published Friday, November 19th, 2010

TVA sale urged to fund green energy projects

As chairman of the Federal Communications Commission in the 1990s, Reed Hundt pioneered the auctions of the nation's airwaves that ultimately generated more than $40 billion for the federal Treasury and allowed the cell phone industry to flourish.

In his current role as head of the Coalition for Green Energy, Hundt is pushing a similar idea he claims could help to both create green jobs and a cleaner environment without costly government subsidies.

Hundt, who heads the Coalition for Green Energy, said Thursday the time has come for the federal government to sell the Tennessee Valley Authority and use the proceeds to create a private, nonprofit Energy Independence Trust to lend money for energy efficiency and renewable energy projects.

Turning green

The Coalition for Green Energy recommends:

* Putting the Tennessee Valley Authority up for auction to sell to private utility by 2014 to raise money for green energy projects

* Create a nonprofit Energy Independence Trust from TVA sale proceeds to make low-cost loans for energy efficiency and renewable energy projects

* Establish for 10 years tax policies to reduce taxes on clean energy investments and reduce regulatory hurdles to such projects

PDF: Cutting the cost of clean energy

"Selling TVA is certainly not a new idea, but we haven't previously had such a need to jump-start investments in the energy sector like we do today," Hundt said. "If we can successfully sell the government's interest in General Motors today, then maybe it's time we work to auction off the government's major involvement in the energy sector and the crown jewel of that is TVA."

The sale of TVA could prove more attractive in the new Congress than it has in the past. Illinois Republican Sen.-elect Mark Kirk already has proposed selling TVA.

But TVA officials and backers insist there is no need to sell TVA, which was created in 1933 to harness the power of the Tennessee River and has grown into the nation's biggest government utility.

TVA President Tom Kilgore said the utility has helped deliver reliable power priced nearly 20 percent below the average national rate for residential electricity.

"It is a model that has worked well," U.S. Sen. Lamar Alexander said in October when TVA welcomed its newest board members.

In a 21-page plan unveiled this week for "cutting the cost of clean energy," the Coalition for Green Energy and the liberal Center for American Progress suggest that incentives and tax breaks could be used to help control carbon emissions linked with global warming rather than the ill-fated "cap and trade" legislation that stalled in the Senate.

The auction of TVA, which Hundt estimates could fetch $10 billion or more, is a way to promote green energy initiatives in the private sector rather than relying upon government mandates or programs.

"If we can get this money for the sale of TVA, we could agree to plow that money back into sustainable energy projects in the same region so that it will turn into jobs in the Tennessee Valley," he said. "It's a way to solve this terrible unemployment problem."

The plan calls for state regulators to help define the terms of any TVA auction to help protect ratepayers and employees during any sale to rival utilities, such as the neighboring Southern Co., or Duke Energy.

Hundt estimates that by leveraging the proceeds from a TVA sale, the Energy Independence Trust could help support up to $100 billion of green energy initiatives.

"If that is targeted in the TVA region, everybody in the whole region would be better off with lower unemployment, higher economic growth and a cleaner environment," he said.

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Like Reed Hundt says, there’s nothing new about abolishing the TVA. While I am in complete agreement that this should have been done many decades ago beginning in the 1930s, TVA has survived if not stronger, very different.

There is hardly a comparison with the original TVA and what it has evolved into today. You could say that because TVA is acting far beyond its original purposes a strong case could be made that it is operating illegally. In fact, the legality of the TVA never specifically has been ruled on, only on surrounding issues.

TVA has weathered many a storm from as far back as President Eisenhower (Dixon-Yates controversy), Senator Goldwater and President Reagan. All of these powerful men believed that the TVA was a form of “creeping socialism” and that it should be stopped.

Several amendments to the TVA Act including the so-called “fence” have only allowed the issue to fester some more. And TVA hasn’t been fenced in either. They have great expansionary plans.

The TVA has spent untold millions in legal expenses fighting off the world from an indefensible position of competing in our free enterprise society. It was not government that led the way to an enormously successful capitalist society, no; it was the entrepreneurial spirit of accomplishment available through America’s freedom loving Constitution.

You will not find the likes of the TVA anywhere in that Constitution; the interpretation of it to allow the TVA to survive the 30s has to be a fluke since most of the other New Deal programs could not survive the plain words of the Constitution.

I have been writing about the TVA for some ten years and it seems that some of my thoughts about the TVA have trickled out in the right places.

I hope it happens but there is one trouble spot and that is TVA’s enormous and unsustainable debt of over $20 billion and commitments extending past TVA’s $30 billion debt cap. (It is ludicrous to think that a “cap” would be placed on any other electricity utility in the U.S.) No straight answers are available as to how that debt would be handled. Presently, it appears that the ratepayers are responsible; but what about the bondholders who bought under TVA’s fraudulent AAA ratings? The government explicitly says it will not guarantee those bonds. Somebody will be left holding the bag and you can be sure it will not be a single federal employee.

Ernest Norsworthy

November 19, 2010 at 11:33 a.m.
Beamis said...

These crooks are operating under an un-Constitutional charter and would be out of business under any normal set of real life economic guidelines. They currently hire lots of new employees, I see them every day at the Chattanoogan, eating their free voucher breakfasts, ordering Cokes and looking like the unemployable rednecks, minority quota trash and lovable losers that they are. This federal boondoggle can only end badly and it will. Just give it time and enough rope and we'll all witness its demise fairly soon.

November 19, 2010 at 8:17 p.m.
rolando said...

You just described 90% of the federal work force, Beamis. Would that we could ever see their demise.

November 20, 2010 at 8:01 a.m.
JohnBravo said...

First off, the TVA is worth a hellofalot more than $10 billion which means this scam is merely someones idea of a way to rip off the American people.

Second, the TVA power generation & distribution utility has been paid for by the people served in this 7-state region. The initial investment by the Federal Government was recouped decades ago. If the TVA is privatized, the only equitable way to do so is to issue stock certificates to the American Citizens living in this 7-state region.

Third, The TVA currently generates more revenue than the utility division consumes. It is a profitable business. It is a good business. Even with it's shortcomings, it produces power at a lower cost than many "publicly held" utility companies. Privatizing TVA will result in higher utility costs for private citizens not only in this 7-state region but across America.

Fourth, What to do with the "natural resource management" arm of the TVA? Surely "they" don't want to sell off all the TVA managed lands!?! If they do intend to do so, the risk of development looms which would ruin the natural beauty of so much of the valley.

Republicans from outside the 7-state region served by the TVA have been trying to sell TVA to private industry for at least 40 years. Now, with more republicans in congress, they may just succeed in destroying the one thing the government got right during the 20th century.

November 22, 2010 at 1:20 p.m.
Tucson said...

Yes, the TVA has an abundance of flaws, beginning with the ridiculous raise Tom Kilgore received, but it is still the best option for the region.

Begin with a board of individuals who are more familiar with the workings of the system. Then perhaps promotions from within, rather than hiring mid-level managers who are totally unfamiliar with the TVA's systems. And finally, training new employees to replace retiring employees and doing away with the "partner companies".

No this would not solve the problems, but it would be a start in the right direction.

November 23, 2010 at 7:57 p.m.
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