Now comes TVA’s explanation of the $822 million payback

Now comes TVA’s explanation of the $822 million payback
March 1, 2011

“With the change to the monthly FCA formula on October 1, 2009, the remaining balance in the existing deferred liability account balance at that date from the quarterly FCA formula of approximately $822 million is being liquidated over a nine-month period from October 1, 2009 through June 30, 2010.” (SEC Report February 3, 2010)

In case you’re having a little trouble in understanding TVA-doublespeak, I’ll try to help some.

What TVA calls a “deferred liability account” is the account where the TVA has held the illegally collected “fuel cost adjustment” of $822 million. That “overcollected” amount was repaid (“liquidated” according to TVA) over nine months to appear that there was an actual rate decrease when it was a repayment of the absconded $822 million.

To add insult to injury, TVA said it had to “replenish” that $822 million somehow to replace the “stolen” funds! It’s all quite arcane and I’m probably leaving out a wrinkle or two. If TVA would show their actual budget line by line and how much has been spent it would be much easier to follow the money trail.

TVA says, “Deferred liability liquidation”, I say fraud.

Ernest Norsworthy

TVA benevolence highly suspect

TVA benevolence highly suspect
February 28, 2011

You’d think that TVA would have gotten the message by now, that more and more people are seeing through their haze of deceptions, obfuscations and deceit. But no, TVA continues to shovel out the rhetoric such as their latest billing change approved at the February 18 board meeting.

How does it affect consumers? Why, not at all because their bill will read the same amount by years’ end but the breakdown will be gone. Why is that? Some have speculated that with the change it will be possible to get a lot more cash in hand to oil their squeaky budget. Seems like a desperate act to me.

Let’s look at what TVA says about this new scheme. “We’re really just changing the allocation of the cost”, said Kimberly Greene, Group President. “No impact to the total rate, essentially moving one component over to another”. “You shouldn’t see, uh, our actual fuel charge shouldn’t be that much”, said CEO Tom Kilgore.

But the question, always the question when it pertains to the TVA, is why would TVA want to change the way fuel cost adjustments are made when it has no effect on consumers?

TVA leaves an entirely incorrect assumption that because TVA plans to shut off, involuntarily, the power to customers in five minute and sixty minute intervals when the system is reaching its peak power production that everything will be just fine, that everything evens out at the end of the year.

This TVA calls a “credit” which is nothing more than the ability to charge more in the summer and winter peak periods and then “credit” those shut off periods when demand is lower. Take it away, give it back.

TVA has not defined how much those”credits” will be but you can assume TVA will make a couple of bucks on the switcheroo transactions. Therefore, as the analogy goes, no one will drown in a pond whose average depth is 2 inches and whose maximum depth is 500 feet. So it all averages out so the customer is paying the same sleight of hand rate for electricity and TVA is the gainer.

Let’s call this more TVA trickery else why would TVA insist on the way fuel cost is accounted for? Also, it would be easier to dump high cost electricity say from the Midwest and not have to reveal how much extra it costs the ratepayer.

“Time-of-use-Rates” will be higher at peak demands for electricity. All of this can be found in the TVA statement, “Modification to TVA’s 5 and 60 minute response interruptible products are needed to align with Time-of-Use rate structure. Annual credit values will be allocated to seasons consistent with seasonal Time-of-Use rate design”. Got it? Simple as pie, TVA is hiding something.

This means they haven’t figured out how much higher the rates will be yet. One report quoted a TVA representative as saying that TVA’s 155 distributors will have to determine rates for 9 million customers. Talk about passing the buck! As I interpret the TVA Act, it also would be illegal.

“Can you just clarify what you want to achieve by the reallocation with the interruptible product, what are we and the customers going to get out of it”, asked Board Member McBride. Continued was a restatement by Ms. Greene that because energy costs more in the summer and winter…etc. I would like to see the basis in fact that TVA-produced electricity necessarily would cost more at any particular time of the year affected only by the vagaries of the cost of production materials.

This means that, oh well, the cost of importing electricity just went up, oh my, here’s your bill for that Mr. Customer. Move fuel costs from the base rate to fuel costs only. “No impact to the total rate,” said Group President Kimberly Greene.

Two questions; why did TVA choose to mix fuel costs with base rate costs in the first place? Why now, do they have to remove it? Ms. Greene talks ahead by focusing on “credits” when in fact the forced shutoff of electricity whether for 5 minutes or 60 minutes could be a great inconvenience to TVA customers, maybe even dangerous.

