TVA – anachronism of the past?
April 9, 2009
Some things are past fixing, past bringing up to speed in today’s fast moving technological world. Building on sand castles is as fruitless as trying to hold back the tide which washes it all away. To build on a better future we need a better model, one that the past at least has shown us what not to do.
Acquiescing to a federal culture has changed Southern culture with all its charm, politeness, honorableness and entrepreneurship into a harsh, domineering ward-state since the 1930s.
It hasn’t happened all at once. The paternalism of the federal government which assumes that government knows what’s best for Southerners is best exemplified by the all pervasive Tennessee Valley Authority. Today, a pall, a patina of TVA’s dominance spreads over all of its 80,000 square-mile territory in seven states.
Why is it that business and industry under TVA’s thumb still has not caught up with other parts of the South that are not served by TVA electricity? I suggest there are several reasons including the dole-mentality indelibly stamped on the southern psyche.
The public assumptions underlying the beginnings of the TVA were that the people were in deep poverty, didn’t know how to farm or much of anything else. Relatively speaking, those assumptions were dead wrong. By taming the Tennessee River the federal government also took a million acres of land away from the people.
From the days of the waterwheel to grind corn the power of falling water has been exploited many times over. A hydro powered turbine is nothing more than a more sophisticated way of utilizing Nikola Tesla’s method of extracting it.
However, the real plan of Franklin Delano Roosevelt was to build similar hydro dams all over the United States as part of the complete nationalization of the electric power industry. His main cohort in the U.S. Senate was George Norris from Nebraska who wanted to install “little TVA’s” across the land.
But by that time Congress was getting weary of pumping millions more into what seemed at the time to be a bottomless money pit. And then came WWII which literally saved the TVA; its electricity was desperately needed for the war effort. But the war ended before any additional TVA power had much of an impact.
A look at the original charter given the TVA in 1933 is so completely different today that it is incredible that it has subsumed that law almost in its entirety not counting the serious doubts – then and now - that the TVA Act even is constitutional.
From a federal agency whose main stated purpose was to provide flood control and to develop cheap fertilizer it has devolved into a power utility authority that has proved time and again it is an unfit vessel to provide electricity.
Operating virtually free of regulations other utilities must conform to, TVA, until recently because of its successful claim of sovereign immunity, has charted its own course, answering to no other entity except Congress. But the congress has paid no attention to the TVA because it does not receive any federal appropriations. That does not mean the TVA receives no money, however.
The problem with this artificial constraint is that the congress also gave TVA the authority to borrow up to $30 billion for more plant expansions; TVA’s income being the sales of electricity. That financial arrangement has turned into a disaster of bailout proportions.
Now, the borrowing limit almost has been reached, the interest on that debt is enormous and electricity sales are dropping like a stone. TVA ironically has resorted to some short term borrowing from the Bank of America, the same bank that the U.S. Treasury has given billions of dollars to.
The ability of the TVA to sell bonds is drying up yet debt service is increasing, costs are on the rise until recently and income is down. If the TVA were operated anything like a regular business it would have gone into receivership or bankruptcy long ago.
TVA has not divulged it recently, but the market value of its assets probably has dropped precipitously in the past year along with the rest of the economy. That $200,000 home last year may only be worth $125,000 in today’s market. The same kind of valuation applies to TVA’s assets and to their borrowing ability.
Management of the TVA the last four years after putting in place the new board structure by any measure must be considered a disaster. But how and where do you start over? I believe the TVA structure cannot be just repaired, patched up or worked over with new management in charge. The whole concept is deeply flawed.
For years, TVA has pretended it has “the flexibility” of a market corporation when it is no more that a federal agency of the government with some abnormalities built in. Starting over is not the solution, there is no going back to a different time when some of what TVA did made a little sense.
TVA’s 8 million customers paying over $10 billion to the federal government for the privilege of using federal electricity seems downright unAmerican to me. This is especially so because these citizens have no control whatsoever over the TVA.
Yes, it’s time for the outdated, abused, misused, TVA Act of 1933 to be abolished along with its unelected, unaccountable management.
Ernest Norsworthy
emnorsworthy@earthlink.net