The Tennessee Valley Authority will celebrate its 65th birthday next year. What a perfect occasion to retire this New Deal dinosaur!
The Tennessee Valley may not be The Lost World, but it is the home of a ravenous, retrograde, reptilian creature that is completely out of place in this modern age. This hideous monster, the product of a grotesque government experiment, is terrorizing the region and threatening the wealth and well-being of all who reside there. Run for your lives, it's Gridzilla!
The Tennessee Valley Authority is very much a throwback to a remote time, an era of darkness and dementia when socialism infected the minds of America's public servants and prompted them to imagine that they could flout the laws of Nature, flout the laws of economics, and accomplish the impossible -- if only they had enough power. Journey with us now into that primitive past . . .
"When the TVA was created in 1933, its mission was to provide flood control, navigation services, and electrical power to the Tennessee Valley region," recalls Adam Thierer of the Heritage Foundation. "Today, it is the largest power corporation in the United States, serving 7.3 million people in seven states and generating $5.7 billion in annual revenues. Throughout its history," Thierer continues, "the federally owned TVA has benefitted from generous subsidies, tax breaks, and regulatory exemptions that allow it to keep its power rates lower than the national average. Yet, despite its protected geographic monopoly, substantial indirect subsidies . . . and sweeping, across-the-board regulatory exemptions, the TVA has managed to amass a debt of over $17 billion and a disturbing record of waste, mismanagement, and chronic cost overruns."
Thierer argues that "these problems can be traced to the fact that the TVA is literally above the law. The same federal, state, or local regulatory authorities that closely monitor private power companies," he points out, "have no regulatory authority over the TVA, and the laws and regulations that govern private power companies do not apply to this independent federal corporation."
Thierer's solution is to privatize the TVA. "Privatizing the TVA could generate billions of dollars in revenue that could be used to reduce the federal deficit," he observes. "More important than the amount of money raised, however, is the effect that privatization would have on U.S. taxpayers. With privatization, hundreds of millions of Americans who receive no benefits from the TVA no longer would be forced to subsidize this inefficient organization."
The TVA is an anachronism in an increasingly competitive electricity market. "The TVA receives generous indirect subsidies, including federal loan guarantees and below-rate interest charges on federal loans, as well as exemption from federal and state income taxes," Adam Thierer reports. "These subsidies, and other forms of preferential treatment accorded to TVA, must be eliminated if the deregulated electricity market is to become truly competitive." Increased competition will provide TVA customers "the chance to shop around for better prices and service." Thierer concludes that privatization is "the only way to end the mismanagement and perpetual debt problems associated with the TVA."
