A thank you note . . .
As an Alabamian, I have an affinity toward North Alabama as I do to the rest of the state. It all began in Montgomery; it’s in my genes, my heritage, my lineage extending many, many generations.
In a way, my generation could be called of the “New South”, of throwing off the shackles of that part of the South that was intolerant and oppressive toward the black race. Not all of that earlier culture was so inclined, myself included.
I happen to believe in equality in every aspect but preferential treatment is abhorrent to me. The entire basis of the successful market-driven entrepreneurial society we call America is opportunity, not handouts.
Of course, there are some, very few, whom we should and must assist due to no fault of their own. The rest are free to take advantage of all of the opportunities this great nation offers.
Some will succeed (according to one’s own definition of success) and some will fall because of their own accord. It is these we must give a hand, to “bootstrap” back up so they may re-enter society as happy, productive members.
America cannot tolerate a permanent underclass, of one able but unwilling to participate. Simply put, it is because it is anathema to the great American experiment. Unfortunately, our prisons are filled with a fraction of those who do not agree with the basic standards of American civility.
North Alabama is different, as is Birmingham, Montgomery or Mobile. Anchored by a river that runs through it, it has not been able to realize some opportunities found in other parts of the state.
Sadly, the dominance of the federal government in North Alabama has so skewed its economy with its fits and starts that there is no solid base to build upon. When, for example, the TVA decided to locate its main operations in another state, it did not leave a viable, energetic populace with marketable skills to cope with changing circumstances.
As you know, I have written much about the TVA and I have posted many times on the Times Daily forum. Unfortunately, one of my latest posts was arbitrarily removed, I believe, because of a difference in political positions. And not for any of the reasons listed in its disclaimer.
I am well aware that the Times Daily newspaper is owned by the New York Times. And I am supposing someone at the TD or the NYT who disagreed with my politics decided to “disappear” my post. I’m not quibbling with their decision (it’s their nickel) only to the extent that if a “free press” cannot tolerate opposing views, it is a misnomer.
I have enjoyed your pummeling me, really, and I hope we both have gained something from our discourse. I know I have.
I still will be publishing my comments on the TVA on my website, Norsworthy Opinion (http://norsworthyopinion.com )
And occasionally on Norsworthy at the Shoals (http://norsworthyattheshoals.blogspot.com )
My next article will be a call for the two congressional oversight committees for the TVA to investigate the recent huge pay raise for the TVA CEO and the huge October rate increase, among several other items.
Sincerely,
Ernest Norsworthy
emnorsworthy@earthlink.net
Thursday, November 6, 2008
Thursday, October 30, 2008
TVA strewing seeds of another Great Depression?
Astraddle two centuries of tumult in the American society, I am in agreement with much of what the “old-timers’” have to say about the Great Depression.
Being there and living through it only now reveals just how different that time was compared with today. The difference is almost incomprehensible in its relevance; the Depression years were nothing like today’s circumstances.
If the smell of fear was in the air then, I never smelled it. I didn’t even realize the level of poverty we lived in; being fearful of “fear itself” (that meaningless FDR slogan) was not practiced by anyone my family knew. But we all lived frugally because there was not much money, barter was much in use.
The small farm near Prattville, Alabama provided almost enough sustenance to our family of five with vegetables, apple pears in the fall and corn for both us and “Crip” the crippled mule. Crip and I got along famously; he taught me how to plow.
While I learned to appreciate hard work and its many benefits such as using a cross-cut saw for cordwood, shucking corn to eat for us and Crip and fodder for him in the winter. Chickens were “free range” and they and the dogs ate the table scraps. I learned how to do it, I know what it actually looks like when a “chicken runs around with his head cut off” which is analogous to an out of control agency. “Wringing” was another option and not bloody at all.
Mother’s wood stove baked the most delicious biscuits and helped warm the house. No electricity or running water or inside “facilities” in our old farm house. Same as in a couple of share-cropper’s houses on the farm. But there was not enough arable land to do much sharecropping. Water was drawn from a well in the yard but had to be toted up a hill to the house.
Saturday mornings meant wash time of both clothes and bodies. Two large black cast iron pots in the yard were heated, one to near boiling soapy water (Octagon was used most and on the scrub board), the other cooler pot was for rinsing. Bathing was inside in a large galvanized tub.
The clothes washing procedure was quite simple, dirty clothes filled one pot and a long stick was used to poke the clothes until they were clean enough (a magical time unknown to any but Mother) and the same stick was used to transport the steaming hot clothes to the rinse pot. Next came the clothes hand-wringing and hanging them to dry on a clothesline using wooden clothes pins.
My father was very handy with tools besides being a functioning genius and got a contract to build a huge drum sign for the brand new Prattville office of the REA (Rural Electrification Administration, 1935). The letters were a jagged REA in neon. I call myself helping him build it. He used a very small Delco AC generator for his power tools. Then he ran some wiring to a few hanging light fixtures in the house but the result was a 60-cycle flickering of even a couple of light bulbs. That was in 1939 or 1940 and the depression still was going strong.
The war already was raging in Europe and Dad went to work at Gulf Shipbuilding in Chickasaw, Alabama, building Liberty ships. He was the chief electrician on their “stiff-leg” crane. We soon moved to Mobile and not long thereafter, we all moved to Richmond, California where Dad, then with Kaiser Shipbuilding, invented a device to speed up the forming of cable straps for the quickly expanding fleet of Liberty ships. He received a patent and a reward for that significant war effort.
So as I review what we lived through without a bone of remorse or feeling as poor as we were, (yes, I went barefoot to school), we survived those tough times and went on to prosper individually and as a nation.
The prolonged depression essentially was over when a wartime economy took hold in 1940 and 1941 in earnest. As America grew and prospered during the post WWII era and despite the Korean “War”, it seemed there was no end to our good fortune of a full workforce and money ready to be spent after WWII for cars, houses and every imaginable electrical gadget. Electricity was cheap, available and was begging for more use.
Many years later while visiting the Shoals area in North Alabama did I better understand the bad hand it had been dealt by the TVA. Government is fickle and makes decisions for its own security instead of for the people. TVA literally abandoned the Shoals, ostensibly the headquarters of the TVA according to the TVA Act, leaving it in shambles from my visits 40 years earlier.
TVA was and is a good example of the failure of the government to “get out of the way”. Instead of turning over its capacity to produce cheap electricity to private enterprise, the TVA instead started on a long destructive path of gross mismanagements to where we are today. Left to its own devices, the TVA has jerked millions of people around with its dogmatic rulings the latest of which has been a huge jolt of electricity rate increases of about 20 percent.
TVA’s rates are uncontestable by any state or local government within its seven-state domain of 80,000 square-miles; it is “illegal” for the millions of customers inside their 2500-mile “fence” to seek lower rates elsewhere, even just on the other side of the fence. And TVA runs its electricity through 17,000 miles of its own federal transmission lines.
State utility commissions regulate electricity rates, among other things, that come under the jurisdiction of elected officials within each state. Not so with the anti-competitive TVA, a federal government agency, which has the unassailable power to set and to collect “taxes” of $10 billion annually in the form of electricity rates.
This is money that is sucked out of every local economy using TVA electricity, money that goes directly to the federal government.
It was called socialism back in the days of FDR; today it is called, “I’m your government and I’m here to help you”. But we’re suckers for taking that sucker bait of “payments in lieu of taxes” gambit held out by a benevolent government. It’s not an inconsiderable amount, about $450 million a year and it is doled out prorata to state and local governments whose customers use the most electricity and for property owned by the TVA. And to some even who have never used a kilowatt of TVA power as far away as Illinois.
A free-enterprise structured power system would provide much more in state and locality taxes and would provide the needed checks and balances not available through the TVA structure.
The state of Alabama decided it would give 5 percent of its TVA largess to dry counties because the poor souls collected not a penny from the Alabama Beverage Control levy on liquor from wet counties.
As history professor Harvey Jackson, Jackson State University, put it in his column in the Anniston Star (10/26/08), TVA is in essence subsidizing prohibition, like it or not.
The point of mentioning the Alabama situation is to show how the TVA has inveigled its way into the far reaches of state and local government with its “bribes” in lieu of taxes.
As a longtime advocate for the privatization of the TVA, I believe the time has come to sell off its assets and to liquidate as much as possible of TVA’s overleveraged $25 billion debt.
We have seen what non-supervision of government sponsored creatures such as Fannie Mae and Freddie Mac have wrought on world financial markets, almost wrecking them. It is time to clean house of an even worse example of an agency under the direct control of Congress and the Administration. The question, the same point presidential candidate Wendell Willkie raised in 1940 is before us still.
“Do we want a nationalized electricity grid in America?” And if so, would that be called “socialism?”
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
Being there and living through it only now reveals just how different that time was compared with today. The difference is almost incomprehensible in its relevance; the Depression years were nothing like today’s circumstances.
If the smell of fear was in the air then, I never smelled it. I didn’t even realize the level of poverty we lived in; being fearful of “fear itself” (that meaningless FDR slogan) was not practiced by anyone my family knew. But we all lived frugally because there was not much money, barter was much in use.
The small farm near Prattville, Alabama provided almost enough sustenance to our family of five with vegetables, apple pears in the fall and corn for both us and “Crip” the crippled mule. Crip and I got along famously; he taught me how to plow.
While I learned to appreciate hard work and its many benefits such as using a cross-cut saw for cordwood, shucking corn to eat for us and Crip and fodder for him in the winter. Chickens were “free range” and they and the dogs ate the table scraps. I learned how to do it, I know what it actually looks like when a “chicken runs around with his head cut off” which is analogous to an out of control agency. “Wringing” was another option and not bloody at all.
Mother’s wood stove baked the most delicious biscuits and helped warm the house. No electricity or running water or inside “facilities” in our old farm house. Same as in a couple of share-cropper’s houses on the farm. But there was not enough arable land to do much sharecropping. Water was drawn from a well in the yard but had to be toted up a hill to the house.
Saturday mornings meant wash time of both clothes and bodies. Two large black cast iron pots in the yard were heated, one to near boiling soapy water (Octagon was used most and on the scrub board), the other cooler pot was for rinsing. Bathing was inside in a large galvanized tub.
The clothes washing procedure was quite simple, dirty clothes filled one pot and a long stick was used to poke the clothes until they were clean enough (a magical time unknown to any but Mother) and the same stick was used to transport the steaming hot clothes to the rinse pot. Next came the clothes hand-wringing and hanging them to dry on a clothesline using wooden clothes pins.
My father was very handy with tools besides being a functioning genius and got a contract to build a huge drum sign for the brand new Prattville office of the REA (Rural Electrification Administration, 1935). The letters were a jagged REA in neon. I call myself helping him build it. He used a very small Delco AC generator for his power tools. Then he ran some wiring to a few hanging light fixtures in the house but the result was a 60-cycle flickering of even a couple of light bulbs. That was in 1939 or 1940 and the depression still was going strong.
The war already was raging in Europe and Dad went to work at Gulf Shipbuilding in Chickasaw, Alabama, building Liberty ships. He was the chief electrician on their “stiff-leg” crane. We soon moved to Mobile and not long thereafter, we all moved to Richmond, California where Dad, then with Kaiser Shipbuilding, invented a device to speed up the forming of cable straps for the quickly expanding fleet of Liberty ships. He received a patent and a reward for that significant war effort.
So as I review what we lived through without a bone of remorse or feeling as poor as we were, (yes, I went barefoot to school), we survived those tough times and went on to prosper individually and as a nation.
The prolonged depression essentially was over when a wartime economy took hold in 1940 and 1941 in earnest. As America grew and prospered during the post WWII era and despite the Korean “War”, it seemed there was no end to our good fortune of a full workforce and money ready to be spent after WWII for cars, houses and every imaginable electrical gadget. Electricity was cheap, available and was begging for more use.
Many years later while visiting the Shoals area in North Alabama did I better understand the bad hand it had been dealt by the TVA. Government is fickle and makes decisions for its own security instead of for the people. TVA literally abandoned the Shoals, ostensibly the headquarters of the TVA according to the TVA Act, leaving it in shambles from my visits 40 years earlier.
TVA was and is a good example of the failure of the government to “get out of the way”. Instead of turning over its capacity to produce cheap electricity to private enterprise, the TVA instead started on a long destructive path of gross mismanagements to where we are today. Left to its own devices, the TVA has jerked millions of people around with its dogmatic rulings the latest of which has been a huge jolt of electricity rate increases of about 20 percent.
TVA’s rates are uncontestable by any state or local government within its seven-state domain of 80,000 square-miles; it is “illegal” for the millions of customers inside their 2500-mile “fence” to seek lower rates elsewhere, even just on the other side of the fence. And TVA runs its electricity through 17,000 miles of its own federal transmission lines.
State utility commissions regulate electricity rates, among other things, that come under the jurisdiction of elected officials within each state. Not so with the anti-competitive TVA, a federal government agency, which has the unassailable power to set and to collect “taxes” of $10 billion annually in the form of electricity rates.
This is money that is sucked out of every local economy using TVA electricity, money that goes directly to the federal government.
It was called socialism back in the days of FDR; today it is called, “I’m your government and I’m here to help you”. But we’re suckers for taking that sucker bait of “payments in lieu of taxes” gambit held out by a benevolent government. It’s not an inconsiderable amount, about $450 million a year and it is doled out prorata to state and local governments whose customers use the most electricity and for property owned by the TVA. And to some even who have never used a kilowatt of TVA power as far away as Illinois.