I suspect the reason was because of TVA’s tortured and arcane accounting procedures. At one time, TVA had overcharged customers about $800,000 in “fuel cost adjustments”. What happened next is a travesty, they then told the SEC in a report that they were planning to “refill” the $800,000 “loss” they in effect had stolen from ratepayers with more borrowing or rate increases.

TVA later started “refunding” the money to ratepayers over a period of months making it appear that they were getting a rate decrease. More of TVA dissembling.

Ernest Norsworthy

Tennessean comment on Scarbro letter 2/26/11

Tennessean comment on Scarbro letter 2/26/11

Mr. Scarbro is right on target; for further discussion on this issue and TVA’s recent board meeting in hide-away Murphy, N.C. see Norsworthy Opinion

I believe TVA has harvested much wool from many Sheeple for pulling over one’s eyes.

No question but the main focus of TVA right now is on money, lots of it, to keep the ship from completely sinking. (A “sinking fund”?) Financially it is in dissolution territory. TVA is a farce, something like “Desperately Seeking Susan” with amnesia and many pratfalls.

It’s an old line today, but the answers will be found if you “follow the money”, particularly the ratepayers’ money. After all, it is they who keep plugging the holes in the sieve-like ship.

Ernest Norsworthy

TVA fails Act test – power costs more than 4 regional electric companies

TVA fails Act test – power costs more than 4 regional electric co’s
February 24, 2011

At TVA’s board meeting in Murphy, N.C. on February 18, 2011, in the opening page, a rather glitzy promo piece of things to come, TVA captions “VISION” ‘One of the Nation’s Leading Providers of Low-Cost and Cleaner Energy by 2020’

Follows is a list of things it purports to be a leader in or to improve by 2020, that’s right, nine years from now. These are:

Low Rates; High Reliability; Responsibility; Cleaner Air; More Nuclear Generation; and lastly, Greater Energy Efficiency

“Acting to meet the region’s needs for the future, while improving our core business today” is the tag line. Except for a tiny TVA logo in the upper right corner there is nothing to lead the reader to believe this was any more than an investor-owned utility’s self-promotion piece.

So you see, TVA starts out in its usual fashion of not quite telling the truth, purposefully hiding the fact that the Tennessee Valley Authority is a federal agency formed by the TVA Act of 1933. TVA has no stockholders and the charade of being a stockholding company is complete on just the first page.

Dwelling on this point a moment, this is one of the key problems with the TVA, pretending it is something it never can be, a publically traded shareholding company. Unless, of course, the government sells it outright to the highest bidder; I doubt the new owners would like to carry the stigma of being a former federal agency, a confusing one at that.

Through its many statements and actions over the years TVA does not dispel the notion that it is not a stock holding enterprise. In fact, TVA promotes it by having two different website addresses, one with a “dot gov” suffix, the proper one and the other a “dot com” ending. The latter usage clearly is misleading. The wise should know the chasm of difference between dealing with the federal government and a regular commercial enterprise.

This has been such a source of confusion for over 80 years that only until recently have other federal agencies stopped deferring to TVA’s unusual status. They have been reticent to criticize TVA, after all, the TVA is a federal government agency. TVA gladly wears which ever hat that seems to fit the best at the time. A fraudulent example of that is TVA’s AAA credit ratings which it gladly accepts thereby getting lower financing rates than any other utility; it costs those utilities millions of extra financing dollars. See GAO report

TVA’s financing documents explicitly state that the U.S. government does not guarantee any of TVA’s financial instruments but the rating agencies, apparently believing in the tooth fairy, do not believe the government would allow TVA’s insolvency. P.S. – TVA already is insolvent on paper, maybe that’s why CEO Kilgore gloats a bit about TVA’s overwhelming debt obligations. It makes TVA a less attractive candidate to sell TVA’s assets.

Low Rates

Here we go again, misleading even in the header of TVA vs. “Regional Holding Companies”. It’s hard for TVA to spit it out, it’s TVA vs. Electric Utilities, it’s not just the more vague “holding companies”, it is electric utilities that are the companies, and those companies are in small print.

Notice that TVA has been misleading with the statement, “TVA’s electricity prices remain below the national average” (from an internal TVA memo to employees) yet it clearly shows on this chart that there are four regional electric utilities with rates lower than TVA’s rates and the adjacent Southern Company with about 1 cent per KWh higher. TVA should change that promotion statement to “TVA’s electricity prices remain above the regional average”.

