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 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



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