TVA and to let America’s entrepreneurial economy perform. Believing in an empty suit is to believe there is an Emperor. (Where’s that lipstick?)
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . September 10, 2008
TVA rate hikes for North Alabama citizens cannot be changed by Alabama Public Service Commission
An Associated Press report (Times Daily 9/9/08) said the Alabama PSC members “hope to scale back Alabama Power Company’s request for a record rate hike of more than 14 percent for homes and nearly 25 percent for industries.”
Alabama citizens in TVA’s territory, however, will not get the benefit of their own public service commission to challenge TVA’s rate hike of about 20 percent.
TVA, a federal agency, has the unchallengeable authority to raise electricity rates in its 80,000 square-mile territory in seven Southern states whenever it chooses and for whatever rate it chooses. Individuals need not appeal those increases.
For many years, TVA provided below market electricity rates until circumstances began to overcome its ability to continue successfully to finance its debt consistently. Some distributors have decided to remove themselves from TVA’s territory and to at least give their customers a chance at lower rates; to be controlled by state regulators instead of the federal monolith.
Other utilities with lower rates than TVA’s are Georgia Power, Ohio Power, Kentucky Utilities, and Louisville Gas and Electric. (TVA report 8/20/08) Many other utility rates were not that much higher than TVA’s.
These are some of the reasons why it is so important to remove the federal government from the rate-making process, to enable citizens to be heard under the aegis of their own elected officials.
And it must be unsettling to investors in TVA's financial instruments with the following statement: (www.tva.gov)
“Cautionary Note Regarding Certain Previously Reported Financial Results:
Investors and others should not rely on TVA’s financial statements for the fiscal years ended September 30, 2006 and 2007, and the quarterly periods ended December 31, 2006, March 31, 2007, June 30, 2007, December 31, 2007, and March 31, 2008, due to errors in the estimation of unbilled revenues. The financial statements for these periods are being restated and will be filed with the Securities and Exchange Commission (the "SEC") when the restatement process is completed. These reports will be available from the SEC through www.sec.gov, and copies will be available from TVA's website. Please see TVA's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 5, 2008, for more information.”
Some of TVA’s statements missed by hundreds of millions of dollars.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . August 27, 2008
Fraud – TVA walks the fine line
When is an act fraudulent? Is it when it is performed or when there is proof of injury?
Definition of Fraud
All multifarious means which human ingenuity can devise, and which are resorted to by one individual to get an advantage over another by false suggestions or suppression of the truth. It includes all surprises, tricks, cunning or dissembling, and any unfair way which another is cheated.
Source: Black’s Law Dictionary, 5th ed., by Henry Campbell Black, West Publishing Co., St. Paul, Minnesota, 1979.
Maybe it is the appearance of fraud that is most troubling. It appears that the TVA mislead the public into believing that its accounts receivables far exceeded the true amount by hundreds of millions of dollars in a 2006 report. Subsequent reports underreported the receivables. TVA is now revising those Securities and Exchange Commission (SEC) reports from 2006 forward and does not know when they will be completed.
Two outside and independent auditing firms failed to recognize those misstatements.
From time to time, TVA puts up for sale it’s so-called “power bonds” usually a billion dollars worth. It is clear that potential buyers of those bonds with the knowledge that TVA grossly misstated its accounts receivables, not on just one occasion but on several occasions, may give pause to a) the accuracy of all of TVA’s financial statements and, b) the viability of TVA’s bonds.
This is particularly significant because the federal government does not provide its full faith and credit behind those financial instruments. However, rating companies still give the TVA bonds a AAA rating because they do not believe the government would allow the TVA to declare bankruptcy.
One of the elements of fraud also can be the omission of key facts in an attempt to “cover up” mistakes of management. The TVA seems very reluctant to share information that may be important to bond buyers, vendors, and its own staff and to its customers.
It appears that TVA did not prepare for the deluge of criticism of its 20% rate hike October 1 brought on by its insufficient time for their customers to make their own preparations for it. The TVA does have discretion in setting the timing of rate hikes and obviously, they have abused it. TVA seems to have been caught unaware of spiraling fuel costs and had to resort to “panic” rate increases.
It is doubtful that the public service commissions in any of the seven states in TVA’s territory would have allowed such a steep rate hike all at once. But the PSC’s there have to answer to their own electorate, the electricity users, and do not have the unilateral power the federal government does to mandate those rate increases.
The TVA Act represents a flaw in the representative form of government provided in the U.S. Constitution, i.e., it is “We the people” who have the power over government, not the reverse of it as practiced by the TVA.
Fraudulent or not, the TVA continuously fights against rules other utilities have to abide by and only with great reluctance upgrades it coal-fired plants with the latest pollution scrubbers.
It could have been fraudulently that TVA conspired with witnesses in their trial against the North Carolina Attorney General to claim that the TVA did not pollute past the North Carolina state line. Apparently the bad air just disappeared at that point. One TVA witness claimed that cutting the pollution from TVA’s coal-fired plants would most benefit the people of middle Tennessee and North Alabama.
Concealment and cover up probably, after the GAO report of May 21, 2008, “Weaknesses in Control Systems and Networks”, was released showing the serious vulnerabilities of TVA’s production and executive computer systems. Their response? “We’ve fixed it” and the usual “we’re working on it”. – “Security reasons” no doubt kept this major management mess up under wraps.
If not fraud, then a cover up of the major mishandling of 5,550 TVA computers that at first could not be accounted for. Some apparently had been given away to a school (at least three of them); this brings up the question of whether government property disposal was handled within guidelines.
This may be no more that a major management debacle but it appears that fraud could be involved.
Part of TVA’s problem is its monolithic attitude and its undecipherable Web site. Search subjects are so general that it may require looking at hundreds of entries that are not in chronological order but according some other arcane method of organization.
Is it fraudulent to claim that TVA’s “principal offices” reside in Muscle Shoals, Alabama? The TVA Act says that is where it is supposed to be or in the “vicinity” of it. Knoxville, Tennessee really stretches the word “vicinity”.
And is it a fraud for the TVA not to conform to the TVA Act in other respects such as its charge to develop new and cheap fertilizers and to assist in developing better farming techniques? That stopped decades ago but the law has not changed.
Some of TVA’s land deals and swaps are highly questionable. A recent one involved a North Carolina congressman who stands to profit greatly from one of TVA’s approvals. And that congressman is part of the Congressional TVA Caucus, a body whose job it is to oversee TVA to prevent just these kinds of dealings.
Also, it appears that the transaction did not conform to the requirements of Executive Order 13406 which specifically prohibits such action. If suit is brought against the TVA for improper practices, perhaps it too could be called fraud.
Finally, does the fact that the TVA Office of Inspector General is paid from TVA funds constitute fraud? The OIG is supposed to be an arms-length independent reviewer of the TVA. The question is, “Does the dog bite the hand that feeds it?”
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . August 21, 2008
TVA’s raw-power anti-competitive money grab
“With the swipe of a pen. . .”
A vestige of FDR’s New Deal socialism, the Tennessee Valley Authority, survives management blunder after management blunder. How, you may say, does a $10 billion power facility survive in a competitive, free-market economy?
Well, it cannot unless some very large government strings pull the TVA out of the world of real competition. But despite its financing advantage, lenders do not believe what the government explicitly says it will not do, that is, to give those lenders a guarantee of the full faith and credit of the United States government. And financial rating companies give the TVA their AAA ratings with statements like “the government never would permit the TVA to default.”
Financing capital construction critically depends on the cost of that money.
Until recently, the TVA has been claiming “sovereign immunity” to thwart legal action against it, however, a federal judge ruled out that defense in an air pollution suit brought by the State of North Carolina.
TVA is in the midst of a paradoxical campaign – sell more electricity and conserve more electricity. They are now predicting that income will be “flat” next year, yet they want to continue additional construction on two abandoned nuclear reactors (Bellefonte) in North Alabama.
With the need to purchase more and more power from outside the TVA “fence”, the federal agency is becoming more and more a broker of electricity instead of a producer of it. And there is a net loss to TVA for it by at least 5 percent, the amount TVA is obligated to dole out to states and localities. Some money, strangely, goes as far away as Illinois.
The out-of-control federal agency, fearless from congressional oversight or having to answer to any of the 8.8 million citizens whose electric bill just went up 20 percent “with the swipe of a pen” as one writer puts it, is unique in the federal government.
Here’s what a former TVA employee had to say about the rate hike, and more:
“With the swipe of a pen, TVA's annual revenue has increased 2 billion a year or close to 20%. How can this travesty take place without some form of representation for the people of the Tennessee Valley?
I never fully understood the unconstitutional powers of TVA until I started reading your articles. At (my) company, we must bring everything to the table in front of the PSC. We are scrutinized inside and out and rightfully so. Any ratepayer deserves a voice at a minimum. I am speechless as result of the latest rate increase. When will the people of this country open their eyes to the greatest mismanagement in federal government?
I don't think any arm of the federal government has as much power over the people as does TVA. The happiest day in my life will be when the TVA is dissolved and the people are free.
I think daily of the unethical, unsafe, and dishonest business practices I was exposed to daily. One day I hope to have my voice heard”.
Others are just as outspoken about the TVA but most are afraid to express publically their views for fear of retribution.
TVA’s unilateral authority over so many people to provide their electricity is unprecedented in America. And, as is always the case, changes in the structure of our federal government must begin at the bottom, with the people themselves.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA Report . . . August 19, 2008
TVA - “The night they drove ol’ Dixie down”?
The federal board meeting of the Tennessee Valley Authority on Wednesday, August 20, 2008, with great agonizing and finger-pointing will meet to declare there will be a huge rate increase in electricity for over 8 million people in the South. This totally is a federal decision; none of the public service commissions in the seven states where the TVA operates have anything to say about it. TVA has to justify nothing, prove nothing.
And the governors of those seven states, locally elected representatives, not even the federal representatives in those states have anything to say about it. The TVA Act specifically says the TVA board is the sole determinant of electricity rates in TVA’s seven-state, 80,000 square-mile territory.
It was only 90 days ago that in commenting on the privatization of the TVA, quoting from the Times Daily of May 20, 2008,
“TVA estimates that its rates would increase 19 percent (if privatized) and that states like Alabama would lose their in-lieu-of-tax payments, which amounts to more than $10 million each year in the Shoals. Taxpayers nationwide would be left to pay for the $25 billion in debt.”
If not a dissembling statement, I never heard one because 19 percent is about the same increase TVA estimated just two weeks ago to be effective October 1. In other words, if TVA is privatized, rates would go up 19 percent (not a supported figure). But they’re going up that much and probably more.
Senator Jim Bunning (R-KY) commented, "A full study of privatization would provide an independent analysis of the financial exposure of the taxpayer and seems like a prudent step to understand what possibilities the country would have if privatization is ever necessary". (Times Daily 5/20/08)
The new “fuel adjustment” figure of about the same amount, along with possibly a “base rate” adjustment will likely be a whopping increase in TVA electricity rates. Obfuscation and confusing statements are par for TVA’s course.
But some already have speculated that neither of those increases would be enough to cover TVA’s expenses.
Is this “The night they drove ol’ Dixie down”? Again?
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA REPORT . . . August 17, 2008
TVA avoids following TVA Act
How many times does it have to go around to come around for TVA to stop and read the TVA Act?
In a remarkably ironic move, Muscle Shoals-based IFDC, International Center For Soil Fertility and Agricultural Development, wants the Shoals to become the core of research into finding affordable, environmentally friendly fertilizers. (Times Daily 8/17/08)
The company wants to lease TVA’s lab facilities unused for decades, to do exactly what the TVA Act calls for the TVA to do. Now it is true private enterprise should be taking up the much earlier benefits derived from TVA research.
The problem today is that TVA does not want to do what the law requires it to do – see http://norsworthyattheshoals.blogspot.com/2008/06/tva-and-corn-crop-sometimes-it-takes.html
And it does not take a genius to figure out why the TVA does not concentrate on improving farming; there is no income to TVA from it.
More power to private enterprise for picking up the few experimental strands of fertilizer development left over by the TVA. The history of TVA’s failed efforts to make any difference in farming in the South began even before there was a TVA. In 1922, Henry Ford wanted to carry on the development of air nitrates for fertilizer, not for the making of munitions for which two plants were designed during WWI.
Ford said he would produce cheap fertilizer according to an agreement where he also would develop the “Detroit of the South” in automobile manufacturing. Certainly, the whole South greatly would have benefited from both of his proposals. But Sen. George Norris (R Neb) fought Ford at every turn from his position on the senate Agriculture committee. In another touch of irony, the South would not see the reality of many automobile manufacturing plants until the late 20th century and most of them are outside TVA’s boundaries.
John Shields, interim director of IFDC's research and marketing and former official at TVA's International Fertilizer Development Center, said the $41 million the federal utility spent on fertilizer research from the 1930s and early 1980s returned $57 billion to U.S. agriculture. (Times Daily) I wonder if the old TVA lab is anywhere near the “principal office” of the TVA in Muscle Shoals; oh, you mean it is just a mailbox address?
Why then, did TVA (or congress or both) drop the ball and stop investing in agriculture research that purportedly was paying off so handsomely for American taxpayers?
That and many questions remain as to the viability of the TVA in today’s volatile markets, a government agency that is too slow to recognize market conditions and not nearly nimble enough to adapt to a survival mode.
First, the TVA is entirely too large to adopt one size fits all rates, and when those rates go up for 8 million customers as they will shortly, some will be paying too much and others will be paying too little. In addition, the TVA has shown its vulnerability to cyber-attacks that could disrupt the entire electricity grid in the U.S.
Because of the strictures in the TVA Act, rate decisions are made by TVA without the input from states’ public service commissions. Their rules are final, non-contestable. There is no appeal to any elected officials in any of the seven states where TVA controls. Since the TVA covers so many different political jurisdictions, there is no one source someone can garner to stand up to TVA decisions. Federal court is their only recourse.
TVA’s management strategy to “streamline and centralize” electricity operations and executive computer controls by combining them resulted in a possible catastrophic management miscue as pointed out by the Government Accountability Office on May 21, 2008.
TVA’s management prowess continues to disappoint. Instead of improving TVA management, the new organizational structure has seemed to exacerbate management mistakes. Beside initially unable to properly account for 5,550 TVA computers, TVA now is having to restate financial information submitted to the SEC from 2006 forward.
TVA has been known in the past to have entered into questionable real estate transactions some of which have been highly profitable to the TVA (TVA is not supposed to make a “profit”).
And now in another very questionable deal where a congressman stands to gain considerably from one of TVA’s famous “land swaps”, it appears that the TVA has not learned its lesson to not do those kinds of transactions any more. Executive Order 13406 clearly prohibits It.
Oh yes, the congressman is on a TVA oversight committee that is supposed to watch out for this kind of underhanded deal.
It’s time for the TVA to cash in its chips and hope there is enough money to put a dent in its $25 billion debt.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA Report . . . August 12, 2008
TVA – how to justify the greatest rate hike in 75 years?
“As in pre-American Revolutionary days, an oppressive British government demanded a stiff tax on tea arriving at the port of Boston to be paid by American citizens to pay for an over-spent British administration. Today, that demand is from the TVA and the increase is
to pay for the many extravagancies of the TVA administration”. Ernest Norsworthy 8/12/08
Federal price controls in American do not work even though they have been tried repeatedly and in every case, they have materially disrupted the normal flow of our market economy.
It is time now to cease federal price controls of electricity provided to over 8 million households in an 80,000 square-mile federally controlled territory in the Southeastern United States. Those households well could be considered to be behind an “iron curtain” 2,500 miles long and denied some of the basic rights guaranteed in the U.S. Constitution.
And now, this federal agency that controls prices in the Tennessee Valley tremendously is going to increase the prices (a tax) it levies for electricity on those 8 million consumers estimated to be 20 percent or even more on October 1, 2008.
Electricity in most of Tennessee and parts of Mississippi, Alabama, Georgia, Kentucky, North Carolina, and Virginia, courses through 17,000 miles of federally owned transmission wires. The electricity is produced for the most part by coal-fired generators and six nuclear reactors. Hydro electricity now plays a minor part in its production. Additional power is purchased from outside the 2,500-mile fence at times of peak demand, now at $701 million so far this year.
It is time to stop the federal intrusion of the Tennessee Valley Authority into national and international markets that impact construction financing of other utilities by flying false colors. With faint denials, the TVA federal agency does not guarantee the full faith and credit of the federal government in the sale of TVA’s financial instruments. Lenders seem to think differently believing that the federal government would never allow a federal agency to go bankrupt while the documents express the opposite view.
The federal government through its own agency, TVA, duplicates the clear missions of other federal agencies such as the National Park Service, Fish and Wildlife, Corps of Engineers, Bureau of Land Reclamation, Small Business Administration and other loan and grant agencies of the federal government.
TVA constantly battles with other federal regulatory agencies and defends suits against it costing in the millions of dollars for both sides.
