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White House ‘strategic review’ of TVA may put agency up for sale

May 12th, 2013 9:00 am by Hank Hayes

White House ‘strategic review’ of TVA may put agency up for sale

While closing in on its 80th anniversary, the Tennessee Valley Authority is undergoing a “strategic review” from the White House Office of Management and Budget (OMB).

That review was called for by President Barack Obama, who indicated he is considering selling the agency when he submitted his budget proposal to Congress last month.

“We’ll participate in the review. ... We’ll do whatever OMB requires,” TVA spokesman Travis Brickey said during a visit to the Times-News with other TVA officials. “If we were a private company, strategic reviews would probably happen more often.” 

The Obama administration suggested TVA’s anticipated capital needs are likely to quickly exceed the agency’s $30 billion statutory cap on indebtedness.

“Reducing or eliminating the federal government’s role in programs such as TVA, which have achieved their original objectives and no longer require federal participation, can help put the nation on a sustainable fiscal path,” Obama’s budget proposal said. “Given TVA’s debt constraints and the impact to the federal deficit of its increasing capital expenditures, the (Obama) administration intends to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divestiture of TVA, in part or as a whole.” 

TVA called the proposal “unexpected language.” 

The idea of selling TVA didn’t sit well with U.S. Sen. Lamar Alexander, R-Tenn.

“Is the Obama administration really going to sell TVA?” Alexander asked last month at a subcommittee hearing on the Department of Energy’s budget. “You might suggest to the president’s advisers that if he’s going to sell the agency that produces tritium — all of the tritium for our nuclear weapons system — he might get some advice from the Department of Energy before he does so.” 

Alexander previously said selling TVA was “one more bad idea in a budget full of bad ideas” that Obama has proposed to Congress.

TVA receives no federal taxpayer subsidy, and Alexander said that after deducting its debt, “selling TVA would probably cost taxpayers money” and “could lead to higher electricity rates” for Tennesseans.

Federal appropriations for the TVA power program ended in 1959, and appropriations for TVA’s environmental stewardship and economic development activities were phased out by 1999, according to the agency.

TVA now funds its operations primarily through electricity sales and power system funding.

Brickey said TVA’s debt, more than $25 billion, amounts to .a very small percentage of the federal government’s $16.2 trillion deficit.

TVA, now the nation’s largest public power provider, was part of President Franklin Roosevelt’s “New Deal” to lift the nation out of the Great Depression in the 19030s.

Roosevelt asked Congress to create “a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.” 

He signed the act creating TVA on May 18, 1933.

“The thought was also the quality of life would be improved throughout the region,” TVA Historian Patricia Bernard Ezzell said of the agency’s creation. “There were few jobs, schools, and there were health issues in the region before electricity. TVA’s stewardship is still relevant today. ... TVA was founded on the principle of resource management. We had all these challenges in the 1930s and instead of only focusing on flood control, folks were smarter than that.” 

TVA’s power service area includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia, and serves more than 9 million people. TVA sells electricity to 155 power distributor customers.


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