TVA ratepayers will suffer, coalition says

TVA ratepayers will suffer, coalition says

By Tom Sharp
The Associated Press

KNOXVILLE (AP) — A TVA watchdog group on Monday charged the utility with making decisions that could eventually force ratepayers to pick up a disproportionate share of the agency's $27.2 billion debt.

The Tennessee Valley Energy Reform Coalition, a group of 18 regional environmental and consumer advocacy groups, said it has obtained a copy of a report supporting its contention that TVA's debt will be crippling in an age of deregulated utilities.

"A major debate about TVA's future is happening without oversight or public input," said Steve Smith, executive director of the coalition. "This debate should be happening in a fish bowl for all to see."

The coalition's argument centers on a report prepared by Burns & McDonnell for the Tennessee Valley Public Power Association, which represents TVA's 160 power distributors.

There are two other recent reports about TVA's position relative to private utility companies under deregulation. One of them, by the General Accounting Office, the investigative arm of Congress, says TVA's debt could hurt it in competition with private companies.

The other, commissioned by TVA and done by Palmer Bellevue, is more favorable to TVA's position.

TVPPA commissioned the Burns & McDonnell report to get help interpreting TVA's Energy Vision 2020 — the agency's energy plan for the upcoming quarter century.

Smith and the coalition say the Burns & McDonnell report sides with GAO and indicates TVA is headed in the wrong direction.

Smith said the coalition thinks TVA would lose at least some of its big industrial customers to rival utilities in a deregulated world, leaving TVA's residential customers to pay a greater share of TVA's costs, including its debt.

"The industry is going to become much more competitive," Smith said. "Those utilities that are lean, mean and don't have a high level of debt are going to be highly competitive. Those carrying large amounts of fixed costs are going to be in trouble. TVA is the latter case."

TVA spokesman John Moulton said Smith's charges are faulty speculation.

"TVA has no reason to believe industries would go to other power producers because TVA right now is very competitive," Moulton said. "The Burns & McDonnell study said our average power cost in 1993 was among the lowest of any regional utility. Quite the opposite could be true."

Moulton said TVA will be ready to compete with investor-owned utilities as industry deregulation evolves.

"That's what we're doing, getting TVA ready for that time when there will be a deregulated environment," he said.

Jerry Campbell, executive director of the TVPPA, said the Burns & McDonnell report is considered an internal working document at this stage, and TVPPA hasn't taken a position on its conclusions.

He said he would not interpret it as Smith does, however.

"I think the report reiterates what GAO found and everybody knows, that TVA has a heavy debt burden and may not be as flexible as some other utilities might be," Campbell said.

"Frankly, we're trying to look at the positive side of what TVA is doing in this new environment. We think it's colossal that they've gone nine years without a rate increase. We're also very impressed that they've gone through a painful downsizing and imposed a debt ceiling on themselves."

Congress limits TVA's debt to $30 billion; TVA has adopted a $28 billion ceiling. The agency also has cut its employment from about 34,000 in 1988 to 16,500 today.