The TVA has usurped the constitutionally granted powers of seven states that contain TVA’s territory. It has done so by disallowing the public service commissions in those seven states to regulate TVA’s electricity rates. TVA sets its prices and then controls them.
From agency income, now at about $9 billion annually, comprises the price controls established by the federal agency, the TVA, and as a sop to elected leaders in those states, rebates five-percent of the gross to “payments in lieu of taxes”. Is that amount, the five-percent, arrived at through consultation/approval of any elected official in any of the seven states? The answer is no. “No taxation without representation”.
With the federal government controlling the income to the agency, there is a negative warping of taxes rightfully owed to localities, states, and even to the federal government since the TVA cannot pay taxes to itself.
That $9 billion does not filter through the common denominator of private enterprise where its use would be much different from filtering through the U.S. Government.
For its entire 75 years, the TVA has skewed the actual outcomes of economic and cultural growth of the South with its paternalistic approaches. “Pity the poor and backward people of the South!” is their approach and with “free” money, nonetheless. Unfortunately, that rebate money goes through many political hands as a slush fund and everyone get to scrape off a little of it from the top. The people who use TVA electricity and who form the basis for TVA’s rebate get none of those benefits directly.
It is easy to speculate that if the Tennessee River Valley had begun its major development by entrepreneur Henry Ford in the 1920s that private employment would have resulted in the millions by this time.
Ironically, Ford’s dream significantly has been realized outside TVA’s control in Georgia, Alabama, and Mississippi where multi-billion dollar auto plants already are in operation with more planned.
The agency of the federal government, the TVA, that manages this monolith has proved to be a very poor manager of its resources; today the agency has a $25 billion unsustainable debt and promises to exceed its statutory limit of $30 billion with planned new nuclear reactors.
Never noted for its ability to foresee market changes with a nimbleness to adapt to them, the agency is now embarking on a paradoxical quest to conserve more electricity while at the same time to “sell more electricity!” There are times when demand exceeds TVA’s capacity to produce electricity and the agency must resort to more expensive sources outside TVA’s fence.
Previously, I have suggested that electricity customers gladly would cut back on power usage during peak hours if the incentive were big enough. The source of this incentive fund may be found ready-made in TVA’s payment in lieu of taxes slush fund that is paid to state and local governments, some $450 million last year. Instead of paying more to this fund based on more usage of electricity, it could be turned around to benefit those who actually conserve more electricity in payments directly to customers as a bonus.
An overly aggressive federal government agency has dampened the entrepreneurial spirit of the Tennessee River Valley to the point that everyone has to check with the TVA before taking almost any kind of action relating to land or water, almost any kind of business move.
TVA’s anti-business spirit pervades the South and its heavy handedness has retarded both its economy and the natural free-enterprise culture of its people.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . August 8, 2008
How can this happen in a democratic republic?
There is a place in America where representative government does not work. It is a very large expanse of territory, some 80,000 square-miles, and it is controlled out of Washington, D.C.
No, it is not some vast area in the West where the federal government owns 25 percent of the land; it is not a territory of the United States. No, it is right in the middle of the Southeastern United States and it is dominated by the Tennessee Valley Authority, an agency of the federal government.
More than 8 million people are inside TVA’s territory surrounded by a 2,500 mile-long fence under the total control of the TVA for the provision of their electricity.
The people seem to be mesmerized by their captor, afflicted with the Stockholm syndrome.
“Please, oh please, let me pay more for your beloved electricity!”
After TVA CEO Tom Kilgore announced on Wednesday there would be a large increase in the cost of electricity October 1, up pops the editorial apologists who pick up TVA’s usual excuses; it is the drought, it’s the heat, it’s the cost of coal, it’s the cost of blah, blah, blah, ad nauseam.
Those writers never mention that the TVA has the people in a lock; in this representative government, there is no one to represent the people inside TVA’s fence. TVA sets the rules (laws) and TVA enforces their own rules (laws).
Public service commissions in seven states are powerless to require the TVA to justify their increased rates; the mayor, city council, county commissioner, state representative, governor, even the federal representatives in congress, all are powerless to make the TVA justify an increase in rates.
The reason is that it is federal law that gives the TVA this extraordinary power and until the law is changed or abolished, well, “cased closed”.
In our representative form of government, the kind of government that makes America so very special in the world, it is the people who decide who will govern themselves. And that "governments derive their just powers from the consent of the governed"--Declaration of Independence.
The very existence of the TVA flies in the face of that well-known and established American precept of government.
The American Revolution was supposed to have settled the issue of sovereignty, are we to be ruled by a king or by ourselves? The issue of sovereign immunity claimed over and over by the TVA to maintain its dictatorial stance over the people in parts or all of seven Southeastern states, slowly is being brought down.
The recent federal trial against the TVA in Asheville, NC,
proceeded only when TVA was denied sovereign immunity. But that is not the same as TVA relinquishing its power to levy a TVA “tax” on the people by increasing its rates.
The attitude seems to be “No, never look at the TVA itself”, that paragon of frugality and efficiency.
Does anyone ask why TVA has a $25 billion debt that is unsupportable?
How much of this latest rate increase will be used to pay interest on that debt?
And much less, how are they going to pay down that debt with an estimated $10 billion more planned in the near future?
Financially, TVA already is bankrupt - right in the middle of a representative democracy.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . August 5, 2008
TVA accounting in high dudgeon – somebody’s got to pay!
Reconciling a checkbook account is not a particularly difficult task but it seems to be so for many people. The problem arises when there is not enough to cover the drafts, “I always keep enough money in my bank account to cover my checks”, they cry. An unreconciled account is a financial bomb waiting to blow.
And it looks like that is what has happened to TVA’s accounting procedures. Too much of an estimate of income in one account and not enough in others.
It goes back to 2006 and the mistake seems to have ballooned up to and including the March 31, 2008 financial
Reports.
The TVA reports in an amended filing with the Securities and Exchange Commission dated August 5, 2008 by Chief Financial Officer, Kimberly S. Greene that those reports “Should not be relied upon due to errors in the estimates of unbilled revenues.”
We’re not talking peanuts here. The first overestimate of billings was $232 million, enough perhaps, for a potential buyer of TVA bonds to make a financial decision to buy.
And then in subsequent reporting periods the billing estimates were too low, again maybe enough for potential bond buyers to make financial decisions.
This is but another glaring management error that could not use the simplest of methods to estimate billings due – “To use TVA meter data and individual distributor wholesale bill dates”. And that is the method they will be using in the future.
Because of TVA’s well-known tendency to “get around” a particular issue for whatever their reasons, this latest financial fiasco just adds to the huge number of management mistakes by the current CEO and board of directors.
TVA already is geared up to put the blame somewhere else. They have had “discussions” with Ernst and Young, TVA’s current accounting firm, and with PricewaterhouseCoopers for the fiscal years ended September 30, 2006 and 2007.
“In order to remediate this material weakness, TVA is taking the following steps”, blah, blah, blah.
Not a mea culpa even hinted. Just part of the “TVA culture”.
If this were any other utility with an unsupportable $25 billion debt (like TVA’s) it would have long ago been liquidated and with a call for SEC sanctions.
Again, “nobody ever gets fired at the TVA” and this looks like another serious management mistake that will go unpunished. I have already called for the U.S. Attorney General to investigate the apparent loss or theft of 5,550 TVA computers that belong to the government.
Management of the TVA is in serious jeopardy of flying completely apart and should be taken over temporarily by the Department of Energy until all of the many serious issues can be sorted out in preparation for the liquidation of the TVA.
This ain’t checkbook accounting, it is holding someone responsible and accountable.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . August 2, 2008
TVA - federal agency shakeup long overdue
"Some heads must roll after this” is an old saying, one that has punch, one that is somewhat assuring that something actually will be done.
None of this applies to the Tennessee Valley Authority, it never has. TVA management can make the most egregious mistakes and still go unpunished. And this is so from the very beginning of the TVA where they told the utility competition in the surrounding area to “sell or be duplicated” meaning TVA would undercut any price offered by those utilities.
In an article published by Time magazine December 5, 1938, utility lawyers concluded “A last-ditch attempt to get the currently New Dealish Supreme Court to reverse the ‘brutal doctrine of Chattanooga’ – the opinion of a three-judge Federal Court this year that since TVA power sales are legal, utilities have no legal relief even from ruinous TVA competition.”
And to a Senate and House committee Wendell Willkie, president of the Commonwealth and Southern Corp., “gave a vivid picture of what utilities, and utility investors, are up against”, said the magazine article. “If subsidized low TVA rates and the ‘brutal doctrine of Chattanooga’ forced utilities to sell out to the Government, their troubles only began”. “Mr. Willkie, for instance, thought Tennessee Electric Power Co. was worth $120,000,000; TVA was offering $65,000,000.” “If any public purchaser disliked the utilities’ price, bitterly protested Wendell Willkie, it could set up a duplicating system with PWA funds (Public Works Administration), getting 45% of the money as a gift and borrowing the rest at low interest.” “Utility properties without a market are valueless except as junk. … In effect, the Government holds a gun to the head of the utility and says ‘Sell at our price or we duplicate.’ This is one of the most cruel, brutal, and unAmerican doctrines ever adopted. …”
That attitude of the TVA so clearly expressed by Wendell Willkie prevails yet today and has become part of the “TVA culture”.
In the 1970s and 1980s, TVA management grossly overestimated the power needs for the region by beginning construction of three times too many nuclear reactors, 17 of them. Six nuclear reactors presently are in operation. Many were abandoned after costing billions of dollars and now TVA plans to finish more of those units at costs estimated to be another ten billion dollars.
Presently, TVA’s debt is about $25 billion with a Congressional debt cap of $30 billion. However, TVA’s income today barely pays debt interest and financially it would be in liquidation status if it were an investor-owned utility.
TVA’s land policy until recently clearly was in violation of Executive Order 13406 which prohibits the disposal of federal property for other than public uses. TVA still retains about 293,000 acres that should be auctioned off as surplus, a management deficiency.
TVA has instituted a “conservation” program (again), one that will not work under TVA’s present organization. Financed to the hilt, TVA cannot afford to cut sales. The entire TVA electrical supply system is based on ever-increasing power demand, on building more capacity. TVA management’s failure to foresee the trends in supply and demand has left the agency without the capability feasibly to finance more new capacity. Watts Bar Unit 2 was estimated to be 80% complete when construction stopped in 1985, however, it was canabalized for use on other nuclear plants and now is an estimated 60% complete. The twin Watts Bar Unit 1 took 22 years an nearly $7 billion dollars to complete.
Canabalization is a very bad management practice comparable to going to the junk yard to scrounge for a particular part that may or may not meet specifications. Completion of Unit 2 at an additional estimated cost of $2 to $3 billion has now been moved forward to 2013.
TVA management seriously blundered when it decided to “centralize and streamline” TVA. The resulting mixing of operational systems computers with executive/management computer systems resulted in serious security breach vulnerabilities as reported by the Government Accountability Office (GAO) May 21, 2008. This mistake was so egregious that it warranted calling for the resignations of both the TVA CEO and the part-time board of directors.
As if that was not serious enough, TVA’s Office of Inspector General reported that the TVA could not track over 5,550 computers in their inventory. “The inability to adequately track, as well as the lack of encryption, on these computers increases the risk for the disclosure of sensitive or restricted information.”
“The policies for handling/reporting stolen computers were not consistently followed.” This lackadaisical attitude of the TVA fits well in the “TVA culture” which permeates the entire organization.
With this new revelation of TVA mismanagement, I have requested the U.S. Attorney General look into possible criminal prosecutions, malfeasance in office of TVA management and possible wrongdoing by TVA’s federal employees.
TVA management mistakes are not infrequent and follow a familiar pattern. “We’ve already fixed it” or “we’re going to fix it and never let it happen again”, all without accepting the responsibility of managing the agency and holding accountable those responsible for it. To assume it is the responsibility of Congressional oversight committees to do the chastising job would be an even bigger mistake.
Because the TVA receives no congressional appropriations, there is no congressional oversight. Now is the time for the Congress to authorize the liquidation of the TVA. Concomitantly, the Executive Branch could be preparing for that eventuality by use of the Department of Energy to develop TVA dissolution procedures.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 31, 2008
TVA - What kind of computer security? Calling for U.S. Attorney General to investigate
Since it is an unwritten policy of the TVA that “nobody ever gets fired from the TVA”, it is high time that policy be changed and reversed – and put in writing.
In a scathing report of the Government Accountability Office (GAO) in May, the TVA’s systems of computer security left the agency and by reference practically the whole country vulnerable to cyber-attacks. The issues were so serious that the GAO would not release most of the report for sensitive security reasons.
Now comes the TVA Office of the Inspector General in a report that is very specific. Since August 2004, TVA has been unable to account for the whereabouts of 5,550 computers.
Stop right there. It doesn’t matter much that they now have accounted for “more than 3000” of those computers and that at least one of the remaining ones is known to be stolen, which contains “personally identifiable information”, e.g. employee social security numbers. “We have not been able to confirm whether the remaining stolen computers contained sensitive or restricted information. . .” (OIG report)
The horse is long gone from the barn and there is no way to correct these very unacceptable management mistakes with the same team that continually keeps committing them.
It is time for the Attorney General of the United States immediately to investigate possible criminal wrongdoing, malfeasance in office of the TVA CEO and the TVA board of directors, and the possible theft of 2,500 computers belonging to the federal government estimated to be worth $1,250,000 (at $500 each).
The TVA is rife with many management mistakes since it was reorganized by an Act of Congress in 2004. Its “Strategic Plan 2007” is a vague document and not too different from such plans in the past. In the latest one, the CEO has almost exclusive control of the entire agency.
No doubt, CEO Tom Kilgore encouraged the part-time board to go along with the combining of both of TVA’s computer systems, operational and executive control.
It was that mixing of the systems that brought very serious national security risks to TVA’s grid and by extension to the rest of the electrical network in the United States. See the GAO report May 21, 2008
It was after that huge management blunder that I suggested to the President and the Vice President of the United States to call for the resignations of the CEO Tom Kilgore, and the board members involved in the approval of the almost disastrous change in TVA’s computer systems. I also suggested that the TVA turn over its operations to the Department of Energy temporarily until risks to national security could be abated and a dissolution plan for the TVA could be developed. At the very least, centralized control of the power grid should be broken up into less vulnerable segments.
Now, the mistakes seem to multiply and clearly, they are the problems of TVA management as part of a kind of endemic “TVA culture”.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 30, 2008
TVA’s Tom Kilgore, his Swan Song?
The last witness for the TVA, CEO and president Tom Kilgore, was singing the same song, second verse and still says he is “going to do” a lot of things the TVA has failed to do.
To look at his pronouncements with anything but a jaundiced eye would be “foolhardy” according to his own judgment of planned action. “It would be foolhardy not to complete those (upgrades)”, he said. (Tennessean 7/29/08)
Of course, he can never take back all of the “foolhardy” mistakes the TVA has made in the past that were recounted on cross-examination.
Particularly telling is the kind of logic the CEO used to rationalize completion of new air pollution control devices on three coal-fired plants in East Tennessee that previously had been “pledged”.
But the new scrubbers on Colbert’s plant also were “pledged” – before changing horses again in midstream from the pressure of this very trial brought by North Carolina and transferred to the plants in East Tennessee. There goes the “health” plan for the Shoals in North Alabama.
TVA’s reactive management is no worse than the many fits and starts of that agency over the years whether there were three directors running the monolith or just one, CEO Tom Kilgore. Yes, there are nine part-time directors (seven presently) who are supposed to chart the path for the TVA and at this point they are badly in need of navigation training.
The board has made some very large errors in direction of the agency and in their setting of the policies to guide it. Most recently, because of a conscious management plan to combine operational and executive computer systems resulting in some major security vulnerabilities to the entire 80,000 square-mile electrical system of the TVA, it is abundantly clear that the board members responsible for that mistake should resign. And so should the CEO, Tom Kilgore, for not having the management skills to foresee such gross misdirection’s from the board. (See GAO report of May 21, 2008)
The TVA is a federal anachronism that is long overdue for liquidation into smaller, more manageable units that would be less vulnerable to cyber-hackers. Until market forces obtain, the entire Tennessee River valley will remain subject to another federally dominated program from Washington that could put the entire nation at risk.
So in essence, TVA’s CEO Tom Kilgore just says, “Trust me, I’m from the government and I’m here to help”.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 29, 2008
TVA witness – “Pollution? We ain’t got no stinkin’ pollution!” (Parody)
“Pollution? What pollution? We ain’t got no stinkin’ pollution!” in a parody of what Quincy Styke testified in federal court today. Styke is the deputy director of Tennessee’s Division of Air Pollution Control. “Tennessee’s been about the business of controlling its emissions”, Styke said in a quote from the Tennessean newspaper today. How about controlling air pollution for Tennessee citizens?
And so goes another TVA witness who believes in the TVA’s version of a fairy Godmother. One witness testified that the pollution from TVA’s 11 coal-fired plants simply disappears when it goes over into North Carolina, magically.
