President’s proposed budget calls for strategic review of government’s role in TVA

Energy Information Administration ^ | MAY 7, 2013 | Energy Information Administration

[thackney]

The president's recently proposed budget for fiscal year 2014 included a strategic review of the federal government's role in the Tennessee Valley Authority (TVA). TVA is a federally owned corporation that owns and operates 56 power plants in the Tennessee Valley Region, which stretches across parts of six states (Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Tennessee). TVA's plants are primarily hydroelectric, natural gas, nuclear, and coal-fired facilities with a combined net summer capacity of more than 35 gigawatts (GW), about 3% of the total U.S. electricity capacity.

According to the proposed 2014 budget, TVA's current capital investment plan includes more than $25 billion of expenditures over the next 10 years. TVA's current debt is roughly $25 billion, only $5 billion under the agency's $30 billion statutory cap on indebtedness. Given TVA's debt constraints and the effect on the federal deficit of its increasing capital expenditures, the budget proposal explained that reducing or eliminating the federal government's role in programs such as TVA could improve the country's fiscal conditions.

Congress established TVA in 1933 to address flood control, power supply, and economic development problems during the Great Depression. TVA expanded during World War II to produce the electricity for aluminum smelters in the region.

TVA currently owns and operates 303 generating units at its 56 plants. About one-third of the generators are hydroelectric, including the 2.5-GW Cumberland Dam in Tennessee, which is the third largest hydroelectric facility in the country and one of only 24 power plants in the country that are 2.5 GW or larger. TVA's other large plants are the 3.3-GW Browns Ferry nuclear plant in Alabama, the 2.6-GW natural gas and coal Johnsonville plant in Tennessee (consisting of 30 generators), and the 2.3-GW Sequoyah nuclear plant in Tennessee.

The utility's largest current project is the completion of the Watts Bar 2 nuclear unit in eastern Tennessee. Construction of this unit began in 1973, was suspended in 1985, and resumed in 2008. The project, which is behind schedule and over budget, is currently expected to be completed by the end of 2015.

Electric generating capacity owned by TVA (2011)

Type of electric generator	Number of generators	Net summer capacity (megawatts)	Capacity share of total (%)
Coal	59	14,684	41.7
Nuclear	6	6,710	19.0
Natural gas	108	8,366	23.7
Conventional hydro	111	3,744	10.6
Pumped storage	5	1,702	4.8
Other	14	29	0.1
Total	303	35,235	-
Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report.

Rather than selling power directly to end users, TVA sells wholesale power to other utilities. TVA sells electricity to 155 utilities, who in turn serve more than 9 million customers, including 51 large industrial customers, and 6 federal installations.

TVA operates nearly 16,000 circuit miles of transmission lines and is connected directly to 12 other electric systems, including two major regional transmission organizations (PJM and MISO) as well as large territories operated by Southern Company and Entergy. The company is also strategically located in the central region of the eastern United States. These assets and their strategic location could enter into the valuation of TVA if a sale is pursued by the federal government.

[Conserev1]

Well id Obummer has anything to do with it. I may be dark in the Tennesse Valley!

[Vince Ferrer]

If Obama is willing to privatize it, I'm game IPO it on the stock market, then pay down the debt. Easy money.

[johniegrad]

It’s a little hard to believe though, isn’t it?

[Black Agnes]

Somewhere, somehow, somewho there’s gonna be graft, corruption and behind the scenes dealing going on with this. Betcha it gets sold to his campaign donors for a song. Or used to further our energy anemia.

[bert]

The non hydro generators can be sold. .The hydro plants and locks can be turned over to the Corps of Engineers.

The problem will be the relations with the various locally owned power boards that retail and distribute the power.

I’m for it.

[Vince Ferrer]

Yes, but maybe he feels it is a better thing to do than cut pensions or medicare. I thought Big Bird was a low hanging fruit, but if he considers TVA negotiable, lets take it.

[Some Fat Guy in L.A.]

I lived in the area served by TVA for many years. I can’t find fault with privatization of a gov’t agency; however this will cause headaches. Rates are generally low, and many rural areas are served by rural coops that distribute TVA’s power - wonder how that will be affected? Suspect that TVA will become a prize to be distributed among influential rats - thus rates will skyrocket and service will plummet.

[ncpatriot]

I wonder if O wants to shut the TVA down because it serves “red” states. You know Obama, he believes in the revenge factor