Tennessee Gets a Lesson in Unaccountable Government
By SCOTT BARKER
Privatizing the TVA is one reform option.
Knoxville, Tenn.
On the night of Dec. 22, a loud roar roused Jeff and Angie Spurgeon from bed in East Tennessee. Looking outside, they saw a massive wave raging down the Emory River toward their home.
It was a wall of fly-ash sludge, a waste product of coal combustion from a nearby power plant. In total, 300 acres were coated with debris in Swan Pond, a rural community about 35 miles west of Knoxville. One house was knocked off of its foundation, and several others were damaged. A coal-bearing train was actually stopped on its tracks by a two-story mound of muck. Miraculously, no one was killed or injured.
The wave came from the collapse of a raised, 40-acre holding pond at the Kingston Fossil Plant in Harriman, Tenn. That plant is run by the Tennessee Valley Authority (TVA), an independent, government-owned corporation dating back to Franklin Roosevelt’s New Deal of the 1930s. In total, some 5.4 million cubic yards of waterlogged fly-ash—enough to fill 450,000 standard dump trucks—flooded into the river, making this the largest environmental disaster of its kind in U.S. history.
The national media briefly gave some attention to the spill. But in the Tennessee Valley, faith in government control of TVA may never recover.
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Fly-ash contains arsenic, lead and beryllium, among other pollutants, so residents are worried about possible long-term effects to their health, water quality and property values.
TVA is trying to mitigate the damage by spending $1 million a day on the cleanup. But with several lawsuits in the works and a state investigation under way, nearly everyone is calling for the utility to be held accountable.
The problem is that it isn’t really accountable to anyone. It is not scrutinized by shareholders and, unlike traditional government agencies, it is self-funded, so it doesn’t have to justify itself to Congress to win annual appropriations.
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Established in 1933, its New Deal mission, in a nutshell, was to modernize a backward nook of the country. TVA dammed the Tennessee River and its tributaries, created a series of reservoirs, and built coal-fired plants. The Kingston Fossil Plant was the largest in the world when it was completed at taxpayer expense in 1955.
In 1959, Congress forced the utility to pay for its energy production with the proceeds of electricity sales. In 1997, Congress cut off TVA’s tax dollars completely after Duke Energy, Southern Company and others lobbied for the government to stop paying for the utility’s environmental initiatives, economic development plans, and other nonpower programs. Except for lawmakers from states where it operates, Congress then pretty much forgot TVA existed.
California Democrat Sen. Barbara Boxer admitted as much in January. At a hearing on the Kingston spill, she apologized for ignoring the utility over the past two years—she is head of the Environment and Public Works Committee, which is supposed to provide oversight of TVA.
But she isn’t the only one in Washington who wasn’t watching. The Federal Energy Regulatory Commission (FERC) regulates private power companies, but doesn’t have jurisdiction over TVA. The Treasury Department oversees government-issued bond sales. But because TVA’s bonds are backed up by its own power sales, there is little immediate concern in Washington with its debts. According to the Federal Emergency Management Agency, TVA, as a federal corporation, is exempt from emergency response protocols required of government agencies. A nine-member board of presidential appointees oversees a chief executive officer who runs TVA’s day-to-day operations, but the board doesn’t answer to a cabinet official. In practice, TVA reports to no one.
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The Tennessee Valley is not the economic backwater it was some 70 years ago. But Mr. Obama and Congress need to redefine TVA’s role in the 21st century and thereby restore residents’ faith in the utility. It’s time to hold TVA accountable to its owners, the American people.
Just another reason why govt should be kept out of business; it’s incompetent, inefficient and dangerous. Govt control of a market results in loss of value over time, while private markets create value.