Under the heading “Monthly Power Use”, TVA here tries to depict a steep increase and decrease of power usage by changing the chart’s ‘x’ and ‘y’ axis and including the highest peaks in one calendar year. If this information had been shown over the past five or more years, a different and more meaningful picture would have emerged.

The kWh peaks would be the same but usage would show the changes in the economy over a longer period. TVA does not explain the shades of red above about 1300 kWh average; there always have been peaks in electricity usage despite efforts to force a reduction in them. Here’s a suggestion of how to reduce those peaks through incentives. For those voluntarily reducing electricity usage during peak periods, offer a reduction in rates, not to force higher rate payments. Where does this money come from? TVA doles out about a half-billion dollars yearly to slush funds throughout TVA’s territory with their so-called payments in lieu of taxes.

TVA can change this very quickly but perhaps to the consternation of the suckling pigs who gulp down the “free” political money.

This colorfully shaded chart would have been very useful if it had shown what the increase in cost per kWh in the “red” areas that TVA plans to implement April 1. They plan to have their 155 distributors figure out what the individual customers’ rates will be, “some more than $3, some less $3 per month”. This is a clear violation of TVA rules which say all members of a class of users must pay the same rate.

TVA should be greatly embarrassed that with all its advantages it receives as a federal agency, there are four other electric utilities in the area with lower rates. These are stockholder owned utilities that obviously have been better managed even suffering from TVA forcing them to pay higher rates for their borrowed money and their having to pay fair taxes to each state they do business in. TVA pays no taxes and tries to substitute only a 30% payment of taxes due with the so-called payment in lieu of taxes ruse. And this money does not go through the regular tax paying process to these states, no, they are doled out to political slush funds that may or may not benefit the people. Rightfully, TVA’s so-called payments in lieu of taxes should be called “bribes” in lieu of taxes.

TVA effectively pays two-thirds less of their fair share of state and local taxes compared with other nearby utilities. TVA determines the amount it pays through its own devised system of “payments in lieu of taxes” and not from tax rates prescribed by individual states and local communities, rates that are approved by states’ public service commissions.

TVA’s “vision” of low rates has long ago faded into a past memory; today’s rhetoric only makes TVA more of a laughingstock.

High Reliability

This series of slides* other than being colorful, are particularly meaningless. The first one, “Interruption Duration” shows a brilliant orange chart dating to 1982. The obvious reason for going back that far is to show the great variation between 1982 and 2010. In the recent era beginning in 2002, it appears that power failures spiked in 2003 and again in 2008 decreasing slightly in 2010.

Interruption Frequency – There is no way a customer can relate to this chart particularly when “Connection Point” is not defined.

Reliability 2011 – Another colorful but incoherent chart. What do the different colors mean? The statement “System Minutes” of Load-Not-Served is meaningless to a lay person. Can’t tell whether it is “good” or “bad”. And why did it start at zero October 1, 2010, was there no history of this information before then? Does it start at zero at the beginning of each new fiscal year? What does the squiggly red line depict?


“Meeting Our Responsibilities” – An explanation of how TVA failed to meet its responsibilities would have been a good preface to this section or at least to elaborate on just what TVA’s responsibilities are. It is irresponsible to shade over TVA’s real responsibilities with “the latest on TVA’s Integrated Resource Plan”.

That effort has been particularly meaningless when after all of the many, many meetings (some of them in secret) there is not even a consensus on which direction TVA should take. It’s like a football coach asking the players “should we punt?” TVA already has punted on this one.

Interesting that TVA states “Last of river ash was removed
from Kingston on December 1, 2010” under Meeting our Responsibilities instead of saying that TVA was responsible for the Kingston ash dam disaster and they’re still working on repairing the damage. “And by the way”, dear ratepayers, “I’m charging you a billion and a half dollars for TVA’s mistake.”

Yes, it was irresponsible for TVA to “partner” with the Environmental Protection Agency to contract with a sanitary fill owner out of Atlanta to dump tons and tons of toxic ash on Perry County Alabama, a particularly impoverished area. And with that same EPA partnership, deciding to stop hauling away the ash and replacing it right where it was as a “dry” pond. And the poor of Perry County are left “high and dry”.

This shows TVA has reached the heights of irresponsible management.

If TVA wants to talk about being responsible, please explain why TVA management let their power production equipment run out because of poor maintenance practices; or how TVA’s dams are silting up lessening the capabilities of the cheapest and environmentally cleanest form of electricity there is – hydroelectricity.