A free-enterprise structured power system would provide much more in state and locality taxes and would provide the needed checks and balances not available through the TVA structure.
The state of Alabama decided it would give 5 percent of its TVA largess to dry counties because the poor souls collected not a penny from the Alabama Beverage Control levy on liquor from wet counties.
As history professor Harvey Jackson, Jackson State University, put it in his column in the Anniston Star (10/26/08), TVA is in essence subsidizing prohibition, like it or not.
The point of mentioning the Alabama situation is to show how the TVA has inveigled its way into the far reaches of state and local government with its “bribes” in lieu of taxes.
As a longtime advocate for the privatization of the TVA, I believe the time has come to sell off its assets and to liquidate as much as possible of TVA’s overleveraged $25 billion debt.
We have seen what non-supervision of government sponsored creatures such as Fannie Mae and Freddie Mac have wrought on world financial markets, almost wrecking them. It is time to clean house of an even worse example of an agency under the direct control of Congress and the Administration. The question, the same point presidential candidate Wendell Willkie raised in 1940 is before us still.
“Do we want a nationalized electricity grid in America?” And if so, would that be called “socialism?”
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
Sunday, October 26, 2008
A most serious job application
Some thoughts on the presidential selection process -
To new graduates, it is the toughest answer they ever will have to give in applying for a job. “What is your experience in what we do here? None? Well what kind of training or other experience have you had to be able to go to work here tomorrow? ‘I can learn’ is not sufficient.”
“Sorry, our employees must be able to contribute to the organization right away. We cannot afford workers who cannot carry their part of the load; it would be unfair to the rest of the organization.”
And today there are applicants for the most important position in the world who immediately must tackle the most egregious problems facing America both at home and in the world.
Exercising our right to choose who that leader will be is more important than any vote we will make in a lifetime of voting.
The already fragile world economy is on the brink of collapse into a depression worse than the 1930s. While the present administration desperately is trying to prevent our present recession from falling into that black hole also, it will require someone with the greatest skills to take over the helm of this great nation in the midst of the storm.
The choices we have been given through our democratic processes may not suit everyone or even anyone. But we have to play the hand we have and choose the best of the lot.
Some considerations in this choice are:
How much experience must he have to be able to grasp the helm, the levers of government, at a most critical time in our history and to steer through this great storm but to also keep the ship from capsizing? Which one – Obama or McCain?
Is the wise experience in the ways of how the federal government operates helpful in critical times? Which one is more likely to benefit from that experience – McCain or Obama?
If experiencing and surviving the deep cauldron of hopeless despair is a measure of the character of a man, one with the resolve, the capability, the understanding of the enormity of the problems facing America right now, which of the two best fits that description? McCain or Obama?
Finally, which one has the experience to be the Commander-in-Chief of all our armed forces and is closest to resembling former president Dwight D. Eisenhower who did not want war but was prepared to fight if necessary? Obama or McCain?
If you were deciding which applicant should get the job, who would you choose, McCain or Obama?
Well, the decision is yours when you cast your vote for the president of the United States of America. Weigh your choice carefully and may God Bless America!
Ernest Norsworthy
emnorsworthy@earthlink.net
To new graduates, it is the toughest answer they ever will have to give in applying for a job. “What is your experience in what we do here? None? Well what kind of training or other experience have you had to be able to go to work here tomorrow? ‘I can learn’ is not sufficient.”
“Sorry, our employees must be able to contribute to the organization right away. We cannot afford workers who cannot carry their part of the load; it would be unfair to the rest of the organization.”
And today there are applicants for the most important position in the world who immediately must tackle the most egregious problems facing America both at home and in the world.
Exercising our right to choose who that leader will be is more important than any vote we will make in a lifetime of voting.
The already fragile world economy is on the brink of collapse into a depression worse than the 1930s. While the present administration desperately is trying to prevent our present recession from falling into that black hole also, it will require someone with the greatest skills to take over the helm of this great nation in the midst of the storm.
The choices we have been given through our democratic processes may not suit everyone or even anyone. But we have to play the hand we have and choose the best of the lot.
Some considerations in this choice are:
How much experience must he have to be able to grasp the helm, the levers of government, at a most critical time in our history and to steer through this great storm but to also keep the ship from capsizing? Which one – Obama or McCain?
Is the wise experience in the ways of how the federal government operates helpful in critical times? Which one is more likely to benefit from that experience – McCain or Obama?
If experiencing and surviving the deep cauldron of hopeless despair is a measure of the character of a man, one with the resolve, the capability, the understanding of the enormity of the problems facing America right now, which of the two best fits that description? McCain or Obama?
Finally, which one has the experience to be the Commander-in-Chief of all our armed forces and is closest to resembling former president Dwight D. Eisenhower who did not want war but was prepared to fight if necessary? Obama or McCain?
If you were deciding which applicant should get the job, who would you choose, McCain or Obama?
Well, the decision is yours when you cast your vote for the president of the United States of America. Weigh your choice carefully and may God Bless America!
Ernest Norsworthy
emnorsworthy@earthlink.net
Tuesday, September 23, 2008
TVA finances cannot be "fixed"
September 23, 2008
TVA finances cannot be “fixed” (Times Daily editorial 9/23/08)
Your editorial today on “Fixing finances” greatly misses the real point.
Government deregulation did not cause today’s fiscal crisis, it was not the free-enterprise system that caused it, as you aver.
No, it was the federal government who insisted that mortgages be issued to people that could not, would not ever pay off those mortgages.
Fannie Mae and Freddie Mac are not lenders but buyers of sub-prime mortgages, which turned out to be billions of dollars of worthless paper. Estimates to bailout these two federally sponsored entities vary from $700 billion to over a trillion dollars.
No one knows the value of this worthless paper until it is put up for auction. Meanwhile the American taxpayers will own that debt, maybe more than a trillion dollars worth. With carrying charges, this could significantly degrade America’s financial systems, its creditworthiness.
There were chances to avoid the sub-prime mortgage crisis offered by the Republicans the last six years but all were rejected by the Democrats.
Homeownership for all, even for those who cannot pay for it, is the tragic false hope fostered by liberals, i.e., that there is a “free lunch”.
Closer to home is the Tennessee Valley Authority’s unsustainable debt, now at $25 billion. The same carrying charges and increased outside purchases of fuel in a declining electricity market parallel the Fannie Mae and Freddie Mac debacle.
Also in today’s paper is a good example of how citizens in North Alabama are unable to take advantage of the people’s advocate, the Alabama Public Service Commission, in utility rate increases.
Residents in TVA’s territory are faced with a 20 percent rate increase and industrial users for up to 50 or 60 percent. Alabama Power Company requested rate increases for residential and industrial users by 14.6 percent and nearly 25 percent respectively.
But through negotiations, Alabama Power agreed to scale back its rate increases to 8.2 percent for residential and 14 percent for their industrial customers.
On the other hand, there are no negotiations between the TVA and any of the public service commissions in the seven states where TVA exercises its unassailable controls.
Alabama Power figured out a way to extend payments for its extra fuel costs and the TVA did not. One is an investor-owned company that pays taxes and the other is the federal government which cannot pay any taxes. Its poor substitute of “payments in lieu of taxes” falls far short of actual taxes paid by free-market companies.
No question that energy costs are going up, but ingenuity by market economy utilities will keep those increases to a minimum as shown in the Alabama Power example.
The Associated Press article in the Times Daily contributed.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
TVA finances cannot be “fixed” (Times Daily editorial 9/23/08)
Your editorial today on “Fixing finances” greatly misses the real point.
Government deregulation did not cause today’s fiscal crisis, it was not the free-enterprise system that caused it, as you aver.
No, it was the federal government who insisted that mortgages be issued to people that could not, would not ever pay off those mortgages.
Fannie Mae and Freddie Mac are not lenders but buyers of sub-prime mortgages, which turned out to be billions of dollars of worthless paper. Estimates to bailout these two federally sponsored entities vary from $700 billion to over a trillion dollars.
No one knows the value of this worthless paper until it is put up for auction. Meanwhile the American taxpayers will own that debt, maybe more than a trillion dollars worth. With carrying charges, this could significantly degrade America’s financial systems, its creditworthiness.
There were chances to avoid the sub-prime mortgage crisis offered by the Republicans the last six years but all were rejected by the Democrats.
Homeownership for all, even for those who cannot pay for it, is the tragic false hope fostered by liberals, i.e., that there is a “free lunch”.
Closer to home is the Tennessee Valley Authority’s unsustainable debt, now at $25 billion. The same carrying charges and increased outside purchases of fuel in a declining electricity market parallel the Fannie Mae and Freddie Mac debacle.
Also in today’s paper is a good example of how citizens in North Alabama are unable to take advantage of the people’s advocate, the Alabama Public Service Commission, in utility rate increases.
Residents in TVA’s territory are faced with a 20 percent rate increase and industrial users for up to 50 or 60 percent. Alabama Power Company requested rate increases for residential and industrial users by 14.6 percent and nearly 25 percent respectively.
But through negotiations, Alabama Power agreed to scale back its rate increases to 8.2 percent for residential and 14 percent for their industrial customers.
On the other hand, there are no negotiations between the TVA and any of the public service commissions in the seven states where TVA exercises its unassailable controls.
Alabama Power figured out a way to extend payments for its extra fuel costs and the TVA did not. One is an investor-owned company that pays taxes and the other is the federal government which cannot pay any taxes. Its poor substitute of “payments in lieu of taxes” falls far short of actual taxes paid by free-market companies.
No question that energy costs are going up, but ingenuity by market economy utilities will keep those increases to a minimum as shown in the Alabama Power example.
The Associated Press article in the Times Daily contributed.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
Tuesday, June 24, 2008
TVA and the corn crop
Sometimes it takes a while to realize when you’ve been duped, when you realize it is far too late to do much about it.
The federal government – yes, that one we call ours – sold our ancestors a bill of goods when they promised a new kind of fertilizer all could afford; to bring back to life the worn out soil in the South. Particularly the farmland in North Alabama.
You remember where to find that promise. Look no farther that the TVA Act of 1933. The words still are there. (Partial quote of Sec. 5).
The Board is hereby authorized—
(b) To arrange with farmers and farm organizations for large-scale practical use of the new forms of fertilizers under conditions permitting an accurate measure of the economic return they produce.
(c) To cooperate with National, State, district, or county experimental stations or demonstration farms, with farmers, landowners, and associations of farmers or landowners, for the use of new forms of fertilizer or fertilizer practices during the initial or experimental period of their introduction, and for promoting the prevention of soil erosion by the use of fertilizers and otherwise.
(d) The Board in order to improve and cheapen the production of fertilizer is
authorized to manufacture and sell fixed nitrogen, fertilizer, and fertilizer ingredients at Muscle Shoals by the employment of existing facilities, by modernizing existing plants, or by any other process or processes that in its judgment shall appear wise and profitable for the fixation of atmospheric nitrogen or the cheapening of the production of fertilizer.
(e) Under the authority of this Act the Board may make donations or sales of the product of the plant or plants operated by it to be fairly and equitably distributed through the agency of county demonstration agents, agricultural colleges, or otherwise as the Board may direct, for experimentation, education, and introduction of the use of such products in cooperation with practical farmers so as to obtain information as to the value effect, and best methods of their use.
(f) The Board is authorized to make alterations, modifications, or improvements in existing plants and facilities, and to construct new plants.
What happened to that dream of a healthy, productive farming community in the valley? The law still is there but the TVA chooses to ignore it to the detriment of farmers and agriculture in general.
I envision a vast crop-growing farmland area almost as large as the San Joaquin Valley in California. True, the soil in that valley is richer than most of the farmland in the South but it could have been a different story if the TVA had followed through with their charge to improve farming and agriculture as stated in the present TVA Act.
There is one major difference between the San Joaquin Valley and the Tennessee River Valley. And that is water. And it appears that water will become very scarce in the San Joaquin Valley in the not too distant future. Already some lands lay fallow for lack of enough water.
The Tennessee River and its tributaries have never run dry although the flow has slowed with the present drought conditions.
If irrigation had followed the enrichment of Southern soil with improved and cheap fertilizer (as called for in the TVA Act) it would not be hard to imagine a Southern “breadbasket”.
I do hope the corn crop is abundant and that their prayers for more rain would be answered with an irrigation system using Tennessee River water.
Ernest Norsworthy
emnorsworthy@earthlink.net
Sometimes it takes a while to realize when you’ve been duped, when you realize it is far too late to do much about it.
The federal government – yes, that one we call ours – sold our ancestors a bill of goods when they promised a new kind of fertilizer all could afford; to bring back to life the worn out soil in the South. Particularly the farmland in North Alabama.
You remember where to find that promise. Look no farther that the TVA Act of 1933. The words still are there. (Partial quote of Sec. 5).
The Board is hereby authorized—
(b) To arrange with farmers and farm organizations for large-scale practical use of the new forms of fertilizers under conditions permitting an accurate measure of the economic return they produce.
(c) To cooperate with National, State, district, or county experimental stations or demonstration farms, with farmers, landowners, and associations of farmers or landowners, for the use of new forms of fertilizer or fertilizer practices during the initial or experimental period of their introduction, and for promoting the prevention of soil erosion by the use of fertilizers and otherwise.
(d) The Board in order to improve and cheapen the production of fertilizer is
authorized to manufacture and sell fixed nitrogen, fertilizer, and fertilizer ingredients at Muscle Shoals by the employment of existing facilities, by modernizing existing plants, or by any other process or processes that in its judgment shall appear wise and profitable for the fixation of atmospheric nitrogen or the cheapening of the production of fertilizer.
