Could the country’s largest public power utility really become private?

Blake Farmer May 22, 2013
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Could the country’s largest public power utility really become private?

Blake Farmer May 22, 2013
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Executives with the country’s largest public power utility meet with the Obama Administration this week, after learning their agency might be up for sale.

President Obama floated the idea of selling the Tennessee Valley Authority in his budget, released last month. He started receiving pushback almost immediately.

“I think there’s somebody with a green eyeshade down there at the Office of Management and Budget who just thinks it’s a cool idea to talk about selling the Tennessee Valley Authority,” Sen. Lamar Alexander, a Republican from Tennessee, said in a recent hearing. “We don’t appreciate that approach.”

TVA originated during the Great Depression. It built hydroelectric dams, then coal and nuclear plants. The utility serves seven states and was conceived as a way to develop an impoverished region. It is fully self-supported through electric rates, and it has national security roles as the country’s sole source for tritium, needed in developing nuclear weapons.

There’s no firm plan to sell TVA, only for a “strategic review” that could result in privatization. But the very idea has done some damage, according to the agency.

The value of TVA’s bonds has dropped sharply. There’s doubt that the sale price would even cover TVA’s $25 billion of debt, and traders fear TVA may not be viable as a private company.

Sen. Alexander has been quizzing Energy Department officials anytime they appear before his committees. During a hearing last week, he asked the acting Energy secretary, Daniel Poneman, if he was consulted about the potential TVA sale.

Poneman admitted that he was not, but said, “the one thing that I do know is that any decision rolling forward that would consider what to do with the TVA would, of course, involve consultation with the Department of Energy.”

TVA officials have said the current business model is a good one, but they’re taking the idea of a potential sale seriously. They’ve committed to cooperating with the White House in good faith.

“I mean, I assume they were serious since they put it in the administration’s budget,” says TVA senior vice president of policy Joe Hoagland.

TVA is celebrating its 80th birthday this week. The meetings in Washington may give a clue as to how many birthdays the utility has left.

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