TVA the hidden-away federal agency
February 16, 2010
“TVA doesn’t affect me”, you might say, far away from the Southeast maybe in Wyoming or Texas. Friend, you would be wrong in that belief.
There is nothing in the federal government like the TVA, no agency or department with the same awesome power to dictate its no-appeal rulings that affect millions of Americans. “In America?” you might say, yes, right here in America.
Coupled with its “eminent domain” power to take your property, TVA then determines how best to use that property. It might be for a commercial venture that no one voted on or a land swap deal similar to the Rep. Heath Shuler D-NC deal where his company stood to increase land values by millions.
For years, TVA “made money” on such land sales and sweetheart swaps. TVA still owns nearly 200,000 acres of land that should be disposed of in a legal manner. But not in accord with the Kelo decision of the Supreme Court which likely will be overturned; dozens of states have passed or are in the process of passing laws to prohibit transactions like Kelo.
The people at least have the ability to change abusive laws but in the case of the TVA with its Star Chamber secret and unappealable rulings, there is no chance for any state or local government to overturn their decisions. TVA’s ruling that a rate increase becomes effective in “X” number of days cannot be appealed. Neither Congress nor the Executive Branch of government can appeal any of TVA’s rulings.
How, you may ask, does this maverick federal agency continue its 76 year-old existence? Well, one reason is that the good people in other states do not believe it affects them. It was not until the Kingston ash-dam disaster did TVA appear on the radar screen. For all intents and purposes, TVA simply did not exist for most until now.
TVA has its own retirement system, determines its own pay scales which in many cases are far above regular federal employees’ rates. TVA has a bonus system that can and does yo-yo up and down with no logical rhyme or reason and is very careless with the monies under its control.
TVA likes to pretend it is a stock-owned utility when it sells no shares; inadvertently, one of nominees at the senate hearing last week referred to TVA “shareholders”. It dabbles in market financing and is very deep underwater in its financial abilities.
TVA is now in the midst of another “reorganization” and one of its features is to hire more people when in fact if were to act like a real business it would be cutting overhead staff significantly. Never known for its nimbleness in the marketplace, TVA always is slow to react to any kind of emergency and never has been “ahead of the curve” where market-driven utilities must stay.
Immediately after the Kingston catastrophe, I recommended that the TVA share no part in its cleanup, the “making right” the mess caused by the TVA. Instead, TVA went ahead and it became obvious that the job was far above any capabilities of the TVA so another federal agency, EPA was put in charge.
Well, this pair of ineptitudes proceeded to make decisions of far reaching consequences. They both decided it would be a good thing to dispose of the toxic ash wastes in another state, Alabama, and now the company handling the contract has gone bankrupt. The toxicity grows.
The obvious and first decision was what to do with the waste; the obvious and best decision should have been to place the ash on other TVA property which readily is available. (That ultimately may be the decision in light of the disastrous mistakes already made by the TVA and EPA.)
It will be up to the full senate committee to thoroughly flush out the four nominees to fill the remaining part-time slots on the TVA board. Here are a few questions I’d like to ask each one of them.
- How do you justify the anti-competitiveness inherent in the TVA? Is not ours a market economy?
- Do you intend to develop policies that would tend to make TVA more business-like? And why.
- In the past, TVA said it was preparing for its eventual privatization; are you familiar with the plans and are you for or against the privatization of the TVA?
- In the sub-committee hearing, several of you seemed unaware of the number of major court cases in process or that are pending. Do you believe that TVA should appeal every ruling against it when the right thing to do would be to proceed to following court orders?
- Do you believe TVA’s right to “sue and be sued” is a proper role for a government agency?
- Do you believe that TVA has the constitutional right to set unappealable electricity rates?
- What impact do you believe you will have on the newly constituted TVA board?
- Do you believe that TVA should follow the openness rules laid out by the Office of Management and Budget?
- In your mind, can there really be a hybrid agency like the TVA that effectively is neither private nor government? Should TVA be abolished or retained in a non-power capacity?
Please prepare your written answers to each of these questions.
That would be it for me; those answers would lead me to making the correct choice or choices if I were voting on these nominees.
TVA, a federal agency, affects every American and every decision TVA makes affects all of us in some way.