(e) Under the authority of this Act the Board may make donations or sales of the product of the plant or plants operated by it to be fairly and equitably distributed through the agency of county demonstration agents, agricultural colleges, or otherwise as the Board may direct, for experimentation, education, and introduction of the use of such products in cooperation with practical farmers so as to obtain information as to the value effect, and best methods of their use.
(f) The Board is authorized to make alterations, modifications, or improvements in existing plants and facilities, and to construct new plants.
What happened to that dream of a healthy, productive farming community in the valley? The law still is there but the TVA chooses to ignore it to the detriment of farmers and agriculture in general.
I envision a vast crop-growing farmland area almost as large as the San Joaquin Valley in California. True, the soil in that valley is richer than most of the farmland in the South but it could have been a different story if the TVA had followed through with their charge to improve farming and agriculture as stated in the present TVA Act.
There is one major difference between the San Joaquin Valley and the Tennessee River Valley. And that is water. And it appears that water will become very scarce in the San Joaquin Valley in the not too distant future. Already some lands lay fallow for lack of enough water.
The Tennessee River and its tributaries have never run dry although the flow has slowed with the present drought conditions.
If irrigation had followed the enrichment of Southern soil with improved and cheap fertilizer (as called for in the TVA Act) it would not be hard to imagine a Southern “breadbasket”.
I do hope the corn crop is abundant and that their prayers for more rain would be answered with an irrigation system using Tennessee River water.
Ernest Norsworthy
emnorsworthy@earthlink.net
Friday, June 6, 2008
Alabama Legislature as Confused as TVA
TVA has Alabama legislature chasing its tail
Idiocy has been described as doing the same thing over and over expecting a different outcome.
But maybe the Alabama legislature is just being sly like a fox. I still call what they have been doing with TVA’s payments idiocy, “bribes” in lieu of taxes from the Tennessee Valley Authority.
Looking at it one way, every year TVA provides about $450 million of free handout money (5 percent of gross sales) throughout its far-flung, 80,000 square-mile territory. And there is a scramble for some of it wherever it shows up.
Several years ago, dry Geneva County, at the bottom of Alabama on the Florida line, doled out some TVA money to the little town of Eunola, population 182 at last census. The problem was that the town of Eunola had not had an election in 40 years. Later, Alabama’s attorney general ruled it too small for re-incorporation.
There is no indication that TVA is concerned how their money is used once they give it away. I could not find out what happened to Eunola’s largess.
Idiocy has been described as doing the same thing over and over expecting a different outcome.
But maybe the Alabama legislature is just being sly like a fox. I still call what they have been doing with TVA’s payments idiocy, “bribes” in lieu of taxes from the Tennessee Valley Authority.
Looking at it one way, every year TVA provides about $450 million of free handout money (5 percent of gross sales) throughout its far-flung, 80,000 square-mile territory. And there is a scramble for some of it wherever it shows up.
Several years ago, dry Geneva County, at the bottom of Alabama on the Florida line, doled out some TVA money to the little town of Eunola, population 182 at last census. The problem was that the town of Eunola had not had an election in 40 years. Later, Alabama’s attorney general ruled it too small for re-incorporation.
There is no indication that TVA is concerned how their money is used once they give it away. I could not find out what happened to Eunola’s largess.
North Alabama feels short-changed
Now, North Alabama legislators believe their part of the state is being short-changed because a number of dry counties in Alabama outside TVA’s territory receive TVA payments. Some of those dry counties depend on the TVA handout to balance their budgets. Crunch time for them if a new Alabama law cuts them off next year.
Today it is conservation, conservation, conservation
The craziness of TVA’s whole giveaway scheme is compounded by an entirely new direction for the TVA – conservation, cutting back on demand for electricity. Presently, TVA takes 5 percent of gross electricity sales and gives it “back” in what they call “payments in lieu of taxes”.
But TVA suddenly has changed directions and wants their 8.8 million customers to use less electricity.
The other part is that not a single TVA customer, those who produce the rebate amounts, ever directly get a part of that rebate. These slush funds go to state and local governments who decide without further input from the ones who enabled the rebate just how to spend this free money. The money is free because nothing has to be done to qualify for it. It’s just there. Obviously, you do not have to live in TVA’s territory to qualify.
Change to conservation means changes in rebate system
First, TVA must change its method of a 5 percent usage payment to state and local governments to a 5 percent incentive payment, or a combination of the two, to the customers who conserve the most electricity.
The incentive would go directly to customers who cut back on electricity usage during peak demand for power, usually in the summer and some in the winter. Those who conserve the most electricity would receive a direct payment or a credit to their monthly electricity bills.
If this method combines the two kinds of rebates and any portion of the 5 percent incentive rebate to customers is remaining for each month, that money would be distributed in the usual manner to state and local communities as in the past, a “payment in lieu of taxes”.
Because this scheme would operate primarily during peak demand periods, the TVA would not have to purchase as much power from outside suppliers said to have cost a billion dollars last year.
One of the main features of this plan is that reward follows conservation, not reward following excessive use. TVA has stated that it would not increase electricity rates to induce less use of it.
Another advantage is that TVA already budgets for these payments and borrowing may not be required.
Reasons plan will not work
There are at least two reasons this plan would never make it through TVA management. First, it would show the nimbleness and innovation of management to meet immediate economic circumstances, traits never thus far exhibited by TVA; and secondly, it makes too much sense.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com
http://norsworthyattheshoals.blogspot.com
Saturday, May 24, 2008
In Opposition to the TVA
In Opposition to the TVA
Why do I oppose the TVA, some have asked. And why do I continue unceasingly writing about it. I started writing about the TVA when we moved for a time to the Shoals area about five years ago. And I was startled to see an irresolute community in despair. Many fewer jobs compared with 40 years earlier in my visits. In an attempt to find out why such a change, all evidence led to the TVA, how the TVA had whip-lashed the community and then deserted it. Fortunately, the Shoals economy is looking up a bit but still has a long way to go.
Just where is the principal office of the TVA? Pointed out last week in a Times Daily article, the TVA pulled the rug from under the Shoals at the very beginning by not establishing the principal office of TVA in Muscle Shoals, Alabama, as required in the TVA Act. Oh, TVA has a post office address in the TVA Reservation, you know, like a Mail Boxes Etc. franchise. It is a sham to say that TVA’s “principal office” is in Muscle Shoals, Alabama.
Here, from personal experience I’ll relate an unpleasant fact. Most of the things we do daily such as opening a door, driving a car or working in the kitchen all are designed for use by right-handed people. Now right-handed people see all of these things as perfectly ordinary and are usually aghast when it is pointed out that left-handers tend to see things differently and usually more analytically.
I think some of this might be at play regarding the TVA. I do see the TVA differently, not from anger, vengeance or any of the other reasons some people like to impute to me (I am left-handed).
I tried to explain the reasons why I believe the TVA should be abolished in much earlier TD Forum posts. It might help to re-read some of them. But here, I will try again, as concisely as I can, to express my reasons.
Experience in the federal government. I learned a lot more about my employer and about American history. The basis of America comes from our founding documents (and don’t let anybody fool you into believing that the U.S. Constitution is “a living document” subject to the whims of change; legislating from the bench).
And that is one of the reasons I believe the TVA is unconstitutional. After much researching of the TVA, I concluded that the TVA exists on very shaky legal grounds. Every ruling that I found about the TVA was divided. A final Supreme Court ruling on its constitutionality is yet to be made. (See Ashwander vs. TVA that dodged the constitutionality question).
TVA Act ill conceived. And it was given a charge to be something it never could be: An organization with all the power of the federal government to take property against the will of the owner and at the same time act like a usual corporation. Repeatedly TVA has proved that the two cannot be mixed no matter how much rhetoric is applied. TVA in the past was given almost free rein but the Congress and several administrations have considerably tightened those reins.
View of the original TVA Act. With amendments (http://www.tva.gov), it shows that TVA has strayed far from its original charter, moving in whimsical directions under triumvirate leadership for 72 years. I will not recount the very many ways that TVA management has fallen well below the mark. Let’s just say there have been multi-billion dollar mistakes and no one has been held accountable for those mistakes. Ratepayers are left holding the bag or is TVA’s $25 billion debt the taxpayers’ responsibility?
Federal price controls. When the TVA sets rates and “fuel cost adjustments”, it is doing so without the normal checking and approving/disapproving those increases by each states’ public service commission. TVA’s decision on rates is absolute and unassailable. I believe this is an infringement on the basic right of citizens in the seven states in TVA territory to have their own elected or appointed representatives make electricity rate determinations.
TVA territory huge, unmanageable. It covers 80,000 square miles, as large as Great Britain and larger than many other countries. Its size also has proven to be one of its weaknesses. (See GAO Security Report http://www.gao.gov/new.items/d08526.pdf ).
TVA finances unsustainable. Particularly with the new thrust to conserve electricity, TVA wants its customers to conserve at a point and place that is convenient to the TVA; customers’ habits are hard to change without significant incentives and it is unlikely they will change much without significant ones. TVA’s indebtedness is going up while its revenues will be coming down if conservation works. And billions of dollars more in the near term will be required to fund nuclear construction.
TVA as model for U.S. electricity production. Viewing the TVA as a national model for electricity production would be similar to a European style of a government-owned and run public utility that would set electricity prices throughout America. Another name for that is Socialism and I do not believe Americans want to travel that road.
TVA revenues, restrictions. TVA, a federal government agency, collects about $9 billion annually from electricity sales. its only source of income; there is no “profit and loss” statement. All revenues are returned to operations of its power facilities, maintenance, new construction, and for non-power uses. There are no congressional appropriations. Instead of filtering through the economy like sales and expenses of a regular corporation, the federal government controls all $9 billion of it.
You may be sure that an investor-owned utility would redistribute those billions of dollars differently to everyone’s betterment including more taxes paid to all levels of government, i.e., state, local and federal.
So you see, it is not out of anger or any other emotional reason but out of principle in support of the basic free-enterprise system of opportunities available to all Americans that I oppose the TVA.
Founding documents. I would like us to follow the precepts in our founding documents; nowhere in any of them is there an inking of the idea of the TVA. It was contrived for political expediency; it lives today a thorn in the side of our Constitution and a blight on our free-enterprise system.
(Why should TVA management resign? Read my article on this current issue at http://norsworthyopinion.com )
Ernest Norsworthy
May 24, 2008
emnorsworthy@earthlink.net
Why do I oppose the TVA, some have asked. And why do I continue unceasingly writing about it. I started writing about the TVA when we moved for a time to the Shoals area about five years ago. And I was startled to see an irresolute community in despair. Many fewer jobs compared with 40 years earlier in my visits. In an attempt to find out why such a change, all evidence led to the TVA, how the TVA had whip-lashed the community and then deserted it. Fortunately, the Shoals economy is looking up a bit but still has a long way to go.
Just where is the principal office of the TVA? Pointed out last week in a Times Daily article, the TVA pulled the rug from under the Shoals at the very beginning by not establishing the principal office of TVA in Muscle Shoals, Alabama, as required in the TVA Act. Oh, TVA has a post office address in the TVA Reservation, you know, like a Mail Boxes Etc. franchise. It is a sham to say that TVA’s “principal office” is in Muscle Shoals, Alabama.
Here, from personal experience I’ll relate an unpleasant fact. Most of the things we do daily such as opening a door, driving a car or working in the kitchen all are designed for use by right-handed people. Now right-handed people see all of these things as perfectly ordinary and are usually aghast when it is pointed out that left-handers tend to see things differently and usually more analytically.
I think some of this might be at play regarding the TVA. I do see the TVA differently, not from anger, vengeance or any of the other reasons some people like to impute to me (I am left-handed).
I tried to explain the reasons why I believe the TVA should be abolished in much earlier TD Forum posts. It might help to re-read some of them. But here, I will try again, as concisely as I can, to express my reasons.
Experience in the federal government. I learned a lot more about my employer and about American history. The basis of America comes from our founding documents (and don’t let anybody fool you into believing that the U.S. Constitution is “a living document” subject to the whims of change; legislating from the bench).
And that is one of the reasons I believe the TVA is unconstitutional. After much researching of the TVA, I concluded that the TVA exists on very shaky legal grounds. Every ruling that I found about the TVA was divided. A final Supreme Court ruling on its constitutionality is yet to be made. (See Ashwander vs. TVA that dodged the constitutionality question).
TVA Act ill conceived. And it was given a charge to be something it never could be: An organization with all the power of the federal government to take property against the will of the owner and at the same time act like a usual corporation. Repeatedly TVA has proved that the two cannot be mixed no matter how much rhetoric is applied. TVA in the past was given almost free rein but the Congress and several administrations have considerably tightened those reins.
View of the original TVA Act. With amendments (http://www.tva.gov), it shows that TVA has strayed far from its original charter, moving in whimsical directions under triumvirate leadership for 72 years. I will not recount the very many ways that TVA management has fallen well below the mark. Let’s just say there have been multi-billion dollar mistakes and no one has been held accountable for those mistakes. Ratepayers are left holding the bag or is TVA’s $25 billion debt the taxpayers’ responsibility?
Federal price controls. When the TVA sets rates and “fuel cost adjustments”, it is doing so without the normal checking and approving/disapproving those increases by each states’ public service commission. TVA’s decision on rates is absolute and unassailable. I believe this is an infringement on the basic right of citizens in the seven states in TVA territory to have their own elected or appointed representatives make electricity rate determinations.
