Seven reasons TVA will not be privatized
February 20, 2009

As matters beyond their ken continue to crash down on the Tennessee Valley Authority and the White House daily confirms its real intent to nationalize everything in sight, it is becoming startlingly clear that it is ridiculous to believe the Obama administration would even think about reducing or eliminating a federal agency.

Every action taken to date reinforces the true intention of the administration to nationalize our financial and industrial economies. With the TVA an already nationalized large chunk of electricity production, the only question is how best to organize it to fit the Obama mold. Here’s how it could be done:

1. TVA’s financial crisis best can be resolved by Executive Order similar to the one just signed forming the White House Office of Urban Affairs. This one could be called the Office of Utility Nationalization.

2. TVA’s staff and operations would remain intact and eventually organized into the normal federal government system of employment and benefits.

3. TVA would be placed under the Department of Energy as an agency.

4. TVA’s debt has become unmanageable and must be assumed by the federal government including all fines, federal court orders, bonds and all existing and forming legal suits stemming from the Kingston disaster. The total could exceed ten billion dollars. The Troubled Assets Relief Program (TARP) could be an immediate vehicle to infuse the necessary capital and to reduce electricity rates.

5. The TVA Agency would request and receive necessary appropriations as a regular federal budget item.

6. Rate increases requested by the TVA would require approval of the DOE; however, the first step would be to reduce rates.

7. Temporarily and by Executive Order, TVA immediately would come under the control of a TVA Czar who would put in effect all the tools of the federal government including the Federal Emergency Management Agency (FEMA).

Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com

TVA and how government reorganizes itself

TVA’s head-rolling for Kingston disaster – not!

February 9, 2009



The Tennessee Valley Authority fiefdom style of organization. . .



See above link for rest of article.

Ernest Norsworthy emnorsworthy@earthlink.net

http://norsworthyopinion.com/

The Tennessee Valley Authority fiefdom style of organization which consists of
cross-responsibilities, muddled lines of authority has now been “reorganized” according to TVA’s statement to the Securities and Exchange Commission on February 9. The heading of that
section of SEC’s report seems to ask for information on the “Departure of Directors or
Certain Officers” among other things. (See below Item 5.02 of the SEC report.)
(follow link)

TVA and "First Principles"

TVA and “First Principles” A Conundrum for Fred Thompson

Sometimes we have to return to “First Principles”, as presidential candidate Fred Thompson likes to say, to get back on track. More about Thompson later.

The Tennessee Valley Authority, a unique federal agency, has dominated the economy of the Southeast since 1933. Actually, it started before that when for national security purposes demolition production plants were built at the Shoals in North Alabama along with plans for two power dams. One of the dams, Wilson Dam, was partially completed when WWI abruptly ended.

Subsequent presidents declared those properties surplus and there were some prospective buyers including Henry Ford who in 1922 offered to produce fertilizer with the nitrate plants and to complete the dams for his power needs. A “Detroit of the South” speculation turned the real estate market in North Alabama on its ear but terms never could be reached to sell the federal properties to anyone.

From the start, Sen. George Norris (R-Neb) fought tooth and nail to keep private enterprise from acquiring any of the land or facilities. For years, he fought until he found an ally in FDR who was anti-big business anyway. Norris helped FDR in his first election and FDR paid him back with the New Deal agency, the Tennessee Valley Authority Act, in 1933. Later, Norris kept up his pressure to start some “little TVA’s” but the congress balked on having more than one of them. Besides, it was not clear at all how the experiment of the TVA would turn out.

Federal barriers to competition from outside TVA’s present-day 2,500 mile-long “fence” have never been stronger but the case for federalizing electric utilities grows weaker. With runaway overspending and mismanagement, TVA has become a mockery of prudent business practices. TVA’s debt now stands at over $25 billion and growing with no prospects of liquidating that debt except by dissolution of its assets or unless TVA electricity sales do much better than their languid 1.9 percent annual growth in demand. It is doubtful TVA’s assets would cover the entire debt.

Who then would be on the hook for the remainder? Why, it wouldn’t be the federal government because the government explicitly does not stand behind TVA’s billions in “power bonds”. What about the TVA itself? That would not be possible because the TVA has no money, nor would it have a way to pay off the debt without income from electricity sales (TVA receives no congressional appropriations). After all, the TVA is run by federal employees. Who else is left? Only the users of TVA electricity, the ones benefiting from artificially low power bills for so many years.