Another said the best improvements to a North Carolina law enacted in 2002 would be for middle Tennesseans and citizens in North Alabama. Put ’em together and what have you got, bippity-boppity-boo.
The trial of the TVA, a federal agency, against American citizens is coming to a close. And the old saying, “With friends like the TVA, who needs enemies?” certainly is apropos to the circumstances.
It is disheartening when our own federal government fights tooth and nail to keep from providing the best possible air cleaners on their smokestacks. And as claimed by North Carolina, is detrimental to the health of their citizens and as testified, to the health of the citizens in other states.
When a state of Tennessee pollution official stands up in court, unbelievably, and testifies that, “TVA is moving ‘as quickly as it can’ to install pollution control technology at its 11 coal-fired plants in Tennessee, Alabama and Kentucky,” the credulity of that witness has to be questioned. (From Citizen-Times 7/29/08)
When this trial is over, the federal judge, Lacy Thornburg will decide its final outcome since there is no jury involved.
Ruling only on the facts and on the law, Judge Thornburg has his hands full in sorting out the major conflicts in this case, and as I see it in the simplest of terms, the question is in an analogy, “should defendant “A” be responsible for the thistles that blow on and damage the property of plaintiff “B”?” A thorny question, no doubt.
But the judge may also rule that immediate steps be taken by the TVA to shut down many, if not all, of the 11 coal-fired plants. Of course, TVA would squeal like a stuck pig if that happened and would seek injunctive relief I imagine.
Long neglected maintenance and upgrading of TVA’s coal-fired plants also should be considered. This suit should have come as no surprise to the TVA; this case opens up the TVA to many more like it, I believe, regardless of how the court rules.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 25, 2008
TVA pays for "unbiased" testimony
One way to win arguments, even arguments about who is dumping on whom regarding air pollution, is through the scientific method.
Here’s the way it usually works. Expert witness “X” posits that the gray skies are caused by “Z” and sets forth the scientific reasons to support that position. The scientific method has strict rules to abide by. If those methods are not adhered to, the testimony is less credible and carries less weight, a lot less if the scientific method is claimed.
Now expert witness “Y” attacks expert “X” and says, according to the Asheville Citizen-Times, “The calculations ‘fly in the face of common sense’.” And further, “These numbers cannot be taken seriously. The assumptions underlying them are meaningless”.
Here’s where it gets sticky. Again, quoting the Citizen-Times, “A Tennessee Valley Authority witness testified today that there’s no scientific evidence to support the contention that emissions from TVA power plants cause premature deaths and health problems in North Carolina”.
TVA’s witness goes further and says, “I’m of the opinion that there isn’t sufficient evidence to support a causal relationship”. So says Suresh Moolgavkar, an epidemiologist with the University of Washington.
There are a couple of problems with Mr. Moolgavkar’s statements. First, he appears to offer no scientific evidence himself that NC’s witness, Jonathon Levy, did not use the “scientific method” to draw his conclusions that premature deaths and sickness were caused by TVA’s coal-fired pollution. In fact, he stated there was not “sufficient evidence” in his opinion to agree with the cause and effect of TVA’s smoke.
That, of course, infers there is some evidence using the scientific method, which supports the NC case.
Mr. Moolgavkar’s statement that “These numbers cannot be taken seriously … and are meaningless” is in itself a non-scientific response to another’s supposition based on the scientific method of discovery.
What Mr. Moolgavkar should do is to prove that there were errors in Mr. Levy’s scientific method - by using the scientific method. Just being dismissive of the presumptions in Mr. Levy’s propositions is, well, not the scientific method of proving or disproving propositions.
“Under cross-examination Moolgavkar acknowledged that most of his published papers cited on health and air pollution on his curriculum vitae were funded by various industry sources, including the electric utility industry.” (Tennessean 7/25/08) It does not appear that Mr. Moolgavkar comes to the table as a nonbiased, independent expert witness.
It is interesting to note that Mr. Moolgavkar, without disputing his professional credentials, still follows the kinds of dismissive attitudes found throughout the TVA. As a scientist, he should avoid those kinds of statements, stick to what is true, and what is not true – and to prove or disprove what has been posited. The scientific method is totally without hyperbole.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 25, 2008
TVA shooting self in foot with witness?
With more witnesses like Mr. Thomas Tesche for the TVA, it looks like TVA is backing right off the cliff.
Mr. Tesche, who magically makes TVA’s pollution from 11 coal-fired plants simply disappear when it reaches the North Carolina border, has now indicted the TVA itself in his assertion that it is middle Tennessee and North Alabama that takes the brunt of the present pollution. And it is there where the best benefits would derive if TVA followed NC’s clean smokestack act of 2002.
Also, Mr. Tesche bases his assumptions on 2002 data, old for the circumstances at hand.
I know this, the Colbert plant in Colbert County, Alabama puts out visibly excessive pollutants. Not only did my family breathe that bad air, I had to wash the black gunk off our house before selling it.
As to the trial, let’s make some assumptions even before it ends sometime next week.
First, assuming the federal judge rules against the TVA, what might his ruling consist of? He could:
Immediately require the TVA to shut down TVA’s coal-fired plants that do not meet the North Carolina standards, shutdowns programmed over 12 months and the availability to replace that electricity from other outside sources. (Apparently, that would mean all 11 of those coal-fired plants).
The Order would be specific as to actions to take by certain dates. (No “planning” to do it). The schedule would be agreed to in advance by both parties to the suit. Failure to perform would result in stiff fines and a re-hearing by the court for each instance of such failure to perform.
A fine of $1 million would be levied against the TVA for its failure to install appropriate state of the art scrubbers for each of the 11 plants when they were needed.
As a first priority, the TVA will install new scrubbers on the Colbert plant and with agreement from parties in the suit scheduled for a hearing in December, quash all complaints in that suit. A fine in that case to be determined by the court.
As an admonition, the court warns the TVA as an agency of the federal government to adhere to all federal laws, rules of the FERC, the NRC and any other federal agencies involved in the production of energy in the United States and for the TVA to cease and desist in the prosecutions of suits in that regard.
As an agency of the federal government and stewards of the welfare of over 8 million people with regard to their electricity needs, it is incumbent on the TVA to take the leadership role provided for in the U.S. Constitution, a role it has neglected to take on important occasions.
The court will suggest that a panel or some such grouping consisting of congressional, executive branch and members selected from the utility industry will be convened to produce an expedited plan to turn over the TVA’s power-producing capabilities to private industry. The judiciary will not be involved except to provide advice on past judicial involvement with the TVA and will not rule on anything other than matters of law.
Of course, another scenario could go like this:
The court finds that the TVA is not now or has not committed a “public nuisance” as alleged by North Carolina. Case dismissed.
Even with the latter ruling, the TVA must take immediate steps to reduce its pollution of the 11 coal-fired plants to standards within state and federal law.
Or maybe something in between the two scenarios. In any case, it is not probable the court will hand down an immediate ruling so there will be much waiting in anticipation on both sides of the issue.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 24, 2008
TVA witness - smoke and mirrors?
From Asheville Citizen-Times reports.
Bill Baxter, former head of the triumvirate TVA, once said that the reason the TVA was picked on so much was that “it was an easy target”.
The latest witness for the TVA, Thomas Tesche, an expert in computer air dispersion modeling, seems to follow the same kind of reasoning. He said the pollution from TVA’s coal-fired plants was not drifting much over North Carolina from Tennessee that it had to come from somewhere else. Target question – from where else?
“The effects of improvements in TVA plants sought in North Carolina’s lawsuit against the utility would largely be confined to central Tennessee and northern Alabama”, Tesche said in U.S. District Court in Asheville.
So does the pollution magically disappear when crossing over into North Carolina? Or is it all absorbed in the eyes and lungs of people in Tennessee and Northern Alabama first, as he implies.
Give TVA a black star for winning clean air suits. But it is not nearly over for the TVA. In December, yet another suit against the TVA will be heard (unless they weasel out of it). This one involves the longstanding claim that TVA’s Colbert coal-fired plant is not operating within the law.
Alabama’s Department of Environmental Management (ADEM) seems to be supporting TVA’s case by insisting that codifying a 2 percent permissible overage of emissions instead of the present ability to fudge the opacity emission using “eyeballs” instead of electronic monitors. EPA does not agree with the ADEM on this.
For the most recent developments on the upcoming case, see today’s Mobile Register article. www.al.com/news/mobileregister
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA Report . . . July 23, 2008
TVA - a leader who's 'way behind
Does the end of TVA’s “cover up” mean the beginning of a new TVA?
By cover up I mean the end of TVA’s claim for (and receiving) sovereign immunity from prosecution. While I am no friend of over-regulation, when there is a law on the books it should be followed by all equally. Fighting for a change in law is an entirely different process.
The federal Clean Air Act and amendments require:
Federal Facilities. Federal facilities are required to comply with all federal, state, interstate and local requirements respecting control and abatement of air pollution to the same extent as nongovernmental entities. § 7418.
It also provides EPA with enforcement powers and authorizes the imposition of civil and criminal penalties. In the case of imminent and substantial endangerment to public health or welfare or the environment, EPA may bring civil action to restrain the emission of the air pollutants in question or to take other action as necessary. Citizen suits, including suits against EPA for failure to take nondiscretionary action, are authorized by the Act. §§ 7413-7414, 7420 and 7601-7607
TVA’s first defense witness in the trial in North Carolina comes off looking typically TVA – ‘we’ve been working on more pollution controls (look what we already have spent on them) and we plan to do more’.
The Asheville Citizen-Times said that John Myers, senior manager for TVA’s environment and regulatory outlook, testified that “TVA’s coal-fired plants produced about 30 percent more electricity last year than plants in North Carolina while emitting about the same amount of sulfur dioxide.” Myers also acknowledged that Duke Energy and Progress Energy “Are poised to significantly reduce emissions” as required by North Carolina’s Clean Smokestacks Act of 2002.
And apparently, no one asked Myers if installation of scrubbers cut back power production as it purportedly does.
Another witness, Ron Nash, overseer of pollution control construction for the TVA, said that scrubbers have been installed on eight of its 59 power generating units at 11 plants and that scrubbers “should be completed on units at three more plants in Eastern Tennessee by 2013”, he said.
Nash does not believe TVA would be able to meet all of North Carolina’s demands “because it takes about five years to design and construct scrubbers”.
And that statement clearly implies that TVA has no intention of expediting installation of those scrubbers. At least not until ordered by the court. And that has been TVA’s foot-dragging approach to making necessary changes to their pollution-producing plants.
A reasonable and forward thinking TVA would have taken the lead in pollution reduction but they do so only reluctantly. Being forced to do what is right for the citizens (and others) it serves by installing the latest available anti-pollution technology on its coal-fired plants is not representative of the federal government and through its agency, the TVA.
(Information from Asheville Citizen-Times and Lexington Herald-Leader reports).
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . July 21, 2008
TVA trial in Asheville a "killer"
The words jump out like red flags in front of a raging bull; 99 premature deaths directly attributable to the raging bull every year in North Carolina alone. That 3000-pound bull, aka the Tennessee Valley Authority, would not stop the killings for decades even if then.
As a youth involved in athletics, we all were warned that smoking cigarettes would ”cut your wind” and stupidly we kept smoking anyway. It took many years to recognize my own stupidity before quitting the harmful and filthy habit. While smoke-free for many decades, I now have lingering health problems from smoking.
A change in military assignment to Ft. Belvoir, Virginia enabled my wife and me to enjoy the beauty of the eastern mountains and the clean, sparkling air along the Blue Ridge Parkway. That was 58 years ago. Today, that scenery and fresh air are being slowly strangled in the grip of smokestack polluters.
The trial of the TVA, one they so desperately tried to avoid, is now taking place in Asheville, North Carolina. The Attorney General of North Carolina says the TVA pollution is not only killing Great Smoky Mountain trees it also, according to expert testimony, is killing it citizens prematurely.
In North Carolina, that pollution will be the cause of two premature deaths at least while the TVA trial is going on. For a time, we lived in the path of the pollution spewed by the coal-fired TVA plant in Colbert County Alabama. We felt compelled to wash down the outside of our house before selling it. The black gunk came from the Colbert plant.
The expert testimony against the TVA I believe is so serious that there must be no delay in taking corrective action by the court. The state should call for injunctive relief right now even while the trial proceeds. That would mean that most, if not all, of TVA’s 11 pollution producing plants would be shut down.
But TVA’s pollution affects other citizens in other states too, such as the Colbert plant in Alabama.
So-called clean burning coal processes presently are available but more costly. But who should bear that cost, utility companies or the families of the loved ones they have extinguished?
For more of my commentary on theTVA, see http://norsworthyattheshoals.blogspot.com
Ernest Norsworthy
Visalia, California
emnorsworthy@earthlink.net
TVA Report ...July 15, 2008
TVA on trial in Asheville, N.C.
There is something degrading when an agency of the federal government, TVA, stoops to name-calling to bolster its case of trying to prove that “TVA is not a public nuisance”.
Whose face has the mud on it? It is not the state of North Carolina whose air pollution rules are tougher.
It is an American shame when our own federal government is pushed legally into making sure that the pollution it emits through coal-fired smokestacks does not harm its citizens.
While TVA crows how much it already has spent on reducing harmful air pollutants it has not taken advantage of the latest technology in doing so.
People downwind of TVA’s 11 coal-fired plants suffer from the unhealthy air they breathe. I know, I lived near one in Colbert County Alabama. When we sold our house, we had to wash the exterior first from the film it collected from TVA’s Colbert plant.
It is no wonder why our federal government is losing its credibility with American citizens when the latest poll shows the Congress has only a 9 percent approval rating. The arrogance of that government is only exemplified when the TVA tries to justify its terribly misguided ways now in a federal court in Asheville, N.C.
I have championed the liquidation of the TVA, as once suggested by the GAO as a possible solution to TVA’s long-standing mismanagement, and to return the authority to states to regulate utilities within their own boundaries. TVA usurps that authority in parts of seven states in the Southeast.
Regardless of the outcome of the trial against the TVA in Asheville, it has shown once again its obstinacy in abiding with what is best for United States citizens.
Ernest Norsworthy
Visalia, California
emnorsworthy@earthlink.net
http://norsworthyopinion.com
http://norsworthyattheshoals.blogspot.com
TVA Report … July 3, 2008
TVA Bonuses – a tissue of lies?
A sales person on commission earns a “bonus” for every sale, the more sales, the more the “bonuses”. For every federal employee who receives a “bonus” in pay (usually up to 20 percent of salary) is an employee who is underpaid or unsuited for a particular job. If the job specifications of a federal employee do not clearly delineate job responsibilities on which their salary is based, it is a poor management practice to award an additional incentive to “work harder for a bonus”.
Some federal employees work extremely hard for the pay they receive and some federal employees do practically nothing for the same pay. That is a management deficiency inherent in all levels of government, state, federal and local. Government simply does not manage work very well.
Now when it comes to paying federal employees of the Tennessee Valley Authority exorbitant bonuses from top executive to production manager, a flaw obviously exists in the concept. TVA workers, particularly union workers, are paid the “prevailing wage” which always exceeds local comparable pay. Some receive bonuses in the form of extra overtime work “to finish the job quicker”.
Much of the bonus system the TVA uses is based on lies while risking the safety and security of nuclear and other electricity producing plants.
The continuing story of “John”, a former TVA employee highly qualified and competent in multiple areas of expertise in nuclear and fossil plants, explains in his own words how TVA’s bonus system works.
“I have been told,” said John, “TVA determines bonuses for its managers in the following manner.”
“Supposedly, each manager is given a budget, and their bonus is based on how much of that budget they don't spend. I think you can see the basic flaw there. At Bull Run, whenever there was an outage they would schedule a tremendous amount of work to be performed and set a number of hours needed for the work to be done.
The Operations Department would be worked to exhaustion removing the equipment from service and isolating it for maintenance. Invariably, well before the end of the scheduled outage, all those jobs would be canceled and we were once again worked to exhaustion returning everything to service. The original work orders would either be assigned to the outage work order, which was signed off as completed, or otherwise made to disappear.
According to the documentation, we did an enormous amount of work and came in well under budget and ahead of time. ‘My, my, don't those boys deserve a fat bonus...’ The younger people in Operations loved it because they received all that overtime pay.”
Continuing, he said, “When I was at WBN (Watts Bar Nuclear), at one point we had over 1200 clearances issued for various items to have maintenance performed. A realistic number for any one unit would be well less than 100. Each clearance documented a problem and provided a way to track it. The fact that there were over 1200 became a major issue, so some fine manager thought to have one clearance issued for each major plant system and to roll all the existing clearances for equipment in that system into the one clearance.
Almost overnight, they went from over 1200 clearances to about 80. ‘Give that man a bonus...and a promotion’. It was considered impolite to mention the minor fact that we lost years of tracking information and documentation”.
“John’s” narrative reveals how safety matters were compromised in just that one plant, all for gaining that bonus check. This kind of action reflects how poorly TVA is managed. When top management supports the bonus plan, nobody argues with it in spite of the dangers to both safety and production. It’s the “TVA culture” at work again.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report . . . June 29, 2008
TVA Watts Bar 2 Nuclear delayed?
