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.