Observers differ on need to expand TVA board

Observers differ on need to expand TVA board

By KATHY CARLSON and NAOMI SNYDER
Staff Writers

Former Tennessee Valley Authority directors and other observers across the state split sharply in their reactions to the prospect of expanding the 70-year-old agency's board.

The proposed federal energy bill that emerged from a House and Senate conference yesterday includes a measure to add six new members to the three-member TVA board, and add a chief executive officer. A vote could be taken next week.

Rep. Jim Cooper, D-Tenn., had earlier introduced a similar version in the House and said the move was a good way to modernize TVA, which generates and sells electric power to virtually all of the local electric utilities across Tennessee.

"Everybody pays TVA electric bills every month," Cooper said. "The best way to keep them low is to have an efficient and modern organization, and the best way to do that is to have one boss."

He said the TVA was facing big issues that need resolving, including its $26 billion debt. TVA lists statutory debt of $25.2 million, but the White House Office of Management and Budget counts long-term leases and sets debt at $26.5 billion.

Cooper said there was bipartisan support for the provision, and that the TVA board would be balanced by Republican and Democratic nominees. But most importantly, there would be one, professional chief executive officer.

"I've never seen an organization that had three CEOs at one time," he said.

Herman Morris, president and chief executive officer of Memphis Light, Gas & Water, said there could be value in bringing TVA's governance structure in line with that of many other billion-dollar businesses. "We will be following it with significant interest," he said of the proposed measure.

TVA's current chairman, along with two former TVA directors, offered three different takes on the proposal.

"Senator Frist and Senator Alexander are strong supporters of TVA, and I know they have the best interests of the people of the valley at heart," said Chairman Glenn McCullough. Changing the utility's governance is the prerogative of Congress, he said, adding that he trusts its collective judgment.

"I have confidence that TVA will continue to be successful in meeting its mission of service to the valley," he said.

Former chairman Craven Crowell, who served during the Clinton administration, said, "That's unfortunate that such dramatic action is being taken . . ." Crowell said he did not doubt "the sincerity of Senator Frist and Senator Alexander in trying to improve" TVA's efficiency, but saw a "lack of public debate about unintended consequences" that could harm TVA.

Among the unintended consequences, he said, is that the change, if approved, "will be viewed by many as the first step in privatization."

Uncertainty over privatization, in turn, could cause lenders to charge more interest on TVA debt, he said. Wall Street "doesn't react well to changes in structure that haven't been discussed," he added.

Finally, he said, enlarging the board could cause rivalries among the seven states that TVA serves, unduly influencing business decisions, such as where to locate facilities.

Former Democratic Congressman Bob Clement, who was a TVA director during the Carter administration, said the proposal "should be given serious consideration but I also have to say . . . we need to be careful and cautious not to dilute the importance of the state of Tennessee in this process."

The "vast majority" of TVA's people and assets are within Tennessee, Clement noted. He'd like to see a majority of the board members come from Tennessee.

Environmental advocate Stephen Smith, executive director of the Knoxville-based Southern Alliance for Clean Energy, said his group supported the concept of expansion, saying it could bring more balance to the board and help curb the effects of politics and personality on decisions.

Smith had reservations, however. First, he said, the board needs to be mindful that TVA isn't just an electric power company, but a public entity that's responsible for flood control, river management and regional economic development.

Management of the river system could suffer if board members are only interested in TVA's electric power side, he said.

Changing the structure of the TVA board won't change the fact that TVA is self-regulated, Smith said. "There is no independent oversight of the TVA board. (Adding board members) does nothing to address that issue. . . . It's unfortunate that they didn't go ahead and fix that problem."