The History of the Tennessee Valley Authority (TVA)

TVA’s history is really interesting, especially given how much things have changed from its original mission. TVA was established in 1933 as part of President Franklin Delano Roosevelt’s New Deal. TVA was created for economic development and environmental conservation. And yes, energy too.

TVA was created not just to help electrify the south. TVA was tasked with modernizing the Tennessee Valley, one of the most impoverished regions of the country. Goals included improving the navigability of the Tennessee River, providing flood control, and developing agriculture, industry, and commerce in the seven-state area of the Tennessee Valley. Along with providing electricity to many rural areas for the first time, TVA would also bring jobs and economic development.

TVA played a major role in the World War II effort, especially making fertilizer. For decades, TVA was progressive,open to unions, and was responsible for some of the earliest movements in the South for desegregating and opening the workforce to everyone. They really pushed the envelope from an environmental, economic, and social justice perspective long before it was accepted in much of the South. That’s not to say TVA was without issues that can be papered over. The creation of TVA dams displaced thousands of families, taking an especially difficult toll on black communities.

Because it was a public utility, TVA could typically generate power at lower costs than investor owned utilities, which are usually more concerned with shareholders rather than the local community.

The Transition Away from Public Power Values

The TVA is now the largest public utility and one of the largest providers of power in the country. Unfortunately, in recent decades TVA has transitioned from operating as a public utility to operating much more like a private investor-owned utility, with a CEO that makes $8.61 milion/year. CEO Jeffrey Lyash’s high salary has drawn the ire of President Donald Trump.

Why has TVA moved away from public power values? Some place the blame as far back as President Reagan, whose conflict with TVA appears to have stemmed from the early 1960s. Reagan had called for the privatization of TVA.

Some place the blame at the feet of the previous CEO, Bill Johnson. Johnson had a background in investor-owned utilities, rather than public power, and instituted many policies from private business. Those policies have resulted in the lack of transparency and many of the problems that we see today.

Regardless of the specific date, TVA has been on a decades long march away from the values of public power.

The Problems with TVA

As we at Energy Alabama see it there are several major issues with the TVA. While they don’t all have easy answers, TVA can and should improve the situation.

Lack of transparency and public input

Given that TVA is a public utility, it is surprising the public has very little say in what they do. While they do provide occasional opportunities for the public to speak on specific topics, the public is largely ignored. We at Energy Alabama, as well as other great groups from around Valley, make every effort to speak out and publicly comment as much as possible. However, TVA tends to follow the typical federal rule-making process. They create a plan, collect public comments, then follow-up by telling the public how they already addressed the public’s concerns in their plan (whether they have or not).

TVA is a member of the Utility Air Regulation Group (UARG) and Utility Solid Waste Activities Group (USWAG), off the books collaboration of utilities that sue the EPA, DOE, and federal government to roll back and destroy environmental regulations. TVA uses public money (that means money from your electric bill) to fund these groups to fight the regulations that they are subject to. Basically, a federal agency using our money to sue another federal agency.

Apparently, this has been happening despite being against the directives of the board of directors. The board had written a policy about how the TVA is supposed to use public money when it comes to lobbying and litigation, but UARG and USWAG expenditures seem to be in complete contradiction to that. They are spending our money against the public benefit; and in many cases, it appears the board doesn’t even know what’s happening.

TVA has gotten really good over the last few years of going through the motion of accepting public comments. They make sure that people like us, their customers, have the opportunity to speak up, but have no real intent of doing anything with the feedback. Basically, they will say just enough to placate and give the appearance that we’ve been heard. We, for one, cannot remember a time in which public comments we sent in to TVA were adopted or addressed substantively.

Equity and Justice

Persistent poverty is a problem in the Tennessee Valley. TVA was created to bring people out of poverty and alleviate it, not make it worse. But there are so many places in the valley where we have completely unsustainable electric bills. Those high, unsustainable electric bills only serve to keep people in these areas in poverty.

There is no focus from the TVA on helping people save energy. In fact, TVA recently cut almost all its funding for energy efficiency and its new long-range planning magically says energy efficiency is not cost-effective. After years of pressure, TVA has run limited pilots for low-income energy efficiency but it has yet to expand these across the Valley at the scale needed. As usual, they look good on a press release but fail to fully address the problem.