Knoxville big loser if TVA leaves
June 13, 2014
So, the unrevealed writers of the Knoxville News Sentinel editorial board believe that the million dollars paid by TVA for the financial justification of the continuance of TVA “should be enough to convince the Obama administration to scuttle the idea.” There is no proof that the ad hoc conclusions of Lazard Frères were not previously known or reasonably expected, but the suspicion is there.
Knoxville, headquarters for TVA, stands to lose many federal jobs in the latest iteration of TVA’s fits and starts. To suggest that private investors would have run the 80 year old anachronism the way TVA has been run, is absurd.
Also, the Lazard survey concentrated on the fiscal aspects of TVA comparing it mostly with investor-owned utilities and not fully recognizing the comparisons between oranges and apples is not valid. A federal agency, particularly TVA for its place in the government hierarchy, has often been compared to private industry, a non sequitur. And nowhere did it mention anything about TVA’s now recognized constitutional question.
It’s at http://www.thecre.com/insurance/?p=1293 where you’ll see a thorough debunking of the Lazard study. And by no less than a former executive with the OMB. For the past two years, OMB has suggested TVA’s assets should be sold; that TVA has outlived its “usefulness.”
But behind Obama’s desire to kill TVA is really his pledge to kill the coal industry. With TVA out of the way, he can fully let loose the EPA to do their dirty work in the whole country. The sudden cessation of the use of coal would, probably, near term, devastate the U. S. Economy; all in the name of “global warming.”
Maybe the people in the Shoals area of north Alabama feel a little revenged since the headquarters for TVA was (and is) the location prescribed in the TVA Act of 1933.
The Decatur Daily (Alabama) recently wrote admiringly about TVA’s quiet “clean air” progress; still in Utopialand.
TVA is not so quietly, but desperately trying to cling to the status quo in the face of two consecutive years of Obama’s suggestion that TVA might have outlasted its usefulness. Still, the actual reason is TVA’s overwhelming debt overhang which is about to exceed Congress’s $30 billion debt cap; this counts against the federal budget shortfall. That’s the real reason for the “outlived its usefulness” remark by OMB, which is, of course, also true.
TVA will spare no avenue to seek support to help save the 80 year old federal monolith. For example, TVA contracted (thanks to TVA ratepayers) with a financial market specialist, Lazard Frères, for a million dollar study, which, wonder of wonders, recommends keeping TVA. But their data do not necessarily bear out their ad hoc conclusions.
Is TVA air cleaner than, say, South Carolina air? (Or Lower Alabama air?) TVA can’t prove that it is or is not; they can only brag about TVA accomplishments. Ah, how clean was my Valley.
Why is TVA, a federal agency, doing such a “good job” of providing cleaner air? Well, it’s more often than not at the behest of the all-powerful EPA, which is likewise a higher ranked federal agency. If not throttled by Congress, EPA promises to control even the air we exhale and every drop of water that exists.
No, it’s a little different down here below in Utopialand where jobs do not magically come down as manna from heaven, but from man’s own hard work.
Isn’t it time to be released from the spell TVA has cast on too many in the South? And let the innate instincts of entrepreneurship take over? For good reasons to abolish TVA, see the references below.
In my forthcoming book, TVA Fraud, read the first two chapter for free. If you have any comments please write me.
First, the pre-beginning…
The story of the Tennessee Valley Authority tells of hardships and delusions, of help and destructions, of directions from Washington. It all started before the first TVA dam was ever built. A senator from Nebraska, of all places, somehow thought that his services fit better in the South than the flood prone Missouri River in Nebraska.
Sen. George W. Norris (R) held a powerful chairmanship and apparently had his eye on the Tennessee Valley and its capability to produce hydro electicity, but he thought it was best to be handled by the federal government, not private industry. Anyway, he must have thought, besides, the property in question already belonged to the federal government.
Pres. Woodrow Wilson had bought property in Muscle Shoals, Alabama to produce electricity for munitions factories to support the war effort during WWI. This was in 1918; suddenly the war ended leaving a partially built dam and some munitions buildings. Further construction immediately stopped and the property was declared surplus.
Only an entrepreneur could see the possibilites and two of them, Thomas Edison and Henry Ford, envisioned something of gigantic proportions. Ford would build what was, he speculated, as the “Detroit of the South,” and Edison would supply the electricity. This was in the early 1920s but the property was owned by the federal government and had to be approved by Norris’ committee who thought the government could better handle the development of the area.
