Public, private: Debate goes on

Calls for the privatization of the Tennessee Valley Authority, the nation's largest public utility, have spotted the agency's 75-year history.

Even before TVA formed in 1933, Congress and industrialists fought over who should have control over Wilson Dam, TVA's first hydroelectric dam.

More recently, Sens. Mitch McConnell and Jim Bunning, both of Kentucky, co-sponsored the Access to Competitive Power Act of 2007 that proposed a study on privatizing TVA.

Privatization would put the utility square in competition with private utilities that some policy experts say would allow fairer competition among electricity providers.

The federally owned utility as of 2006 owns $34.5 billion in assets but also has $24.7 billion in debt. TVA counters that privatizing its operations would saddle 8.8 million residents with utility bills 19 percent more than they pay now.

"I think the privatization idea is one that gets pulled up once in a while because we are a government-owned corporation, but privatization is not a good idea because if we privatize, whatever company bought TVA would have to pay dividends to its shareholders," said TVA President and CEO Tom Kilgore. "If we were privatized, somebody would want to earn a profit to pay to shareholders; we don't have to do that."

Privatization advocates and TVA critics have a decades-long history.

One of the first mentions of privatizing TVA came during Barry Goldwater's 1964 presidential campaign, according to research from The Heritage Foundation, a conservative think tank.

The latest push came from Kentucky in March 2007 when five utility companies there tried to leave TVA to find lower rates, which are 15 percent less on average in the Bluegrass State.

In reaction, Bunning cosponsored a bill that would have initiated a study into privatizing TVA and had the agency under the same regulations as private utility companies.

"After this bill was introduced and with the expansion of the TVA board (from three members to nine), our Kentucky customers were able to reach a deal with TVA on their issues after years of negotiations," Bunning said.

"For now, I'm not actively pushing the legislation, but if the customers in Kentucky feel like they are not treated fairly again, I will try to move this legislation through Congress as quickly as I can."

Bunning said TVA's $25 billion debt may become a national financial liability if TVA couldn't pay the debt.

"A full study of privatization would provide an independent analysis of the financial exposure of the taxpayer and seems like a prudent step to understand what possibilities the country would have if privatization is ever necessary," Bunning said.

TVA privatization would likely have significant financial and political hurdles.

TVA estimates that its rates would increase 19 percent and that states like Alabama would lose their in-lieu-of-tax payments, which amounts to more than $10 million each year in the Shoals. Taxpayers nationwide would be left to pay for the $25 billion in debt.

All would be political land mines across the Tennessee Valley.

"Talk of privatizing TVA - maybe it does serve as a check and balance on the way they act, I think that's healthy," said U.S. Rep. Bud Cramer, D-Alabama, who has been in Congress for 18 years.

"I'm not an advocate for privatization."

Neither is TVA, or even Bunning for that matter.

The Access to Competitive Power Act of 2007 died quietly.

TVA also does not support its own privatization for what could boil down to a simple reason.

"The proof is really our rates," Kilgore said. "If you look at our rates compared to the national average or even compared to those (rates) right around us, we do very well in comparison, so why would you want to mess with success? That's my simple answer. It's working; why would you change it?"

Trevor Stokes can be reached at 740-5728 or trevor.stokes@timesdaily.com.