By helping people solve the issue of high electric bills at the source, and fix these issues for people first, we can work towards solving the larger issues.

Customers are paying high electric bills for three main reasons.

We are paying for uncontrolled high consumption. Electric use is high in the Tennessee Valley for natural reasons. We have warmer weather which increases the need for air conditioning in the summer and when heat is needed, we are more likely to use electric heat. TVA has been historically woeful on helping people lower their consumption. In fact, they take steps to ensure that we use more energy instead of less.

We are paying for bad decisions of the past. TVA was built to create affordable energy for the people. However, unwise decisions made in the 1970s and 1980s created an undue burden on the ratepayers that will exist for many years to come.

In the early 1970’s the TVA began building 17 nuclear facilities to meet increased power demands. However, after several years the build-out for 10 of those reactors was cancelled due to lack of need. Unfortunately, the costs had already been largely incurred and continue to be passed on to the customers.

So, we now have billions of debt on the books for power plants that were never finished. That debt gets passed to the customers in the form of higher utility bills.

We are paying to maintain uneconomic power plants. Many existing coal and gas power plants around the country are losing money. Some of these are running despite a lack of need, and those that are needed could be replaced by efficient energy sources, such as solar and wind.

Despite this, TVA wants to add even more unneeded natural gas!

Communities in Transition

Attention also needs to be paid to how we deal with communities in transition. In areas where there were coal plants that are closed/closing, or areas where TVA has simply decided to outsource jobs. How do we take care of those people and make sure they are not hurt in this transition? This energy transition needs to take place but we need to make sure people aren’t hurt in the process. When people are being hurt, we can’t be surprised when they are resistant to the transition that needs to take place.

If we fix the problems that would help people the most, it would be easier for other things to fall into place after that. If policies are centered around people then our priorities will be in the right place.

TVA has little to no published information or planning about helping communities in transition. Will it be retraining workers? Will TVA and local power companies build renewable energy and invest in local energy efficiency in these communities? By now, you probably know the answer to date.

TVA’s Lack of Ambition Regarding Renewable Energy

We’ve seen a lack of ambition from TVA regarding moving towards renewable energy, or any focus on energy storage and electric transportation. You’d think that electric companies would be out hawking electric cars as it would generate more revenue for them under the current structure. Much as they did with refrigerators and appliances in the 1940’s. However, what we’ve seen from TVA is the opposite. Their efforts seem focused on removing incentives for renewable energy and largely standing on the sidelines of the electrification discussion.

TVA’s Green Power Providers Program, launched in 2003, allowed regular people and businesses to sell excess energy from solar/renewable energy at a predefined rate. When it launched it was one of the most progressive programs in the country. It was very aggressive and provided above retail rates for renewable energy sources to stimulate economic growth. There was always an intention that those rates wouldn’t continue forever, and over the years the price of their buyback went down to around retail rates as expected.

Along the way, however, TVA decided distributed generation was a threat, not an economic driver. They got more aggressive and slashed the buyback below retail and then took it even further, paying a fraction of retail. What started as a reasonable reduction of the buyback rate, turned into a way for TVA to gut competition to their monopoly. Gutting buyback rates to the point where there was no economic incentive to participate; so, no one wanted to participate. When no one participates in a flawed program they had the justification to kill the program instead of just fixing it. While this was all happening, they were also trying to raise grid access fees (charging people more to even connect to the grid), basically decimating small scale solar in the process. Energy Alabama is currently challenging the “Grid Access Charge” in federal court.

TVA may market like it’s doing wonderful things with renewables but it is mostly hype. At the end of the day, they are doing slightly more utility scale solar that they own and operate but eliminating any options for the average person, small businesses, and communities. They can’t claim they are going to all this effort for renewable energy when they are planning a massive unneeded gas build-out.

TVA’s relationship with local power companies

When TVA was created and much of the south was being electrified, TVA grew quickly, much to the alarm of neighboring power companies like Southern Company. They didn’t like TVA growing into their territory. So when a private company doesn’t like something, they call their lobbyists. Federal legislation passed to put a fence around the TVA limiting where they could operate… and also limiting the ability of other utilities to operate inside that area.