TVA territory huge, unmanageable. It covers 80,000 square miles, as large as Great Britain and larger than many other countries. Its size also has proven to be one of its weaknesses. (See GAO Security Report http://www.gao.gov/new.items/d08526.pdf ).
TVA finances unsustainable. Particularly with the new thrust to conserve electricity, TVA wants its customers to conserve at a point and place that is convenient to the TVA; customers’ habits are hard to change without significant incentives and it is unlikely they will change much without significant ones. TVA’s indebtedness is going up while its revenues will be coming down if conservation works. And billions of dollars more in the near term will be required to fund nuclear construction.
TVA as model for U.S. electricity production. Viewing the TVA as a national model for electricity production would be similar to a European style of a government-owned and run public utility that would set electricity prices throughout America. Another name for that is Socialism and I do not believe Americans want to travel that road.
TVA revenues, restrictions. TVA, a federal government agency, collects about $9 billion annually from electricity sales. its only source of income; there is no “profit and loss” statement. All revenues are returned to operations of its power facilities, maintenance, new construction, and for non-power uses. There are no congressional appropriations. Instead of filtering through the economy like sales and expenses of a regular corporation, the federal government controls all $9 billion of it.
You may be sure that an investor-owned utility would redistribute those billions of dollars differently to everyone’s betterment including more taxes paid to all levels of government, i.e., state, local and federal.
So you see, it is not out of anger or any other emotional reason but out of principle in support of the basic free-enterprise system of opportunities available to all Americans that I oppose the TVA.
Founding documents. I would like us to follow the precepts in our founding documents; nowhere in any of them is there an inking of the idea of the TVA. It was contrived for political expediency; it lives today a thorn in the side of our Constitution and a blight on our free-enterprise system.
(Why should TVA management resign? Read my article on this current issue at http://norsworthyopinion.com )
Ernest Norsworthy
May 24, 2008
emnorsworthy@earthlink.net
Wednesday, April 16, 2008
TVA's definition of "spend" and "save" in the same sentence
How does TVA say “save” and “spend” in the same sentence?
As usual, TVA is travelling in parallel universes; one says, “We have to conserve energy use to reduce the amount of electricity during peak demands usually in the hottest and coldest times of the year”.
TVA already is travelling under the likely assumption that “peaking demand” cannot be met because they are moving ahead with the development of multi-billion dollar nuclear plants. This means that TVA will have to continue paying higher prices for that extra electricity from outside sources. TVA also is continuing to gobble up “at surplus” privately owned plants in preparation of peak demand needs as early as this summer.
In other words, TVA does not believe their efforts to help customers reduce electricity needs will be sufficient. Anyway, TVA really does not want customers to reduce their use of electricity, especially at the higher rates customers are now paying because every dollar a consumer saves reduces TVA’s income by a dollar. And TVA’s cost per unit of production correspondingly goes up.
So TVA is playing the “pull the rope” game, at one end are the true conservationists whom TVA says they support, those who would rather see alternate forms of energy to reduce air pollution, and at the other end, TVA and its adherents to raise even more TVA’s rates to keep from borrowing even more money to pay interest on TVA’s outstanding debts.
Unfortunately, “you can’t have your cake and eat it too”.
To add to TVA’s bad economic news, sales are down and costs are up (TVA April Board meeting www.tva.gov ).
TVA has an interesting concept of budgeting, “As long as it’s in the budget, it can be spent” regardless of whether there is enough income to pay for it.
The irony of trying to reduce consumption only during peak demand periods shifts those periods to another peak period, which too must be reduced and so on.
TVA unfortunately finds itself in a box with a very deep hole in it. And borrowing even more money (which they are authorized to do, up to $30 billion from present debt of $25 billion) will not solve the problem because TVA continues to borrow billions just to pay interest on debt now coming due.
For years, TVA has gotten away with its backdoor financing scheme of borrowing and borrowing more money but the income, now even lessening, cannot even keep up with the spending just for debt repayment.
I do not know anyone who thinks that TVA could not cut its budget drastically, at least ten percent for starters, better to bring TVA in line with reasonable debt to income ratios.
Of course, for some time now, I have advocated the dissolution of the TVA, a federal agency, for constitutional reasons and for its anti-competitive stand against our free-enterprise system. TVA’s recent acquisitions of corporately owned electricity plants is just one example of TVA’s anti-competitiveness.
If TVA is serious about conservation (and I believe they are not) a more positive and immediate result would be to stop payments in lieu of taxes to state and local governments and instead make those “payments” in the form of credits to users of TVA electricity based on LESS power consumed, that is, an incentive to cut down on electricity usage.
Today, those payments are based on how much electricity is consumed and the less consumed the less payments that are made to the seven states and localities, just one more reason TVA works at cross-purposes with itself.
Since TVA makes the rules about this sort of thing, arcane though they may be, they also can change the rules at their discretion. Any rule favoring the ones paying electricity bills could only place the TVA in a more favorable light. But the words of the TVA Act and the deeds of TVA management seldom coincide; one does not have to look too far to find other pitfalls the TVA finds itself lurching toward. The present direction of the very flexible Strategic Plan 2007 is sure to bump into the cold reality that financial resources are extremely limited and will be for quite some time. There isn’t even a “half-price” lunch, much less a “free one”.
And now, just now, at the April Board meeting, and after two years in existence, the board has clarified that the board makes TVA policy and the CEO carries out those policies. Huh? Much too late in closing the barn door.
Suggestions on developing the
Dissolution Plan
for the
Tennessee Valley Authority
White Paper
by
Ernest Norsworthy
December 2006
Now that the TVA land policy dust* is somewhat settled don’t believe for a second it was just “we listened, we heard” from the more than 5000 comments received that convinced the TVA to adopt a comprehensive and permanent land policy. Presidential Executive Order 13406 clearly states that all federal agencies, including the TVA, must not sell or lease acquired property for private uses.
Perhaps this clarification of how TVA-owned lands will be handled will help sort out the eventual privatization of TVA’s electrical production and transmission lines. For years, TVA has talked about privatization and for years, TVA has practically ignored doing anything about it.
The strategy could go something like this but not necessarily in order:
Open TVA’s transmission grid (“open access”) to all power suppliers willing to pay a competitive fee. This act alone will bring TVA into compliance with the Federal Energy Regulatory Commission (FERC) order to open up a section of TVA’s transmission lines to East Kentucky Power Cooperative, Inc. (See TVA vs. FERC, US District of Columbia Court of Appeals.) TVA’s exclusive grid and service area impedes the flow of commerce between the seven states under control of the TVA and through and between states in the Eastern Grid not just for “seasonal power exchanges and reliability.”
Group some of the less desirable power properties with better ones in auction/bid lots. This should ensure that all power production facilities would be removed from federal ownership. Stage the auctions over a period of months to liquidate as much as possible TVA’s huge $25 billion debt and to keep disruptions at a minimum.
Immediately release distributors from their long-term contracts with TVA if they so desire. This will allow those distributors to seek lower cost electricity from other presently available sources. TVA requires a minimum five-year notice; a number of distributors have already given notice.
Immediately cease buying even more surplus power units for use only during peak power needs. Additional nuclear power soon will be coming on line; TVA is on the verge again to be overbuilding electrical capacity.
Immediately allow suppliers offering cheaper electricity rates to use TVA transmission lines.
Cease immediately the paternalistic requirement that TVA approve all nonpower expenditures by TVA distributors. (See TVA Office of the Inspector General report www.tva.gov/oig )
By Executive Order of the President, bring in executive level staff from other federal and state departments and agencies to be headed by a non-government liquidation firm. This team, a Task Force, Commission or some such organization, would develop a phased plan of dissolution with the goal of abolishing the TVA. The Team itself would be closed down by a date certain. Part of the Plan would include finding jobs for displaced TVA employees for those not transferring to private utility companies; a union representative also would be included to receive grievances.
The Dissolution Plan would be devised to be the least disruptive to market forces and to TVA distributors for a smooth transition period. Many of 8.6 million users of TVA electricity would have for the first time the ability to choose among electrical suppliers.
Financial aid to states and communities as payments-in-lieu-of taxes would continue at the present rate for two more years then stopped. Other long-term financial agreements with the TVA (other than bonds) will be negotiated for completion within six months of the beginning of the Dissolution Plan.
All health and retirement plan obligations will be transferred to the appropriate federal agency or agencies.
Form a special unit in TVA’s Dissolution Plan to deal with the many legal wrangles that are sure to come since the new Land Policy was issued. Fold in the suits now pending in which TVA is a litigant.
The Dissolution Plan should have at its core a time line of activities with their planned and actual completion dates.
Assign the various parts of TVA to appropriate federal agencies such as the surplus 293,000 acres to the National Park Service for future national park expansion. Some properties should be allotted to the states for development of state parks.
Direct loans or grants from TVA such as the Economic Development Loan Fund should cease immediately; those loans currently in effect will either be transferred to the appropriate federal agency or be negotiated to an early settlement. TVA was never intended to be a lending agency or a bank.
TVA should ramp up its installation of scrubbers and other clean air devices on all its coal-fired plants. Long ago, TVA should have taken the lead as a federal agency to make our air as clean as currently possible.
There should be no more TVA funds used for experimentation. Other agencies and sources have a far deeper involvement in anything TVA has viewed as “experimental.”
Refrain from using the statement that TVA is “self-financing” because it requests no appropriations from Congress. It is misleading and some consider it a false statement because TVA goes through the backdoor for financing its operations through the sale of bonds “…and (TVA) is required to be self-supporting from power revenues and proceeds from the issuance of debt” (underline supplied.) TVA’s debt is now estimated at $25 billion.
Summary
In summary, it is past time for the federal government through its agent the TVA to get out of the way and allow consumers more freedom of choice between electricity suppliers; to open up for the first time the 17,000 miles of TVA transmission lines to permit normal commercial traffic over them; to let competitive markets prevail and to return to each of the seven states in which TVA operates their rightful control of public utilities. TVA has just hiked its electricity rates again and not one public watchdog agency (PSC’s) in the seven states involved can do anything about it.
---
As usual, TVA is travelling in parallel universes; one says, “We have to conserve energy use to reduce the amount of electricity during peak demands usually in the hottest and coldest times of the year”.
TVA already is travelling under the likely assumption that “peaking demand” cannot be met because they are moving ahead with the development of multi-billion dollar nuclear plants. This means that TVA will have to continue paying higher prices for that extra electricity from outside sources. TVA also is continuing to gobble up “at surplus” privately owned plants in preparation of peak demand needs as early as this summer.
In other words, TVA does not believe their efforts to help customers reduce electricity needs will be sufficient. Anyway, TVA really does not want customers to reduce their use of electricity, especially at the higher rates customers are now paying because every dollar a consumer saves reduces TVA’s income by a dollar. And TVA’s cost per unit of production correspondingly goes up.
So TVA is playing the “pull the rope” game, at one end are the true conservationists whom TVA says they support, those who would rather see alternate forms of energy to reduce air pollution, and at the other end, TVA and its adherents to raise even more TVA’s rates to keep from borrowing even more money to pay interest on TVA’s outstanding debts.
Unfortunately, “you can’t have your cake and eat it too”.
To add to TVA’s bad economic news, sales are down and costs are up (TVA April Board meeting www.tva.gov ).
TVA has an interesting concept of budgeting, “As long as it’s in the budget, it can be spent” regardless of whether there is enough income to pay for it.
The irony of trying to reduce consumption only during peak demand periods shifts those periods to another peak period, which too must be reduced and so on.
TVA unfortunately finds itself in a box with a very deep hole in it. And borrowing even more money (which they are authorized to do, up to $30 billion from present debt of $25 billion) will not solve the problem because TVA continues to borrow billions just to pay interest on debt now coming due.
For years, TVA has gotten away with its backdoor financing scheme of borrowing and borrowing more money but the income, now even lessening, cannot even keep up with the spending just for debt repayment.
I do not know anyone who thinks that TVA could not cut its budget drastically, at least ten percent for starters, better to bring TVA in line with reasonable debt to income ratios.
Of course, for some time now, I have advocated the dissolution of the TVA, a federal agency, for constitutional reasons and for its anti-competitive stand against our free-enterprise system. TVA’s recent acquisitions of corporately owned electricity plants is just one example of TVA’s anti-competitiveness.
If TVA is serious about conservation (and I believe they are not) a more positive and immediate result would be to stop payments in lieu of taxes to state and local governments and instead make those “payments” in the form of credits to users of TVA electricity based on LESS power consumed, that is, an incentive to cut down on electricity usage.
Today, those payments are based on how much electricity is consumed and the less consumed the less payments that are made to the seven states and localities, just one more reason TVA works at cross-purposes with itself.
Since TVA makes the rules about this sort of thing, arcane though they may be, they also can change the rules at their discretion. Any rule favoring the ones paying electricity bills could only place the TVA in a more favorable light. But the words of the TVA Act and the deeds of TVA management seldom coincide; one does not have to look too far to find other pitfalls the TVA finds itself lurching toward. The present direction of the very flexible Strategic Plan 2007 is sure to bump into the cold reality that financial resources are extremely limited and will be for quite some time. There isn’t even a “half-price” lunch, much less a “free one”.
And now, just now, at the April Board meeting, and after two years in existence, the board has clarified that the board makes TVA policy and the CEO carries out those policies. Huh? Much too late in closing the barn door.
