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

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

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

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

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

(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.

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.

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.

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.

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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.

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