Watchdog group fears TVA deals will end up hurting homeowners

Watchdog group fears TVA deals
will end up hurting homeowners
By Dave Flessner
The Chattanooga Times

Residential electric rates in the
Tennessee Valley are among the
lowest in the nation.
But a TVA watchdog group
charged Monday that TVA is mak-
ing decisions that could eventually
push those rates higher and force
homeowners to absorb a dispro-
portionate share of the utility's
$27.2 billion debt.
"It's April Fools' Day, but we're
here to let TVA know that we are
no fools," Dr. Stephen Smith, ex-
ecutive director of the Tennessee
Valley Energy Reform Coalition,
said Monday. "A major debate
about TVA's future is happening
without oversight or public input.
The employees and ratepayers of
the valley are being ill-served."
Smith charged that TVA is offer-
ing "sweetheart deals" to lure in-
dustry into the valley or to sell sur-
plus power outside of the valley.
Smith worries residential custom-
ers will end up having to pay for
TVA's stranded investment in
more than $10 billion of partially
completed or idle nuclear plants.
"The residential customer who
may end up having to foot the bill
for TVA's mistakes has no one
looking out for them," Smith said.
TVA insists its rates are based
upon the cost of delivering service
and are intended to promote eco-
nomic growth in the region. TVA
provides residential customers
the benefits of its cheapest power
source—hydroelectric power gen-
erated by water passing through
its dams.
Residential rates, as a conse-
quence, are low. But TVA's indus-
trial rates are about average.
Smith said his group will fight
any change in the hydro prefer-
ence for residential customers.
TVERC is also opposed to TVA's
proposal to sell electricity outside
of its seven-state region. Smith
cited a draft report being pre-
pared for TVA's distributors sug-
gests that the coming deregulation
of the utility industry may cripple
TVA.
"As a wholesale supplier, the
vast majority of TVA's load would
be at risk to competition without
the Wall (that protects TVA from
most competition by neighboring
utilities)," said David Geschwind,
an analyst for Burns & McDonnell.
The Tennessee Valley Public
Power Association, aided by funds
from TVA, commissioned Burns &
McDonnell to study TVA's compet-
itiveness. Jerry Campbell, execu-
tive director of the TVPPA, said
the Burns & McDonnell report is
considered an internal working
document at this stage, and
TVPPA hasn't yet taken a position
on its conclusions.
"The report reiterates that TVA
has a large debt and may not be as
flexible as some other utilities in
the future," Campbell said. "But it
also shows that TVA rates, in most
instances, are now very competi-
tive."
Although TVA is not regulated
by state public service commis-
sions, its three-member board is
appointed by the president and
Congress frequently conducts
oversight hearings of the agency.
But Smith said the current mem-
bers of Congress aren't interested
in TVA and the presidential ap-
pointments to the board have be-
come too political.
"Johnny Hayes (who President
Clinton recommended last week to
serve another term on the TVA
board) is being appointed because
he was a major fund-raiser for Al
Gore," Smith said. "We need expe-
rienced utility professionals on
the board, not just political ap-
pointees."