Experts take aim at TVA's problems

Experts take aim at TVA's problems
Debt, public image head list of agency's woes, Runyon, others agree
By KEVIN ELLIS
Gannett News Service

WASHINGTON — In 1935, writer James Agee likened the Tennessee Valley Authority to a giant gamble.

"Remember that roads which lead to high places commonly have that character," the Knoxville native wrote.

Much has changed for TVA since its creation in the 1930s as a national demonstration project to bring cheap power to the Tennessee Valley, provide jobs, develop better farming methods and tame the Tennessee River.

But for auto executive turned TVA Chairman Marvin Runyon and the rest of TVA, the gamble continues. Beset by huge debts and many other problems, Runyon, who took over Jan. 25, has said his gamble is nothing less than to save TVA from financial oblivion.

Last week's management restructuring was the first round of Runyon's changes. Expected soon are massive layoffs that some estimate will affect several thousand workers.

For the most part, TVA employees and observers appear to be uniting behind Runyon's changes. But some warn that his solutions could do more harm than good.

Runyon — as well as other experts — have identified TVA's problems:

■ Debt. TVA says its debt is $17.9 billion. At least $8 billion of that has not been incorporated into electric rates paid by TVA customers. Runyon concedes it can't keep borrowing unrestrained — as it has for years — from the federal government.

■ Public image. TVA's nuclear plants — closed in 1985 — have been a debacle that's brought much criticism.

"Too many of our employees are frustrated in their jobs and are concerned and embarrassed about how the public feels about TVA," Runyon said earlier this month.

■ Nuclear contractors. Critics describe TVA's budget as a feeding trough for the nuclear industry. Estimates vary on how much TVA has paid consultants and outside contractors to fix the five nuclear reactors closed for safety reasons, but Barron's, the financial weekly, has said it's about $951 million.

■ Costs and competitiveness. Runyon has said $300,000 must be saved by October if TVA is to keep rates stable for three years. Otherwise, power suppliers at the edge of the valley will begin offering power for less than TVA and steal TVA customers, Runyon said.

With the management changes under way, Runyon's remaining goals are to operate a more competitive power system with no rate increases and provide better services by reducing costs.

Other than those broad steps, Runyon has skirted discussion on specifics except to say that layoffs will be necessary.

But TVA spokesman Gil Francis said, "Every program is on the table."

One candidate for major cuts is TVA's conservation program — known within the agency as Energy Services — which provides valley ratepayers with free energy surveys, millions in low interest loans for home weatherization improvements and energy appliances such as heat pumps.

"One way to help hold the line on rates is to reduce some services TVA has been providing to the ultimate consumer," Runyon told the Tennessee Valley Public Power Association May 3. He said TVPPA, which buys power from TVA wholesale then sells it to the customer, could better offer those services.

At the same time, Runyon contends the five nuclear units at the Sequoyah and Browns Ferry should be restarted.

To some, dropping the service programs would turn TVA into just another utility, a far cry from its innovation in agriculture, energy and environment.

"They are about to blow it," said former TVA board member David Freeman, father of many of the agency's conservation efforts and now head of a similar development authority in Austin, Texas.

The only way TVA can keep its