It is irresponsible for TVA to contract for wind powered electricity from hundreds of miles away with no consideration given to the ones who must pay extra for it, the ratepayers. As if TVA could find no other claim for “meeting its responsibilities”, listed is a government sponsored award for one of the “best” websites of a federal agency.

Obviously it is the glitz that dazzled them, not the content of TVA’s site; it is most difficult to track down information that may be in there somewhere but it is not arranged easily to be retrieved. Try it yourself, put in “TVA budget” and you’ll come up empty handed. Of course, there are some things that TVA does not want anyone to know too much about.

It is irresponsible for TVA to claim meeting its responsibilities includes “The trail system at Raccoon Mountain”. How about the flowers and trails around the Colbert steam plant too?

“Measuring Our Reputation” must be a hard one for TVA to take. Besides not showing any source of their opinion poll or who and how the survey was made and the questions asked, a rating of “79.3%” must be quite galling. The first and logical question is why does the TVA believe it must have a survey for a “Public Opinion Favorability Rating” at all? Must have been a lot worse in the past. What does it prove?

The present administration in Washington has a very low approval rating and that is more believable because the polling companies mostly are very reliable. Maybe one of those companies should do the next opinion poll on the TVA.

Under “Jobs and Capital Investments” there are no sources shown for any of these figures so they all must be questioned. And “Economic Development Highlights” equally are suspect.

In a two month period (which period?) is claimed “$642 million in total investments, 4,300 jobs retained, and 500 jobs added”. There is no source for these figures especially suspect is the “4,300 jobs retained”. Looks like sky hook estimates to me.

The chart titled “Capturing Fuel Costs” depicts far too much information to be understandable. There is no narrative explaining it; Mr. McBride even wanted to know what it meant. That question alone shows that TVA has some kind of different motive in mind. This appears to be a kind of “shuffle” which is not explained very well by TVA staff.

The remaining charts are just about as unintelligible. If TVA were clearer in why it is doing things, the real reasons why, then maybe some of their initiatives might be palpable. Right now, all of their moves remain suspect.

Ernest Norsworthy

*These charts are good examples of “How to Lie with Statistics”, written by Darrell Huff some 50 years ago. This small book is suggested reading before looking at any graphical charts or figures provided by the TVA.


TVA FOIA on Green Power Switch continues

Ms. Denise Smith
TVA FOIA Officer
Tennessee Valley Authority
Knoxville, Tennessee

February 24, 2011

Dear Ms. Smith;

Please be advised that the information requested through the TVA FOIA will be used in a commercial venture, namely, the publication of much of it in a forthcoming book about the TVA.

I would be happy to send you a copy of the chapter headings of that book and a picture of its proposed cover. At this point it is estimated the final number of pages of the book will be between 300 and 400 pages. It readily will be available on the Internet upon publication for a sales price not yet determined.

Hopefully, this will be sufficient reason to proceed with my FOIA request concerning information from the TVA OIG’s office and to waive the proposed $1,000 fee. To speed up the process, a search of only the past five fiscal years would be sufficient to my needs so long as they coincide with the CRS certifications time frame.

Also, I would appreciate a response to the remaining items on my original Green Power Switch request stretching back to last June which deal with financial data of the GPS program.

Thanks for an early response.

Ernest Norsworthy

Metro Pulse – my comment on Held article

Metro Pulse comment on Held article
February 21, 2011

There is such obfuscation, misguided and erroneous information in Mr. Held’s article that is difficult to put in perspective what he has said. The first point is “where is he coming from”?

Well it appears he’s representing a “street organizer’s” viewpoint and with the exception of a few benign comments from seemingly opposing positions on “green” power, he is just another ideologue aping our major domo street organizer in Washington.

He apparently knows nothing of the history of the program which he uses as the title of his piece, “TVA’s Green Power Switch?” omitting anything about the current status of that fraudulent program.

TVA is very reluctant to release any information about the finances of the Green Power Switch program. In 2010, TVA spent over $500,000 more than expenses to run that program which immediately should be abolished. All funds TVA has received under the imaginary “blocks” of electricity also should be refunded for the simple reason that TVA has fraudulently implied that Green Power Switch moneys go to “green” projects or programs; they explicitly go into TVA’s general power mix and are not allocated specifically to any green program or project.

This is like donating money to your grocery store because they’ve done such a good job keeping their grocery carts in good repair. Most feel like they pay enough for their food supplies already.

