TVA – in the crosshairs again
March 26, 2013

So again, we come to another crossroads concerning the Tennessee Valley Authority. There have been so many “crossroads” and opportunities missed that one wonders if most citizens couldn’t care less about the ever-heating water TVA ratepayers are in, like the frog not recognizing he has already been cooked.

This latest crossroad comes with Pres. Obama’s renomination of Marilyn Brown to the TVA board. His first renomination failed when both Tennessee senators objected and blocked it earlier this year. Brown becomes the “whipping boy” for the administration, which advocates climate control and a cap on carbon both of which she agrees with through “energy efficiency.” This is a buzz phrase meaning more government control over the lives of nine million citizens in the TVA territory.

When decisions about their use of electricity emanates from Washington, it is evident that government knows best; go ahead and pay a fair share for your electricity for the good of all. This, of course, is anathema to the way American’s feel about their government. And that sets up a battle between the Obama ideology and the basic principles that drive American citizens; entrepreneurship, self-reliance and competitiveness.

The TVA is not representative of any of these and is, in fact, clearly anti competitive. TVA has driven competition out of the TVA territory by reducing rates unsustainable by private enterprise. Despite these incursions, TVA has been unable to match or meet present electricity rates of some surrounding utilities.

One reason for this is that TVA has been used as a vehicle for behavioral change such as the incentivized use of wind and solar energy. Some wind-powered electricity comes to TVA via subsidies from the Dept. Of Energy to the suppliers. This clearly is a violation of federal law that prohibits TVA from receiving congressional appropriations although indirectly.

As a federal arm of the administration, TVA has the power of eminent domain, the forcible taking of private property, among other advantages. Just the underlying threat of eminent domain has been a powerful tool unavailable to those standing in the way of TVA. Most significant is the anti-competitive position of TVA; it talks “competitiveness” but acts as a federal power; it has effective electric rate control over 80,000 sq. miles of southern land and all of its communities in seven states. TVA has accumulated debt of $30 billion, which is the responsibility of ratepayers, not taxpayers.

TVA presents a basic problem of the agency since 1933. Should TVA direct the planning and distribution of electricity for 9 million citizens thru the central government or should the market-driven free enterprise system do it?

The battle-lines have been drawn (again.) The Congress is in a position to get the South on track again with common sense legislation for a free people; to move out of the way and let the free-market decide which is the better way.

Marilyn Brown just happens to hold the Obama ground of more government-directed behavioral change and the rest of most of us who want less government, particularly of the TVA type, and to give that sovereign ground back to state control.

Ernest Norsworthy
Limited Government

TVA nuclear – will it ever end?

March 25, 2013

In a one syllable word, “no” and that is by choice and not by chance. Although chances are that there never will be a disaster like the tsunami that crippled Japan’s Fukushima Dai-ichi nuclear plant, the Nuclear Regulatory Commission continues to use it as a benchmark for safer nuclear plant construction and operation.

Does this mean lower cost of operations? Of course not, increases in these costs making our nuclear reactors safer have multiplied construction and maintenance costs by ten or more in some cases. The Ft. Calhoun nuclear plant in Omaha, Nebraska that was inundated by Missouri River floodwaters several years ago may never become operational again. Even so, the danger of the nuclear fuel or fuel waste will last a thousand years.

Nuclear proponents fail to mention long-term peripheral costs, just the costs of construction and operational maintenance. The upshot of it is that nuclear power is more costly than any present energy source including solar, wind, biodegradable, coal, natural gas, or hydro.

Nuclear “kicks the gas can down the road” for 500 generations and we unwisely leave those costs to them. Nuclear still incorrectly is considered the cheapest form of energy.

TVA over and again has proved how much more nuclear energy costs by a $20 billion debt owed by TVA (oops, I mean (ratepayer’s) for failed nuclear fits and starts began 30 or 40 years ago. And the question must be asked, “If nuclear is so cheap, why hasn’t industry picked up the subsidy slack and started building them for profit?” Nuclear simply is a poor risk that investors avoid.

