Statement Of Sen. Alexander - TVA Congressional Caucus Hearing

Posted on April 14, 2005

President Franklin D. Roosevelt was so pleased with the new Tennessee Valley Authority that he considered proposing "seven new TVA's." But the country settled for one, and that one has become America's largest and best-known public power company, supplying electricity to 8.3 million people and serving as a powerful force for prosperity in the Tennessee Valley. This year, we celebrate TVA's 70th birthday. But today, we are looking at TVA's future. As members of Congress from the seven-state TVA region, we know that we serve our constituents best by helping to keep TVA strong. My goal for this hearing is to learn more about TVA's plans for the next 5 to 10 years. I hope we can focus on four areas. First, during the next ten years, what new capacity will TVA build, and what will its rates be? During the 1980's, as the auto industry brought higher family incomes to Tennessee, I was reminded once again of what an advantage it is to have TVA supplying reliable, low-cost power. But Tennessee is the only state in which most municipal utilities must buy their power from a single supplier (TVA). Many distributors have asked Congress to change the law to give them a choice. TVA has indicated it might agree. Ratepayers have a lot at stake in the decision, and we should discuss it here. Second, what will TVA's debt be 5 years and 10 years from now? The debt is $25 billion today, close to the $30 billion cap set by Congress. Interest payments were $1.4 billion last year, an amount that is four times the $365 million that TVA's proposed rate hike would bring in. This situation seems to leave limited money available for building or modernizing capacity, for paying for clean air improvements or higher interest rates or for the aggressive plan of debt reduction suggested by the federal Office of Management and Budget. Third, what are TVA's plans for cleaning the air in the Tennessee Valley? Yesterday, I drove to the Foothills Parkway in Blount County. I looked east toward Knoxville and west toward the Great Smoky Mountains. I could only see a few miles because of the dense haze. Most of this is not natural haze. Park officials say that average daily visibility in the Smokies should be 113 miles. But now it averages only 25 miles, and on a hot, summer day like yesterday, it is more like 12 to 13 miles. Eighty percent of this haze, or smog, is caused by coal-fired power plants. About half of this is caused by TVA's coal-fired power plants, which have an average age of 45 years. These coal-fired power plants also produce nitrogen pollutants, creating a different kind of smog, called ground ozone. Only Los Angeles and Houston have higher ozone levels than the Smokies. Knoxville is on the American Lung Association's list of top ten cities with polluted air. Memphis is 18th and Nashville is 21st. Chattanooga and Tri-Cities aren't too far behind. When ground ozone smog is this bad, older people, children and those with respiratory problems are urged to stay indoors. Last week the state of Tennessee told the Federal Environmental Protection Agency that 18 of Tennessee's largest counties — all major metropolitan areas - have "the potential to be designated in non-attainment" under clean air rules for ground ozone pollution. This could mean new restrictions on recruiting industry and loss of federal highway funding. TVA's 59 coal-fired power plants contribute about 20 percent of this ground ozone smog. The rest comes from other coal-fired power plants and emissions from cars and trucks. President Bush has proposed legislation that would set still higher air quality standards. I support legislation that goes farther, faster than the President's. I hope we hear today what mix of electricity generators TVA will use to meet these clean air standards and how it will pay for them. Fourth, should TVA's executive authority be vested in a single chief executive officer or in a three-person board as it is today? Since TVA's beginning, it has been managed by three directors appointed by the President and confirmed by the Senate. From the beginning, there have been questions about this management by a committee of three. The Draper Committee that looked at TVA for President Roosevelt recommended a stronger general manager to provide executive leadership and decision-making ability. In 1986, Virginia Governor Gerald Baliles headed a commission that recommended that a chief executive officer run TVA. Senator Bill Frist has reintroduced legislation that would create a larger, part-time board that would hire a chief executive officer. In an article about these hearings, last week, the Economist Magazine boiled down the question before TVA to these few words. "Can TVA clean up its plants, and its books, without raising prices?" We members of Congress are not the managers of TVA. That responsibility lies solely with the Board of Directors. But TVA is wholly owned by the federal government, which means it belongs to the people of the United States. As their representatives, we have important oversight responsibility, which we are exercising today.