TVA has long-term contracts with its local power companies. This is not uncommon in the utility industry and often referred to as “all-requirements” contracts. TVA has massive power plants that generate and sell power to local power companies that they then sell to their members. Contracts were typically 5-10 years, but today TVA is increasing the length of those contracts to 20 years with rolling contracts that require a 20-year notice to cancel. This makes it virtually impossible to get out of the contract.

This still wouldn’t be a totally terrible thing if TVA was responsive to the people. The new contracts claim to allow local power providers 3-5% choice in generation, giving them the option to choose things like rooftop solar and battery storage. It’s an improvement over the complete lack of choice they have now; but, as we see with other power providers across the country, 5% is just unsustainable. Other areas, like Colorado, have tried similar things and found that, given the abundance of cheap, renewable energy, you can hit the cap very quickly. Oh, and it turns out that what TVA said was 5% local choice, was really more like 1-2%. Chalk it up to fuzzy math.

The current setup only benefits TVA; not you and not local communities. It guarantees their revenue in perpetuity and hoses the rest of us, making sure we are always on the hook for TVA’s decisions regardless of how good or bad they are.

How can we get out from underneath TVA?

After understanding TVA’s long march away from public power values, there is a desire to just get out from underneath the TVA or to enact serious reforms. To some degree this is more possible now than ever before due to advances in technology. There are options for regular people or businesses to install renewables and energy storage, or for local power companies to substantially generate their own power and not necessarily rely on TVA.

For instance, Memphis is looking at leaving TVA, becoming their own independent utility, and saving a lot of money. That could be great for them. But it could also have a huge effect on any remaining members of the TVA as those costs are passed back.

There is no good answer here. Memphis has an obligation and a responsibility to take the possibility of hundreds of millions in customer savings seriously, and by all accounts it is. The rest of Valley must be concerned about the impact of Memphis leaving TVA. If Memphis did leave TVA, one could only hope it is a sizable enough event to wake TVA out of its slumber.

Memphis is a perfect example of the potential consequences of the failure to adhere to the core principles of public power. To be clear, Energy Alabama does not generally support privatization of public utilities.

If only there were another way….

What you can do: Tennessee Valley Energy Democracy Movement

The Tennessee Valley Energy Democracy Movement was founded to return TVA to its roots, bring back good paying jobs, and benefit communities. In other words, put the public back into public power.

The largest objective is to bring the people power back to the TVA. It was founded as a public agency but has become less and less responsive to the needs, wants, and demands of the people who are supposed to be in charge of it. That’s you!

We at Energy Alabama have joined the TVED Movement because we are excited about bringing that voice back.

The movement is about listening to the people and learning what they want their public power to do for them besides just sending them a bill.

Tennessee Valley Energy Democracy Movement is focused on:

Efficient and renewable energy
Local and decentralized generation – economic development opportunities, helping to ensure support of coal communities as those transition, making sure that the transition is equitable and fair for all.
Democratic control – people want to know that their voice matters.
Bills and equitable access – a lot of people don’t think about these issues beyond seeing their bill and struggling to pay it. We have extremely high poverty rates and people often struggle to decide whether to pay their electric bill or feed their family or pick up medicine. This is an unacceptable choice.
Healthy communities and environment – making sure we aren’t just generating electricity but are also feeding the health of the people and the environment. Here in the south we all have a very strong connection to the outdoors and nature. TVA should continue looking after those aspects as well.
Safe, high quality jobs

How you can help:

Visit EnergyDemocracyYall.org and follow them on social media to learn more about the policy platform
Talk to your representatives about making sure that TVA is listening to the people. We are starting to see reps at the federal level starting to listen more and understand that we do want to preserve the public power and we need to be acting holistically to avoid privatization.
Talk to your local power company – local utilities are usually sub-units of the local government. They should be responsive to local leaders, to local residents.
If you are a member of a local electric cooperative, get involved. Run for office, vote, campaign to push these cooperatives to get involved in making change.
Keep an eye out for and join us at town hall meetings starting this summer.

It takes people power from the bottom up.

Sources:

The History of the Tennessee Valley Authority (TVA)