The risk is not contained in a risk/reward equation alone; the danger to humans is constant and subject to becoming more dangerous at any moment for a thousand years. Somehow the so-called cheap electricity never comes; cooling water is too hot, disposal of fuel wastes, a problem for 50 years, never has been resolved and we seem no closer to the answer than at the start; repairs get more expensive and more extensive to make reactors safer. The nuclear danger is never farther than a moment away. Can generations of humans be relied on to never make a mistake or to keep an ever-watchful eye on our nuclear disasters in the making?

TVA should be moving like Germany toward the complete cessation of the manufacture of nuclear energy. Maybe in some future year the nuclear waste problem will be solved. All we are doing now is exacerbating the problem by adding more and more ever potent waste.

Nevertheless, nuclear disasters will come as sure as this is written and the sun rises tomorrow. We have to stop fooling ourselves that nuclear is cheap and safe when it is just the opposite.

Ernest Norsworthy

Limited Government

 

  

TVA – fixing the unfixable?

March 17, 2013

 After 80 years of experiments, Congress has has yet to see that when the federal government tries to duplicate what private industry does, it is bound to fail. Of course, the Tennessee Valley Authority was the Great Experiment in the 1930s. It boggles the mind to see how many iterations TVA has gone thru and still it has been unable to replicate industry results. There is good reason for this…

 TVA says it is “competitive” in the utility business but it is a federal agency, and by its very nature, it is not supposed to compete within our free enterprise system. FDR said something about being fearful and the Congress was also afraid and the New Deal was born; many of those programs later were ruled unconstitutional and Congress for the most part, let them remain so.

 Not so, for TVA, which today provides electricity to about 9 million customers in the southeast blanketing parts of seven states in violation, I believe, of their state sovereignty. The weaknesses of those states are now much improved since the ‘30s and they should recoil from further federal domination. Withdrawal from the requirements of the TVA Act could be done by small changes in state laws, which in effect would make competitive electricity once more available to their citizens. The collection of taxes would again be controlled by the individual states reflecting state requirements, not an artifically derived so-called payment in lieu of taxes.  

 The monoply of the TVA has to be broken to enable free enterprise to again florish in the South and to rekindle the then budding electric utility business of the 1930s. The dominance of federal presence for such a long period has altered the culture of the region from one of independence, which was growing, to a stunted dependence on the federal government.

 Because of the inveiglement of TVA in almost every facet of of southern civil society, looking at the consequences of TVA are hard to swallow. Besides racking up an enormous debt of $30 billion, which presently is hung around the necks of TVA ratepayers, not taxpayers, it is hard for them to see the looming rate increases that must follow. And a look at the dichotomy between the government and private business is just plainly ignored. The revenue to TVA annually is about $10 billion and that money is coveted by the federal government. If that same amount were instead distributed thru the normal business process, each of the states involved would profit for their own citizens instead of pouring it into the amorphous black hole of the TVA.   

 TVA proudly proclaims that it receives no congressional appropriations, that is, it gets no taxpayer money and relies only on income from money received from ratepayers. That is not true if TVA’s backdoor financing is considered the responsibility of American taxpayers. TVA, like the rest of the federal government, seems unable to restrain itself from spending money, as they say, they are unable to repay.

 TVA cannot and should not be “fixed.” It is not a hard choice to make between the federal government and private business; the Constitution is abundantly clear on the issue of electricity control.

 Ernest Norsworthy

Limited Government

 

 

   

TVA – “taxation” without much representation

March 9, 2013

 What is more certain than taxes? Of course, it is more and more taxes. And TVA has screwed up the taxing system in the South big time. When states and communities have to depend on artifically derived taxes from government, you know there is trouble ahead. Tennessee is hit hardest by TVA’s so-called payments in lieu of taxes.

 Not only do these so-called taxes mess up the tax base for communities when TVA changes its payments to them, the amounts of money TVA doles out depends on how electricity is selling in Mississippi or the western tip of Virginia and the rest of TVA’s vast collection area.

 TVA’s plan from the start was to provide these so-called in lieu of tax payments as a kind of “protection money,” money to keep the people from complaining too much by providing them with subsidized electricity, to keep the politicians happy with “slush funds,” as former Ala. Governor Riley called them. This scheme has resulted in endless local discussions about who was to receive TVA’s “free” money that has no strings attached; there is no direct connection between the money they receive and the locality or state.

