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Eighty years after it was birthed by the federal government as a part of President Franklin Roosevelt's New Deal, the Tennessee Valley Authority might be better off severed from Uncle Sam, U.S. Sen. Bob Corker, R-Tenn., said Wednesday.
Corker said he isn't pushing to sell TVA to try to cut the federal debt, as President Obama proposed last month in his fiscal 2014 budget plan. With nearly $25 billion in debt, TVA probably wouldn't fetch enough from buyers to pay what it owes, Corker said.
But new approaches for TVA, including converting the agency to a nonprofit corporation or transferring ownership to TVA distributors and customers, might help improve the utility, Corker said.
"I've not been comfortable with the federal government involvement with TVA and thinking that that is going to lead TVA to a great place," Corker told the Times Free Press in a telephone interview Wednesday. "I worry that over time the fact that TVA is controlled by the federal government but in a laissez-fair manner could leave it less and less as an identity to drive economic growth in our state."
Corker is splitting with most other Tennesseans in the Congress who have balked at a proposal in the Obama budget plan to conduct a strategic study on cutting TVA loose from the federal treasury.
"Reducing or eliminating the federal government's role in programs such as TVA, which have achieved their original objectives and no longer require federal participation, can help put the nation on a sustainable fiscal path," the White House says in its budget plan.
U.S. Sen. Lamar Alexander of Tennessee, the ranking Republican on the Energy and Water Development Appropriations Subcommittee, said that spinning off the nation's largest public utility could mean higher electricity prices for the seven states that the authority serves. Just the talk about selling TVA has hurt its bond values and raised TVA's effective borrowing costs, Alexander said.
Even U.S. Rep. Mo Brooks, an Alabama Republican who denounced Obama a "socialist" in January, said the president's suggestion to privatize TVA is "unsupportable and inexplicable."
The Tennessee Valley Authority no longer receives any federal funds and is an independent federal corporation that relies entirely upon electric ratepayers to fund its $11 billion-a-year budget. TVA does enjoy the implied backing of the federal government through its federal ownership, which helps the agency maintain a top bond rating and borrow money at a lower rate than do private utilities.
But Corker said presidents of both parties don't spend much time picking TVA board nominees or worrying about the federal utility.
"To them, it's a total pain and not something they relish doing so they don't spend a lot of time on it," Corker said. "I think we have a number of people on the board who are very good, but unfortunately TVA is becoming is less competitive and yet it is a big driver in our economic success in Tennessee."
Governors in TVA's seven state region or the 155 distributors who buy TVA's power and sell it to the 9 million end users of that power are more interested in a successful TVA, Corker said.
Jack Simmons, president of the Tennessee Valley Public Power Association, said many distributors are interested in gaining ownership in the TVA assets they finance through their purchases of TVA power. Power distributors and municipalities own public power generators in many parts of the country, Simmons said.
"Our interest is in making sure that TVA power is competitive, affordable and reliable," he said.
TVA industrial sales fell by more than 8 percent in the first half of the agency's current fiscal year, in part, because some power loads were shifted to cheaper sources other than TVA.
"Would TVA be a better identity if the distributors that sell TVA's power to the end users owned it?" Corker asked. "Would it be better if state governments were more involved and get it away from this federal government that has a tendency to not be the best at being involved in identities like that? There are all kinds of things that you could look at to force TVA to step its game up and be a better asset to the Tennessee Valley."
Contact Dave Flessner at dflessenr or at 757-6340
Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...