Environmental Group Hits Wamp, Duncan Over TVA

Environmental Group Hits Wamp, Duncan Over TVA

By VICTOR MILLER
Free Press Staff Writer

KNOXVILLE — The head of a 10,000-member environmental group said here Wednesday U.S. Reps. Zach Wamp and John Duncan will be "painted into a corner" unless they begin to exert oversight responsibility toward TVA.

Steve Smith, executive director of the Tennessee Valley Energy Reform Coalition, made the comments during a board meeting.

Referring to what he called the "imminent crisis" facing TVA's financial future, Dr. Smith said, "I have spoken with Zach Wamp and John Duncan and I have told them that unless they get out and get ahead on this issue, we're going to paint them into a corner that this is their fault because it's happening on their watch."

"They need to get more aggressive in looking out for the interests of the citizens of the valley."

The two congressmen recently sent a letter to TVA expressing their concern that the federal agency operate as efficiently as possible. The letter was in response to complaints about advertisements TVA has been running throughout the valley.

In an interview, Chairman Craven Crowell said he has talked to both congressmen, but said, "I would avoid discussing any conversation I had with them. But my position has been that this board is operating TVA as conservative fiscally as possible."

Mr. Crowell said it was "proper and appropriate" for Reps. Wamp and Duncan to communicate their concerns and to "seek an explanation," which he said is that advertising is desirable "to prepare TVA for a deregulated electric industry in an environment where keeping your customers is going to be important."

"All other utilities that I know of in the country advertise."

During the meeting Mr. Crowell also deflected criticism concerning:
• TVA's hosting of and footing the bill for receptions. Critics have said the funding is an improper function for a governmental agency.
• TVA's use of contractors. Leroy Beasley of Chattanooga, president of the TVA Engineering Association, said contractors are being used while TVA employees are being "downsized," some after training their contractor replacements.

Mr. Crowell asked for more information and said that should not occur.
• What Dr. Smith called "sweetheart deals" on rates for steel mills in north Alabama and Memphis.

Mr. Crowell said such "innovative rates," which are "not new," "help attract industry to the valley, creating jobs." He said no new categories of rates were created especially for the mills.

• Net income for fiscal year 1995 of $10 million, compared to $151 million in fiscal year 1994.

David Smith, chief financial officer, said a primary reason for the decrease was the $137 million TVA spent on its early-out program that reduced TVA employment by 2,500 in a "humane way."

Mr. Crowell said, "The closer you get to no retained earnings the better off you are, because what you're doing is returning that money to the ratepayers. It's not our objective as an organization to take any more money from rates than absolutely necessary to operate the system."

• Dr. Smith's contention that adding the cost of Watts Bar Nuclear Plant's Unit 1 reactor to the rate base will hurt TVA's ability to keep rates constant. Mr. Smith said TVA calculated the financial impact of Watts Bar 1 into its rate projections for 1996 and still recommended no rate increase.

He said, "The cash flow from Watts Bar's operation will indeed be quite favorable. … It will be one of the greatest cash contributors that the agency has, providing for debt reduction and additional reinvestment."

Dr. Smith advocated the creation of an independent body to provide oversight of TVA, arguing Congress has abdicated that responsibility.