Suggestions on developing the
Dissolution Plan
for the
Tennessee Valley Authority
White Paper
by
Ernest Norsworthy
December 2006
Now that the TVA land policy dust* is somewhat settled don’t believe for a second it was just “we listened, we heard” from the more than 5000 comments received that convinced the TVA to adopt a comprehensive and permanent land policy. Presidential Executive Order 13406 clearly states that all federal agencies, including the TVA, must not sell or lease acquired property for private uses.
Perhaps this clarification of how TVA-owned lands will be handled will help sort out the eventual privatization of TVA’s electrical production and transmission lines. For years, TVA has talked about privatization and for years, TVA has practically ignored doing anything about it.
The strategy could go something like this but not necessarily in order:
Open TVA’s transmission grid (“open access”) to all power suppliers willing to pay a competitive fee. This act alone will bring TVA into compliance with the Federal Energy Regulatory Commission (FERC) order to open up a section of TVA’s transmission lines to East Kentucky Power Cooperative, Inc. (See TVA vs. FERC, US District of Columbia Court of Appeals.) TVA’s exclusive grid and service area impedes the flow of commerce between the seven states under control of the TVA and through and between states in the Eastern Grid not just for “seasonal power exchanges and reliability.”
Group some of the less desirable power properties with better ones in auction/bid lots. This should ensure that all power production facilities would be removed from federal ownership. Stage the auctions over a period of months to liquidate as much as possible TVA’s huge $25 billion debt and to keep disruptions at a minimum.
Immediately release distributors from their long-term contracts with TVA if they so desire. This will allow those distributors to seek lower cost electricity from other presently available sources. TVA requires a minimum five-year notice; a number of distributors have already given notice.
Immediately cease buying even more surplus power units for use only during peak power needs. Additional nuclear power soon will be coming on line; TVA is on the verge again to be overbuilding electrical capacity.
Immediately allow suppliers offering cheaper electricity rates to use TVA transmission lines.
Cease immediately the paternalistic requirement that TVA approve all nonpower expenditures by TVA distributors. (See TVA Office of the Inspector General report www.tva.gov/oig )
By Executive Order of the President, bring in executive level staff from other federal and state departments and agencies to be headed by a non-government liquidation firm. This team, a Task Force, Commission or some such organization, would develop a phased plan of dissolution with the goal of abolishing the TVA. The Team itself would be closed down by a date certain. Part of the Plan would include finding jobs for displaced TVA employees for those not transferring to private utility companies; a union representative also would be included to receive grievances.
The Dissolution Plan would be devised to be the least disruptive to market forces and to TVA distributors for a smooth transition period. Many of 8.6 million users of TVA electricity would have for the first time the ability to choose among electrical suppliers.
Financial aid to states and communities as payments-in-lieu-of taxes would continue at the present rate for two more years then stopped. Other long-term financial agreements with the TVA (other than bonds) will be negotiated for completion within six months of the beginning of the Dissolution Plan.
All health and retirement plan obligations will be transferred to the appropriate federal agency or agencies.
Form a special unit in TVA’s Dissolution Plan to deal with the many legal wrangles that are sure to come since the new Land Policy was issued. Fold in the suits now pending in which TVA is a litigant.
The Dissolution Plan should have at its core a time line of activities with their planned and actual completion dates.
Assign the various parts of TVA to appropriate federal agencies such as the surplus 293,000 acres to the National Park Service for future national park expansion. Some properties should be allotted to the states for development of state parks.
Direct loans or grants from TVA such as the Economic Development Loan Fund should cease immediately; those loans currently in effect will either be transferred to the appropriate federal agency or be negotiated to an early settlement. TVA was never intended to be a lending agency or a bank.
TVA should ramp up its installation of scrubbers and other clean air devices on all its coal-fired plants. Long ago, TVA should have taken the lead as a federal agency to make our air as clean as currently possible.
There should be no more TVA funds used for experimentation. Other agencies and sources have a far deeper involvement in anything TVA has viewed as “experimental.”
Refrain from using the statement that TVA is “self-financing” because it requests no appropriations from Congress. It is misleading and some consider it a false statement because TVA goes through the backdoor for financing its operations through the sale of bonds “…and (TVA) is required to be self-supporting from power revenues and proceeds from the issuance of debt” (underline supplied.) TVA’s debt is now estimated at $25 billion.
Summary
In summary, it is past time for the federal government through its agent the TVA to get out of the way and allow consumers more freedom of choice between electricity suppliers; to open up for the first time the 17,000 miles of TVA transmission lines to permit normal commercial traffic over them; to let competitive markets prevail and to return to each of the seven states in which TVA operates their rightful control of public utilities. TVA has just hiked its electricity rates again and not one public watchdog agency (PSC’s) in the seven states involved can do anything about it.
---
*- As of the April 2008 Board meeting, the dust still is swirling. It appears that the TVA has not conformed to the requirements of Executive Order 13406, which clearly states that property disposed of by the TVA (or any other federal agency) must be for public uses, not for “commercial”, “industrial” or for “private development”. There are a number of examples given in the EO for guidance.
Ernest Norsworthy
April 16, 2008
Sunday, April 13, 2008
TVA to states: Your Water Policy be Damned!
TVA to the states – “Your water policy be damned?”
So, the TVA controls the electricity for 8 million people. Let’s restate that. The Tennessee Valley Authority controls the electricity for 8 million people AND all the water in the rivers and tributaries in TVA’s 80,000 square-mile territory.
The governors of Tennessee, Georgia and Alabama can talk all they want to among themselves about critical water issues but the one irrefutable federal agency atop all that dammed-up water is the TVA. And the TVA is not answerable to any state or local government entity including all seven of the state governors in TVA’s territory.
Does that seem un-American? It does to me. Our federal government in 1933 established a supra-government called the TVA and it is unlike any other federal agency. It has the powers of the federal government to take property and until recently, thought it had the power to buy, sell and swap land for a profit.
Aside from having the power directly to compete with free-enterprise utilities, the TVA with its arcane rules and procedures, in effect, is a separate and uncontrolled federal agency.
The Congress refuses to exercise oversight of the TVA and the several states are powerless to make any changes in it. Still, at least three states under TVA’s jurisdiction, Tennessee, Georgia, and Alabama are developing their own water policies and presumably their own strategies in how to deal with a water crisis.
The last person now standing appears to be the TVA and they shouldn’t be standing in the mix at all.
Ernest Norsworthy
emnorsworthy@earthlink.net and http://norsworthyopinion.com
So, the TVA controls the electricity for 8 million people. Let’s restate that. The Tennessee Valley Authority controls the electricity for 8 million people AND all the water in the rivers and tributaries in TVA’s 80,000 square-mile territory.
The governors of Tennessee, Georgia and Alabama can talk all they want to among themselves about critical water issues but the one irrefutable federal agency atop all that dammed-up water is the TVA. And the TVA is not answerable to any state or local government entity including all seven of the state governors in TVA’s territory.
Does that seem un-American? It does to me. Our federal government in 1933 established a supra-government called the TVA and it is unlike any other federal agency. It has the powers of the federal government to take property and until recently, thought it had the power to buy, sell and swap land for a profit.
Aside from having the power directly to compete with free-enterprise utilities, the TVA with its arcane rules and procedures, in effect, is a separate and uncontrolled federal agency.
The Congress refuses to exercise oversight of the TVA and the several states are powerless to make any changes in it. Still, at least three states under TVA’s jurisdiction, Tennessee, Georgia, and Alabama are developing their own water policies and presumably their own strategies in how to deal with a water crisis.
The last person now standing appears to be the TVA and they shouldn’t be standing in the mix at all.
Ernest Norsworthy
emnorsworthy@earthlink.net and http://norsworthyopinion.com
Wednesday, April 2, 2008
Comment on Trevor Stokes article on TD Forums
Mr. Robert Palmer, Editor
Times Daily
Florence, Alabama
March 24, 2008
Subject: Times Daily forum (article by Trevor Stokes 3/24/08); my suggested commentary
Trevor Stokes article about forums gets him an ‘E” for effort in trying to explain the forum phenomenon (as he said, it started a 1000 years ago in Rome) and he gets an “L” for loyally sticking up for the hand that feeds him but only a “C” in conclusions from his analysis.
One of the great failings of newspapers today, not just of the Times Daily, is their seeming inability to bring depth of reasoning, analyzing the subject matter and drawing conclusions based on them to the fore. At one time, that process was a pillar of practically every newspaper. And I think I know some of the reasons why it is missing today.
Since the 1980s when the Genie called the computer came out of the sand-bottle making the whole world interactive, the desire to talk, to be seen and heard through the Internet has exploded. And so has advertising in newspapers conversely imploded. Seen as the common enemy as did radio when TV moved ears and eyes to a small black and white screen, there was much ballyhooing about the death of radio, and the same death knell of newspapers is now at hand because of the computer.
A funny thing happened on the way to the forum – radio has never been larger and I think, in time, newspapers or some facsimile of them will again flourish, as will books and the written record of thousands of years. What if societies could not maintain the proper balance between zero’s and one’s and digitally speaking, they disappeared? There would not be a single trace left of the digital age except a few disintegrating pieces of hardware that itself would disappear in less than a thousand years.
So newspapers must figure out how to stay in the game and continue profitability. Computer ads, though less profitable, do produce revenues to help the media keep pace.
There will have to be a lot more work to make computer advertising pay off. Content-driven sites will attract the viewers who, like Americans in general, are very eclectic. Newspapers, because they play to diverse audiences, must place more emphasis on readability content to get their attention there in the first place.
While just about every business has a Web presence and mentions it in all of their advertising, I do not think the computer side of a newspaper ever will displace it. Like television was to the radio, they both captured increasing audiences.
The headline of Stokes’ article, which implied that forums might be dangerous to democracy, is not substantiated in the story, in fact; I believe the opposite to be true. While there is much, much misinformation on the Internet, its value to democracies all over the world is inestimable.
When a curiosity seeker, or researcher, or a student doing homework, has at their fingertips literally more than the great library of Alexandria with more and more information coming online every day, one cannot help but be in awe of the greatest wonder of the world, the Internet.
So Mr. Stokes’ article really could have no ending because there is not one smart enough (or stupid enough) to predict the final outcome. Today, there are forums for people to use pretty much as they like (how’s the fishing?) and tidbits about the community.
However, the tenor of some of the “discussions” on the Times Daily forum lead me to believe that some are not aware of the universality of the Internet and that what they say never will go away – until all zero’s and one’s are gone.
Ernest Norsworthy
Visalia, California
emnorsworthy@earthlink.net and http://norsworthyopinion.com
Times Daily
Florence, Alabama
March 24, 2008
Subject: Times Daily forum (article by Trevor Stokes 3/24/08); my suggested commentary
Trevor Stokes article about forums gets him an ‘E” for effort in trying to explain the forum phenomenon (as he said, it started a 1000 years ago in Rome) and he gets an “L” for loyally sticking up for the hand that feeds him but only a “C” in conclusions from his analysis.
One of the great failings of newspapers today, not just of the Times Daily, is their seeming inability to bring depth of reasoning, analyzing the subject matter and drawing conclusions based on them to the fore. At one time, that process was a pillar of practically every newspaper. And I think I know some of the reasons why it is missing today.
Since the 1980s when the Genie called the computer came out of the sand-bottle making the whole world interactive, the desire to talk, to be seen and heard through the Internet has exploded. And so has advertising in newspapers conversely imploded. Seen as the common enemy as did radio when TV moved ears and eyes to a small black and white screen, there was much ballyhooing about the death of radio, and the same death knell of newspapers is now at hand because of the computer.
A funny thing happened on the way to the forum – radio has never been larger and I think, in time, newspapers or some facsimile of them will again flourish, as will books and the written record of thousands of years. What if societies could not maintain the proper balance between zero’s and one’s and digitally speaking, they disappeared? There would not be a single trace left of the digital age except a few disintegrating pieces of hardware that itself would disappear in less than a thousand years.
So newspapers must figure out how to stay in the game and continue profitability. Computer ads, though less profitable, do produce revenues to help the media keep pace.
There will have to be a lot more work to make computer advertising pay off. Content-driven sites will attract the viewers who, like Americans in general, are very eclectic. Newspapers, because they play to diverse audiences, must place more emphasis on readability content to get their attention there in the first place.
While just about every business has a Web presence and mentions it in all of their advertising, I do not think the computer side of a newspaper ever will displace it. Like television was to the radio, they both captured increasing audiences.
The headline of Stokes’ article, which implied that forums might be dangerous to democracy, is not substantiated in the story, in fact; I believe the opposite to be true. While there is much, much misinformation on the Internet, its value to democracies all over the world is inestimable.
When a curiosity seeker, or researcher, or a student doing homework, has at their fingertips literally more than the great library of Alexandria with more and more information coming online every day, one cannot help but be in awe of the greatest wonder of the world, the Internet.
So Mr. Stokes’ article really could have no ending because there is not one smart enough (or stupid enough) to predict the final outcome. Today, there are forums for people to use pretty much as they like (how’s the fishing?) and tidbits about the community.
However, the tenor of some of the “discussions” on the Times Daily forum lead me to believe that some are not aware of the universality of the Internet and that what they say never will go away – until all zero’s and one’s are gone.