Tennessee Valley Authority has requested yet another delay in the completion date for the Watts Bar Unit 2 nuclear plant.
The almost completed plant has been subject to fits and starts since a July 14, 2000 letter from the TVA to the NRC that the Watts Bar Unit 2 met the NRC’s definition of a “deferred plant”.
TVA changed the original construction completion date of December 31, 2010 last August to a completion date of April 1, 2012. Now, in a letter of May 8, 2008, TVA has requested changing the completion date again to March 31, 2013.
If all of this seems very confusing, it must greatly upset the vendors and the NRC.
In the latest filing, the door is left open by the NRC to deny TVA’s request resulting in the expiration of the construction permit for Watts Bar Unit 2.
If TVA’s request is denied, it could result in TVA seeking other sources of electrical power according to the NRC.
“Siting and constructing new power generating facilities would result in their own environmental impacts…” and would significantly delay starting
another nuclear plant.
The indecisiveness of TVA management may work to their disadvantage because of the very seriousness of constructing, operating, and maintaining a nuclear reactor. Decisions about every aspect of nuclear facilities must be approached with great caution and concern not only for the safety of their workers but also for the safety of perhaps a million people surrounding the plant.
It presently does not appear that the TVA has the capability to manage all of the power facilities it now has online. Adding another nuclear plant that has been dormant for decades appears to be a poor choice.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA Report … June 25, 2008
TVA – another appalling story
This is a story that shouldn’t have to be told because it never should have happened. Not today or ever.
The story is about a man whom we shall call John, not his real name. John was employed by the Tennessee Valley Authority, a long-time employee, with skills unquestioned to operate in both nuclear and fossil-fueled electricity plants. He worked at three of them and wound up his career with TVA earlier than he had planned at one near Knoxville, Tennessee.
It started when John, a very conscientious and safety-mined worker began to report problems to his supervisors for corrective actions according to their standing operating procedures. He soon was sneered at as a troublemaker, as one who would not go along with the sloppiness of important processes and procedures. He was not a part of the “TVA culture” as he put it.
After some time in trying to get along well with his co-workers, which seemed more and more unlikely, he requested a transfer from the nuclear plant to a steam plant where, he thought, there would be a more amenable work relationship. To his dismay, however, the “TVA culture” he tried to escape from was also following him. And it wasn’t too long before the same kind of shunning and picking at him persisted at the new plant until that became intolerable.
Then a family sickness called for him to work at another plant that was closer to home. Requesting another transfer, he was hopeful that the “TVA culture” would not follow him there. Unfortunately, it did, only this time it was becoming meaner, more antagonistic.
Then one day he opened his desk drawer where the instructions for that shift were placed by his supervisor or their assistant. The shock was appalling horror. For there in his desk drawer was a hangman’s noose, a symbol of unquestioning meaning to a black person.
Fearful for what might happen to his family or even to himself, John filed for early retirement the next day. He had planned on working for at least another five years with the TVA. His retirement quickly was approved and he retired in complete shock, in disbelief that that kind of treatment toward another human being could be carried over to modern times.
That was two years ago. Dispirited, he did nothing much to fight back. However, today he is giving it all he has; he reported the noose incident to the Knoxville FBI office, sent copies of a package of materials to the TVA board members, to the two Tennessee federal senators, the TVA Office of the Inspector General and has a file pending with the EEOC in Washington.
This man has been terribly wronged. He, in effect, was pushed out of his job for doing his job of reporting safety and procedural errors and for not being part of the “TVA culture”.
I have been following the TVA for sometime and his actual experiences coincide with my beliefs that the TVA is rotten on the inside and that the problems are endemic to the point of being irreparable.
The TVA is a highly controlled monolithic environment that speaks primarily through its public relations department and if you ask the wrong questions, which apparently I have done on several occasions, there is no reply. None. Not even an acknowledgement.
TVA’s board members, supposedly the backbone of the operation, making appropriate policy and moving with alacrity, show neither. In fact, the whole idea of interaction with those with whom there might be disagreement is squelched; there is nothing but controlled interaction with either the CEO or the board members with the public.
TVA’s Strategic Plan 2007, the supposed blueprint for guidance for CEO Tom Kilgore, is so vague that it can move in any direction and still say it is within the purview of the Plan. One of the ideas in that plan was to “centralize and streamline” operations to the point of having control of all of TVA’s 33,000 megawatts of electrical capacity in the hands of one person with a laptop computer.
The Government Accountability Office (GAO) report of May 21, 2008, pointed out some serious weaknesses in that concept when TVA tried to put the computerized operations and executive systems into one system.
As the GAO report points out, this opens vulnerabilities to the entire TVA system of control over power plants in all of the 80,000 square-miles of TVA territory in seven Southeastern states. And a ripple of power failures could affect all of the electricity grids in America.
Management of the TVA has been anything but smooth in its 75 years. Without regurgitating those many mismanagements here, suffice to say that those errors have resulted in a $25 billion debt, one that seems insurmountable without a major reorganization.
And for putting the whole nation at risk with the ineptitude of TVA’s board and management, I have called for the resignations of the CEO and board members who approved or participated in the specious computer management scheme.
Also, I believe control of the TVA should at once be turned over to the Department of Energy. There, the DOE will develop liquidation procedures to sell off all of TVA’s assets. This also would reduce the vulnerabilities of computer systems to cyber-hackers known to have occurred in Europe.
John has become an unwilling pawn in the mammoth TVA but still he is owed restitution for all the injuries incurred by the TVA to himself and to his family.
Ernest Norsworthy
emnorsworthy@earthlink.net http://norsworthyopinion.com http://norsworthyattheshoals.blogspot.com
(Media: Write me for more information and for possible contact with “John”).
EN
TVA Management Needs Replacing Now
Someone at TVA must assume the responsibility for some serious management errors regarding security. According to the GAO in a recently released report on the TVA,
“TVA has not fully implemented appropriate security practices to secure the control systems and networks used to operate its critical infrastructure.”
This could mean disaster for a whole region of the country if not corrected immediately.
“On control systems networks, firewalls reviewed were either inadequately configured or had been bypassed, passwords were not effectively implemented, logging of certain activity was limited, configuration management policies for control systems software were inconsistently implemented, and servers and workstations lacked key patches and effective virus protection.”
“In addition, physical security at multiple locations did not sufficiently protect critical control systems. As a result, systems that operate TVA’s critical infrastructures are at increased risk of unauthorized modification or disruption by both internal and external threats.”
“An underlying reason for these weaknesses is that TVA had not consistently implemented significant elements of its information security program".
http://www.gao.gov/new.items/d08526.pdf
I understand there is much more to the GAO Report that cannot be revealed because of sensitive security reasons.
This is such a gross management mistake that I am calling for the immediate resignation of the TVA President and Chief Executive Officer, Tom Kilgore, and likewise for the remaining six members of the TVA board. This is accountability time, something that has been lacking in the TVA since the very beginning.
Congress wanted to set the TVA up as a “streamlined and centralized organization”. One of the obvious results of such a change is to hold management accountable. This is the time for it.
In the interim, I am calling also for the handing over the controls of the TVA to a Department of Energy team until a satisfactory solution is found.
Perhaps the core problem is the culture of the TVA, a culture like an amoeba moving without particular direction, sucking up what it can. Present management has had over three years to figure out what is going on in the TVA and to fix what is wrong. Management has failed on both counts.
While I definitely am opposed to the nationalizing of the electricity industry in the U.S., I also realize that such serious errors in the security of the TVA controls could wreak havoc not only in the Southeast but also in the rest of the nation.
Meanwhile, TVA’s exclusive electrical grid immediately should be opened to the other grid systems and also to surrounding electricity suppliers. This would enable the free flow of electricity into and out of the 80,000 square-mile territory TVA now controls and would open up TVA’s grid to all the other systems in the U.S.
If necessary, and I think likely, TVA will have to provide more entry/exit portals than now exist.
Concomitant with the Department of Energy assumption of control of the TVA, plans to liquidate the government’s assets of power dams, nuclear plants and other power producing facilities should begin.
Too often the huge size of the TVA points up its vulnerabilities including its inability to move quickly enough to meet current and market demands. An example of that occurred last year when the TVA did not seem to realize the ten-year old drought in the Southeast was going to be as severe as it was.
Call it what you will, management by chaos, inability to see the train bearing down until it is too late, or crisis management. It’s all the same and it is a direct reflection on management, management at last that can be held accountable.
Ernest Norsworthy
A Cigar for TVA Ethics Reform
The horse is dead, even after escaping before the barn door was ever slightly closed. What’s all the hubbub about TVA letting contractor employees and TVA employees use TVA’s Gold credit cards?
The dead steed is named “Hospitality” and its ghost still runs rampant at the TVA.
That must be a “normal business practice”; a federal government agency never would let that sort of thing happen. Oh but it does happen, you say?
This issue comes up every time there is a report on TVA’s expenditures, year after year, but the issue never goes away. As in, “Management must take strict control of credit cards and none should be issued to employees below the level of (blank) or to any of TVA’s contract employees.” That could be TVA’s policy but it is far from it. TVA’s response to the OIG report? We’ll fill out another form!
It’s really a matter of attitude toward accountability. The TVA can make the most horrendous management mistakes in the billions of dollars yet still not be held accountable. No one is fired, or pays anything for mistakes. That attitude is systemic, I believe, in the TVA culture that repeatedly is confirmed, no one is responsible.
The apparent feckless Office of the Inspector General for the TVA says it’s okay to be hospitable toward quite a number of people both inside and outside the TVA, “if within TVA’s policy”.
Shouldn’t it be the policy of the OIG to call TVA’s hand on their “policy” and point out that it is unethical if not illegal for federal employees to have freedom in credit card spending, including alcohol? Is management still trying to figure out which account the credit card spending should go in?
And for contractors to have what amounts to a free line of credit by using those same TVA credit cards?
All audits of the TVA performed by the present inspector general should be suspended until it is determined that the office of the OIG is paid from other than TVA funds, an obvious conflict of interest for the TVA OIG.
The Washington office of the OIG should temporarily take over the responsibilities of the TVA OIG until that matter can be resolved.
For 75 years, TVA management says that, in essence, it can do what it pleases if it has a “policy” on the issue, no matter that the policy may be very bad policy and perhaps even an illegal one.
Not until the Supreme Court finally resolves the shaky constitutional standing of the TVA will normal business practices prevail in the Tennessee Valley. They must determine whether TVA is fish or fowl, it can’t be both. If they find that the TVA is, in fact, a regular federal agency, it must conform to federal government requirements. Otherwise, TVA should be considered a significant and dangerous step toward the nationalization of all electrical power in the United States.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
http://norsworthyattheshoals.blogspot.com
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TVA after 75 Years Yet Again Changes Direction 180º
TVA metamorphosis No. 9; first it was dam building and flood control with a little fertilizing on the side, then it forgot about hydro (likely dam sites were fewer) and it morphed into coal and other-fired generator plants.
The really big morph came when it was smart for TVA to build 17 nuclear plants, which was not smart at all, and they still are smarting from that colossal mistake.
And they morphed and they morphed until they nearly blew the house down. Ta da! Strategic Plan 2007, which of course, was no plan at all except to build more power plants and sell more electricity per the new CEO Tom Kilgore, “We need to sell more electricity!”
But nobody planned for a drought that had been coming on for years and everybody seemed to forget that all of TVA’s plants, including nuclear, require water and lots of it to keep the turbines turning.
Now, this latest morph, which is in total opposition of its philosophy to “use more electricity”, is to Conserve More Electricity. The whole model of construction for 50 years in the Tennessee River Valley has been to use more (then cheap) electricity for heating home and water and every electrical appliance known to man.
So now there is no room left in the hen house and someone’s got to pay extra to roost there. Who do you think that chicken is?
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyattheshoals.blogspot.com
TVA Board Meeting February 15, 2008
TVA’s CEO Tom Kilgore at their board meeting in Chattanooga on Friday, February 15 (five board members present, one on the telephone and three members short), led off the main discussion with his progress report on the federal agency. See www.tva.gov
There was not a whole lot of good news to report, in fact, in addition to the 7 percent rate increase later approved by the board, he only alluded to the additional 5 percent “FCA” fuel cost adjustment announced five days later.
The only logical reason for not revealing the total rate increase at the board meeting, I believe, was to try to somewhat mitigate the grief of a double-digit increase. Certainly, both figures could have been released at the time of the board meeting. Was deception involved or just bad management?
The handling of the 7 percent rate increase and the 5 percent “fuel cost adjustment” typifies why utility rate increases should be under the purview of the seven public service commissions in Mississippi, Alabama, Tennessee, Georgia, Kentucky, North Carolina, and Virginia. These organizations representing the people have no say in how much TVA increases rates and there is no appeal to TVA’s edicts. TVA talks very little about cutting costs.
You may complain to a federal senator or representative about TVA rates but they are helpless to do anything about it, likewise your governor or state representatives or mayor, all unable to do anything about TVA rate increases. TVA is law over these matters in an 80,000 square mile territory locked in by a 2,500-mile fence.
And as usual, TVA is “behind the curve” in anticipating not only this FCA but also probably very large increases in coming months if the drought does not significantly relent. It is as if TVA saw the train coming ‘way down the track (the drought) but decided only at the last minute to jump out of the way (resulting in the FCA) but hoping it would shift to another track.
The plight and the action (insufficient planning) has now placed millions of people dependent on electricity in jeopardy not only for their utility needs but also for their health. The problem, of course, is water and plenty of it to cool every operating plant of the TVA, even the hydro plants.
Nuclear plants need enormous amounts of water for cooling and if it “dries up” not only would 30 percent of TVA’s generating capacity, nuclear, be in peril but also so would the basic human need for water. There was no indication at the meeting, which would come first – water for power plants or water for people.
In last November’s meeting it was discussed that some sort of water priority plan would be devised by the time of this meeting, however, Kilgore said there would be no change from present policy which is that he would determine the smaller cases and the board the larger ones such as Georgia’s request for water if there is one.
Kilgore did not state what TVA’s policy would be on the prioritization of water.
Lacking much in specificity about costs, Kilgore went on to explain about the payment of “taxes” (which is not true – it leaves the wrong impression that TVA actually pays taxes).
“We pay taxes on the top line; we don’t get to deduct anything before we pay those taxes”, Kilgore said, as if he were talking about a regular taxpaying corporation and not a federal agency that cannot pay taxes.
“Delivered cost of power” was above the Plan estimate primarily because of lower sales volume and increased cost of purchased power. Because of the amount of hydro being less, tax equivalents “and those kind of things” did not paint a positive financial picture at the board meeting.
“Debt-like obligations” are “down where they need to be”, said Kilgore, but because of the lack of earnings, the earnings to asset value are in the red, he continued. I cannot find where TVA defines a “debt-like” obligation. Common English would define it as a debt or not a debt, not fuzzing up the term such as saying it was a “power outage” instead of a “power failure”.
For the “equivalent availability” of power, “about three” large plants have had major power outages (failures) during January “that have hurt us”, said Kilgore.
One nuclear plant is running code “yellow” at reduced output because of five non-scheduled shutdowns since last May according to the Nuclear Regulatory Commission.
Ken Breeden, who is handling the Energy Efficiency and Demand Response effort of the TVA, said “69 percent of homes in the Valley heat hot water with electricity which accounts for about 20 percent of a typical monthly bill. And 46 percent of homes heat with electricity.” The average home electricity bill will be going up to about $117 a month April 1, including the added fuel cost adjustment of 5 percent.
“This is education”, said Breeden. “Some of this will require programs”, he said, without specifying anything about the “programs”.
A consultant is collecting data; meetings have been held with distributors and key stakeholders; “working groups” on automated metering and load control have been established with the Tennessee Valley Public Power Association (TVPPA), Breeden said.
Over 4000 self-audit kits, which contain two each CFLs (compact fluorescent lights) have been distributed since January.
“You’ll see a lot more in the April Draft Plan”, said Breeden. (We’re “working on it” is a familiar phrase often heard in reports about the TVA.)
Skila Harris, a board member, asked Tom Kilgore about water temperature.
One of the nuclear units had to be shut down last summer, “The temperature coming downstream was hotter than what we were allowed to put out so we had to stop”. “That’s even with cooling towers at Browns Ferry”. “It will continue to be a problem”, said Kilgore.
How do we cool these power plants with less water? He asked rhetorically. “Probably will be putting capital projects in the budget, he said, to reduce our dependence on water for cooling.” All the plants need to be cooled including hydro plants, he said.
The next topic, “Renewable Portfolio Compliance”, deals with federal legislation that has not yet been passed that would require utilities to attain a certain percent of energy from renewable sources, e.g., wind, bio, etc., by a date certain which is very uncertain at this time. No one knows what the final version of such legislation, if any at all, would pass both the House and Senate but the TVA distributors wanted some kind of assurance from the TVA that they would not be stuck with any penalties for non-compliance.
