Alexander: No Rate Position

By Thomas Fraser
of The Daily Times Staff

Sen. Lamar Alexander said Tuesday he has not taken a position on a proposed Tennessee Valley Authority rate increase.

Congress "is not ready to take rate-setting authority away from the board" of directors of TVA, said Alexander, who chairs the TVA congressional caucus. Alexander made the comments during a conference call to discuss a caucus field hearing Monday in Knoxville.

"I don't want to set TVA's rates. I was not elected to do that," the Maryville native said.

The authority has proposed a rate increase of 7.4 percent for residential and most industrial customers, coupled with a decrease of 2 percent for rates paid by about 2,500 manufacturers throughout the seven-state service area.

The increase is necessary, TVA officials argue, to pay for emissions controls at some of its coal-fired power plants.

"This is not a hearing on rate increases," Alexander said of the caucus meeting, which will take place at the City-County Building downtown. However, the meeting will present an opportunity to "take a long look at the future of TVA," including issues of debt, management and air quality.

Representatives and senators from at least some of the seven states served by TVA are expected to attend Monday's caucus meeting, as well as "witnesses" who will speak on a variety of issues, Alexander said. Most Tennessee representatives are expected to attend; the meeting will be hosted by Rep. John J. Duncan Jr.

"My goal (as caucus chairman) is to make sure we have a strong TVA for the foreseeable future," Alexander said.

Sen. Bill Frist has proposed legislation that would change the makeup of the current TVA board of directors to resemble corporate boards. Frist, Alexander said, thinks TVA's current three-person board of directors "ought to be organized more like a major corporation," with a board of directors overseen by a chief executive officer. Alexander said he would "withhold judgment" on the proposal until after the hearing.

On the issue of deregulation, Alexander said: "I want to make sure TVA has a strong management structure so it can be successful in whatever environment it finds itself."

As for TVA's debt, Alexander said he hopes the Bush Administration "holds its fire for a little while" on a proposed debt consolidation for the authority. TVA was $27.7 billion in debt in 1997, but has since reduced that figure to $25.3 billion, said TVA spokeswoman Michelle Chang. Further reductions of $375 million are projected for Fiscal Year 2003, and another $191 million in reductions are anticipated for Fiscal Year 2004.

Nuclear energy

On that note, Alexander wondered out loud whether it was "wise" for TVA to "start up a mothballed" nuclear plant at Browns Ferry rather than pursue new nuclear plants to meet its power needs and reduce the amount of fossil fuel-based pollution from its coal plants.

Clean air advocates, such as the Knoxville-based Southern Alliance for Clean Energy, have charged that the proposed rate increase is really to cover the costs of restarting Browns Ferry nuclear plant, rather than clean up the air.

"Technology has changed dramatically," since TVA built its first nuclear units, Alexander said, so it might make sense to discuss the "relative cost of restarting" versus construction of new nuclear power plants.

However, nuclear energy, in Alexander's opinion, could help reduce TVA's dependence on coal-fired plants, which produce about a third of the emissions responsible for air pollution in the Tennessee Valley.

"TVA has to be a major player in cleaning up the air. It will be expensive and require imagination."

This year marks TVA's 70th anniversary, and the authority has "been tremendously important for Tennessee growth over that time," Alexander said.