Op-Ed: Deregulating TVA Could Mean Higher Electric Rates

Posted on March 25, 2007

I am disappointed that Kentucky’s two United States Senators (with whom I usually agree) have introduced legislation that would destroy the Tennessee Valley Authority as we know it. Their bill (S.864) would put TVA’s transmission lines on the chopping block and sell them, and put TVA on a path toward deregulation, privatization and sale of its other assets. Specifically, the bill would require the TVA to allow its transmission system to be used by others at the expense of existing customers. It would also place the TVA under the jurisdiction of the Federal Energy Regulatory Commission, and require studies on its debt level and the potential for privatization or sale. Such deregulation is usually music to Republican ears, that is, until you take a look at what deregulation has been doing to electric rates across America. Since Congress authorized wholesale deregulation of electricity in 1992, I have yet to find one single instance in which deregulation has resulted in lower prices. However, I have found plenty of instances in which electric rates shot up sharply. When I was governor and Nissan and Saturn came to Tennessee, a major selling point was TVA’s supply of reliable, low cost electricity. The auto industry now provides one third of our manufacturing jobs in Tennessee. In addition, residential customers won’t want to see their rates go the way of gasoline and natural gas prices. While TVA rates are equal to or lower than rates in most of the country, it is true that some rates in Kentucky are lower that TVA’s. But that may not last for long. Rates in Northern Kentucky just jumped up. That may be why four of seven Kentucky utilities that had decided to leave TVA recently changed their minds and rejoined. Having a strong TVA is a good option for Kentucky too. TVA’s new board of directors is in the midst of developing a new strategic plan for its future. The most important decision will be whether there is good reason to change TVA’s autonomy and its geographic service area. I hope my Kentucky colleagues will give the new board the opportunity to decide whether so-called “deregulation” would result in unreliable power, higher electric rates and fewer good jobs. Doing so would be best for Tennesseans – and, in the long run, it might be for Kentuckians, too.