In a policy decision, the Board agreed that TVA would be responsible for any penalties. This is but an indication that the 159 some-odd distributors are uneasy about their relation with the TVA about who ultimately would be responsible for TVA’s bonded indebtedness since the federal government explicitly states that the full faith and credit of the United States will not cover TVA debt.
Anyway, how can the TVA posit a policy without knowing what renewable requirements the federal government might enact into law and any subsequent penalties?
Enter the Seven States Corp., a customer-owned generation scheme headed by Jack Simmons, head of SS Corp and the TVPPA.
What happened was that the TVA board authorized CEO Tom Kilgore to “enter into arrangements” with TVA’s distributor customers where TVA can jointly own a power plant or plants with them through the SS Corp.
156 of 159 TVA distributors (three of them are leaving the TVA) committed over a million dollars in working capital to SS Corp. to capitalize it to be used for business planning, studies, consultants, and attorneys.
The partnership is claimed to be a ‘win-win” situation for distributors which will put equity in the hands of Valley stakeholders rather than in the hands of the U.S. Treasury, which is where all of TVA’s assets lie today, i.e., the federal government, averred Simmons.
Belief that the partnership between the SS Corp. and the TVA ultimately could bring lower cost of electricity to the Valley also drives the plan. The idea is to bring some funds to the table to help TVA in their ambitious expansion program, to bring more debt to the table in the name of SS Corp. and keeping it off the balance sheet of TVA.
The big question – who will repay the debt owed by the SS Corp.?
It seems to me the only source of funds will come from users of TVA electricity. There is no blood in a turnip so the only way under this shaky and risky scheme is for the ratepayer to cough up even more dollars in addition to any other TVA rate increases.
I do not believe it is possible for the U.S. Government to share ownership of anything including the joint equity ownership of power plants in TVA’s territory. If this were possible, the federal government could reduce a lot of its debt by selling ownership by bits and pieces of many national treasures.
Overall, the TVA board meeting on February 15, 2008, left me with the feeling that the new management is no better than previous bad managements, that TVA’s financial condition is so precarious that plans need to be developed now for the dissolution of its assets to try and pay off as much as possible the $25 billion debt that continues to rise as the water levels fall in its reservoirs.
The failure of the Senate to “advise and consent” to the re-nomination of three board members, an extremely simple and appropriate thing to do, tells me there are other forces at play. At the least, it shows a lack of support of current TVA management and perhaps of the TVA itself.
Ernest Norsworthy
emnorsworthy@earthlink.net http://norsworthyattheshoals.blogspot.com/ and http://norsworthyopinion.net
All is well in TVA-Land
If I were King today surveying my kingdom, a kingdom larger than Great Britain, I would say, “All is well”. My subjects, some 8 million of them (I lose count of exactly how many), have placidly and obediently accepted my latest edict to exact more money from them. After all, it is for their own good. Why shouldn’t I?
I have the unquestioned authority to do so, don’t I? I neither have to bother with the governors or other officials elected or sanctioned by the people. My authority rules over them all. Oh, I give them nodding recognition but they know not to challenge me. Part of my appeasement program is to dole out dollars to those who use the most of my powerful substance, those who conserve get less.
So far, the squabbling among themselves of how to divide it up diverts their attention enough for me to continue my merry old way, which is to borrow and borrow some more dollars to spend for my pleasures. My coterie gets paid very well and other expenses, well, eat up of a lot of income.
And I make not a cent out of all this. Why should I make a Midas profit when I can use all the money I want to, and then some?
Pssst! - what they don’t know is that I’m about to zap them with even more “tax” to pay for some of my more “fuelish” moves. Oh well, I don’t think I’ll have the same problem as another king when there was a great discussion over taxing some cheap tea they had to buy.
And yes, all is well in TVA-Land and my subjects love me greatly. And that is a requirement.
This edict signed on the Ides of February, the year of our Lord two-thousand and eight.
Pseudo King
(Ernest Norsworthy
Visalia, California)
emnorsworthy@earthlink.net
TVA’s Arrogance of “Power”
“I’ll venture out and just say if Atlanta calls (about water), I lived there when they were supposed to build six reservoirs around the city and they built zero, so they’re starting with the wrong person.”
That statement by TVA CEO Tom Kilgore at their last board meeting November 29, 2007 exemplifies the long-standing arrogance of the federal power agency. (www.tva.gov )
In a scheduled board meeting in Knoxville, TN, docile members listened quietly as CEO Tom Kilgore brought forth his usual “excuse” charts, this cost item was “up” because it was too hot, or this one was “down” because of a lack of rain, and on and on ad nauseam.
Then came the votes by the board, all were rapidly approved unanimously with hardly a question by any of the members. The nine-member board is one member short awaiting Senate advice and consent confirmation. I wonder if that new member from Georgia awaiting confirmation would have appreciated much Kilgore’s comments about Atlanta’s water. The large population is not in the City of Atlanta but in surrounding suburbs, many of which extend upward toward Chattanooga.
If the board was not giving the CEO even more authority through some of its votes, it seemed to fall all over itself to want to raise Kilgore’s pay by a million dollars a year. After all, it is OPM (other people’s money).
An inordinate amount of time was spent in the meeting by the presenters in trying to justify the huge increase in Kilgore’s pay. Even an outside consultant was called in to help. Try as they might, the consultants could not come up with a comparable to the TVA. There were lots of apples to compare but not a single orange (TVA).
One of the board members insisted that the amended TVA Act called for the board to look at outside pay plans in a market survey. The naïve board took that charge literally and tried to justify a very large pay increase for a federal employee, the largest in the federal government, I think.
TVA board member Mike Duncan was not completely happy with the plan and several times raised his skepticism about the subjectiveness of the criteria. What the board approval amounted to was to okay results for which criteria have not been fully developed. It would have seemed more reasonable for the board to have in hand the basis for the pay increase before granting the increase. Forcing the balance always results in the same balance.
To their credit, the board seemed truly confused about the whole pay plan for Kilgore. However, they approved it before all the pieces were available.
In other matters, board member Don DePriest called on all the members to submit by the February meeting their First Annual impressions of their time on the TVA board. I would hope those comments would be made available to the public.
TVA’s Water Withdrawal Policy has not yet been fully formed and Atlanta’s request is certain to be one of the focuses. This brings up a major issue with the TVA Does the TVA own and control all of the water in all its rivers and tributaries inside the TVA “fence”? Even Tennessee River water that flows down the Mississippi River to New Orleans?
I believe the seven states involved in TVA’s 80,000 square mile territory have the sovereign right to demand sufficient water that is essential to the health and well-being of its citizens over another priority that the TVA might establish.
In a magnanimous move, TVA board Chairman Bill Sansom announced that TVA’s “Listening Session” usually held after the board already has decided on their agenda items will henceforth be held before the board formally meets probably around 8 a.m. the day of the meeting. Sansom says they will allow an hour and a half for the “Listening Session”.
Since most, if not all, board decisions are confirmed in the “working session” before the regular board meeting, it is doubtful if it really matters when the Listening Session begins. After this board meeting adjourned, two persons spoke briefly during the “Listening Session”.
Too bad the TVA board did not publically discuss the TVA Inspector General’s Report on the Economic Development Loan Program. In a report dated August 16, 2007, the OIG found that TVA’s Economic Development Loan Program had serious loan defaults in numerous cases. Some of their findings were carryovers from a previous audit.
This OIG report does not make TVA’s current management leadership look very good because the Loan Program has carried these problems over for many years. And TVA’s loan criteria are not all that altruistic. One consideration for a loan is how much it will “(F)oster the increased sale of electricity by TVA and its power distributors…”
I’m no legal scholar, but wouldn’t that be illegal on the face of it? Or at least unethical?
I have questioned in the past the need for TVA to be in the loan business in the first place. Unless, of course, it is to increase sales of TVA electricity. . .
Ernest Norsworthy
emnorsworthy@earthlink.net and http://norsworthyopinion.com
Who owns the TVA?
It may not feel like it and you may not even realize that you are a captive of a very onerous, dictatorial federal program called the TVA.
TVA for a long time has been jerking the chains of millions of people who happen to live in TVA’s 80,000 square mile territory enclosed by a 2,500-mile perimeter fence. And that fence is not porous like the one on our southern border. You cannot shop for a better price for your electricity even though it might be available just on the other side of that
fence.
TVA is the most unusual federal agency in the United States. It has powers unimagined by other federal agencies. The one mentioned most here, of course, is the power of eminent domain. That is, it can take your property against your will ostensibly for public purposes only.
TVA is a power unto itself when it comes to setting electricity rates and building power plants. TVA leadership over the years has made many mistakes with your money. The greatest debacle was the wildly misjudged and overestimated power demand in the 1980s when billions of dollars went down the rat hole on nuclear plants. Not even one of the public service commissions in the seven states in which TVA operates has a say in TVA’s rate setting. There is no appeal either except to a federal court.
Franklin Delano Roosevelt started the whole thing and at first he let his appointed directors of the TVA fight it out among themselves; no one, not even FDR knew where the experiment known as the Tennessee Valley Authority would lead. And it has been all over the map.
From the start, TVA tried to act like what FDR wanted it to be like; the power of the federal government (taking of property) with the flexibility of a private corporation. That just shows how far wrong TVA was in the first place. The federal government never was intended to be in competition with private enterprise but a very weak ruling in Ashwander by the Supreme Court, in effect, said it was permissible.
The question, for 75 years, was and is today: Do we want a nationalization of the electricity industry? We keep accepting the fumbling and bungling of over-paid federal employees at the TVA as if that is the default direction.
Because the Congress never has performed its proper oversight role concerning the TVA, the agency has mostly been left to its own devices. Run by a triumvirate of appointed directors for nearly 75 years, the TVA has governed like drunken sailors, at their own whim. Now, the TVA is run by a part-time board of nine-members with a board-appointed CEO.
Today, the TVA is heavily in debt (it gets no appropriations from Congress) and it is planning to add another five to seven billion dollars to its already unwieldy $25 billion debt for more nuclear plants. TVA’s statutory debt limit is $30 billion and it appears that limit easily will be reached in the next few years.
The TVA did not, out of the goodness of its heart, stop its illegal land sales and land swaps. No, it took an Executive Order of the president, No. 13406, to stop it. In essence, that order says that a federal agency such as the TVA cannot dispose of government property unless it is used for public purposes such as for roads, schools, hospitals, and the like. Specifically, it is not to transfer federal property for commercial uses. That is why, I believe, TVA changed its land policy.
Presently, I’m writing a book about the TVA but I would commend the reader to a new book on the Great Depression, Amity Shlaes’ The Forgotten Man. It is an excellent history of why we are standing in the dross of the TVA today. (See other of my articles about the TVA on this site.)
TVA Loses Federal Lawsuit
Tall smokestacks spread out the pollution to dilute it and to make it less deadly. For a long time that was TVA’s position on pollution control of coal-fired generating plants. Today that excuse by the TVA no longer will “wash”. So-called scrubbers are supposed to clean the emissions to an acceptable level. The big problem with that approach is, “Is it economically feasible to clean up the tailpipe (smokestacks) or go for a whole new power source?”
It is a problem the entire power industry is facing, not just TVA.
The Alabama Sierra Club on August 27, 2007, won a stunning victory over the TVA when the federal district judge of North Alabama agreed with them that the TVA had been violating the Clean Air Act thousands of times at their Colbert plant near Tuscumbia. This ruling not only has extremely serious implications for TVA, it does not bode well for the entire industry of coal-fired electricity plants in the United States.
Coal reserves in the U.S. are huge; enough entirely to take Saudi Arabian oil completely off the energy table. With that abundance of coal comes the harsh reality that it cannot be converted to practical use without an added expense Americans are not yet willing to bear. Next to hydroelectric power, coal is the cheapest form of energy to run power plants.
The two stacks at the Colbert plant, the ones covered by the federal lawsuit, in less than a two-year period spewed noxious fumes 2,351 times out of a single 650 foot stack, (combined generating units 1 through 4), and 1,038 times from another 600 foot stack, (generating unit number 5). This determination was based on the excessive opacity of the emitted smoke. Granted, it is an indirect way to measure the quantity and amounts of noxious fumes being emitted. That, of course, depends on the quality and grade of coal being burned.
The thousands of violations of the Clean Air Act were tallied between January 3, 2000, and September 30, 2002 from TVA’s own records. Shortly thereafter, we bought a house in Sheffield and began to notice the film on our cars and on the house itself. Of course, we were breathing that stuff too, because we were downwind of the Colbert plant as are most of the other North Alabama Shoals residents.
It was then we discovered that TVA did not intend putting scrubbers or upgrading them on those two Colbert stacks for at least five years. But TVA changed their priorities when it came to the coal-fired plants in east Tennessee, Kentucky, and Alabama, the ones closest to North Carolina. TVA now is taking action to upgrade those polluting plants with scrubbers. Why them and why now?
The Attorney General of North Carolina has an active suit against the TVA for air pollution that is killing the trees in the Great Smokey Mountains, home of the most visited national park in America. And that same pollution wafts over North Carolina citizens too. Their AG claims it is making them sick.
TVA, a federal entity, should be the steward of healthy air in accord with federal clean air standards for the some 8.7 million customers in seven states it serves. Instead, it even fails those adjacent to their service area with pollution from coal-fired electricity plants. But TVA has a long history of avoiding or evading rules that apply to others.
Because of the authority granted the TVA in the 1933 Tennessee Valley Authority Act, which is unique among all federal laws, the TVA has acted with almost complete immunity from suits brought by other federal agencies and most others. But because of more and more environmental concerns and of the air we breathe, suits against the TVA have been more successful and numerous.
The important issue before all Americans is at what point it is okay to pollute the air – a little bit, some, or a lot. Facts are facts and it looks like we are making sick a lot of Americans and reducing the lifespan of many more. Where is the line to be drawn?
Cleaner-burning coal processes are rapidly being developed; utilities such as TVA should greatly reduce their smoke output with these new technologies or risk being even more heavily sued.
The federal district court order against the TVA is precise: “TVA shall prepare and file with the court, within sixty (60) days of the date of this Order, a proposed remediation plan to bring its Colbert plant into compliance with the 20% opacity limit set forth in the Alabama SIP and incorporated into TVA’s Title V permits”.
The date of the court Order was August 27, 2007.
Also, the Sierra Club will have 45 days to respond after the TVA remediation plan is filed.
It is likely that TVA will “throw the book” at the court, pleading everything from national security (a plea they have made before) to threatening possible electricity rate increases to consumers. Clearly, it is not over, but because the Sierra Club already has won the point of the many past violations of the Clean Air Act, action must be taken soon by the TVA to stop what apparently has been a continuous violation of the Clean Air Act since 2002.
How long will we tolerate such negligence and abuse of the law by our own governmental entities? It truly is a travesty of justice if they expect compliance for the rest of us to keep a clean house when their sooty footprints are so evident
TVA Strategic Plan 2007 (final)
Starting at the beginning, I defy anyone in their right mind and with a modicum of common sense to overlay the template of TVA’s Strategic Plan 2007 on the 1933 TVA Act and to come up with a legal rationale of it. It simply doesn’t fit. A square peg in a round hole, squeezing government into a free-enterprise suit.
The breach of the Constitution began as an experimental mixing of federally anointed government waters with the oil of a free-enterprise business. It did not then and does not now break out into some sort of hybrid government/business model that satisfies either camp. Those early sages, our founding fathers, were not geniuses but they had a profound understanding of human nature and the difference between right and wrong as exemplified in the Constitution and the Bill of Rights.
Somehow, in 1933, either because of fright or compassion for the American people in a deepening depression, the Congress turned over, relinquished, a part of the core of liberty guaranteed in the Constitution to an activist president that had no sure idea of where the TVA concept would take us or even if it was a good idea. He did say that TVA was an experiment.
Because TVA is a creature of Congress, it should shoulder most of the blame for a federal agency gone berserk. Here is the introduction to the 1933 TVA Act:
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That for the purpose
of maintaining and operating the properties now owned by the
United States in the vicinity of Muscle Shoals, Alabama, in the interest
of the national defense and for agricultural and industrial
development, and to improve navigation in the Tennessee River
and to control the destructive flood waters in the Tennessee River
and Mississippi River Basins, there is hereby created a body corporate
by the name of the ‘‘Tennessee Valley Authority’’ (hereinafter
referred to as the ‘‘Corporation’’). The board of directors first
appointed shall be deemed the incorporators, and the incorporation
shall be held to have been effected from the date of the first meeting
of the board. This Act may be cited as the ‘‘Tennessee Valley
Authority Act of 1933.’’
From that early release of the genie came what we now know as TVA incarnate. One of the byproducts of the original charge to the TVA was the generation of hydroelectricity. Building dams to lessen flood damage offered up a free, non-polluting power source to run the turbines that generate electricity. A navigable river, an abundant water supply and electricity were then and now the main ingredients for a developable river basin from farming to Ford cars.
