published Tuesday, March 4th, 2014

White House suggests TVA could be sold to state and local governments

Should TVA be sold?

America's biggest federal utility could come under state and local ownership if Congress goes along with a plan proposed today by the Obama administration.

In the White House budget for fiscal 2015 released today, the Office of Management and Budget suggests Congress consider selling the Tennessee Valley Authority to state or local governments, power cooperatives or other energy companies. The proposal advances the idea floated by OMB a year ago for the federal government to dispose of TVA to help cut the federal debt associated with the government-owned utility.

"The administration continues to believe that reducing or eliminating the federal government's role in programs such as TVA, which have achieved their original objectives, can help mitigate risk to taxpayers," OMB suggests in its budget plan for next year. "The administration recognizes the important role TVA serves in the Tennessee Valley and stands ready to work with the Congress and TVA's stakeholders to explore options to end federal ties to TVA, including alternatives such as a transfer of ownership to state and local stakeholders."

TVA was created by Congress in 1933 as part of Franklin Roosevelt's New Deal. The federal agency manages the Tennessee River and its tributaries and provides electricity to 155 power cooperatives and municipalities in pats of seven states across the Southeast.

TVA no longer receives direct appropriations from Congress. But the debt of the self-funded federal agency is counted as part of the overall U.S. debt.

In its budget for fiscal 2015, TVA projects its debt and debt-like obligations will increase next year by $394 million to $28.8 billion. TVA has a borrowing cap of $30 billion.

TVA and OMB officials have been studying the financial status of TVA and options for its future over the past year in closed-door meetings.

U.S. Sen. Lamar Alexander, R-Tenn., among other lawmakers in the Tennessee Valley, has criticized the administration for proposing to dispose of TVA. Alexander says such talk only increases the cost of TVA's bond borrowing programs and isn't likely to get through Congress. Alexander said selling TVA would likely raise electricity rates in the Tennessee Valley without helping the U.S. treasury.

Last year, Alexander called OMB's consideration of selling TVA “one more bad idea in a budget full of bad ideas."

TVA President Bill Johnson said today that he is "pleased the Administration has recognized TVA’s efforts in improving our financial outlook and supports our ongoing operating and financial direction.

"We will continue to work collaboratively with the Office of Management and Budget,” Johnson said, “But, be assured, our focus tomorrow will be the same as it is today – to provide lower cost, reliable power to the 9 million people of the Tennessee Valley.”

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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