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TVA privatization proposal still a live wire

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President Obama’s fiscal 2014 budget request may be moribund on Capitol Hill, but one hot-button proposal buried deep within it appears to be very much alive: Taking a close look at the option of selling off the Tennessee Valley Authority, the government-owned electric utility.

The administration has launched a strategic review that’s delving into issues like “de-federalization,” the implications of a change in TVA ownership for economic development and how to deal with the agency’s assets, according to a rundown of “stakeholder outreach discussion items” provided to FedLine by the International Federation of Professional and Technical Engineers, a union representing about one-fifth of TVA’s some 12,500 employees.

The document, which IFPTE legislative director Matt Biggs said was drafted by the Office of Management and Budget, indicates that an interagency working group overseeing the review is made up of officials from the White House, Treasury Department and TVA.  It is marked “pre-decisional and deliberative,” a tactic often used by agencies to shield records from disclosure under the Freedom of Information Act.

As the administration evaluates “a broad range of options to address TVA’s capital financing constraints,” it is  ”firmly committed to working with TVA’s stakeholders in an effort to better understand and address the interests and concerns of these groups regarding prospective TVA financial strategy alternatives,” the document says.

But in a Friday letter, IFPTE President Greg Junemann said the union got few concrete answers in a call with officials earlier this week. In the letter, addressed to OMB and TVA managers, he sought more information on a dozen points,  including exactly how the strategic review will work and whether any recommendations will be run by Congress.  “In our view, the belief that the TVA’s mission is no longer essential and is somehow linked [to] the fiscal sustainability of the overall budget is ill-advised,” Junemann said in the letter.

OMB spokesman Steve Posner and other agency officials could not be reached for comment late Friday afternoon.

The TVA, headquartered in Knoxville, Tenn., is one of the best-known legacies of the New Deal, with staunch defenders even among the Republicans who dominate Southern congressional delegations. (Yes, FedLine gets the irony.) But it also faces some well-documented challenges. For the record, here’s what the White House said in its FY14 budget request:

“Since its creation in the 1930s

during the Great Depression, the federally owned

and operated Tennessee Valley Authority (TVA)

has been producing low-cost electricity and managing

natural resources for a large portion of the

Southeastern United States. TVA’s power service

territory includes most of Tennessee and parts of

Alabama, Georgia, Kentucky, Mississippi, North

Carolina, and Virginia, covering 80,000 square

miles and serving more than nine million people.

TVA is a self-financing government corporation,

funding operations through electricity sales and

bond financing. In order to meet its future capacity

needs, fulfill its environmental responsibilities,

and modernize its aging generation system,

TVA’s current capital investment plan includes

more than $25 billion of expenditures over the

next 10 years. However, TVA’s anticipated capital

needs are likely to quickly exceed the agency’s

$30 billion statutory cap on indebtedness. Reducing

or eliminating the federal government’s role

in programs such as TVA, which have achieved

their original objectives and no longer require

Federal participation, can help put the Nation

on a sustainable fiscal path. Given TVA’s debt

constraints and the impact to the Federal deficit

of its increasing capital expenditures, the

Administration

intends to undertake a strategic

review of options for addressing TVA’s financial

situation, including the possible divestiture of

TVA, in part or as a whole.”

 

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