Sen. Norris blocked every offer the two entrepreneurs presented and finally they just gave up. The land and buildings lay fallow, the dam still incomplete. Ford and Edison had earlier visited the Shoals area and speculation that Ford was coming to build a factory escalated land prices enormously all up and down the Valley in Alabama and Tennessee.
Basic structures were even built in Muscles Shoals, including a fire station and school. I first saw the abandoned “city” in 1965; the streets were still laid out in a grid pattern with tumbleweeds rolling by. This was a city built on pure speculation. The narrow lots were not even buildable, but the boom never came. That was in the 1920s and Sen. Norris used his powerful blocking position and sat on the property.
Alabama had an “adverse possession” law of forty years and clear title was almost impossible for many years. Eventually land titles were cleared and the town of Muscle Shoals began.
Growing slowly, north Alabama became the center for federal operations including rockets for the space program in Huntsville. The huge rockets were barged down the Tennessee River, the Mississippi, around Florida to Cape Canaveral on Florida’s east coast. The “Rocket City,” Alabama’s most famous city, alas, is nothing more than a tourist stop today.
As predictable with the federal government, projects like the start of the space program, began because of political considerations, are now rusting remembrances of days gone by. Dotted throughout north Alabama are the stains of failed or discontinued federal projects. Count TVA as one of them; Muscle Shoals was supposed to be the headquarters, but again, alas, politics moved it to Knoxville, TN and a sub-headquarters Chattanooga.
Built as strong as Ft. Knox, the TVA has grown in plant size to challenge any private business in Tennessee. Most of these assets and the many dams, coal plants and nuclear reactors have been built on the backs of TVA’s ratepayers, who, having no representatives governing TVA’s policies, are still required to carry TVA’s massive debt of about $30 billion.
The residue of many of TVA’s fits and starts of ill conceived programs and half-cocked ideas of what the federal agency should do in the name of TVA, is a good example of why the TVA should be abolished.
How FDR organized the TVA…
The Tennessee Valley Authority was organized with ideas from Sen. Norris whose basic input was that TVA was to be controlled by the federal government, not private enterprise. FDR conceived the “neither fish nor fowl” concept of how it should be organized.
Disclaiming knowledge of how the TVA should work (a doubtful assumption,) FDR named three directors, two of them from the north, to run it. Control of the direction of TVA was, at first, controversial and FDR fired the “troublemaker.” Apparently, they hadn’t read the fine print; the Act calls for agreement of the directors to ascribe to the idea of TVA.
Until 1959 when TVA stopped getting Congressional appropriations and became “self-supporting,” TVA financing became trickier and trickier. Ever since then, TVA said it would pay down its debt with pledges to GAO and others. That never happened and TVA’s debt has grown to nearly $30 billion with amounts exceeding that cap in the next few years.
TVA has used some rather exotic ways to try and get around that $30 billion limit by; selling an asset and leasing it back (this apparently does not count against the $30 billion,) and “off the books financing.” The way TVA has operated financially to avoid having to ask Congress for more money is to borrow money long-term. It’s called “backdoor financing” and gives TVA an immediate source of cash but, of course TVA has to pay for that money with interest.
One of the reasons TVA has kept up with this charade is that while the federal government specifically denies guarantee of TVA bonds, the rating companies do not believe the government will let the TVA go broke and falsely gives TVA their best rating, AAA. No other utility has this advantage. Correspondingly, TVA bond buyers feel their money is secure although at a lower interest rate.
With the administration’s talk of selling TVA, the rating companies are a bit more wary of their assumptions.
TVA likes to claim it is comparable in organizational structure with private utilities and often compares itself with other stockholding companies. But that’s like calling a duck a goose; similar, they both have wings, but think of all the differences between TVA, a federal agency, that originates from a completely different branch of government with all of the baggage that comes with it and a privately run utility who has to cope with the many regulations mandated by that same federal government. Many requirements are waived for TVA.
An example of this misguided, perhaps illegal comparison of salaries, was when TVA tried to justify higher salaries by comparing a number of utilities’ salary scales with those proposed for TVA management. All of them were higher, some of them were much higher. The Board of Directors still opted for lower salaries for TVA management. Why? Because they thought TVA’s salary scale was not really justified?
Of course, TVA has no stockholders to direct the salaries of top management. TVA seems never to be satisfied with their organization and recently spent millions on trying to correct the uncorrectable.
