President Barack Obama’s administration seems willing to explore the possibility of privatizing the government-owned Tennessee Valley Authority, according to the 2014 federal budget proposal released by the White House this week.
According to the proposed budget, the Tennessee-based utility and hydroelectric power provider would be subject to “strategic review” as the administration looks for ways to help reduce the country’s deficit.
“Reducing or eliminating the Federal Government’s role in programs such as TVA, which have achieved their original objectives and no longer require federal participation, can help put the Nation on a sustainable fiscal path,” the budget proposal said.
Divestiture of TVA “in part or as a whole” is an option suggested, though the budget does not present a specific plan detailing the utility’s future.
“At this point, we don’t know what the strategic review might include or what options might be explored,” TVA Board Chairman Bill Sansom said. “In the meantime, we will continue operating TVA in a sound financial manner in support of the people of the Tennessee Valley and the interests of the federal government.”
Though TVA and its resources are owned by taxpayers, the corporation has not received government subsidies since 1998. Regulatory filings show TVA recorded more than US$11 billion in sales this past year, and even though it has around $25 billion in debt that counts toward the federal deficit, taxpayers are not legally liable for it.
“TVA is the lowest-cost business model and the best value for the region,” TVA Chief Financial Officer John Thomas said. “We remain financially healthy.”
TVA — created in 1933 as part of President Franklin Roosevelt’s “New Deal” — now provides power to nine million in seven southeastern states via a portfolio that includes 29 hydroelectric projects, 11 coal plants and three nuclear power plants.
The Obama administration is not the first to consider the possibility of selling TVA, however, as several presidents since Dwight Eisenhower have also floated similar ideas.