The recent downgrade of the United States' credit rating is having a variety of serious effects, including locally.
The Tennessee Valley Authority's credit rating now has also been downgraded by the rating agency Standard & Poor's. That's just after the agency lowered the United States' rating from AAA to AA+, with a negative outlook.
TVA is a federal government utility, and it is assumed that Washington would come to its aid if TVA experienced hard times financially. But TVA's credit rating is tied to the rating given to U.S. Treasurys. So now that our nation's credit rating has dropped, so has TVA's.
What's most troubling about TVA's downgrade is that the utility will eventually have to pay higher interest rates on its more than $26 billion in debt. With debt that large, even a slight increase in interest rates could be a major financial burden on TVA -- and therefore on the millions of rate-payers in our region who rely on electricity produced by TVA. Looking at your power bills during this hot summer, you probably feel that you're paying enough for electricity already. But unfortunately, those bills could rise in time because of TVA's credit downgrade.
We have only just begun to see serious economic fallout from the federal government's long-term financial irresponsibility.