In 1964, Republican presidential candidate Sen. Barry Goldwater of Arizona said he felt it was unfair for the federal government to compete with private companies, and since the TVA was competing with companies like Alabama Power, the federal government should sell the TVA.
Not long after that hit the news, bumper stickers and signs began to appear all over the Tennessee Valley. They read: “Sell TVA? I’d rather sell Arizona.”
When Goldwater lost the election, the TVA seemed safe.
Few will deny that the low-cost electricity provided by the TVA has helped make the Tennessee Valley attractive to industries. Without the TVA, Huntsville might still be a cotton-mill town instead of one of the economic engines that runs the region.
However, in recent years the TVA has come upon hard times. The agency’s net income has fallen from $972 million in 2010 to just $62 million in 2012, and it appears that the TVA will soon exceed its $30 billion debt limit. Cost overruns at the second reactor at Watts Bar Nuclear Plant have been a contributing factor.
Although the federal government owns the TVA, it does not receive taxpayer dollars, so the debt is not funded through taxes. However, the agency is expected to pay for itself, or at least keep the debt manageable, and that does not seem to be happening.
In his recently released budget, President Barack Obama announced that his administration intends to undertake a strategic review of the TVA.
This is not the first time the TVA has come under scrutiny. Under President George W. Bush, the federal Office of Management and Budget looked it over and noted in 2003 that to be run like a business the TVA would need a healthy balance sheet and a plan to guide investment. The OMB concluded that “the TVA currently has neither.”
Apparently, the TVA still has neither, so it is reasonable for the president to call for a review of the agency. If the TVA is, as its chief financial officer John Thomas said, “the lowest-cost business model and the best value for the region,” a review will show it.
If it not, then now is the time to make it right. It may be premature to say the answer is to sell the TVA, but if the agency is to be saved, it is time to explore the alternatives.