TVA Studies Breakaways, Joint Ventures

By: Gordon Boyd
By: Gordon Boyd

Knoxville (WVLT) - How can our country's largest public power provider meet growing demands and shrink its debt?

Volunteer TV's Gordon Boyd reports the struggle for answers may be setting up a border battle that could hold your electric bill in the balance.

Both of Kentucky's senators are trying to persuade Congress that TVA is a monopoly, whose contracts force us to pay more and get less than we should.

But their remedy has some Tennessee folks blowing a fuse and others looking for a piece of the action.

"You should never use legislation as the way to solve a contract dispute," says Douglas Weiland from the Association of Tennessee Valley Governments.

A group advocating for more than a thousand local governments in TVA's service area believes what some are calling Kentucky's breakaway bill is about more than saving money, more than covering your bases, in cases of disaster, such as failure of Wolf Creek Dam.

If the McConnell-Bunning Bill passes, TVA-supplied power companies in Kentucky not only could shop around for cheaper bulk rates, TVA would have to keep enough power capacity to supply their full needs

Or, as critics claim, having your cake and eating it too.

You start cherry picking, taking off large customers. The obvious answer is it's gonna increase the rates for the rest of the people in the valley," says Weiland.

How much? Nobody's even guessing, but as TVA's interim president puts it, the free markets
aren't free.

"The biggest concern is that they want to study privatization," says Tom Kilgore, interim TVA Chief Executive Officer. "We're gonna follow the bill. We've obviously got some pretty strong feelings about certain aspects of it."

Feelings strong enough, that they may be driving TVA into something it's never tried before.

"If TVA were ever sold or privatized, those assets would go to somebody else. And we'd have to buy, pay for them again. Plus return on investment. We want to make sure we get an equity stake in the Valley," says Jack Simmons from the Tennessee Valle Public Power Association.

TVA's spent $23 million for an expandable power plant in West Tennessee.

But its distributor companies would pay for the upgrades, and be majority owners.

"The customers owning this actually helps us because it's not debt on our balance sheet, it still generation in the Valley," Kilgore explains.

Enough power to meet the needs of a city a third the size of Memphis.

"I think it's gonna mean lower rates for the customers, and higher reliability," Simmons says.

"They have a long-term desire to own some generation, but they're still our customers, so I don't see that as being the first steps towards privatization at all," Kilgore adds.

That plant upgrade could take 3 years.

Meantime, TVA is buying a power plant site near Brownsville, Tennessee and opening talks to lease a power plant near Columbus, Mississippi. Both aimed making sure what happens the next four years isn't a repeat of the past four; TVA doubling the amount of power it has to buy from somebody else, just to meet needs.


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