A “Stress Test” for the TVA?
April 28, 2009
“The government's latest lifeline for major banks, announced Monday, has one main qualification: A bank has to essentially fail the stress test, which is meant to determine if it could survive a worse-than-expected decline in the economy.
Treasury Secretary Tim Geithner has described the stress test only as "a more consistent, realistic and forward looking assessment about the risk on balance sheets," administered by "the government agencies with authority over our nation's major banks." The testing, part of an initiative called the Capital Assistance Program, is to begin Wednesday, the Treasury said; it's unclear if it will reveal more about the tests then.” (Source: The Charlotte Observer (Charlotte, N.C.) 4/24/09)
So far as I know, a “stress test” designed specifically for the Tennessee Valley Authority (TVA) has not been developed. But here are a few elements that could be included in such an examination.
· If TVA has the “flexibility” of a private corporation, at what point does it change into a federal agency? How? Why?
· Because Congress does not appropriate funds to the TVA (it basically must operate on the proceeds from sales of electricity), how much in excess of the present $30 billion statutory limit can TVA exceed? For how long? On what legal basis does TVA have to exceed its statutory limits against future obligations?
· How does the TVA justify receiving moneys from TVA distributors or from the formation of a consortium of distributors and “sharing” ownership in new electricity production? Can the title to U.S. Government properties be shared with other entities?
· How much money does TVA use to incentivize the conservation of electricity, i.e., where is the plan to refund, or credit, the 8 million users of electricity for their individual diligence in cutting back on their own use of electricity? It has been suggested that the TVA instead of using “payments-in-lieu-of-taxes” for slush fund accounts by state and local governments that these monies go directly to those who conserve the most. Some $450 million is divvied up to those who use the most electricity, not save the most electricity. Some of these payments extend far beyond the 80,000 square-mile TVA territory. What are the plans to shift this money to the more prudent consumers?
· What actions, if any, have been taken to eliminate the exorbitant bonus structure for federal (TVA) employees? For reductions in executive staff pay?
· Because of the failure to hold TVA management accountable for past management errors some of which ratepayers continue to see in their electricity bills in the amount of billions of dollars , how will TVA management prevent or minimize such occurrences in the future?
· The latest TVA disasters, i.e., Kingston and Widows Creek dam bursts, will end up costing ratepayers billions of dollars in damages and for other unanticipated costs for repairing similar dams. If management did not anticipate these dam breaks even with plenty of warning, what actions have been or will be taken to prevent such future disasters?
· TVA has had some problems in filling out the forms submitted to the Securities and Exchange Commission over the last two or three years. What actions have been taken to correct this issue? More staff training? Better qualified and experienced employees in dealing with fiscal matters?
· If today, the TVA is part of the federal government (despite some actions it has taken to the contrary), why would this agency, TVA, need to borrow billions from a failing bank who has received billions of taxpayer dollars to prop it up? (Bank of America)
· What, if any, plans are being made to sell off some of TVA’s assets to try and liquidate its $25 billion present debt?
Some other “test questions” could be added; but the list should not be excessively long. The next and final question is what if the TVA did not pass the hypothetical “stress test”?
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinioon.com