And from whole cloth not of the Constitution came the imaginary Tennessee Valley Authority. Thankfully, nothing like it has appeared since. There is nothing in the Constitution remotely like the TVA with its supra powers. The immediate conflict with the Constitution is that the federal government has made itself into a business that competes unfairly in our free-market system of commerce and which sets and controls the sales price of electricity from production to the retail user.
Not only does TVA not pay comparable federal, state and local taxes (TVA has about a 15% tax advantage) it also is able to borrow money more cheaply because of its government status.
I believe the TVA concept drains the competitive spirit from millions who otherwise might become innovators and entrepreneurs in our market driven society. The pall of the paternalistic attitude that pours from TVA engulfs us all and it is a bit mesmerizing. It’s easy, TVA knows best.
Our Constitution never, never, intended for the federal government to be in direct competition with any American business including the production and sale of electricity.
If we do not take this opportunity to sell off or greatly curtail products sold by the TVA, the competitive spirit of all Americans will be dampened even more.
There is a hidden and ominous threat from TVA’s CEO that grew even more so between the draft plan and the final version of TVA’s Strategic Plan 2007. Say both the chairman, Bill Sansom and CEO Tom Kilgore in the draft, “Our reward … is immeasurable, that of providing an indispensable (underline provided) service to the people of the Tennessee Valley”. In the final version signed just by Kilgore he expands indispensable to the plural, “services”.
The point reached long ago to cease TVA’s “experimenting” with our Constitution must now come to a halt. If the Congress will not move on this, the leadership of the seven sovereign states now subject to TVA edicts should join in chorus to require that the TVA must conform to each state’s public service commission requirements and not approve any TVA rate increases unless unanimously approved by all of those state regulating bodies. (Presently prohibited in the TVA Act.)
Meanwhile, competing utilities in some areas near TVA’s “fence” are offering consumers lower priced electricity despite TVA’s subsidized rates, nee, social welfare. There is no other choice for those consumers; they must pay the higher TVA rates. Hardly ever mentioned by TVA is its $25 billion debt, an “inconvenient truth”.
The enormity of TVA’s negative impact on the social, economic, and judicial systems covering 80,000 square miles of seven sovereign states in the Southeast can best be measured by those same conditions in non-TVA territory. I could find no instance where TVA’s influence exceeded similar areas. In fact, economic growth inside TVA’s “fence” was even less in some instances. TVA uses its 17,000 miles of transmission lines to lock up more and more territory within its “fence”; about 8.7 million people now use subsidized TVA electricity.
Many New Deal era programs were ruled unconstitutional early on while a few such as the TVA have managed to remain. Inadequate planning or no planning has resulted in a TVA that shifted direction at a whim of its triumvirate directors, now nine part-time directors and a CEO. Some of those decisions have been very, very costly.
Nowhere in any document provided by the experimental TVA is there a plan for its dissolution, unheard of in legitimately designed experiments. Therefore, action must be taken by the people through their elected representatives, federal, state, and local, to end it for them.
Ernest Norsworthy
emnorsworthy@earthlink.net
.
A Parable
A baker came into town and started selling bread for less than the other bakeries. This baker had extraordinary power – it not only could set lower prices, it could require the other bakers to sell their bakeries to the Big Baker or just leave.
Big Baker took over the supplying of bread for the whole town; it could sell bread cheaper because it got financial aid from the Really Big Baker in Washington. And so it went until Big Baker cornered the market in supplying bread to 8.7 million people. The people were happy with cheap bread.
Then one day, some of the people complained that they could buy bread cheaper from a baker on the edge of town. But Big Baker would not let them buy bread from another baker. This made Big Baker very mad because they were going to have to increase the price of bread even more because the Really Big Baker cut off its supply of extra money.
What to do? Big Baker thought and thought and finally came up with a plan where it borrowed money and obligated the same people it was supplying bread to without the people realizing it. Wow! Big Baker had now borrowed $25,000,000,000 ($25 billion) dollars! And “Nya-na-na-na-na the people still would be responsible for it and still buy my bread!” said the Big Baker.
It could be called stealing.
Now Big Baker’s equipment is getting old and outdated and other bakers are clamoring to get inside Big Baker’s market using some of Big Baker’s distribution routes and selling bread even cheaper.
Then the people began to realize that Big Baker was taking their money and not spending it like regular bakers do. Because of their power, they paid no taxes to the town or to anyone else. Oh, they paid off a few townspeople here and there.
And that, my friends, is the parable of the TVA, the federal government, and it is time to get rid of Big Baker and get one where we set the price of bread, not Big Baker.
Ernest Norsworthy
emnorsworthy@earthlink.net
TVA’s Strategic Plan 2007 (draft)
After a careful review of TVA’s “Strategic Plan 2007”, I am left with the feeling that not much has changed in TVA’s philosophy of its self-importance. If this Plan, the last of a long line of them, is supposed to convince American taxpayers that TVA will take care of its huge $25 billion debt and that all is well in TVA-land, it falls flat on its face.
As usual, The Plan is so full of “will be’s” that it cannot be taken seriously, the same old “will be’s” so often heard in the past.
The new Directors, now numbering nine (one recently resigned) instead of three, who ruled TVA-land with an iron fist for over 70 years, do not seem to have a clue of what TVA actually is.
Let me help.
• The Tennessee Valley Authority is part of the federal government and as such, must abide by federal laws, not just pick and choose which ones.
• TVA has authority over 8.7 million customers in seven Southeastern states to set electricity rates without approval or oversight of any state public service commission.
• TVA not only sets its own electricity rates, TVA tells its distributors what it must charge its customers for it. “Price setting” is illegal in every other commercial transaction.
• TVA is a classic monopoly protected by a legal “fence”.
• If the federal government is supposed to foster our free-market economy, this is an example of the government taking the opposite approach – TVA is anti-free enterprise by perpetuating the use of government controlled price setting.
• Instead of being a national leader in the reduction of smokestack pollution, TVA has fought every way possible to slow down installation of current anti-pollution technology. Having spent “X” billions on scrubbers so far is their answer but not the right answer and it will not be until environmentally it is a “wash”.
• TVA is responsible for unhealthy air over much of its 80,000 square miles of “territory”. The State of North Carolina is now suing TVA for this very reason.
• TVA’s debt to assets ratio is so badly out of kilter that if TVA were cut loose from the federal government today, it would have to declare bankruptcy tomorrow.
• TVA’s prohibition of other competing electricity suppliers to use their 17,000 miles of transmission lines is a restraint of trade.
• Free-market electricity is available to some TVA areas at a lower price; however, those customers cannot take advantage of the lower rates because of government protectionist policies.
• TVA no longer can pretend it is a private business. It is part of the federal government with the constraints of government.
• With the power of eminent domain, TVA has been able to acquire thousands and thousands of acres of land in the Tennessee River Valley. Investment-owned utilities are much more constrained.
• TVA’s recent change in its land policy affirms Executive Order 13406, which states that any land purchased by a federal agency, including the TVA, must be used only for public purposes. In the past, TVA bought, swapped, and sold land for a profit, working out some highly questionable deals with developers
• Nowhere in the Strategic Plan 2007 is there an exit strategy for the TVA. No, TVA believes itself irreplaceable by “… providing an indispensable service to the people of the Tennessee Valley”. (pg 2 of Strategic Plan 2007)
• Unlike any other federal agency, TVA has the exclusive right to set its own rules (laws) and it is the final arbiter. Injured parties have no recourse but to appeal to a federal court for final adjudication. Not many people or entities can afford the cost of litigation in federal court to carry their case forward.
• TVA acts as a single entity over a huge swath of land in the Southeast that contains many separate and single jurisdictions. There is no unified body to challenge the TVA. Congressional oversight is lacking because there are no funds to appropriate, TVA is “self financing”.
• TVA is misleading when it claims, correctly, that it does not receive appropriations any longer from the federal government, only from power revenues and “financing”. But it does not make clear that “financing” means borrowed money (sale of bonds), a debt that now stands at about $25 billion. That should make every taxpayer in America very uncomfortable because all of us and our children are on the hook for it.
• TVA has manipulated the people and governments with its “payments-in-lieu-of-taxes” gambit with nothing less than what seems to be a good ‘ol buddy system of largess distribution. In Alabama, for example, the small town of Eunola received some of TVA’s payments, which appear at least questionable. The city has not held an election in 40 years. Eunola is near the Florida border, and far from any TVA involvement.
• TVA presents a federal, anti-market economy model of electricity provision. Is that the proper or the better one over our market economy? If so, should we expect a complete federalizing of power in America? Otherwise, there must be in place specific actions to eliminate the TVA. (See http://http://norsworthyopinion.com for some suggested action points.)
• TVA’s Plan asserts that electricity demand is growing at a rate of about a 2% per year with little substantiation except for historical data. There seems to be no contingency for a possible economic slowdown or a change in customer plans. Right now, TVA complains that it is not hot enough or cold enough and their revenues fell by $55 million last quarter. In effect they’re saying “use more power so we can sustain a higher level of spending” while mouthing off platitudes about conservation.
• What is TVA’s fallback position if demand slacks off? What if the Green Power Switch actually worked? For example, the small fluorescent light bulbs are getting a lot cheaper and they use only a quarter of the electricity of the same wattage of incandescent bulbs. This is a major consideration because Wal-Mart plans to sell 100 million of the power saving bulbs to its customers in one year. The Web site 18seconds.org (the time it takes to change a light bulb) has some very interesting information. Was the possibility of this significant reduction in power demand factored in?
• Is TVA’s projection model better than the one in the 1980s? That one grossly overestimated nuclear power needs resulting in the debacle of billions of wasted dollars. Some of that waste is included in TVA’s present debt of $25 billion.
• TVA has said it wants to build two more nuclear reactors at an estimated cost of $5 to $7 billion. How can this be financed? Allow it to exceed its statutory debt limit of $30 billion with more tax exempt bonds?
• TVA fails to recognize that ours is a supply/demand economy. The TVA model is a government-controlled economy. It is the market that should set prices, not government.
• TVA operates under the illusion it can keep prices low through subsidies (borrowing) when maintenance and upgrade expenses already are greatly expanding and while more plants become obsolete.
• TVA speaks of “partnering” with TVA’s distributors, to give them a piece of the pie. In fact, this is nothing more than an extortion racket to get more money from the distributor’s customers. If they chose not to go along with the TVA plan, they soon could be the “odd man out”. With the TVA, there is only one way.
• At this time, the fiefdom days of the TVA should be coming to an end. Instead of a three-director body, the new 9-member board has turned everything over to one man – the CEO. TVA’s Strategic Plan 2007 gives the CEO a blank check to spend money any way he sees fit. From three to nine to one – doesn’t look like much progress to me.
The TVA has strayed so wildly from its 1933 charter that today it is unrecognizable from it. The main source of power, hydro dams, is the cleanest and arguably the cheapest method today of producing electricity. The power of falling water, at eight pounds per gallon, is a terrific power source to turn the turbines that generate electricity. Today, TVA's hydro output is only about ten percent of the total.
Long ago, there was a time when those proverbial crossroads came together and bounced in different directions never to cross again. In the 1920s, Henry Ford and Thomas Edison wanted to strike a deal with the federal government for an uncompleted and surplus dam and properties at Muscle Shoals. (Now Wilson Dam) “Detroit of the South” Ford was said to exclaim and land speculation went wild; Edison was to provide the electricity.
The deal never went through although offers were made but rejected by the government. Sen. George Norris (Neb.) gets the blame or credit for FDR including the TVA as one of many New Deal programs. Norris even tried later, unsuccessfully, to get the congress to go along with “little TVAs” all over the place.
Since 1933, the federal government has inveigled itself in and with the culture of the South. I believe it has had a stultifying effect on the economic growth of the region. Ironically, the growth of automobile assembly and manufacturing plants have expanded greatly into the South, but not much into areas controlled by the TVA.
The TVA is a thorn in the side of the U.S. Constitution and it is time to pluck it out and let the South heal its own wounds, to let the Constitution work as originally intended, letting free enterprise reign. Instead of being ruled by the TVA, each of the seven sovereign states in TVA territory now can tear down that “fence” once and forever and can take charge again of their own states’ destinies.
The TVA model (government model) is neither appropriate nor suitable for these rapidly changing economic times in America. Only the nimble-footed entrepreneur-type company can survive the chaos and not only survive but thrive in it.
Suggestions on developing the Dissolution Plan For the Tennessee Valley Authority White Paper By Ernest Norsworthy December 2006 Now that the TVA land policy dust is somewhat settled don’t believe for a second it was just “we listened, we heard” from the more than 5000 comments received that convinced the TVA to adopt a comprehensive and permanent land policy. Presidential Executive Order 13406 clearly states that all federal agencies, including the TVA, must not sell or lease acquired property for private uses. Perhaps this clarification of how TVA-owned lands will be handled will help sort out the eventual privatization of TVA’s electrical production and transmission lines. For years TVA has talked about privatization and for years TVA has practically ignored doing anything about it. The strategy could go something like this but not necessarily in order: Open TVA’s transmission grid (“open access”) to all power suppliers willing to pay a competitive fee. This act alone will bring TVA into compliance with the Federal Energy Regulatory Commission (FERC) order to open up a section of TVA’s transmission lines to East Kentucky Power Cooperative, Inc. (See TVA vs. FERC, US District of Columbia Court of Appeals.) TVA’s exclusive grid and service area impedes the flow of commerce between the seven states under control of the TVA and through and between states in the Eastern Grid not just for “seasonal power exchanges and reliability.”
- Group some of the less desirable power properties with better ones in auction/bid lots. This should ensure that all power production facilities will be removed from federal ownership. Stage the auctions over a period of months to liquidate as much as possible TVA’s huge $25 billion debt and to keep disruptions at a minimum.
- Immediately release distributors from their long term contracts with TVA if they so desire. This will allow those distributors to seek lower cost electricity from other presently available sources. TVA requires a minimum five-year notice; a number of distributors have already given notice.
- Immediately cease buying even more surplus power units for use only during peak power needs. Additional nuclear power soon will be coming on line; TVA is on the verge again to be overbuilding electrical capacity.
- Immediately allow suppliers offering cheaper electricity rates to use TVA transmission lines.
- Cease immediately the paternalistic requirement that TVA approve all nonpower expenditures by TVA distributors. (See TVA Office of the Inspector General report www.tva.gov/oig )
- By Executive Order of the President, bring in executive level staff from other federal and state departments and agencies to be headed by a non-government liquidation firm. This team, a Task Force, Commission or some such organization, would develop a phased plan of dissolution with the goal of abolishing the TVA. The Team itself would be closed down by a date certain. Part of the Plan would include finding jobs for displaced TVA employees for those not transferring to private utility companies; a union representative also would be included to receive grievances.
- The Dissolution Plan would be devised to be the least disruptive to market forces and to TVA distributors for a smooth transition period. Many of 8.6 million users of TVA electricity would have for the first time the ability to choose among electrical suppliers.
- Financial aid to states and communities as payments-in-lieu-of taxes would continue at the present rate for two more years then stopped. Other long-term financial agreements with the TVA (other than bonds) will be negotiated for completion within six months of the beginning of the Dissolution Plan.
- All health and retirement plan obligations will be transferred to the appropriate federal agency or agencies.
- Form a special unit in TVA’s Dissolution Plan to deal with the many legal wrangles that are sure to come since the new Land Policy was issued. Fold in the suits now pending in which TVA is a litigant.
- The Dissolution Plan should have at its core a time line of activities with their planned and actual completion dates.
- Assign the various parts of TVA to appropriate federal agencies such as the surplus 293,000 acres to the National Park Service for future national park expansion. Some properties should be allotted to the states for development of state parks.
- Direct loans or grants from TVA such as the Economic Development Loan Fund should cease immediately; those loans currently in effect will either be transferred to the appropriate federal agency or be negotiated to an early settlement. TVA was never intended to be a lending agency or a bank.
- TVA should ramp up its installation of scrubbers and other clean air devices on all its coal-fired plants. Long ago, TVA should have taken the lead as a federal agency to make our air as clean as currently possible.
- There should be no more TVA funds used for experimentation. Other agencies and sources have a far deeper involvement in anything TVA has viewed as “experimental.”
Refrain from using the statement that TVA is “self-financing” because it requests no appropriations from Congress. It is misleading and some consider it a false statement because TVA goes through the backdoor for financing its operations through the sale of bonds “…and (TVA) is required to be self-supporting from power revenues and proceeds from the issuance of debt” (underline supplied.) TVA’s debt is now estimated at $25 billion. Summary In summary, it is past time for the federal government through its agent the TVA to get out of the way and allow consumers more freedom of choice between electricity suppliers; to open up for the first time the 17,000 miles of TVA transmission lines to permit normal commercial traffic over them; to let competitive markets prevail and to return to each of the seven states in which TVA operates their rightful control of public utilities. TVA has just hiked its electricity rates again and not one public watchdog agency (PSC’s) in the seven states involved can do anything about it.