 Alabama is an example of how brabbling over this money turned into a royal battle between the dry counties, which received no money from taxed liquor revenues of the state controlled liquor stores, and the wet counties that did. Demanding no less attention than from then Gov. George Wallace, George designated a part of Alabama’s share of loot from the TVA to the dry counties, which had no TVA supplied electricity. After all, they received no money from liquor taxes, poor things, so George just dipped into the TVA “free” money. I believe to this day that he pulled off that trick in a spiteful way against the feds. This was a sore spot for decades in Alabama.

 Anyway, a few years ago, because the cities and counties in north Alabama hollered loudly that they were being deprived of their “rightful” TVA money, Alabama changed its law to feed the dry counties from the General Fund and to “give back” the in lieu of tax money to the northern tier of the state, TVA country. The fight continues over who shall get the money that TVA designates is Alabama’s share.

 These kinds of arguments are found all over the 80,000 sq. mi. TVA territory. And as the amount from TVA continues to shrink, the arguments become more intense. This warping of the tax structures of the seven states and many cities and counties involved has left them struggling with uncertain tax income futures. Dozens of legitimate taxing authorities depend on the machinations of TVA’s incorrect method of taxation.

 TVA has caused irreparable damage to southern states taxing entities, which by their very nature are separate and different. Everything fitting the same size is the TVA model. Of course, the solution is to liquidate TVA’s assets and to let normal taxing authorities use their best political judgments. How much states, counties, and local goverments have skewed their present “tax forgiveness” for businesses because of a dependance on TVA’s so-called payments in lieu of taxes is unknown. Likely a considerable amount, it is a subject worth exploring.  

 Ernest Norsworthy

Limited Government

 

TVA – does it own the news?

TVA – does it own the news?

March 7, 2013

 Another writer in another newspaper questioned whether NASCAR owns the images of that fiery crash at the Daytona 500 race, which brought up the question of who actually owns any of the news. For example, I own this article, yet it is freely available to the public. From what I can see, my writings have a varied and wide distribution; I am happy about that because what I have to say, I believe, is relevant to the times.

 The point is this: Almost everybody has an opinion about endless things and many, like me, write about what is interesting. In my case, it mostly is about government. Those who approach a subject, as journalists are supposed to do so with objective balance, are obliged to tell both sides of a story to remain credible, a high mark.

 One such journalist who easily reaches that mark is Dave Flessner at the Chattanooga Times Free Press. Dave is becoming a rarity these days because most other so-called journalists present their own point of view or keep quiet another’s and do not reveal the truth. To be fair, most news media cannot afford the calibre of Flessner on their staff.

 Major cutbacks in print media circulation and advertising have called for major belt tightening, unlike our bloated federal government. Newspapers have had to rely on national media reporting as a cost reduction effort. This content, of course, short-changes local readers, which is why many readers subscribe in the first place.

 After many years of following the media in discussions about the mammoth TVA, extremely few media post anything, local analysis, commentary, except perhaps what the TVA expounds, leaving out the significance of the effect TVA is having on them. There really is not that many key media centers in TVA’s territory; Memphis, Nashville, Knoxville, and Chattanooga in Tennessee and three in north Alabama; Florence, Decatur, and Huntsville, the latter known for Redstone Arsenal and BRAC. (What to do with surplus federal employees from closed federal operations?)

 These three cities are the most federally dominated in all of Alabama. TVA in Muscle Shoals, Ala. was the foundation for the federal TVA intervention program and now TVA spans a great swath of the South from the western tip of Virginia to middle Mississippi, covering about 9 million people. Many lines of political jurisdiction are crossed in the process.  

  In my opinion, while TVA exists it does not come under the cloak of constitutionality. In some eyes, it is heretical to speak ill of TVA and others see TVA for what it is, government run wild, and a federal agency out of control that is usurping the rights of the people.

 Who owns the news about TVA? Certainly not TVA.

 

 

   

TVA and the Roger Taney Supreme Court decision (A comment in the Tennessean 3-6-13)

Isn’t this about where our Constitution began to be discredited by black citizens? Taney is remembered for a grossly misconstructed Supreme Court decision yet, he seemed to exemplify exactly the opposite in his personal life.

