TVA: From flood control to national defense?

Subhead: Part II in a series
By Kathy Helms-Hughes


   Tennessee Valley Authority has come a long way since its establishment by an act of Congress in 1933 which -- first on the list of instructions -- authorized the agency to improve navigability and provide for flood control of the Tennessee Valley.
   One of its stated purposes, under the original act, was to "provide for the national defense by the creation of a corporation for the operation of government properties at and near Muscle Shoals in the state of Alabama, and for other purposes."
   The agency now to produce tritium for nuclear weapons at TVA's Watts Bar and Sequoyah nuclear plants, which are on track to begin generating by late 2003.
   By the end of World War II, TVA had completed a 650-mile navigation channel the length of the Tennessee River and had become the nation's largest electricity supplier. However, power demand was outstripping the utility's capacity to meet demand from hydroelectric dams and TVA sought federal appropriations to build coal-fired plants. It was turned down. TVA then sought authority to issue bonds, and in 1959, Congress passed legislation to make TVA self-supporting from power revenues.
   "In effect, Congress was no longer financing or budgeting for TVA's power program," said Ann Harris, a former TVA employee and founder of We The People, a group made up of safety advocates.
   The 1959 amendment placed a limit of $750 million on TVA borrowing, a limit raised four times over the next two decades, according to the General Accounting Office (GAO). Debt ceilings were increased four times from the original $750 million to $1.75 billion in 1966; $5 billion in 1970; $15 billion in 1975; and then doubling to $30 billion in 1979. The bonds are not guaranteed by the federal government, according to the TVA Act, though they are viewed by the financial community as having an implicit federal guarantee.
   TVA began an ambitious nuclear plant construction program in the mid-1960s and at the height of the program in the 1970s, 17 nuclear plants were either under construction or operating. According to TVA, an international oil embargo drove up fuel costs in the late 1970s, causing the average cost of electricity to increase fivefold into the early 1980s.
   Large-scale investments based on projections of technology and market growth for electricity contributed to TVA's troubled financial condition, caused largely by construction delays and cost overruns, according to the GAO.
   TVA canceled several nuclear plants, including Phipps Bend in Hawkins County, Hartsville and Yellow Creek. Following the announcement of Phipps Bend's cancellation, local residents filed into the site in pickup trucks and hauled away all useful construction materials at TVA's invitation. The utility recovered its $4.6 billion in capital costs for the plants over 10 years by increasing rates 88 percent.
   Not only does GAO project financial trouble ahead for TVA, but recent financial analysis at the Yale University School of Management indicates that TVA "is now nearly insolvent," yet it continues to carry a AAA credit rating.
   "The extent of lack of realism in evaluating its operations is indicated by its public relations effort to be held out as a model organization with the solution to California's current energy supply and distribution problems," according to the Yale report prepared by Dennis E. Logue of the University of Oklahoma and Paul W. MacAvoy of Yale.
   According to the study's authors, by 2000, $17.9 billion had been invested in TVA's nuclear program, accounting for 63 percent of assets. However, TVA generated 31 percent of electricity from both fossil and nuclear plants, according to the utility's financial statements cited in the Yale research.
   TVA has announced that it expects to reduce its current debt by $2.4 billion in the next five years, including $252 million in the next fiscal year in order to prepare the agency for competition. Last year, TVA said it would cut its debt $208 million this fiscal year, but now projects a reduction of around $50 million.
   "When you add up short-term and long-term debt and then the fees debt, it is over $34 billion," We The People's Harris contends.
   Recently, TVA contracted with a consortium which includes Nuclear Fuel Services of Erwin to downblend 33 metric tons of weapons grade uranium provided by DOE into fuel for TVA's reactors at Browns Ferry, and restarting Unit 1, which was mothballed in 1985 after being virtually destroyed by fire from a candle.
   In 1999, TVA was selected by the Department of Energy to produce tritium for nuclear weapons over the next 30 years in its Watts Bar and Sequoyah reactors. TVA also will increase power production at the facilities.
   Harris and Kenneth Bergeron, who spent 25 years in research and management at DOE's Sandia National Laboratories in Albuquerque, believe the production of tritium "is not an industrial or commercial activity. It's a military activity," Harris said.
   Both say there are significant safety issues which must be addressed before tritium is produced and contend that the Nuclear Regulatory Commission, which regulates TVA, does not have regulatory authority over the mission.
   The two also believe that the TVA and DOE have blurred the line that has traditionally separated military and commercial endeavors.
   "There is no separation," they said. "And that is the way the military is going to take over this country."