TVA Tentacles on the move again Ernest Norsworthy The newly appointed CEO of the Tennessee Valley Authority (TVA), Tom Kilgore, didn’t waste any time in moving to acquire more ready-made electrical capacity with plans to pick up even more available power units in the future – if the price is right. His first move will be to buy the mothballed and never used 680-megawatt power plant in Calvert City, Ky., to help meet peak power demands. It might operate only 200 hours per year during peak periods. The plant, which has never operated, was built originally by Duke Energy but was determined not to be efficient enough to produce competitively priced electricity using diesel fuel or natural gas. The plant is now owned by an investment firm, KGen Partners LLC. Think about it. The federal government is going around looking for fire sale properties from private companies to do what with? It is not to put the TVA on the electricity grid to more efficiently move power, it is not to make less dominant TVA’s stranglehold on electrical power production in an 80,000 square mile swath of the Southeast, no, its only real purpose seems to be to run free enterprise power producers out of the area or even out of business. Effectively, that is what TVA is doing. Everyone has heard of government surplus sales because there is a lot of unwise buying by the federal government. But no one ever heard of the federal government buying up surplus properties. This puts the federal government squarely in the unfavorable position of being seen as anti-business and anti-free enterprise. Then, TVA turns around and takes even more advantage of public taxpayers by not paying any federal taxes on over $7 billion of yearly electricity sales. TVA never could be considered a profit making enterprise on which it would have to pay federal taxes so it considers its income to be to “break even.” The problem with this approach is that while claiming no federal funds have to be appropriated TVA just turns around and borrows billions of dollars to play with. Some of their financial dealings have been disastrous. The far overbuilt nuclear plants still remain a huge debt. Total TVA debt at this time stands at $26 billion with a payout schedule that never can be met. Is TVA a good deal? Well, it was for consumers until power suppliers outside the so-called TVA fence started being very competitive and began undercutting TVA’s electricity rates. Unfortunately, customers could not take advantage of those lower rates because they reside inside TVA’s fence. It’s a wakeup time for millions of affected electricity customers that now find themselves locked out of lower rates. No, I think TVA, borne of FDRs “New Deal” legislation in the 1930s, has turned out to be a very bad deal dominated by a board with dictatorial powers, a board that with the threat of eminent domain can take anything you have for “just compensation.” It should leave an unsettled feeling. It does not appear that TVA will have anything to do with opening up its transmission lines to “outside” suppliers by its actions to acquire even more power plants to run on their own lines. If not stopped, TVA could take over vastly more territory for its electricity domain. A thoughtful review of TVA’s web site www.tva.gov would show how TVA has inveigled itself into every local economic crevasse possible in hundreds of instances. It even is a lender “for good purposes” throughout the hundreds of miles of TVA territory. You may decide that TVA has far outlived its usefulness and now is just a subtle but heavy hand of the federal government involving itself in millions of lives. That is what I believe; you of course, may have a diametrically opposite view. If so, please email me at emnorsworthy@earthlink.net I’d like to hear your reasoning. In the meanwhile, state and local governments in the seven affected states are left out of the loop and have no veto power over the non-elected TVA board. And oh yes, TVA has its own police force.
TVA – Last Chapters? Ernest Norsworthy “We believe there is an increasing inherent conflict in TVA serving as a regulator while working to ensure good customer relations.” TVA Office of the Inspector General June 13, 2006 Richard W. Moore, Office of the Inspector General (OIG) of the TVA, may just be the “fox in the hen house” needed to tame some of TVA’s extravagances and lax management. OIG reports in the last six months should be leaving TVA management quivering in its wake. Employees, contractors and the general public now will be able to report suspected fraud, waste or abuse affecting TVA through an anonymous “Powerline.” I should be one of the first in line to complain. But my complaint would not be about the pilfering of tools, apparently a serious problem, or about some of the strange management practices of the TVA. My complaint would be that the TVA has outlived its usefulness by many years and now has devolved into spats over contractor’s overcharges or bad reporting of their services. (See TVA’s OIG site at http://oig.tva.gov ) But meanwhile back at the main switch, the OIG has been performing its role as a non-partisan reviewer of TVA’s operations very well. One of TVA’s rules is to authorize any of its distributor’s “non-electric” expenditures which can cover a range of uses. TVA sets the rates to distributors and then tells them, TVA’s customers, how much distributors may charge its retail customers. Also, TVA is supposed to approve any “non-electric” expenditures of its distributors. This is such an arcane procedure that even TVA’s own inspectors are having a hard time producing some of its distributor approvals. This is akin to having your electricity provider going over your utility bills to determine if you had unwisely used the electricity you purchased. (Oops! “You left that outside light on all day” or “did you know you used electricity for an unauthorized purpose?”) The OIG has questioned TVA’s practice of being the rate setter of electricity and then the regulator of it. Does that come under the heading of “fraud, waste and abuse?” The TVA as reviewer of business plans for distributor expenditures of non-electric funds is laughable when considering that the TVA has become an almost unmanageable federal agency. It is no wonder that some of TVA’s distributors are opting out of their long-term contracts; that some “outside the fence” suppliers have offered rates a reported 20 to 40 percent less than TVA’s. And without all the red tape involved in trying to do business with the federal government. Inspector General Moore is asking the hard questions and getting many soft answers from management. Ironically, the OIG just might be the catalyst to help speed up the liquidation of TVA’s $26 billion debt that all taxpayers owe.
NAFTA’s Superhighway to Nowhere Ernest Norsworthy “What’s your agenda?” say the cynical press and conspiratorialists. But it sometimes is nice for ordinary citizens to know. Recently we have been hearing about the so called “super highway” from the tip of Mexico, Cardenas, to Canada. first port-of-entry from Mexico - Kansas SmartPort - an “inland port.” This is no typical freeway and it seems to have been under consideration since 2002 or earlier. In March 2005 the triumvirate country leaders of Canada, the US and Mexico signed a pact called Security and Prosperity Partnership Of North America. Somewhere in the bowels of the Department of Commerce is supposed to be an office of SPP that coordinates the many public and private organizations who are gearing up for this massive multi-billion dollar project. The first stretch of some 600 miles of it in Texas is slated to begin in 2007. Here are some of the highway specifications: The right-of-way will be from 1000 to 1200 feet wide (four football fields) swallowing up nearly 150 acres per mile; multiple lanes for cars and trucks, railway and pipeline above and below ground. This is not a “limited access” highway; it is essentially a “no access” toll road highway and first POE from Mexico will be at Kansas City. About 90,000 acres of Texas land will be taken off tax rolls with no likelihood of replacement by interchange and other commercial developments Apparently there is an agreement that says a foreign investment company will finance most of the super highway from tolls both new and changing some other free highways to toll roads. The president’s immigration agenda becomes clearer now; there should be no borders between the US and Mexico or Canada. That seems to justify the unwillingness of the administration to effectively control our borders. Some may call this a conspiracy. It seems to be a “hidden agenda” in plain sight. If this NAFTA superhighway becomes a reality something called the North America Union would establish rules of operation of it over three countries and above the laws of the United States of America in direct contravention of the US Constitution. I have proposed a no less ambitious project that would help the US first that also would benefit Mexico and Canada. The plan is as simple to state as “Why not dig a canal across the Isthmus of Panama?” The Panama Canal, a great engineering feat was one of the great achievements of the 20th century. Paralleling that great achievement could be “The Great Southwestern Project,” a canal from the Gulf of California for a thousand miles inland up the Colorado River and its tributaries. Today, Colorado water is fought over as fiercely as staking claims in the 1849 gold rush. Interstate agreements or pacts are signed, broken and re-signed. There simply is not enough water. A series of locks and dams would help meter the Colorado’s water while providing a navigable waterway to transport goods to and from the Gulf and thence the Pacific Ocean. Simple to state, very difficult to accomplish. It could be the great achievement of American ingenuity in the 21st century to complete such a bold plan. While navigability is a significant asset to the western states, the plan would have to be complemented with a major breakthrough of desalinating brackish and sea water. Huge amounts of potable water must be made available to grow crops and to maintain human and animal lives in a desert atmosphere far and above that available from the Colorado River. Presently, the cost of desalination of water is not cost effective using the latest techniques, mainly reverse osmosis. I am suggesting that a Manhattan-like project be formed to seek and find the imperative answer for not only our sake but for humankind to provide cheap and plentiful water. A truism is “water the desert and it will bloom.” The proof of that already exists in vast stretches of the Southwest. Treaties with Mexico already exist which provide for a canal through the short section of Mexican territory to the Gulf. The future of America may turn on the success of this great project by providing another “Garden of Eden” for Americans and the wide world. It also could complete the promise of “The American Dream” Part II by fulfilling the dream of our Founding Fathers; the westward movement of Americans to the Pacific Ocean.
Hazleton, Pa., immigration exemplar? Ernest Norsworthy Chicken Little said “the sky is falling!” It’s worse than that. Our country is “falling.” Really. Never has there been a more discussed and cussed issue than immigration. Time was when it was “their problem,” meaning the Southwestern region of the U.S. No more. Every state in the Union has been affected to one degree or another by illegal immigration, “illegal aliens,” sucking up practically all the available low wage, labor intensive, unskilled jobs. Speaking English not required. Most illegal immigrants from Mexico and Central American countries speak their native tongue, Spanish, not even attempting to learn to speak English. There is no U.S. law prohibiting the speaking a foreign language, any foreign language. There is, however, the requirement that to become a naturalized American citizen the applicant must speak English and know a modicum about the history and customs of American society, to become assimilated citizens. For every person that sneaks across our borders illegally, regardless of good intentions, undermines one of the stalwart principles of the American culture – the rule of law. Once in the country illegally, aliens can pick and choose which other laws not to their liking that can be ignored or violated. A major underground business of providing fake ID’s flourishes in American including duplicate Social Security numbers. The Social Security Administration says it cannot seek out illegal numbers for privacy reasons. All they have is a huge data file of suspected fraudulently issued or duplicate cards. When discovered, the heartbreak and despair of having one’s identity stolen has already happened to tens of thousands of Americans. Sadly, many still do not know that the most personal of belongings, their identification, has been stolen, some unknown for years. The Social Security Administration knows the fraud exists but feels powerless to do anything about it. That is just one symptom of our “falling” society. The low wages illegals will accept, low by our standards but much higher than many of the jobs in Latin countries, drags down our economy particularly when much of their wages are sent back to their home country. These payments in the billions of dollars account for a huge impact on the Mexican economy, either number one or number two with oil and tourism. It is a double loss to our economy, capital is drained, much of it never taxed or accounted for, and American worker’s wages are depressed. Of course, the “carrying charges” to the states because of provided services to illegal aliens, i.e., free education, routine medical care and health emergency services, even housing and incarceration costs are bleeding many local budgets dry. For decades, states and communities have cried, “it’s the federal government’s job” to protect our borders and prevent illegal crossings. And for decades, federal laws presently on the books were ignored or not enforced. The two bills in congress passed by the House and Senate that tackle the immigration problem are so far apart that it is unlikely any compromise can be reached. The House version emphasizes border security first; the Senate wants a “comprehensive” approach which includes a form of amnesty, according to House proponents. Both sides are adamant to not come off their positions. Public hearings sponsored by both houses are scheduled during the August break. Passage of the House version last December raised much opposition to it and numbers of demonstrations have been held. The first large protest demonstration in Los Angeles, where many foreign flags of Mexico and other Central American countries were vigorously waved, was a wakeup call to many Americans. Chastised for this, subsequent parades displayed mostly American flags. That flagrant display of foreign flags on American soil more truthfully represented the sentiments of many illegal aliens in the U.S. Estimated to be at least ten-million strong, some pundits worry that the real issue is how to deal with these millions. Not many say “Round ‘em up and ship ‘em out.” The result of that approach would result in chaos unimagined. The best approach would be to work against passage of any new reform immigration legislation in this session and to just enforce present laws; some clarifying legislation may be required. Faced with more enforcement, reduced benefits and stiffer fines on businesses it is believed that out-migration would pick up dramatically. Many localities and state legislatures refusing to wait for the snail’s pace of the federal government have enacted their own laws to toughen up their immigration policies. Hazleton, Pa. is currently the top small-town example of how illegal immigration has impacted their town, population 30,000, with limited tax resources. They have made it illegal for landlords to rent to illegals, for businesses to hire them and for an expeditious exit from their town. Legal immigrants are welcomed with open arms said Hazelton mayor Lou Barletta. Is America’s sky falling for real?
Truly an American tragedy Ernest Norsworthy What if alcohol use in America was illegal as is the use of illegal drugs? No bootleggers or drug dealers? No market for them? We tried the grand experiment of prohibition and it didn’t work. But neither has the legalization of alcohol which has left its devastating effect on the unborn and those addicted to it. Our “war on drugs” has been fought mostly outside American borders in an attempt to stop drug dealing at its source or as close to it as possible. My libertarian friends believe the fight against illegal drug use is a no win situation and that it should be legalized as was alcohol. Their proof is how we handled the ban of alcohol; making its use a crime and then legalizing it. As a legal substance, alcohol has caused havoc in every community in America, being the cause of tens of thousands of deaths on our highways. I know libertarians would hate this but the only way alcohol related deaths and injuries on our highways can be prevented is to “stop their use of alcohol at the source.” In other words, limit access to our highways by randomly checking drivers and vehicles before they are allowed even to enter the highway system. Eventually, drivers would carry a certificate of none-use of alcohol for at least 8 hours before driving a vehicle. Very stiff penalties for non-compliance including immediate incarceration would follow. Nearly forty-percent of auto fatalities are alcohol related of the slightly fewer than 45,000 deaths per year on our highways. I write those statistics as if to say “there was a fire yesterday at ---“ or there was an “earthquake in Indonesia.” Tsk,tsk, too bad. Here is the statistic we will not face: More than 400,000 people have died in the United States in just the past ten years and millions have been maimed and injured in vehicle accidents. And about 160,000 of those wasted lives were in alcohol related “accidents.” (From NHTSA statistics.) And yes, we mourn the death of even one of our soldiers killed overseas while bravely protecting our country. A lifetime of proud mourning is left for their families; a lifetime of despaired mourning is left to those families and loved ones who have needlessly, negligently and woefully lost their lives to a drunken driver. Apparently we just do not want to think about it. By now there is no one in the United States who has not been directly or indirectly affected by this traffic mayhem. The question is not what should be done about it but when? Clearly, we know a major factor is alcohol induced driving. The FAA has a strict and unbending rule that pilots cannot fly an airplane for 8 hours (“bottle to throttle”) since drinking alcohol in any amount and preferably for 24 hours. It’s big news when they break that rule. Pilots are punished severely for it. And the general public is safer because of that rule. No such safety rule applies to highway drivers in America. With much stiffer penalties and lower permissible blood alcohol levels than we now have, highway deaths could be greatly reduced. If anyone knows a better way of reducing the carnage on our highways, they should immediately step forward for all to hear about it. Strong action will not be taken until Americans say “enough!” It comes down to the users of alcohol and drugs that impair judgment, coordination and ordinary common sense. If drivers do not act responsibly then their driver privileges should be taken from them. They do not have a right to abuse those privileges, to have a license for access to our streets and highways now littered with white crosses, unless and until they are proved to be responsible citizens. We must expect more from the news media – newspapers, radio and TV – to focus on this unbelievably ignored source of mayhem in America. It is time for citizens to demand that their elected representatives pass local and state laws to severely punish those who would inflict unbearable pain and suffering on the rest of us. Federal laws do not seem to have enough effect.