So far, the TVA Office of Inspector General has refused to provide GPS program certification information as requested through the TVA Freedom of Information Act (FOIA). This certification is required from an independent certifying agency before TVA can post a “Green Energy” logo.

My original request for information on the Green Power Switch program began in June 2010 in an attempt to find out how and where the GPS money was spent. I have received only the smallest bits of information so far. My second FOIA request specifically was for the records on TVA’s OIG “Green-E” certification and the correspondences between TVA OIG and the independent certifying agency. That agency is perfectly willing to provide me with that information but the TVA OIG has so far refused to divulge it.

This is an ongoing battle between a federal agency, even though required by federal law, and the public to obtain pertinent data about TVA. TVA has been very uncooperative and at this point, it appears TVA will continue its refusal unless required by a higher court.

Check with your federal representatives on this for their opinion.

Ernest Norsworthy

TVA nuclear – is it “more or less” safe?

TVA nuclear – is it “more or less” safe?
February 20, 2011

Whoo Boy! Count me out of the arguments about the technical nuances of nuclear power. But here are some things I do know:

n Nuclear reactor power never has been “human” safe enough. We haven’t even figured out a safe way to dispose of nuclear waste, a problem plaguing the industry from the start.

n My first understandings of the huge potential for human destruction came when two atomic bombs were dropped on Japan which effectively ended World War II.

n Military training in Chemical, Biological and Radiological (CBR) warfare convinced me to be very wary of the inherent dangers of them all. Nuclear proliferation has been of national security concern for at least 60 years; rogue countries such as Iran and to some extent Pakistan are of constant concern. Israel is caught in the middle.

n TVA does not have a very good record of management and operations of nuclear reactors, a “cheap” source of “clean” electricity in the Tennessee Valley as claimed. TVA is grossly wrong on both counts. Ratepayer debt for ill conceived plans for 17 reactors in the 1970s continues to be a major financing problem. And the 1975 fire in a Browns Ferry reactor control room causing a near meltdown haunts not only TVA but the entire nuclear industry.

n With all of the rules surrounding nuclear activities for commercial use, TVA has fared badly in its management of existing plants and for the one remaining unit under construction, Watts Bar Unit 2. Suddenly, TVA “fired” its Iranian born nuclear construction engineer and offered only the barest of explanations. “All we’re saying is he’s no longer with us.”

Divorce documents reveal a quite different story. He fraudulently withdrew a large sum of deferred salary payments and sent $600,000 of it through a bank in Canada to Teheran promising more. If that was not suspicious enough, TVA failed to take aggressive action when they knew about his fraudulent act. He appears to have violated Section 21.(c) of the TVA Act which states;

“Any person who shall receive any compensation, rebate, or reward, or shall enter into any conspiracy, collusion, or agreement, express or implied, with intent to defraud the Corporation or wrongfully and unlawfully to defeat its purposes, shall, on conviction thereof, be fined not more than $5,000 or imprisoned not more than five years, or both. [48 Stat. 68-69, 16 U.S.C. sec. 831t].”

n I have been told by an eyewitness how lackadaisical TVA can be in operating nuclear reactors. In one instance, a nuclear reactor operator allowed a clean up person to “shut down” a reactor; all kinds of holiday decorations were allowed in the control room. The person who told me of these instances later was forced into early retirement by showing him a hangman’s noose in his control room desk at a coal-fired plant. He reported safety infractions and was not a “team” player.

n The Nuclear Regulatory Commission repeatedly has warned TVA of safety violations. I do not believe possible that the existing culture of the TVA will ever permit the TVA from operating its nuclear facilities with maximum safety.

n For a hair raising account of some earlier TVA nuclear escapades, see the Fortune Magazine article of October 27, 1986.

n Hundreds of U.S. submarines and other Navy ships are nuclear powered. They should be available from FEMA for emergency electricity failures. We know the Navy knows how to operate them despite TVA’s naval involvement mentioned in the above article.

n TVA cannot operate much longer in its stressed financial status of being a producer of “cheap” electricity while serving as an experimental arm of the U.S. Government and requiring billions of dollars in grant money. TVA ratepayers will not continue paying for many of TVA’s frivolous ventures into vague “out there somewhere” programs such as the overspending of more than $500,000 of ratepayer funds on their Green Power Switch program. A FOIA request is pending for that answer. Stay tuned.

Ernest Norsworthy