The problem with that last scenario is that TVA users, ("stakeholders"), have not been told of the possibility they might be obligated to pay if TVA’s assets were liquidated in the negative, even after another electricity supplier takes over. The TVA bond rating, however, is at the top and the rating agencies claim that the federal government, oh no, would not let TVA bonds default; that TVA is protected from competition. Wouldn’t it depend on who’s in charge?

The TVA literally usurps the rights of parts of seven Southeastern states. Since it was ruled constitutional by the Supreme Court by the narrowest of margins, the TVA remains still a thorn in the side of our U.S. Constitution. Even a modest perusal of how far TVA has strayed from its original legislation should bring quick condemnation of the agency.

Besides restraining interstate commerce trade, TVA’s anti-competitiveness in opposition to the free flow of electricity has, I believe, stultified the economic and social growth of a whole region. Figures show that the economy of the region prior to 1922 was growing at a steady double-digit rate. That was not so after TVA came on the scene. They did offer some temporary construction jobs but not much more than gradual improvement of industrial growth.

The Shoals, North Alabama, Tennessee, and the entire Tennessee Valley could have been the dynamic industrial engine of the South long into the twentieth-century but for the actions of very few people. The main culprit was, of course, FDR who thought he could make a silk purse out of a sow’s ear, a popular saying of the time.

Roosevelt wanted to have an agency with the power of the federal government, eminent domain for one, and the flexibility of a corporation to carry out his nebulous TVA plans. FDR wanted it both ways – an agency to compete with free enterprise thereby increasing a dependency on government and “getting back” at big business that he despised.

Run by an appointed three-person board for most of its 75 years, TVA has changed direction at whim leaving a long line of mismanaged fits and starts and a very, very large debt I call “backdoor financing”. Generations have lived under the pall of federal government control of their electricity and control over their economic development. The seven Southeastern states have had no say in TVA’s electricity rates.

I believe former Sen. Fred Thompson’s arteries run red with TVA blood, that his previous positions on the TVA would not allow him to disown the TVA now even if he truly believed in the “First Principles” of our Founding Fathers he so fervently espouses.

As a Southerner, I cannot say that I am proud of the leadership we have offered for president in the recent past. “Green eyeshade” and “slick” are pejoratives that immediately come to mind.
“First Principles” and “TVA” seem dissonant and irreconcilable and appear to be an “either or” question and not compatible with presidential candidate Fred Thompson’s stated positions.

As to what can be done about the TVA, see my Website http://norsworthyopinion.com/ for some thoughts. I am writing a book about the TVA and would appreciate any source material you might have available.

Write me at enorsworthy1@earthlink.net or emnorsworthy@earthlink.net
For a current in-depth analysis of the Great Depression, see Amity Shlaes new book “The Forgotten Man”, a very readable narrative-history.

Ernest Norsworthy

A Parable about the TVA

A Parable

A baker came into town and started selling bread for less than the other bakeries. This baker had extraordinary power – it not only could set lower prices, it could require the other bakers to sell their bakeries to the Big Baker or just leave.

Big Baker took over the supplying of bread for the whole town; it could sell bread cheaper because it got financial aid from the Really Big Baker in Washington. And so it went until Big Baker cornered the market in supplying bread to 8.7 million people. The people were happy with cheap bread.

Then one day, some of the people complained that they could buy bread cheaper from a baker on the edge of town. But Big Baker would not let them buy bread from another baker. This made Big Baker very mad because they were going to have to increase the price of bread even more because the Really Big Baker cut off its supply of extra money.

What to do? Big Baker thought and thought and finally came up with a plan where it borrowed money and obligated the same people it was supplying bread to without the people realizing it. Wow! Big Baker had now borrowed $25,000,000,000 ($25 billion) dollars! And “Nya-na-na-na-na the people still would be responsible for it and still buy my bread!”

It could be called stealing.

Now Big Baker’s equipment is getting old and outdated and other bakers are clamoring to get inside Big Baker’s market using some of Big Baker’s distribution routes and selling bread even cheaper.

Then the people began to realize that Big Baker was taking their money and not spending it like regular bakers do. Because of their power, they paid no taxes to the town or to anyone else. Oh, they paid off a few townspeople here and there.

And that, my friends, is the parable of the TVA, the federal government, and it is time to get rid of Big Baker and get one where we set the price of bread, not Big Baker.

Ernest Norsworthy
5/13/07