Where are the journalists? Ernest Norsworthy At last I now know the difference between a journalist and, well, just a prolific writer such as myself. A local newspaper editor cleared it all up. I’m not rich so I should shutup and be happy. I’m not a journalist either and I’m happy about that too. About all I’ve seen that passes as journalism these days is nothing more than opinion. And in my opinion a news journalist should write about facts, “just the facts, Ma’m” as the famous detective once said. But that is hard to do when the objective of the profession is “to reveal truth and make a difference,” as echoed by the editor. It’s that “making a difference” (read Pulitzer Prize) that bothers me some. Is that a role of a journalist? That credo sounds a bit self-serving to me, something you might hear from a politician. But taking the high road, journalists – they call journalism a profession – should then take professional charge in ousting their miscreant members. I have never heard a journalist speak ill of another journalist. That comes from pundits. What we have here is the need to uphold the truth. There have been some big “truth makers” in that profession and for them to be expunged takes a lot of red-handedness before action is taken, sometimes many years. The rotten apple analogy is good here. How about “revealing the truth” when it is found? The esteem of journalism would be greatly enhanced. One reason the public holds journalism and generally all the media in low esteem is they believe they are agenda driven. For example, the Los Angeles Times is widely known as a left-leaning anti-Bush newspaper. Much of what is written there is opinion, not news in the traditional sense. But it also is the placement in the paper, any newspaper, of agenda driven stories. It is that great unseen hand that tries to steer public opinion one way or the other. If journalists want to “make a difference,” let me suggest a few areas a good muckraker should go: Explain truthfully all sides of the eminent domain issue and let readers draw their own conclusions. The truth may sometimes be painful as in “oh, that company (or big developer) is a big advertiser and we couldn’t step on their toes.” And trace down the “cancer cure” scammers and reveal them for what they are (that would be “making a difference".) I get a plastic bag from one of them nearly every week. It’s a pretty good garbage bag. And there is the huge water problem that seems to be ignored as much as “illegal aliens.” What, if any, are plans in Southern California to deal with the water shortage certainty? The issue is so watered down that we tend to ignore it – except the rising water bill. That 800 pound gorilla is staring us in the face and he drinks a lot of water. It would take a good investigative journalist with facts to tell us our options that are not colored by the views of the writer. These are not “sexy” issues here in the shadow of Hollywood but they are a lot more important. The hybrid of fact and fiction is faction and that is what we are devolving toward, factions of pundits. If I have any advice to journalists or would be journalists it is that if you are passionate about an issue, write your opinions about it and not as a news article. Today, this seems very hard to do. Even though I have a lot of opinions I strive for a basis for all of them. But it is my “gut feeling” about an issue that gets me started and sometimes for quite a long while. Anyway, I never understood the “inverted pyramid” style of journalistic writing. Ernest Norsworthy emnorsworthy@earthlink.net
TVA only choice for Electricity in Shoals of North Alabama Now that the Supreme Court has decided that congressional redistricting by state legislatures is appropriate (League of United Latin American Citizens v. Perry) it would be interesting if that same logic could apply to the 7-state incursion of the federal government through the Tennessee Valley Authority (TVA.) The TVA supplies electricity to over 8 million people within the TVA “fence,” an area covering 80,000 square miles in parts of seven states including almost the entire state of Tennessee. TVA’s customers have no choice even when electricity is available from another supplier at lower cost. The government says “take it, period.” The TVA this week announced a rate reduction of between 3.5 and 5 percent if approved by the board to be effective October 1. This comes not a year after two rate increases, the last being 9.95 percent (how do you say “ten-percent”?) But with that concession of a small rate reduction comes this catch: The TVA would automatically raise (or lower) rates based on the cost of fuel and their purchase of electricity from other suppliers without further TVA board approval. So this means that without any binding input from any elected representative from any of the seven states in TVA’s huge fenced off area, decisions of major proportions impacting millions of citizens inside the fence will be made. The fits and starts of TVA’s management continues to show its ineptitude and lack of understanding market forces and an inability to make the right decisions on a “bottom line” they do not possess. If the TVA territory was returned to rightful state domains, there would be no rate increases unless approved by state public service commissions or other elected bodies that represent the people. There are several ways to correct the great travesty on our representative democracy that is now impugned by the TVA. First, the president through Executive Order could call for the orderly dissolution of TVA to prepare for the sale of TVA’s assets to market driven electricity suppliers. Second, the TVA would be required to obtain approval of all of the seven states involved where TVA might impinge on state lands or its citizens by any decisions TVA proposes. Either of these approaches surely would get the attention of Congress Smoke pollution from the Barton plant in Colbert County would then be under accountable control of an investor-owned utility who would meet clean air standards. The way TVA looks at it now is that the Barton emissions are just part of a much larger number of pollution emitters of TVA coal-fired plants and that overall, there have been some reductions but not in carbon dioxide emissions. TVA says the Barton plant emissions of carbon dioxide increased because of an increase in production. Where would Shoals residents turn for relief? Good question.
NAFTA to the extreme By Ernest Norsworthy Don’t look to Europe as a model for NAFTA to emulate. The great push to combine all of Europe into one large European Union nation is not exactly setting the woods on fire. Spain, a loosely knit nation with four official languages, slowly is separating itself from the federal government by parliament’s granting Catalonia an “autonomous state,” one of 17 autonomous communities in the country. Also wresting control from the national government is their right to control work permits, a significant concession from Madrid. In discussing this with a Barcelona hotel manager two years ago, he said that Catalonia related more to France to the north than with its own country. Certainly Catalonia with its Catalan language has its own culture. Now, with the deculturatization of the United States by NAFTA and plans for a “super highway” from the south of Mexico’s Cardenas Port through the middle of the United States to Canada, our sovereign borders will be obliterated. It is not comforting to know that shipments spanning the length of Mexico ending in a Kansas “port” would arrive with few or no inspections I have propounded another idea which would be no less dramatic but less costly and which would serve mostly the United States. The Great Southwestern Project would affect the vast stretches of undeveloped American soil in the Southwest by making the Colorado River navigable from the “Port of Yuma,” Arizona for a thousand miles northward. The Hidalgo Guadalupe treaty with Mexico permits construction of a waterway through the short section of Mexican territory to the U.S. border from the Gulf of California (Sea of Cortez.) It readily can be seen that shipping in 600 miles of sheltered ocean up and down the Gulf to and from Yuma would be far preferable to trucking goods nearly twice that distance through Mexico at a higher cost. The engineering challenges in building this water transportation route and port would be daunting to say the least. The series of additional locks and dams could result in a more stable flow of Colorado River water to surrounding states. Concomitant with this construction project would be a Manhattan-like project to find ways to cheaply desalinize brackish water and sea water to provide the necessary constant flow of water inland. This monumental task not only would provide the necessary additional water for agriculture but also potable water for humans and animals. The Great Southwestern Project with enough water and a way to export American products cheaply could be the veritable Garden of Eden of the world while providing for more efficient imports from Asia. When better known, this concept should be able to raise large amounts of private investment capital. The sovereignty of America would be maintained while assisting in the widespread global water shortage. “Water the desert and it will bloom,” it has been said and it is so. And it follows that the full economic potential of the Southwest will expand accordingly. These two major projects could provide the basis for the American Dream Part II; the continuance of the westward movement to the Pacific by Americans has not yet been completed.
Our Flag
(Note: Today, June 14, 2006 is “Flag Day” in the United States of America and while the words penned here were written just a few days after the 9/11 terrorist attack bringing mayhem and destruction on American soil, they perhaps are no less poignant and mindful this day of celebration.) Today, our flag hangs limp in sorrow But what about tomorrow? That banner spangled in the night of our despair Hangs limp but stately in the air. Our flag hangs limp in sorrow But what about tomorrow. Is Suribatchi only a faint memory Of a flag once held so high and proud We'd die for it and thee? And now our flag, limp in sorrow Unfurls to a new tomorrow. Symbol of the free, will it stand? Or fall to terror from a far off land. Our flag unfurled in sorrow Flies high today, tomorrow. The pain endured from despot's arrow Returns to them with venom strong As the will of right over evil wrong. Our flag flies high in sorrow With tears of strength tomorrow. United Americans, steely in resolve Now move together With power and might from above. 2001 Ernest Norsworthy
Nine Points to Sanity Or why illegal immigration could lead to the downfall of America Ernest Norsworthy June 2006 Why would 10 million immigrants come to America illegally? Part of the reason is simply because they can. They are to be found all over America and offer themselves as shadow labor to every company that will hire them illegally. And apparently, there are plenty of companies and individuals looking for day labor. “Don’t ask, don’t tell,” if they do not have a Green Card or other valid ID. It is clearly un-American to pay a lower wage to willing but illegal immigrants. The pressure has to begin with business. They must pay at least the minimum wage, collect the taxes, and offer available benefits. So grapes go up 10 cents a pound? So be it. But the workers must also be legal. And that precisely is the problem today. We have scofflaws who think they can get away with breaking our very clear and specific laws even if uncoordinated. Every time our laws are broken some of our freedoms are frittered away. How can it be that some of our laws that are violated be the rule for just some of us? America needs willing but unskilled workers to do the heavy lifting, from farm workers to landscaping and other labor-intensive jobs. There never can be a completely free America if 5 or 10 percent or any percent of our workers effectively are enslaved and not free according to our own Constitution. The “problem” will not go away however deep the ostrich buries its head in the sand. On one hand, we moan about the loss of jobs, “outsourcing,” while illegally funding others under the table. When monies transferred to Mexico from America represent a huge part of Mexico’s GDP, we cannot expect help from the Mexican government to stanch the flow of illegals. In fact, they encourage it. There is clearly little benefit to the Mexican government to prevent illegal immigration to America. Besides being a drain on our capital output, terrorists have little problem entering through our very porous southern border. The new “legal ID” requirement is but a small step in bringing the issue of illegal immigration under control. Some countries, to stop the drain of their currency, do not allow it out of their borders. In our case, we have a huge outflow of dollars to Mexico most of it untaxed. Much of it includes taxes owed in federal, state or local taxes, Social Security or for part of the benefits legal citizens enjoy. Just the opposite is true. The state of California courts for example, overturned a Proposition (187) approved by 59% of California voters to deny free services to illegals. They now receive millions of dollars worth of free health, educational and other benefits that other California taxpayers must pay for. Some medical facilities are in serious financial trouble because of unreimbursed costs. With many emergency rooms closing, legal citizens run the risk of denial of life saving care. Hitting the matter head-on, i.e., closing the borders or rounding up all the illegals and – (doing what with them?) would result in chaos. Here are a few suggestions that gradually could be implemented: 1. Check outgoing people for ID and record it. This might help stem some of the flow of outbound dollars. 2. Prohibit financial institutions, e.g., banks, from opening individual transaction accounts without proof of legal status. Much of the monies sent to Mexico are by electronic transfers. 3. Spot-check vehicles for safety requirements, for insurance and legal ID of all drivers. Impound unsafe vehicles and those operated illegally. Inspect all incoming trucks at borders and ports for safety standards and legal drivers. 4. Encourage the media to cooperate in advising citizens that it is unlawful to hire illegal aliens for anything, from dishwashing to lawn mowing to picking grapes. Spell out the penalties. 5. Coordinate the efforts of all law enforcement agencies so they will consistently apply immigration rules. There must be a plan at least to temporarily detain illegals in holding camps or other facilities while checking their status. Many of them are hard-core criminals who have been deported more than once. Repeat felons should be incarcerated. 6. Enter into a pact or agreement with Mexico where Mexico pays the U.S. for expenses involved in dealing with their citizens illegally in the United States. For leverage, use economic sanctions. 7. Greatly speed up approval of “Green Cards” for legal aliens and the processes for them to become legal American citizens. 8. Provide only contingent citizenship to newborns of parents illegally in the U.S. until parents meet qualifying citizenship criteria. 9. California should reword Prop. 187 to account for the portions of it struck down by the courts for resubmission to California voters. Ernest Norsworthy May 28, 2005 emnorsworthy@earthlink.net Note: Since proposing the above suggestions last year, two major events have occurred. First, the House of Representatives in December passed a law to toughen immigration rules that would put in place stricter border controls and classify entering the country illegally a felony offense. Presently a misdemeanor, the Democrats forced the felony provision in an attempt to blame it on Republicans. Second, the Senate passed an almost totally different approach to illegal immigration with a “guest worker” plan, called amnesty by opponents. It is hard to see how the two bills could be reconciled without major concessions by either side. The public favors the House approach over the Senate plan. The immigration issue in America is so deep-rooted in its foundations that we once again come to the famous crossroads. The wrong path surely will lead to the dissolution of America as originally envisioned and as we have lived and supported it the ensuing 250 years. We cannot reward illegal acts including identity theft nor give in to demands of foreign nationals who seem to believe they have rights not even provided to American citizens. The Senate seems to be significantly out of step with most Americans on the issue and those up for re-election this fall may suffer the consequences. EN 6/06.
America’s Heart and Soul How one country lost its soul while giving away its heart. We are in another bloodless civil war between those who would exploit cheap labor and those who believe in the rightness and goodness of America. I went on a Friday night police ride once as an observer in a Los Angeles County precinct that was touted as the county’s “worst.” It was interesting to see how the nature of police calls changed as the night wore on and how ably the two officers handled each case. At first, it was the noise of a garage band, about the grass clippings of the neighbor next door or chickens getting loose into another’s yard. Then, as if someone flipped a switch, the darker it got the nastier the calls became. From joining in on a police chase of a Black Panther (they still were considered criminals at that time) to chasing a small-time drug user and his friends through school house grounds, by car and by foot, pistols drawn and eventually catching one of them through wry police savvy, did the exciting and informative evening end. But not before they pulled over a “wetback” (properly called an illegal alien) and asking to see his Green Card. The diminutive Mexican, unable to speak English used his nine year old son who spoke excellent English as his translator. The man produced nothing to identify himself. After several minutes of awkward conversation, one of the officers said to the boy, “Tell your father to lock his car and have one of his friends come back and pick it up.” And the two Mexicans, one probably American by birth, scurried away. After the ordeal was over I asked the officers two questions; one, how they recognized that the driver was a “wetback” just from observing him driving down the street and secondly, why they did not immediately take the suspect to the INS for processing and deportation to Mexico. Their answers were logical and practicable if not entirely legal at that time. Asked if I’d ever been to Tijuana and observed the typical driving habits of Mexicans (my answer was, “no” but since then I’ve driven in Tijuana.) Their response was that many Mexicans drive jerkily and somewhat erratic as I later learned for myself. The other question about not taking what appeared to be an illegal alien to the INS was answered clearly; they did not want to waste another three hours processing the man when they knew, everybody knew, “they would be on the way back to LA before the INS bus could turn around at the Tijuana border.” Gradually, over many years since that 1971 experience, our society’s soul has been quietly diminished until now. It’s as if an America full of Rip Van Winkles have wakened to an awareness that our sovereign borders have been obliterated, that our laws are being ignored; that some very selfish people and businesses large and small have exploited cheap labor and that exploited labor extols ownership of our land. All land in America down to the smallest parcel is defined by invisible lines. Those lines are enforceable through our system of laws to which Americans pledge. Lines establish sovereignty as surely as if they were visible walls. It is natural to defend that sovereignty, to protect that right of ownership inside each marked off piece of land or water. It is a territorial right and in the case of the U.S. Constitution to defend that sovereignty against all who would intrude. Great civilizations have risen and fallen defending what was considered their rights of ownership. Those unable to maintain that ownership have usually fallen with a much muted “bang.” When others have taken territories won by default or outright victory they then must defend their sovereign rights, to the death if necessary. Other global powers have striven to conquer America by force from without. Now it is America’s struggle to determine if there is will enough to defend its sovereignty from forces within. Does America have the heart to win back its soul? Is there enough fire in our bellies to defend what rightfully is ours? Ernest Norsworthy emnorsworthy@earthlink.net
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| | Welcome all to a little different experience on a web site. For those who believe there are not enough venues to “sound off” on contemporary issues quickly enough; that talk radio and interactive TV probably satisfies most because of their immediacy and that is enough. For those like me, “letters” or articles to the paper or calls to a radio show are not enough to sate my opinion appetite. I suspect that many writers just like to write; their production far exceeding small placements in other media here and there. Then comes along the greatest communication tool since Gutenberg invented moveable type – the Internet. Accessible to millions, the computer enables almost anyone the ability to express their views in writing and eventually through sound and video. On my site you are invited to join in the discussion, to give your unique perspective with only one caveat – there will be no “flaming,” crass or ill tempered conversation or personal attacks. We’re looking for civil exchanges of opinions and ideas but be prepared to defend your positions. Eventually, this site will be self-sustaining and profitable through the sale of some of my other writings and that of others. And maybe some miscellaneous stuff. . . |
| | Welcome all to a little different experience on a web site. For those who believe there are not enough venues to “sound off” on contemporary issues quickly enough; that talk radio and interactive TV probably satisfies most because of their immediacy and that is enough. For those like me, “letters” or articles to the paper or calls to a radio show are not enough to sate my opinion appetite. I suspect that many writers just like to write; their production far exceeding small placements in other media here and there. Then comes along the greatest communication tool since Gutenberg invented moveable type – the Internet. Accessible to millions, the computer enables almost anyone the ability to express their views in writing and eventually through sound and video. On my site you are invited to join in the discussion, to give your unique perspective with only one caveat – there will be no “flaming,” crass or ill tempered conversation or personal attacks. We’re looking for civil exchanges of opinions and ideas but be prepared to defend your positions. Eventually, this site will be self-sustaining and profitable through the sale of some of my other writings and that of others. And maybe some miscellaneous stuff. . . |
| | Welcome all to a little different experience on a web site. For those who believe there are not enough venues to “sound off” on contemporary issues quickly enough; that talk radio and interactive TV probably satisfies most because of their immediacy and that is enough. For those like me, “letters” or articles to the paper or calls to a radio show are not enough to sate my opinion appetite. I suspect that many writers just like to write; their production far exceeding small placements in other media here and there. Then comes along the greatest communication tool since Gutenberg invented moveable type – the Internet. Accessible to millions, the computer enables almost anyone the ability to express their views in writing and eventually through sound and video. On my site you are invited to join in the discussion, to give your unique perspective with only one caveat – there will be no “flaming,” crass or ill tempered conversation or personal attacks. We’re looking for civil exchanges of opinions and ideas but be prepared to defend your positions. Eventually, this site will be self-sustaining and profitable through the sale of some of my other writings and that of others. And maybe some miscellaneous stuff. . . |