Tennessee Valley Authority

In President Obama’s recently released 2014 Federal Budget Proposal the Administration called for a “strategic review” of the Tennessee Valley Authority (TVA), including the possible privatization of the utility. Founded in 1933, TVA is currently the largest public utility with over 9 million customers located throughout the Eastern United States. TVA also has a debt of around $30 billion that counts towards the federal deficit. TVA has no federal taxpayer subsidy, and taxpayers are not legally responsible for the debt.

Although the idea of “strategic review” and sale of the public utility has created a buzz among both democratic and republican representatives, CGC is not at all unfamiliar with the notion. In 2010, CGC published an outline and discussion for proposed energy reform legislation for the 112th Congress advocating the role of private involvement and investment in the energy industry. CGC specifically recommends:

  • Reducing artificial regulatory barriers to private sector investment in clean energy through promotion and development of uniform and predictable practices for regulation of utility rates and utility mergers, joint ventures, and other forms of corporate re-organization that tend to maximize efficient, long-term private sector investment in clean energy. In addition to the development of uniform and predictable utility rate making practices of general applicability, provide performance-based rate making incentives targeted to utility investments in or purchases of clean energy.
  • Targeting public sector engagement in clean energy investment and deployment where it is most needed, while freeing the private sector to lead where it is best suited to innovate – including minimizing the use of agencies and instrumentalities of government in direct financing and deployment of clean energy – and focusing the federal role instead on research, development, and first of a kind deployment of breakthrough clean energy technologies.

The privatization of TVA has the potential to reduce the federal deficit by $25-30 billion, create new jobs, and efficiently deploy clean energy at more affordable rates. Although it may have taken a few years to reach this point, CGC is definitely of the opinion: better late than never! 

For more information see:

Paul Barton, White House floats Idea of Selling TVA, The Tennessean, April 11, 2013.

CGC’s Project 2011: Cutting the Cost of Clean Energy (Version 2.0)

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