Since the contractor for this latest management iteration guaranteed TVA would save X, Y, and Z, and failed to do so, TVA tried and failed to get a refund.
A lot more is coming, please reserve your place to see excerpts from time to time. Send your email. Thanks!
February 22, 2014
Shades of “1984”! Orwell’s novel of the future is with us in spirit even today. Somebody at the FCC (nobody seems to know who) thought it would be a good idea to check out newsrooms in the country to be sure that left-thinking was not left out.
The media should have been outraged but only Fox thought it serious enough to call their hand on press freedom, press intimidation, in addition to one outspoken FCC commissioner. The Commission quickly backed away but not completely, leaving hanging out there the real possibility of revisiting the idea later.
I’m thinking how close our society is from complete intimidation by the government, snooping in on the most intimate of details. Now what I’m talking about is taking it to the individual (the NSA has already done this to a considerable extent) and to hush all opposition to government power. A chilling thought.
There are present ways, however, to squelch free speech and that is by throwing roadblocks to discourage criticism. An example concerns the TVA’s FOIA methods. All TVA has to do is to make the charge for getting documents so expensive, so onerous, as to make it practically impossible for an individual to retrieve such documents.
In other instances, the media itself makes it cost prohibitive to obtain content from them unless you subscribe or, in one significant case of the Chattanooga Free Press, not even taking comments anymore. Is that a “free press”? Others make it so difficult to interact with the media that only the persistent break through.
The media in TVA’s territory has “rolled over” and only presents a regurgitation of TVA “news,” according to TVA. One brave Kentucky legislator has challenged TVA’s transparency of board meetings. That trickle of opposition, hopefully, will turn into a torrent of dissatisfactions with TVA’s operations.
I’m rereading “1984” to pick out the immediate analogies to today’s society. Is it time to “hunker down” and wait for better times? I think not; the present oppressiveness needs to be challenged with every fearless ounce of courage we can muster. We can no longer depend on a submissive “free press” to do its constitutionally granted job.
Unionization 101 – no thanks! On VW’s rejection of the UAW
February 21, 2014
Somewhat wistfully, I have read that Henry Ford and Thomas Edison pitched the purchase/lease of the partially finished Wilson dam and other facilities at Muscle Shoals in 1922 or 1923. Ford stated he wanted to build the “Detroit of the South,” and the South went wild with land speculation.
The only thing holding the deal back, you’d never guess, Nebraska Sen. George W. Norris (R), the so-called savior of the South. In his powerful position in the senate, Norris said he wanted the operation to be run by government, not private enterprise.
Sen. Norris got his way and glommed on to FDR’s (D) plan to governmentize everything in sight. The TVA Act of 1933 was the first thing FDR signed into law to reward Norris the Republican for his support.
Ironically, the VW rejection of the union topped 80 years of government control of the South and it does not bode well for TVA to much longer survive. In another bit of irony, FDR was vehemently opposed to the unionization of public employees (about the only thing that was sensible.) Look at Detroit now and other public entities in deep, deep debt because of union control.
My uncle, a Democrat and former legislator in Alabama, (I loved him dearly,) and I did not see eye-to-eye on unionization primarily from an early experience I had with a labor union. The CWA had some phone installation work in Montgomery and I was hired not really knowing what the union was about. I went to the next union meeting and discovered to my amazement that it did not concern anything about the CWA or its supportive activities but it was a call for felonious acts on company property.
“Who’ll volunteer to cut down telephone poles south of town?” And the calls for malicious action on various other important phone company properties went on until all the “jobs” were filled. Of course, there was the usual call for picketers. I wanted no involvement with that group of anarchists.
Another instance at work dealt with a union member maliciously shorting out a bank of telephone circuits with a long screwdriver (which not could have been done accidentally) and he was summarily fired. But not for long; the union got him reinstated.
Observing the union scene for many years and watching how thugs constantly disrupt business, sub-rosa or out in the open, unions finally drain the substance out of businesses until they go bankrupt, leave the country or stop fighting and close up shop.
FDR was right on one thing, public employees should never be unionized.