Ernest Norsworthy
Visalia, California
emnorsworthy@earthlink.net and http://norsworthyopinion.com
Friday, February 22, 2008
TVA February 15, 2008 Board Meeting
TVA Board Meeting February 15, 2008
TVA’s CEO Tom Kilgore at their board meeting in Chattanooga on Friday, February 15 (five board members present, one on the telephone and three members short), led off the main discussion with his progress report on the federal agency. See www.tva.gov
There was not a whole lot of good news to report, in fact, in addition to the 7 percent rate increase later approved by the board, he only alluded to the additional 5 percent “FCA” fuel cost adjustment announced five days later.
The only logical reason for not revealing the total rate increase at the board meeting, I believe, was to try to somewhat mitigate the grief of a double-digit increase. Certainly, both figures could have been released at the time of the board meeting. Was deception involved or just bad management?
The handling of the 7 percent rate increase and the 5 percent “fuel cost adjustment” typifies why utility rate increases should be under the purview of the seven public service commissions in Mississippi, Alabama, Tennessee, Georgia, Kentucky, North Carolina, and Virginia. These organizations representing the people have no say in how much TVA increases rates and there is no appeal to TVA’s edicts. TVA talks very little about cutting costs.
You may complain to a federal senator or representative about TVA rates but they are helpless to do anything about it, likewise your governor or state representatives or mayor, all unable to do anything about TVA rate increases. TVA is law over these matters in an 80,000 square mile territory locked in by a 2,500-mile fence.
And as usual, TVA is “behind the curve” in anticipating not only this FCA but also probably very large increases in coming months if the drought does not significantly relent. It is as if TVA saw the train coming ‘way down the track (the drought) but decided only at the last minute to jump out of the way (resulting in the FCA) but hoping it would shift to another track.
The plight and the action (insufficient planning) has now placed millions of people dependent on electricity in jeopardy not only for their utility needs but also for their health. The problem, of course, is water and plenty of it to cool every operating plant of the TVA, even the hydro plants.
Nuclear plants need enormous amounts of water for cooling and if it “dries up” not only would 30 percent of TVA’s generating capacity, nuclear, be in peril but also so would the basic human need for water. There was no indication at the meeting, which would come first – water for power plants or water for people.
In last November’s meeting it was discussed that some sort of water priority plan would be devised by the time of this meeting, however, Kilgore said there would be no change from present policy which is that he would determine the smaller cases and the board the larger ones such as Georgia’s request for water if there is one.
Kilgore did not state what TVA’s policy would be on the prioritization of water.
Lacking much in specificity about costs, Kilgore went on to explain about the payment of “taxes” (which is not true – it leaves the wrong impression that TVA actually pays taxes).
“We pay taxes on the top line; we don’t get to deduct anything before we pay those taxes”, Kilgore said, as if he were talking about a regular taxpaying corporation and not a federal agency that cannot pay taxes.
“Delivered cost of power” was above the Plan estimate primarily because of lower sales volume and increased cost of purchased power. Because of the amount of hydro being less, tax equivalents “and those kind of things” did not paint a positive financial picture at the board meeting.
“Debt-like obligations” are “down where they need to be”, said Kilgore, but because of the lack of earnings, the earnings to asset value are in the red, he continued. I cannot find where TVA defines a “debt-like” obligation. Common English would define it as a debt or not a debt, not fuzzing up the term such as saying it was a “power outage” instead of a “power failure”.
For the “equivalent availability” of power, “about three” large plants have had major power outages (failures) during January “that have hurt us”, said Kilgore.
One nuclear plant is running code “yellow” at reduced output because of five non-scheduled shutdowns since last May according to the Nuclear Regulatory Commission.
Ken Breeden, who is handling the Energy Efficiency and Demand Response effort of the TVA, said “69 percent of homes in the Valley heat hot water with electricity which accounts for about 20 percent of a typical monthly bill. And 46 percent of homes heat with electricity.” The average home electricity bill will be going up to about $117 a month April 1, including the added fuel cost adjustment of 5 percent.
“This is education”, said Breeden. “Some of this will require programs”, he said, without specifying anything about the “programs”.
A consultant is collecting data; meetings have been held with distributors and key stakeholders; “working groups” on automated metering and load control have been established with the Tennessee Valley Public Power Association (TVPPA), Breeden said.
Over 4000 self-audit kits, which contain two each CFLs (compact fluorescent lights) have been distributed since January.
“You’ll see a lot more in the April Draft Plan”, said Breeden. (We’re “working on it” is a familiar phrase often heard in reports about the TVA.)
Skila Harris, a board member, asked Tom Kilgore about water temperature.
One of the nuclear units had to be shut down last summer, “The temperature coming downstream was hotter than what we were allowed to put out so we had to stop”. “That’s even with cooling towers at Browns Ferry”. “It will continue to be a problem”, said Kilgore.
How do we cool these power plants with less water? He asked rhetorically. “Probably will be putting capital projects in the budget, he said, to reduce our dependence on water for cooling.” All the plants need to be cooled including hydro plants, he said.
The next topic, “Renewable Portfolio Compliance”, deals with federal legislation that has not yet been passed that would require utilities to attain a certain percent of energy from renewable sources, e.g., wind, bio, etc., by a date certain which is very uncertain at this time. No one knows what the final version of such legislation, if any at all, would pass both the House and Senate but the TVA distributors wanted some kind of assurance from the TVA that they would not be stuck with any penalties for non-compliance.
In a policy decision, the Board agreed that TVA would be responsible for any penalties. This is but an indication that the 159 some-odd distributors are uneasy about their relation with the TVA about who ultimately would be responsible for TVA’s bonded indebtedness since the federal government explicitly states that the full faith and credit of the United States will not cover TVA debt.
Anyway, how can the TVA posit a policy without knowing what renewable requirements the federal government might enact into law and any subsequent penalties?
Enter the Seven States Corp., a customer-owned generation scheme headed by Jack Simmons, head of SS Corp and the TVPPA.
What happened was that the TVA board authorized CEO Tom Kilgore to “enter into arrangements” with TVA’s distributor customers where TVA can jointly own a power plant or plants with them through the SS Corp.
156 of 159 TVA distributors (three of them are leaving the TVA) committed over a million dollars in working capital to SS Corp. to capitalize it to be used for business planning, studies, consultants, and attorneys.
The partnership is claimed to be a ‘win-win” situation for distributors which will put equity in the hands of Valley stakeholders rather than in the hands of the U.S. Treasury, which is where all of TVA’s assets lie today, i.e., the federal government averred Simmons.
Belief that the partnership between the SS Corp. and the TVA ultimately could bring lower cost of electricity to the Valley also drives the plan. The idea is to bring some funds to the table to help TVA in their ambitious expansion program, to bring more debt to the table in the name of SS Corp. and keeping it off the balance sheet of TVA.
The big question – who will repay the debt owed by the SS Corp.?
It seems to me the only source of funds will come from users of TVA electricity. There is no blood in a turnip so the only way under this shaky and risky scheme is for the ratepayer to cough up even more dollars in addition to any other TVA rate increases.
I do not believe it is possible for the U.S. Government to share ownership of anything including the joint equity ownership of power plants in TVA’s territory. If this were possible, the federal government could reduce a lot of its debt by selling ownership by bits and pieces of many national treasures.
Overall, the TVA board meeting on February 15, 2008, left me with the feeling that the new management is no better than previous bad managements, that TVA’s financial condition is so precarious that plans need to be developed now for the dissolution of its assets to try and pay off as much as possible the $25 billion debt that continues to rise as the water levels fall in its reservoirs.
The failure of the Senate to “advise and consent” to the re-nomination of three board members, an extremely simple and appropriate thing to do, tells me there are other forces at play. At the least, it shows a lack of support of current TVA management and perhaps of the TVA itself.
Ernest Norsworthy
emnorsworthy@earthlink.net http://norsworthyattheshoals.blogspot.com/ and http://norsworthyopinion.net
TVA’s CEO Tom Kilgore at their board meeting in Chattanooga on Friday, February 15 (five board members present, one on the telephone and three members short), led off the main discussion with his progress report on the federal agency. See www.tva.gov
There was not a whole lot of good news to report, in fact, in addition to the 7 percent rate increase later approved by the board, he only alluded to the additional 5 percent “FCA” fuel cost adjustment announced five days later.
The only logical reason for not revealing the total rate increase at the board meeting, I believe, was to try to somewhat mitigate the grief of a double-digit increase. Certainly, both figures could have been released at the time of the board meeting. Was deception involved or just bad management?
The handling of the 7 percent rate increase and the 5 percent “fuel cost adjustment” typifies why utility rate increases should be under the purview of the seven public service commissions in Mississippi, Alabama, Tennessee, Georgia, Kentucky, North Carolina, and Virginia. These organizations representing the people have no say in how much TVA increases rates and there is no appeal to TVA’s edicts. TVA talks very little about cutting costs.
You may complain to a federal senator or representative about TVA rates but they are helpless to do anything about it, likewise your governor or state representatives or mayor, all unable to do anything about TVA rate increases. TVA is law over these matters in an 80,000 square mile territory locked in by a 2,500-mile fence.
And as usual, TVA is “behind the curve” in anticipating not only this FCA but also probably very large increases in coming months if the drought does not significantly relent. It is as if TVA saw the train coming ‘way down the track (the drought) but decided only at the last minute to jump out of the way (resulting in the FCA) but hoping it would shift to another track.
The plight and the action (insufficient planning) has now placed millions of people dependent on electricity in jeopardy not only for their utility needs but also for their health. The problem, of course, is water and plenty of it to cool every operating plant of the TVA, even the hydro plants.
Nuclear plants need enormous amounts of water for cooling and if it “dries up” not only would 30 percent of TVA’s generating capacity, nuclear, be in peril but also so would the basic human need for water. There was no indication at the meeting, which would come first – water for power plants or water for people.
In last November’s meeting it was discussed that some sort of water priority plan would be devised by the time of this meeting, however, Kilgore said there would be no change from present policy which is that he would determine the smaller cases and the board the larger ones such as Georgia’s request for water if there is one.
Kilgore did not state what TVA’s policy would be on the prioritization of water.
Lacking much in specificity about costs, Kilgore went on to explain about the payment of “taxes” (which is not true – it leaves the wrong impression that TVA actually pays taxes).
“We pay taxes on the top line; we don’t get to deduct anything before we pay those taxes”, Kilgore said, as if he were talking about a regular taxpaying corporation and not a federal agency that cannot pay taxes.
“Delivered cost of power” was above the Plan estimate primarily because of lower sales volume and increased cost of purchased power. Because of the amount of hydro being less, tax equivalents “and those kind of things” did not paint a positive financial picture at the board meeting.
“Debt-like obligations” are “down where they need to be”, said Kilgore, but because of the lack of earnings, the earnings to asset value are in the red, he continued. I cannot find where TVA defines a “debt-like” obligation. Common English would define it as a debt or not a debt, not fuzzing up the term such as saying it was a “power outage” instead of a “power failure”.
For the “equivalent availability” of power, “about three” large plants have had major power outages (failures) during January “that have hurt us”, said Kilgore.
One nuclear plant is running code “yellow” at reduced output because of five non-scheduled shutdowns since last May according to the Nuclear Regulatory Commission.
Ken Breeden, who is handling the Energy Efficiency and Demand Response effort of the TVA, said “69 percent of homes in the Valley heat hot water with electricity which accounts for about 20 percent of a typical monthly bill. And 46 percent of homes heat with electricity.” The average home electricity bill will be going up to about $117 a month April 1, including the added fuel cost adjustment of 5 percent.
“This is education”, said Breeden. “Some of this will require programs”, he said, without specifying anything about the “programs”.
A consultant is collecting data; meetings have been held with distributors and key stakeholders; “working groups” on automated metering and load control have been established with the Tennessee Valley Public Power Association (TVPPA), Breeden said.
Over 4000 self-audit kits, which contain two each CFLs (compact fluorescent lights) have been distributed since January.
“You’ll see a lot more in the April Draft Plan”, said Breeden. (We’re “working on it” is a familiar phrase often heard in reports about the TVA.)
Skila Harris, a board member, asked Tom Kilgore about water temperature.
One of the nuclear units had to be shut down last summer, “The temperature coming downstream was hotter than what we were allowed to put out so we had to stop”. “That’s even with cooling towers at Browns Ferry”. “It will continue to be a problem”, said Kilgore.
How do we cool these power plants with less water? He asked rhetorically. “Probably will be putting capital projects in the budget, he said, to reduce our dependence on water for cooling.” All the plants need to be cooled including hydro plants, he said.
The next topic, “Renewable Portfolio Compliance”, deals with federal legislation that has not yet been passed that would require utilities to attain a certain percent of energy from renewable sources, e.g., wind, bio, etc., by a date certain which is very uncertain at this time. No one knows what the final version of such legislation, if any at all, would pass both the House and Senate but the TVA distributors wanted some kind of assurance from the TVA that they would not be stuck with any penalties for non-compliance.
In a policy decision, the Board agreed that TVA would be responsible for any penalties. This is but an indication that the 159 some-odd distributors are uneasy about their relation with the TVA about who ultimately would be responsible for TVA’s bonded indebtedness since the federal government explicitly states that the full faith and credit of the United States will not cover TVA debt.
Anyway, how can the TVA posit a policy without knowing what renewable requirements the federal government might enact into law and any subsequent penalties?
Enter the Seven States Corp., a customer-owned generation scheme headed by Jack Simmons, head of SS Corp and the TVPPA.
What happened was that the TVA board authorized CEO Tom Kilgore to “enter into arrangements” with TVA’s distributor customers where TVA can jointly own a power plant or plants with them through the SS Corp.
