Energy & Environment

Is TVA Up for Sale?

By Steven Johnson | ECT Staff Writer Published: April 12th, 2013

President Obama’s fiscal 2014 budget calls for a strategic review of the Tennessee Valley Authority, with an eye toward selling the nation’s largest public power provider.

President Obama's fiscal 2014 budget puts the idea of selling the Tennessee Valley Authority, and its dams like Fort Loudoun, on the table. (Photo By: TVA)

President Obama’s fiscal 2014 budget puts the idea of selling the Tennessee Valley Authority, and its dams like Fort Loudoun, on the table. (Photo By: TVA)

But the proposal, which blindsided TVA officials, might run afoul of a 1986 law that already bars putting TVA on the market without congressional authorization.

The 27-year-old law came into focus because Obama’s budget, released April 10, contained a surprise announcement that the administration will seek a strategic review of TVA.

Citing the authority’s debt constraints and capital requirements, the administration will consider the possible divestiture of TVA “in part or as a whole,” the budget document said.

“Reducing or eliminating the Federal Government’s role in programs such as TVA, which have achieved their original objectives and no longer require Federal participation, can help put the Nation on a sustainable fiscal path,” budget writers said in a section on “Creating a 21st Century Government.”

NRECA officials said they regard the budget recommendation as suspect and misguided.

TVA provides power to 155 electric cooperatives and municipal systems, so a sale or other modifications could have major consequences for those customers.

“The rationale behind the administration’s proposal appears to be extremely dubious,” said Kirk Johnson, NRECA senior vice president, government affairs. “NRECA will be coordinating an appropriate response with affected co-ops to ensure no changes are made that hurt co-op consumer-members.”

A provision in a 1986 supplemental appropriations act bans the use of federal funds to solicit or study any proposals designed to transfer ownership or control of TVA and the four federal power marketing administrations, unless Congress approves.

That came in response to an attempt by the Reagan administration to consider selling TVA and the PMAs. Reagan signed the bill into law in July 1986, though he objected in his signing statement to the prohibition on considering the sale of TVA and the PMAs.

In a response to the Obama administration, TVA issued a statement saying it will work with the Office of Management and Budget to meet the strategic review request. It quickly added that it is on solid financial ground.

“TVA is the lowest cost business model and the best value for the region. We remain financially healthy,” said John Thomas, chief financial officer.

Sen. Lamar Alexander, R-Tenn., roundly criticized the Obama budget, calling the possible sale of TVA “one more bad idea in a budget full of bad ideas.

“There is today no federal taxpayer subsidy for TVA, period. There is by law no federal taxpayer liability for TVA debt. And after deducting its debt, selling TVA would probably cost taxpayers money,” he said.

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