Concept of turning TVA into a private utility – Part 3
December 13, 2015
Shocking as it may seem, I think it is feasible to turn TVA into a private utility quickly. To be sure we are not confusing the two separate entities; let’s call the new corporation “Valley Energy” or VE for short. (This can be changed later.) The administration has stated that when federal agencies like TVA lose their usefulness, they should be abolished.
No better way to do this than to follow TVA’s desire to become a competitive utility in the marketplace. They claim that TVA is self-sufficient; it needs no help from congress or the administration.
In order to receive all of TVA’s assets, it must also be responsible for all its debts. It’s funny how TVA has been getting away with that clause in the TVA Act of 1933 that expressly states that the federal government does not guarantee any of TVA’s indebtedness. The lending agencies apparently do not believe what the Act clearly says; TVA also clearly states that any loans are backed by the income from TVA’s ratepayers. But it is a moot point when TVA is privatized.
Under the new setup ratepayers will pay their individual light bills directly to VE, not to any intermediary cooperative. In such cases, the ratepayer will receive two bills; one for electricity and the other for the operation of the cooperative. This resolves the sticky problem of past due accounts which now become the problem of VE. This makes clearer the path from user to the new utility. There is an estimated 4 million ratepayers serving about 9 million users in the present TVA territory. TVA territory follows a meaningless route including river tributaries.
When the new corporation is defined by state and local borders, the salability of chunks of assets becomes easier. As part of the 7 sovereign states which comprise the present TVA territory, it would seem logical to sell off those non-profitable parts of the old TVA such as the small parts of Virginia, Georgia and perhaps Mississippi or Kentucky. By concentrating on the core parts of what was the old TVA, the new company can focus on profitability. That’s what makes the difference between TVA an VE, the profit motive.
More to come as we explore the change of TVA and its sustainability as a private utility.
Concept of privatization of TVA – Part 2
December 12, 2015
Of the many changes from the old TVA to a private company, we must start with a solid base, hence a legal foundation in each state. In setting up the new corporation, governors of the seven states must appoint a representative that is authorized to act in the governors’ name in establishing the new private electric utility in their state.
Step 1 – A single representative from each of the seven states appointed by governor;
Step 2 – Temporary commission of seven members to serve until the new corporation is formed. Roberts Rules of Order shall be used in all official meetings. Board Members and the CEO will be named by this commission.
Step 3 – State laws pertaining to TVA, a federal agency, shall be considered moot and non-operative.
Step 4 – Tax-setting authorities in each state will determine the rates for the new corporation by determining amounts of power sold to the group of 155 utilities and for those directly served by the former TVA. Over all, the combination of taxes to the states and local governments should far exceed the present payment of 5% presently charged as payments-in-lieu-of taxes particularly since the 5% excludes so many items chosen by TVA. The amount of the PLOT to each state and locality is based on how much electricity is used; a particularly unfair distribution of PLOT.
Step 6 – Restructure the new corporation to fit into a profit-making mode, including reviews of every operation of the old TVA to determine if it costs more than it is worth. It is expected that the new electric utility will shed many operations that are eleemosynary in nature or functions that do not relate to the production and sale of electricity.
More to follow in the proposed dissolution of TVA…
Concept of Dissolving TVA
December 7, 2015
Since TVA tries to be like a private utility, why not turn everything over to them and completely remove themselves from the federal government? TVA could change its name to “Tennessee Valley Energy” (TVE,) wholly owned by shareholders and in no way connected to the federal government. If this sounds shocking, well, it is as revolutionary as was the TVA Act of 1933.
This means striking down the TVA Act completely; as if it never existed. Now the conversion of TVA is another matter. Can TVA be eliminated in one fell swoop? A clean and massive break probably is the best. First, TVA has to be restructured into a private, shareholding entity. A CEO and board of directors must be established to clearly identify TVA as no longer part of the federal government.
All of the land and properties owned by the government controlled TVA will be transferred to the company called “Tennessee Valley Energy” or some such other name, a private company. When that occurs and when the new company is duly formed, the new company must be recognized as a legitimate utility by each of the seven state Public Service Commissions who approve rate changes proposed by the electric utility serving the state.
Those appointed or elected separately in each of TVA’s seven states will assume the regulatory role of electric utilities, not by the federal government. If one or more states in the seven-state TVA territory have not organized with some kind of public service commission then that state’s official governing body must recognize the new company as a legitimate utility doing business in that state.
State laws authorizing TVA will henceforth become moot and inapplicable. The proceeds from the “payments in lieu of taxes” will cease unless the new company wishes to continue them, which is unlikely since the company will be required to pay state and local taxes.
This is Part 1 of a series on the privatizing of the present TVA. Note that the administration said that when an agency like TVA loses its usefulness, it should be eliminated. This proposed method of TVA’s dissolution is one of many alternatives to accomplish this; however, a quick, clean break from the federal government would seem to accomplish the administration’s goal.
Your comments or suggestions are welcomed.
Some questions for TVA Chairman Ritch
December 5, 2015
“TVA Chairman Joe Ritch acknowledged that TVA’s executive staff is well paid by government standards. If correctly quoted in the Chattanooga Times Free Press and I believe it is correct, I have some questions for Mr. Ritch:
- “(You) acknowledged that TVA’s executive staff is well paid by “government standards.” As a federal employee yourself, by whose standards should TVA operate under outside the scope of “federal standards?” Please explain (a) the methods of TVA operation and for any differences in “federal standards” that apply; (b) Does it not cause pause that TVA’s CEO is the highest paid federal government employee? And (c) by what authority do you have to set the salary range of any TVA employee; by what “federal standards” do they diverge?
- But you insisted that TVA is not a typical government agency and the federally owned utility must compete with higher-paying, investor-owned utilities to keep and retain top talent. Acting like an investor-owned utility which TVA is not, please cite the legal authority justifying run-away salary increases.
- Would you entertain the idea of a complete breakaway from TVA turning it into a stockholding private utility? TVA is claimed to be “self-sustaining” anyway.
Your answers to these questions with any comments you may have would be greatly appreciated.