156 of 159 TVA distributors (three of them are leaving the TVA) committed over a million dollars in working capital to SS Corp. to capitalize it to be used for business planning, studies, consultants, and attorneys.
The partnership is claimed to be a ‘win-win” situation for distributors which will put equity in the hands of Valley stakeholders rather than in the hands of the U.S. Treasury, which is where all of TVA’s assets lie today, i.e., the federal government averred Simmons.
Belief that the partnership between the SS Corp. and the TVA ultimately could bring lower cost of electricity to the Valley also drives the plan. The idea is to bring some funds to the table to help TVA in their ambitious expansion program, to bring more debt to the table in the name of SS Corp. and keeping it off the balance sheet of TVA.
The big question – who will repay the debt owed by the SS Corp.?
It seems to me the only source of funds will come from users of TVA electricity. There is no blood in a turnip so the only way under this shaky and risky scheme is for the ratepayer to cough up even more dollars in addition to any other TVA rate increases.
I do not believe it is possible for the U.S. Government to share ownership of anything including the joint equity ownership of power plants in TVA’s territory. If this were possible, the federal government could reduce a lot of its debt by selling ownership by bits and pieces of many national treasures.
Overall, the TVA board meeting on February 15, 2008, left me with the feeling that the new management is no better than previous bad managements, that TVA’s financial condition is so precarious that plans need to be developed now for the dissolution of its assets to try and pay off as much as possible the $25 billion debt that continues to rise as the water levels fall in its reservoirs.
The failure of the Senate to “advise and consent” to the re-nomination of three board members, an extremely simple and appropriate thing to do, tells me there are other forces at play. At the least, it shows a lack of support of current TVA management and perhaps of the TVA itself.
Ernest Norsworthy
emnorsworthy@earthlink.net http://norsworthyattheshoals.blogspot.com/ and http://norsworthyopinion.net
Saturday, February 9, 2008
Improvement from Hard Work
Visalia, California
February 9, 2008
Subject: Improvement from hard work
Occasionally, good writers intentionally or not hit one out of the ballpark. The article by Dennis Sherer in Florence, Alabama’s Times Daily is one of those. And it really has nothing to do about fishing.
What Sherer subtly pointed out is that it is fine for government to help, to provide seed money or technical guidance in just about any undertaking. And then for the government, all levels of government, to get out of the way and let the magic of entrepreneurship, innovation thrive.
For too long, Shoals residents and those in the Tennessee Valley have relied on the government to take the lead in economic development, cultural growth and the responsibility for the area’s economic wellbeing.
Once, I lived on a small Alabama farm and got to know a lot about the way animals act and react. We had one mule called “Crip” with a lame right hoof and some “free range” chickens. Dad wanted me to train a billy goat to pull a small cart for my brother. Good idea, but the goat kept butting in and bleating “no”.
The mule and I, however, got on famously. After “geeing” and “hawing” in a day of plowing when it was time to head back to the barn, he needed no directions and usually at a good pace.
Cattle on the old farms without a call or urging usually would come clanking their cowbells back to the barn in the evening for feed and milking. They always used the same cow path and all the cattle docilely joined the queue. Simple, non-thinking, but effective for everyone.
Now big government for three-quarters-of-a-century has told the people in the Tennessee Valley what was good for them and expected obedience to their calls for more and more rate increases for their anti-competitive product – in this case, for electricity.
Instead of providing an atmosphere for the seeds for entrepreneurs to grow and thrive in, the TVA jealously guarded its prerogatives of total government control thereby snuffing out the incentives naturally borne of opportunities.
And for many people, always doing what the federal government says is comfortable enough and anyway don’t they get a “refund” of sorts from that same government depending on their usage of electricity? (That “payment” should be more for those who use less electricity rather than a payment for more and more use).
The TVA budget this year includes $22 million to help users “conserve” electricity when the CEO has said that TVA needs to sell more electricity!
So the example Sherer has given us is one of hard work, independence of action calling on governments not to lead but to offer assistance they can and should provide. In other words, throwing off the shackles of stultifying government.
Ernest Norsworthy
Visalia, California
http://norsworthyattheshoals.blogspot.com/
http://norsworthyopinion.com
February 9, 2008
Subject: Improvement from hard work
Occasionally, good writers intentionally or not hit one out of the ballpark. The article by Dennis Sherer in Florence, Alabama’s Times Daily is one of those. And it really has nothing to do about fishing.
What Sherer subtly pointed out is that it is fine for government to help, to provide seed money or technical guidance in just about any undertaking. And then for the government, all levels of government, to get out of the way and let the magic of entrepreneurship, innovation thrive.
For too long, Shoals residents and those in the Tennessee Valley have relied on the government to take the lead in economic development, cultural growth and the responsibility for the area’s economic wellbeing.
Once, I lived on a small Alabama farm and got to know a lot about the way animals act and react. We had one mule called “Crip” with a lame right hoof and some “free range” chickens. Dad wanted me to train a billy goat to pull a small cart for my brother. Good idea, but the goat kept butting in and bleating “no”.
The mule and I, however, got on famously. After “geeing” and “hawing” in a day of plowing when it was time to head back to the barn, he needed no directions and usually at a good pace.
Cattle on the old farms without a call or urging usually would come clanking their cowbells back to the barn in the evening for feed and milking. They always used the same cow path and all the cattle docilely joined the queue. Simple, non-thinking, but effective for everyone.
Now big government for three-quarters-of-a-century has told the people in the Tennessee Valley what was good for them and expected obedience to their calls for more and more rate increases for their anti-competitive product – in this case, for electricity.
Instead of providing an atmosphere for the seeds for entrepreneurs to grow and thrive in, the TVA jealously guarded its prerogatives of total government control thereby snuffing out the incentives naturally borne of opportunities.
And for many people, always doing what the federal government says is comfortable enough and anyway don’t they get a “refund” of sorts from that same government depending on their usage of electricity? (That “payment” should be more for those who use less electricity rather than a payment for more and more use).
The TVA budget this year includes $22 million to help users “conserve” electricity when the CEO has said that TVA needs to sell more electricity!
So the example Sherer has given us is one of hard work, independence of action calling on governments not to lead but to offer assistance they can and should provide. In other words, throwing off the shackles of stultifying government.
Ernest Norsworthy
Visalia, California
http://norsworthyattheshoals.blogspot.com/
http://norsworthyopinion.com
Wednesday, January 16, 2008
(Working title) TVA then and now
You're in for a treat, Shoals residents, for a peek at the beginnings of my much heralded new book(s) on the TVA. Your comments are welcomed and deeply appreciated. EN
1939 was a very cold year. The old farmhouse my parents bought with its hilly 57 acres near Prattville, Alabama seemed a good investment especially with its large stock of longleaf heart-pine. We siblings did not recognize the hardships we had faced during the long and uncertain trek through Depression years but still we were happy to have a change from city life. The 19th century steep-roofed and badly weathered house had none of the modern conveniences even of that day.
No electricity, well water by the bucket and privacy in the little house out back. Heat came from a two-sided fireplace in the middle of the four-room house and the wood stove in the kitchen. Those chilly 1939 mornings called for alternately burning up on the fire side and freezing on the back side.
I had never heard of the Tennessee Valley Authority back then; we were far from the dam building going on several hundred miles to the north. But there was one companion New Deal agency I learned something about, the Rural Electrification Administration.
Standing alone as the most socially aggressive of American presidents, FDR pulled every lever of government power both legal and unimagined to form what generally is called the New Deal. The REA was a late comer to the crowded bowl of alphabet soup of new agencies to try to overcome the depressed American economy. The New Deal nearly killed the American spirit of independence, self-reliance and a positive belief in America in exchange for a culture of government dependency. The American culture was greatly damaged even to today with some of the New Deal vestiges of what FDR tried to do – to make Americans first to rely more on the federal government and to reject the concept of a market economy run by the big corporations he despised.
Standing alone as the most socially aggressive of American presidents, FDR pulled every lever of government power both legal and unimagined to form what generally is called the New Deal. The REA was a late comer to the crowded bowl of alphabet soup of new agencies to try to overcome the depressed American economy. The New Deal nearly killed the American spirit of independence, self-reliance and a positive belief in America in exchange for a culture of government dependency. The American culture was greatly damaged even to today with some of the New Deal vestiges of what FDR tried to do – to make Americans first to rely more on the federal government and to reject the concept of a market economy run by the big corporations he despised.
In 1939, the Depression had worsened, not improved as FDR had said it would even after all the many millions spent on a plethora of Washington-directed programs. His soothing and reassuring “fireside chats” did have a mesmerizing effect and probably helped forestall a nationwide panic and there had been enough to panic about, a stock market that had gone bust, a bank “holiday”, and moving off the gold standard. There was not much money in circulation. America at that time still was a market-based economy despite the influence of Keynesian economics that called for central government control.
Sen. George Norris for years tried to get legislation passed that would keep Muscle Shoals under the dominance of the government. Norris in 1922 was chairman of a powerful Agriculture Department committee that held hearings on proposals to take over the partially completed Wilson Dam and the nitrate plants that produced demolitions.
The uncompleted properties were declared surplus after World War I. Two major capitalists of the time, Henry Ford and Thomas Edison, had plans of how they would use the Muscle Shoals facilities that would in Sen. Norris’ view ruin any chances for a TVA-like government program Norris ardently, passionately supported. Roosevelt probably was most happy to get back at the industrialists with the help of the Republican senator from Nebraska and passage of the Tennessee Valley Authority Act in 1933.
Reflecting on the time when Ford and Edison visited the Shoals area of North Alabama in the 1920s when Ford supposedly proclaimed that he would make the Shoals “the Detroit of the South”, it didn’t take long for land speculators to understand the significance of that statement. Ford would build the cars and Edison would provide the electricity.
The genesis of the TVA came long before its enactment into law in 1933. In Senate hearings in 1922 chaired by Sen. George W. Norris, it was clear that Norris wanted the federal government to maintain control of the dam at Muscle Shoals and the nitrate producing buildings in Colbert County.
The dam across the Tennessee River originally was to produce electricity for the process of making explosives during WWI. However, the war abruptly ended and the unfinished dam and other facilities immediately became surplus government property for sale to the highest bidder. When, after repeated attempts of Ford and Edison to make offers for the uncompleted Wilson Dam and other surplus properties continually fell on deaf federal ears, they moved on to other enterprises. Hearings in the Senate. Committee on Agriculture and Forestry (S. 3420, sixty-seventh congress) – 1922 chaired by Sen. Norris
But the more FDR tried Washington-based programs the more doubt crept into American’s belief in its own rhetoric – freedom, independence, the entrepreneurial spirit and in its ability to grow and prosper in a depressed world economy.
The REA was considered a “bootstrap” adventure because there were no grants, only loans. However, through a system of federal loan subsidies, the REA soon became the vehicle to electrify sparsely populated farm areas that had no access to electricity because of cost considerations of private utilities. Our small farm was able to tap on to a transmission line for the first time ever in 1939 four years after FDR’s Executive Order in 1935 authorizing the REA. Later, it would become a law and subsequently folded into the Agriculture Department as today’s Rural Utilities Service.
The REA office in Prattville was graced with a huge drum neon sign with the jagged REA letters in red on each side. That sign was built by my father with some help (hindrance?) from me.
A case can be made that the subsidized REA loan program impeded innovative development of alternative energy sources such as bio-degradables, solar, wind and even wave energy since the 1930s. But as the production of electricity presently provided through the REA and the highly subsidized TVA becomes too expensive, innovation may again take the forefront.
A case can be made that the subsidized REA loan program impeded innovative development of alternative energy sources such as bio-degradables, solar, wind and even wave energy since the 1930s. But as the production of electricity presently provided through the REA and the highly subsidized TVA becomes too expensive, innovation may again take the forefront.
While the thrice-told story of TVA’s beginnings preceded the TVA Act in 1933 by many years, my understanding of it began in the 1960s when as a federal representative of the Department of Housing and Urban Development it became my task to nurture along the several projects in the Shoals area of North Alabama. There were Urban Renewal projects in Florence, Sheffield and Tuscumbia where dilapidated and slum dwellings were razed for redevelopment for both private and public re-uses.
Along Alabama’s northern tier of towns roughly paralleling the Tennessee River Valley were other similar projects all of which also came under the purview of the Tennessee Valley Authority, yet another layer of federal government later to grow to 80,000 square miles of land in parts of seven Southeastern states.
TVA had changed directions so many times, often at the whim of the three-person non-elected board of directors, Congress finally decided on two major issues. TVA would be “self financing”, that is, there would be no more congressional appropriations for its undertakings, and there would be a “fence” around TVA’s territory impenetrable from outside competitive forces.
Later, the Congress changed the makeup of TVA management by requiring an appointed nine-member part-time board who appoints a CEO. Effectively, this means that one person has control of and is responsible for the entire TVA operations with revenues of over $9 billion annually.
Later, the Congress changed the makeup of TVA management by requiring an appointed nine-member part-time board who appoints a CEO. Effectively, this means that one person has control of and is responsible for the entire TVA operations with revenues of over $9 billion annually.
A patina of imperial government lies over 80,000 square miles of seven sovereign states in the Southeast. If it were only a vast acreage like much of the unpopulated western lands it would be one thing and it might not be so noticeable but this is a direct federal presence dominating the lives of more than nine million people every day when it comes to their use of electricity.
