Tennessee's senior senator said Wednesday he could support raising the debt ceiling for the Tennessee Valley Authority to help finance construction of more nuclear power plants.
U.S. Sen. Lamar Alexander, the Senate Republican Caucus chair and former head of the TVA Congressional Caucus, said raising the $30 billion, congressionally imposed limit on TVA borrowing might be appropriate given the growth in TVA and its power load.
"I believe TVA needs flexibility in its debt and I'm willing to consider any proposal they present to me," Alexander said. "It (TVA) needs to go ahead with the nuclear power plant, so if TVA thinks it needs more flexibility with its debt, I'm perfectly willing to consider that."
TVA announced last month it plans to sell ownership of the Watts Bar Unit 2 nuclear plant and the Johnsonville gas-fired plant the utility is building to raise the $4.9 billion needed to build a new reactor at the Bellefonte Nuclear Plant. TVA would lease back and operate those plants to generate power to replace aging coal plants being retired across the Tennessee Valley.
TVA is using the alternative financing method rather than issue its own bonds to avoid exceeding its debt cap, which Congress set at $30 billion in 1979.
TVA Group President Kim Greene said the leasebacks of plants will likely cost TVA more money than borrowing with its own money. But Greene said TVA is reluctant to ask Congress for more borrowing authority following the August congressional battle over raising the federal government's overall debt ceiling.
"It just doesn't seem like a good time politically for this discussion in Washington, D.C.," she said.
U.S. Sen. Bob Corker, R-Tenn., and Alexander have both urged Congress to limit deficit spending to control the growing federal debt. Corker said Wednesday in a luncheon speech to the Hamilton Place Rotary Club that Congress needs to do more to limit spending and borrowing in Washington D.C.
While Corker praised TVA board's decision to move forward on the 37-year-old Bellefonte plant, the debt-averse senator demurred on the debt ceiling question, instead listing other factors he believes would raise rates and "hurt employment in the valley."
He said the closing of coal-fired plants across the country could drive power rates up "23 or 24 percent."
"When it comes to [TVA] using an off-balance sheet mechanism to stay within some confine Congress has put together, we have all of these things that work together that drive up price," he said. "We have to look at this on a macro level."
Alexander noted that TVA has cut the share of ratepayer funds used to pay interest expenses from more than 35 percent in the 1990s to under 15 percent today.
"The best measure of TVA's debt is a percent of its revenues, and as a percent of its revenues, TVA's debt is greatly reduced today over 10 years ago," Alexander said.
Business editor Dave Flessner contributed to this report