TVA – puny outlook at best
May 6, 2013
Sounds like even with a cheery note at the end of the conference call on Friday, May 3, CEO Bill Johnson and CFO John Thomas did not make the sale. With many mumbo-jumbo answers by John Thomas, many comparisons that made no difference, the upshot of the entire conference call was moaning about declining sales, sales that cannot sustain TVA costs.
TVA reflects the national economy and the overall economy is trending lower. Why is a shift so important to TVA? There is no “wiggle room” for TVA; it spends all it takes in and relies more and more for the ever-increasing debt to fill the gap. Borrow more, short term or long and it is ultimately the same thing to TVA
Nevertheless, more importantly, TVA’s ratepayers are faced with probable ever-increasing electricity rates, as the mandated $30 billion borrowing cap looms closer. TVA claims their production assets do not exceed their debt, however that cannot be stated with certainty; TVA does not really know what the market will bear. Anyway, bids on TVA’s money producing assets are subject to negotiation.
TVA has proved it is not very good at forecasting (there is no penalty for doing it badly) and has most of the present debt to show for it. The prescient forecaster came from a foreigner, Alexis de Tocqueville, a French political writer and philosopher, effectively pegged what America would be 150 years later.
Tocqueville, however, did not envision the anomalous TVA. However, he did write about the evils of socialism and how it deprived citizens of their freedom. So, if we open our eyes and ears to how America operates, there should be no problem in liquidating TVA.
Anyway, the upshot of the PR conference was to bemoan a lack of sales and the need for more money. Doesn’t seem like the TVA “model” Chairman Bill Sansom envisioned is working out too well.