TVA must increase N-power to compete: Runyon

TVA must increase N-power to compete: Runyon

ANNE PAINE
Staff Writer

TVA, which owes $16 billion, will have to increase productivity to stay competitive and avoid high rates for consumers, TVA Chairman Marvin Runyon said yesterday.

Meanwhile, a representative of a Tennessee Valley citizens group charged that a new policy Runyon has established will limit public access to the TVA board.

Of the $16 billion TVA debt, about $8 billion is a result of its nuclear power construction program and is not yet reflected in TVA rates, Runyon said in a telephone interview.

"We've got a very serious problem right now," Runyon said. "We've got about $8 billion in nuclear facilities that is not in the rate structure. When it comes time to put those plants on-stream, then that cost goes into the rate structure."

"We've got nine units, one of which we're planning on starting imminently. Eight other units are not on-stream yet."

The cost of the plants, which are being built with borrowed money, are not passed on to TVA customers until the plants begin producing power, Runyon explained.

A long-range study is being carried out to determine when the different units — which have the potential of producing a huge amount of power — should be brought on-stream, he said.

"The sooner a plant goes on-stream, the less money it costs," he said. The Bellefonte plant in northeast Alabama, for example, represents about $2 billion of actual capital investment and more than $2 billion in interest that has already been paid, Runyon said.

"All of that will go on the rate base when Bellefonte goes on-stream. It will be more by the time the plant opens."

Competition from other power companies is another concern, Runyon said.

"TVA is in a situation whereby there are some power companies around its perimeter that can provide power to TVA customers cheaper than TVA can," Runyon said in the interview.

If these customers — principally industrial customers — decide to purchase power elsewhere, it could cause rates for all consumers to rise, he said.

"Our cost of making power does not go down, but if our revenues go down then our cost of power to the consumer goes up," he said.

"The more our rates get out of line with utilities around us, the more of a problem that is."

"It can be turned around by increasing productivity and getting our nuclear plants back on line. We need to get our costs down and our plants up, and with all that put together we'll be very competitive soon."

Runyon met Monday in Nashville with representatives of the TVA Board Appointment Coalition, an umbrella organization of citizen and environmental groups. He had declined to meet with them before his appointment to the TVA board.

"We were glad he met with us," said Mark Siegel, a member of the group and executive director of the Tennessee Valley Energy Coalition.

"We thought it was a good first step though we didn't feel like a great deal of progress was made."

Runyon was asked questions on environmental, nuclear and accessibility issues, but "in a lot of cases he just asked for time to become more familiar with the agency," Siegel said.

The major point of disagreement came on a new policy Runyon established that will keep citizens from being able to ask questions of the TVA board during its meetings, Siegel said.

"That pretty much cuts off a lot of access to real questioning. It's a significant loss of access for the general public," he said.

Runyon has also changed the seating arrangement at board meetings so that TVA's top managers will sit with their back to the public rather than facing them as they have in the past.

Runyon said he wanted the managers to face the board front-on and that eliminating the questions would make the board meeting more productive.