TVA needs more competition

TVA needs more competition

In response to and article in The Tennessean I’ve written a two-part piece (In an entirety here) that tries to clarify that TVA is a federal agency and should not be in competition at all with our market-enterprise system.

My comments:

“TVA intervention into the lives of millions of people is not a two-way street; there is only one way and that belongs completely to the TVA.

“TVA needs more competition”, the writer says. What we have here, to quote a famous movie line, “is a failure to communicate”.

The writer’s main but incorrect assumption is that TVA should compete in the marketplace while as a federal government agency it should be explicitly prohibited from competing in our free market entrepreneurial society. What would that mean?

Let’s look at a little history. Senator George Norris from Nebraska, looking down from his lofty position as a pre-Depression senate chairman proclaimed, “The poor downtrodden people in the Tennessee River Valley deserve more to help them out of poverty.” He seemed not to care as much for the same poor downtrodden people from his own state.

And so began his quest for a federally planned and operated scheme of federal control of a huge swath of the Southeast. President after president rejected his ideas until President Roosevelt came along and rewarded the Republican senator with what we now know as the TVA Act of 1933 as part of FDR’s New Deal.

Norris fought and fought still more for “little TVA’s” throughout the land but wiser congresses refused to go along. Norris later was defeated as a Nebraska senator. Many in the South look upon him as a sort of savior when in fact it was he that carried over the national domination of the South since the Civil War, properly called the “War Between the States”.

TVA has warped the economies of the seven states where it dominates in an 80,000 sq. mi. territory from the tip of Virginia to middle Mississippi, almost all of Tennessee. The TVA Act is a really devilish scheme to buy off state and local governments with its so-called payments in lieu of taxes which amount to 5% of TVA’s gross annual sales now at about $10 billion.

Now this money does not travel through normal tax collection methods of the states but goes directly to state and local governments, “slush funds” former Alabama governor Bob Riley called them.

TVA’s deceit is that while calling it an “in lieu” payment, it is no such thing. Some studies show that TVA pays only about a third of what utilities in the area pay. That’s just one example of TVA’s cheating. Another is TVA’s willing acceptance of a fraudulent AAA credit rating which enables TVA to sell bonds at a more favorable rate that others competing for that same money in the bond markets.

GAO once did a survey that showed how this preferential rating cost other utilities millions of dollars. The reason that the highest credit rating is fraudulent is that the government explicitly does not guarantee TVA bonds. But the rating agencies do not believe the government will allow TVA to default on its debts while there is absolutely no evidence that the government will not abide by its own written, explicitly written, assurance that it will not stand behind TVA’s debt.

This is getting to a critical point because TVA is broke and under almost any other circumstances TVA would be in default right now.

It’s a long and sordid tale that gets only messier and messier with debt piled higher and higher on ratepayers with no end in sight.

For much more about the TVA see Norsworthy Opinion on the Internet.”

Ernest Norsworthy