It is all about “demand,” which means demand for electricity and the article by Ed Marcum of the Knoxville Sentinel tries to lessen the blow of declining sales, the bugaboo of all industrial manufacturing. The only thing is that TVA is no ordinary company whose fate rests on sales of its product. If only TVA could see the stark reality of what would be done under ordinary industrial manufacturing circumstances instead of whimpering to (sob, sob) mother Washington, then TVA would be among the largest manufacturers in America and prepared to take its lumps.
But TVA has such a colossal fixed cost it never could buy or produce its way out to a reasonable breakeven point, much less to profitability. Look way back some 80 years ago when the strange TVA was formed with the soul of southern states hanging in the balance. That balance leans more than ever to a leftward socialistic society.
But the writers of that legislation new what they were doing with enticements of jobs and the wily payments in lieu of taxes gambit. Soon, almost the complete state of Tennessee was brought under the spell of federal money. Other states became pawns in the game of federal government control and their politicians promising more jobs and money.
The principle of a separation of powers was blown to bits with the enactment of the TVA Act of 1933. TVA was recognized decades ago as an anomaly of the Constitution (which was never ruled on by the Supreme Court as to TVA’s constitutionality) but the leaders then, while acknowledging the breakdown, saw weak politicians (among some now,) rejecting the idea of our entrepreneurial system of government, at least in TVA’s case.
The continual declining of electricity sales (since 2007?) for TVA means the colossal collapse of the faulty framework of the TVA. There’s no place for TVA to go but to go begging because of its legal makeup.
TVA – and the worm turns toward 2014
December 13, 2013
HO! HO! HO! And a Merry Christmas to you all!
You won’t hear that greeting or any other greeting of holiday joy from the TVA. Secular to the core, TVA is not supposed to have any kind of humanistic feelings especially at times like Thanksgiving, Christmas and New Years.
Then why do we bow to a monolithic non-entity such as TVA? Part of it is because of TVA’s domineering and intrusive presence in the lives of about 9 million citizens in the southeast. Its intimidation goes “hat-in-hand” deep; it even extends to the media. TVA’s autonomy as a federal agency makes it unique among all agencies in the federal hierarchy.
There are three major newspapers in Tennessee; Knoxville News Sentinel, Chattanooga Times Free Press, and the Tennessean in Nashville. Each of them in their own way squelch critics of TVA. KNS recently instigated a policy of “no commenting” without a paid subscription, the Free Press stopped receiving comments, period. These head-in-sand reactions deprive citizens of other points of view about TVA.
TVA news from these publications are read from coast to coast because TVA news affects energy decisions everywhere but comments about TVA are not elicited. Is this a form of censorship? I believe it is and I have some personal experiences which confirm that.
TVA itself is a national issue but is treated like a local
organization. TVA is, in fact, controlled by the president of the United States through a board of directors appointed by the president. Since 1933 when the TVA Act was passed, TVA has been transmogrified from one iteration to another to suit the whims of the directors and the president. Today, it’s “green” energy, tomorrow, who knows what.
Challenged by the Supreme Court, but not for its constitutionality, TVA has maintained its hold on the political class because of its so-called payments in lieu of taxes, bribery money paid directly to local and state governments avoiding state taxing laws. Alabama Gov. Riley once called the payments “slush funds.” This usurpation and warping of state power in seven southeastern states
has led to an accurately stated degree of “creeping socialism.”
It’s for the good of a “greener” society that it has tried to fool people into buying non-existent electricity by the “block.” Of course, TVA is glad to receive these donations from some of TVA’s gullible ratepayers at $4 per block of nothing; TVA is glad to receive that money; it’s just added to the customers’ monthly electric bill. And TVA adds it to the “mix” of their enormous expense budget. Why not call the GPS a “fee” and simply prorate the appropriate amount based on use? After all, everyone must pay their “fair share” for greenness’ sake.
When a correspondent told of finally realizing he had been duped by TVA and having paid several hundred dollars into the Green Power Switch program, he asked for his money back. We’ll follow his progress. The problem TVA has is trying to sell a “product” that is nonexistent. Translated in the vernacular, it’s a fraud.
Congratulations are in order to those who have challenged the Goliath TVA because of a breach of trust in TVA’s handling of lakeside properties and to those who challenged TVA’s heavy-handed way of handling the right-of way-clearance. Every dollar they spent is a monument to the fight for freedom from government; from government over control. And thanks for the perseverance of those suing TVA for the Kingston negligence debacle in Dec. 2008.
For those of you who wish to correspond with me, send an e-mail to email@example.com/