NASHVILLE - Eighty-one years after Congress created the Tennessee Valley Authority, the federal utility has made the final scheduled payment to repay the $1 billion investment taxpayers made to build America's biggest government-owned utility.
TVA has made payments of $10 million to $20 million a year - plus interest - to the U.S. Treasury since 1961. The final $10 million payment came in September, swelling TVA's total payments to Uncle Sam to more than $3.6 billion over the past half century.
"This may be as close to a mortgage-burning milestone as you can have in the federal government," TVA CEO Bill Johnson told the TVA board here Thursday.
The payment terms were part of an amendment to the TVA Act in 1959 that ended federal appropriations to TVA's power program. TVA will continue to pay about $7 million to the federal treasury a year, but the original money given to start TVA - what Johnson said would be called venture capital today - has been repaid with interest.
"The government has gotten its money worth - and then some," Johnson said.
TVA now funds its capital improvements, including a record $2.5 billion of projects in 2o14, through bonds sold to private investors.
TVA has a Congressionally imposed debt ceiling of $30 billion and the agency's statutory debt reached within $2 billion of that level in 1996. Since then, TVA has paid down its debt by nearly $5 billion, including $1.2 billion in 2014, and currently has a statutory debt of just over $23 billion.
"We're clearly headed in the right direction," said TVA Director Peter Mahurin, chairman of the TVA board's finance committee.
TVA also continues to pay tax-equivalent payments to state and local governments, which will increase this year after a couple of years of declines. As a government identity, TVA is exempt from state and local property and sales taxes, but TVA pays 5 percent of its revenues in tax-equivalent payments each year to state and local governments in its 7-state region.
In fiscal 2015, TVA will pay state and local governments $542 million, including nearly $335 million to Tennessee governments, $106.1 million to Alabama governments and $9 million to governments in Georgia.
In fiscal 2014, TVA paid state and local governments a total of $533 million.
TVA was created in 1933 as a multi-purpose federal agency to harness the power of the Tennessee River for flood control, navigation and power generation and to promote the economic growth of what was then an impoverished Appalachian region.
In fiscal 2014, TVA helped recruit and promote a record $8.5 billion of new business investment in the Tennessee Valley from projects such as Volkswagen's $900 million expansion in Chattanooga, Hankook's $800 million tire facility in Clarksville, Tenn., and Beretta's $45 million gun production plant planned in Gallatin, Tenn. Collectively, such projects retained or added a record high 60,300 jobs, including 7,000 in Southeast Tennessee, Northwest Georgia and Western North Carolina.
Last year surpassed the previous record investment from TVA-aided projects of $5.5 billion in 2007 prior to the Great Recession.
"The economy has definitely come back and we're continuing to see a lot of projects in the pipeline," said John Bradley, senior vice president of economic development for TVA.
Bradley said TVA's reliability and rate options for industry have helped attract businesses to the region. The Valley Investment Initiative, which TVA began five years ago to reward businesses that stay or expand in TVA's service territory, also helped keep more growing businesses in the region, Bradley said.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340