 In times of turmoil, we sometimes make grossly mistaken decisions that affect a great many people and circumstances for a very long time. Such is the case of the once glorified Tennessee Valley Authority, which as a federal agency promised to rid us of the Great Depression symptoms.

 Yes, fear was in the air; any plan of hope will do, shove private enterprise aside, and let the plan from Washington begin. Temporarily, TVA did provide some jobs (my Dad actually worked on electrifying one of the dams) but it seemed that FDR had another plan in mind for TVA to “electrify America.” Congress squelched the idea of so-called “little TVA’s” however; TVA itself has grown into a behemoth of epic proportions and mostly without supervision or oversight by Congress.

 When the law was changed so that TVA became “self-sufficient” it just opened the backdoor to exotic financing, debt financing that nears $30 billion dollars today.

 Income to the federal TVA now is about $10 billion annually and by 2015 the total will reach $500 billion (is that a half-trillion dollars?) for the preceding five years. That is a huge amount of money going for federally directed projects; when TVA is liquidated those moneys will go to our free-market economy coffers instead of supporting the federal government.

 Yes, the Taney decision was a horrible mistake but in terms of dollars taken from the nine million citizens in the South for federal purposes, TVA is by far the winner.

TVA – is it really constitutional?

March 3, 2013

If ever the Supreme Court looks again at the TVA Act of 1933, it will see how wrong their decision was in approving the existence of TVA. The Court never ruled on the key issue under which TVA now operates. Since TVA is a government competitor in in a free market economy, it flies in the face of the essence of our Constitution.

Ruling narrowly on a contract issue and never reaching the core point, the Court succumbed to the will of FDR and went along with this New Deal program although many others were later ruled unconstitutional. Supreme Court Justice McReynolds’ dissent in Ashwander vs TVA rings as clear today as it did in its ominous warning from the past.

He spoke plainly when he accused TVA for dissembling and pretending one thing but claiming another. Ironically, that trend found throughout TVA’s sullied existence, belies many of TVA’s motives.

The trial court ruled TVA unconstitutional and on appeal to the circuit court, ruled in its favor. The Supreme Court had to decide one way or the other whether TVA was legally granted the authority to pursue the purchase of utilities of the Commonwealth & Southern Corporation’s subsidiaries in Tennessee, Alabama, Mississippi, and Georgia.

In McReynolds’ dissent he proffered;

The trial court made findings of fact which fill more than sixty printed pages. They are not controverted, and, for present purposes, are accepted; upon them the cause stands for decision. Plainly they indicate, and that court, in effect, declared, the contract of January 4th was a deliberate step into a forbidden field, taken with definite purpose to continue the trespass.

Further,

The record leaves no room for reasonable doubt that the primary purpose was to put the Federal Government into the business of distributing and selling electric power throughout certain large districts, to expel the power companies which had long serviced them, and to control the market therein. A government instrumentality had entered upon a pretentious scheme to provide a “yardstick” of the fairness of rates charged by private owners, and to attain “no less a goal than the electrification of America.”

And TVA said,

When we carry this program into every town and city and village, and every farm throughout the country, we will have written the greatest chapter in the economic, industrial and social development of America.

To read the entire dissent of Justice McReynolds and the ruling by the Court, see http://www.law.cornell.edu/supct/html/historics/USSC_CR_0297_0288_ZX.html

Why his dissenting vote to affirm the TVA law is haunting today is that he was so correct in his opinion some 78 years later. His perception that it was just a ruse by TVA to do just what it has done to the detriment of millions of citizen in the Tennessee River Valley makes his dissent even more poignant.

Justice McReynolds opined then and it is even more critical today to acknowledge that the breach between a competitive, free market economy and an ever-growing government dependent culture is at its widest.

Even a quick perusal of the TVA Act will show how misdirected TVA has become, how mismanagement has led ratepayers to a $30 billion debt. To claim that TVA is “self-supporting” is ludicrous and was not even considered in the original TVA Act. Early on, TVA used its power to force “competing” utilites out of business because of TVA’s low and subsidized electricity rates.

Is the TVA Act unconstitutional? It has been unconstitutional from the very start.

Ernest Norsworthy

Limited Government

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