Unique among all federal agencies, the Tennessee Valley Authority makes its own rules, then assures adherence to them. TVA goes to court when they deem it necessary and it has done so without authority from the Justice Department of the United States. In a recent case, the TVA chose to file suit against the explicit direction of the attorney general not to do so. In legal matters, the attorney general of the United States speaks for the United States government; separate parts of the same government cannot go their own way choosing to sue or not to sue at will. Legal chaos surely would result.
Such is the case of the TVA in its attempts to avoid falling under the same rules of all other federal agencies. The Environmental Protection Agency, in an attempt to require the TVA to correct perceived violations of the Clean Air Act, was told that because it was part of the same government that it could not sue the TVA. It would be the same as suing one’s self. The fact of its own abject failure to self-regulate diminishes any other case for compliance, further eroding public trust.
Franklin Delano Roosevelt forced passage of the TVA Act in 1933 partly to pay back Sen. George Norris (R-Neb.) for his help in FDR’s presidential campaign and to wrest some of the power from free-market businesses, those big corporations whom he despised.
FDR said he wanted an agency with the power of the federal government, among other things, to take personal property and with the flexibility of a private corporation. Trying to mix those obvious impossibilities (if you believe the Constitution) has resulted in haphazard execution of the TVA law and has left in its wake a mélange of start-stop projects many of which have resulted in multi-billion dollar boondoggles. FDR’s obvious political ploy (an “experiment”) has turned the TVA into an arrogant federal agency that appears to answer to no one.
TVA has picked and chosen just which rules it wants to go by. For example, for many years TVA was in the land sale/swap business managing to turn some tidy “profits”. It was not until the Supreme Court Kelo case, which now allows public entities to acquire private properties by eminent domain (taking) and to turn them over for private development, did the present administration take action to stop federal agencies from doing the same thing.
Through Executive Order 13406, which prohibits federal agencies from using acquired properties for any but public uses, the TVA effectively was stopped from providing such private to public (TVA) and then for commercial uses. Only the traditional uses in keeping with previous interpretations of the Fifth Amendment to the Constitution are now available, that is for public roads, schools and other public entities. The executive order lists examples.
Since the Kelo decision, many states have adopted laws or are in the process of passing them that would prohibit eminent domain takings for private use. There is an instance in Fresno, CA where the local governing body in one scenario seems about to force the sale of private property to assemble it for a private developer. While it may turn out to be legal under California law and it appears to be accommodated by the Kelo decision, this kind of public taking is frowned on by most Americans.
The thing that put the kibosh on the possible Bass Pro Shop development in Veterans Park in Florence, Ala. was the clamping down on the TVA which by executive order prohibits federal agencies from taking private property and turning it over to a private developer even though in this case the TVA acquired the land many years ago.
In the Fresno case, Donald Trump is the developer who wants the city to carry his water in the assembly of land parcels, just the kind of action now prohibited by federal government agencies. Trump wants to take a bankrupt golf course project called Running Horse and turn it into one of his legendary developments by acquiring the property the easy way.
It now appears that the major creditor for the property, La Jolla Loans, will assume title to their interest in the project, sell it to the City of Fresno who then will assemble the rest of the property by eminent domain and turn all of it over to developer Trump. And if this process ever made it to the present Supreme Court, it probably would be ruled illegal.
The Shoals has its Retirement Systems of Alabama developments and it has performed exceedingly well according to reports even without the addition of a commercial attraction in Veterans Park.
The speculation in the 1920s that Henry Ford was planning a “Detroit of the South” in Muscle Shoals is another bit of irony – those automobile plants (not Ford’s) actually did come to Alabama many years later with no particular thanks to the TVA. Ford’s offer to lease and improve the surplus Wilson Dam at Muscle Shoals and other properties from the federal government was a fact but it was strenuously objected to by none other than George W. Norris, then chairman of a powerful .Agriculture Department committee and later considered to be the “father” of the TVA. Here are some of the comments from those 1922 hearings that preceded the TVA Act by eleven years.
.(comments here)
Sen. James T. Heflin, uncle of Howell Heflin who also later became a United States senator from Alabama, served on that same committee with Norris and he was strongly in favor of the private development proposed by Henry Ford because it offered many permanent and good-paying jobs for the Shoals area. Later, his nephew Howell would laud the TVA and became one of its most ardent supporters.
Besides questioning whether the TVA Act is actually constitutional, (there have been no substantial challenges since Ashwander v. TVA in 1936) there remain some very serious flaws in the execution of its overall scheme. Despite an obvious non-partisan air, FDR was a vicious and vengeful political infighter and became concerned that the Supreme Court was overturning many of his New Deal programs
FDR could not cajole the justices to stop overruling his programs as being unconstitutional so he took another tack. He proposed legislation to put an age limit of 70 years for all judicial appointments but he was aiming at the five judges that kept ruling against him. They were “too old”; he said, the court needed “fresh blood” for the “living” constitution. And then if a justice did not retire, a new one would be added and so on. It could have resulted in a 15-person court or no fewer than nine members. The newspapers picked up quickly on this FDR ploy and called it what it was, “court packing”.
Either the current justices became spooked by FDR’s threats or public opinion began to work against FDR, the court began to go easier on FDR’s programs and the controversial “court packing” scheme was dropped.
Meanwhile, the TVA began its odyssey of trying to figure out how to fill in the numbers on the blank check FDR handed the first appointed TVA directors. They had very different ideas of how to carry out the charge in the TVA Act.
By establishing its own territory, the TVA conversely removes that land area from the jurisdiction of the seven states involved for purposes on rulings on utility rates and on other decisions normally made by those states. There is no longer “state control” over electricity and flood control there and the land effectively is transferred to the federal government for those purposes.
Whenever TVA decides to increase electricity rates, it does so without the authority of any of the states’ public service commissions or any other legal authority of those states. It is incumbent on states to go “hat in hand” to “request” a change in TVA policy (not rates) that affects them.
Unique among all federal agencies, the Tennessee Valley Authority makes its own rules, then assures adherence to them. TVA goes to court when they deem it necessary and it has done so without authority from the Justice Department of the United States. In a recent case, the TVA chose to file suit against the explicit direction of the attorney general not to do so. In legal matters, the attorney general of the United States speaks for the United States government; separate parts of the same government cannot go their own way choosing to sue or not to sue at will. Legal chaos surely would result.
Such is the case of the TVA in its attempts to avoid falling under the same rules of all other federal agencies. The Environmental Protection Agency, in an attempt to require the TVA to correct perceived violations of the Clean Air Act, was told that because it was part of the same government that it could not sue the TVA. It would be the same as suing one’s self. The fact of its own abject failure to self-regulate diminishes any other case for compliance, further eroding public trust.
Franklin Delano Roosevelt forced passage of the TVA Act in 1933 partly to pay back Sen. George Norris (R-Neb.) for his help in FDR’s presidential campaign and to wrest some of the power from free-market businesses, those big corporations whom he despised.
FDR said he wanted an agency with the power of the federal government, among other things, to take personal property and with the flexibility of a private corporation. Trying to mix those obvious impossibilities (if you believe the Constitution) has resulted in haphazard execution of the TVA law and has left in its wake a mélange of start-stop projects many of which have resulted in multi-billion dollar boondoggles. FDR’s obvious political ploy (an “experiment”) has turned the TVA into an arrogant federal agency that appears to answer to no one.
TVA has picked and chosen just which rules it wants to go by. For example, for many years TVA was in the land sale/swap business managing to turn some tidy “profits”. It was not until the Supreme Court Kelo case, which now allows public entities to acquire private properties by eminent domain (taking) and to turn them over for private development, did the present administration take action to stop federal agencies from doing the same thing.
Through Executive Order 13406, which prohibits federal agencies from using acquired properties for any but public uses, the TVA effectively was stopped from providing such private to public (TVA) and then for commercial uses. Only the traditional uses in keeping with previous interpretations of the Fifth Amendment to the Constitution are now available, that is for public roads, schools and other public entities. The executive order lists examples.
Since the Kelo decision, many states have adopted laws or are in the process of passing them that would prohibit eminent domain takings for private use. There is an instance in Fresno, CA where the local governing body in one scenario seems about to force the sale of private property to assemble it for a private developer. While it may turn out to be legal under California law and it appears to be accommodated by the Kelo decision, this kind of public taking is frowned on by most Americans.
The thing that put the kibosh on the possible Bass Pro Shop development in Veterans Park in Florence, Ala. was the clamping down on the TVA which by executive order prohibits federal agencies from taking private property and turning it over to a private developer even though in this case the TVA acquired the land many years ago.
In the Fresno case, Donald Trump is the developer who wants the city to carry his water in the assembly of land parcels, just the kind of action now prohibited by federal government agencies. Trump wants to take a bankrupt golf course project called Running Horse and turn it into one of his legendary developments by acquiring the property the easy way.
It now appears that the major creditor for the property, La Jolla Loans, will assume title to their interest in the project, sell it to the City of Fresno who then will assemble the rest of the property by eminent domain and turn all of it over to developer Trump. And if this process ever made it to the present Supreme Court, it probably would be ruled illegal.
The Shoals has its Retirement Systems of Alabama developments and it has performed exceedingly well according to reports even without the addition of a commercial attraction in Veterans Park.
The speculation in the 1920s that Henry Ford was planning a “Detroit of the South” in Muscle Shoals is another bit of irony – those automobile plants (not Ford’s) actually did come to Alabama many years later with no particular thanks to the TVA. Ford’s offer to lease and improve the surplus Wilson Dam at Muscle Shoals and other properties from the federal government was a fact but it was strenuously objected to by none other than George W. Norris, then chairman of a powerful .Agriculture Department committee and later considered to be the “father” of the TVA. Here are some of the comments from those 1922 hearings that preceded the TVA Act by eleven years.
.(comments here)
Sen. James T. Heflin, uncle of Howell Heflin who also later became a United States senator from Alabama, served on that same committee with Norris and he was strongly in favor of the private development proposed by Henry Ford because it offered many permanent and good-paying jobs for the Shoals area. Later, his nephew Howell would laud the TVA and became one of its most ardent supporters.
Besides questioning whether the TVA Act is actually constitutional, (there have been no substantial challenges since Ashwander v. TVA in 1936) there remain some very serious flaws in the execution of its overall scheme. Despite an obvious non-partisan air, FDR was a vicious and vengeful political infighter and became concerned that the Supreme Court was overturning many of his New Deal programs
FDR could not cajole the justices to stop overruling his programs as being unconstitutional so he took another tack. He proposed legislation to put an age limit of 70 years for all judicial appointments but he was aiming at the five judges that kept ruling against him. They were “too old”; he said, the court needed “fresh blood” for the “living” constitution. And then if a justice did not retire, a new one would be added and so on. It could have resulted in a 15-person court or no fewer than nine members. The newspapers picked up quickly on this FDR ploy and called it what it was, “court packing”.
Either the current justices became spooked by FDR’s threats or public opinion began to work against FDR, the court began to go easier on FDR’s programs and the controversial “court packing” scheme was dropped.
Meanwhile, the TVA began its odyssey of trying to figure out how to fill in the numbers on the blank check FDR handed the first appointed TVA directors. They had very different ideas of how to carry out the charge in the TVA Act.
By establishing its own territory, the TVA conversely removes that land area from the jurisdiction of the seven states involved for purposes on rulings on utility rates and on other decisions normally made by those states. There is no longer “state control” over electricity and flood control there and the land effectively is transferred to the federal government for those purposes.
Whenever TVA decides to increase electricity rates, it does so without the authority of any of the states’ public service commissions or any other legal authority of those states. It is incumbent on states to go “hat in hand” to “request” a change in TVA policy (not rates) that affects them.
The point TVA hardly ever discusses is how they have kept electricity rates as cheap as they have been (but not so much so anymore) and how the “mystery” is solved. Your lower rates are caused by the direct subsidy of so-called “backdoor” financing. This amounts to about $25 billion in bonded indebtedness today with an added $5 to $7 billion in the next few years.
TVA’s “dirty little secret” is that it is the users, the stakeholders, of TVA electricity who are on the hook for that huge debt. No one in the TVA hierarchy is personally responsible for it, not your congressional representatives, not even the president of the United States, and technically, not even the government of the United States. Divide 8.7million accounts into 25 billion dollars to get an idea of how much debt you (not we or them) owe today. It comes to about $2800 for each electricity account. Or if you use the so-called logic of TVA’s payments in lieu of taxes that is based on prorated usage, some customers would be in for a huge surprise.
TVA’s “dirty little secret” is that it is the users, the stakeholders, of TVA electricity who are on the hook for that huge debt. No one in the TVA hierarchy is personally responsible for it, not your congressional representatives, not even the president of the United States, and technically, not even the government of the United States. Divide 8.7million accounts into 25 billion dollars to get an idea of how much debt you (not we or them) owe today. It comes to about $2800 for each electricity account. Or if you use the so-called logic of TVA’s payments in lieu of taxes that is based on prorated usage, some customers would be in for a huge surprise.
Perhaps taxpayers could claim their share of extra TVA cost as an expense of government directly attributable to them. Maybe the IRS needs to make a ruling on this.
Now that the Southeast is in the middle of a most severe drought, it seems that everyone wants some of the Tennessee Valley water. Likewise, it also seems that the one to try to get that water from is none other than the TVA. Apparently, TVA (the federal government) lays claim to the ownership of that water. Again, states must defer to a federal agency run by a non-elected body answerable only unto itself, raising again the ugly head of sectionalism
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