TVA Has a Vital Role in a Deregulated Marketplace
By Craven CroweIl
September 7, 1997
The people of the Tennessee Valley rightfully expect TVA to provide low-cost electricity and to promote the economic growth of this region.
Our recent action in implementing a debt reduction plan is the capstone of a four-year effort to meet those expectations, and to prepare the TVA deregulation of the electric utility industry.
However, the core decisions shaping deregulation legislation will be made in Washington, not by individual TVA board members.. It should come as no surprise that our efforts to make the TVA more efficient and competitive have served as a magnet to draw out critics, especially those .from, the Northeast who are envious of low electric rates in our region, and those who want us contained.
It is important for the people of the Tennessee Valley that the TVA be treated fairly and equitably in deregulation, so this region can continue to receive the benefits of low-cost electricity for years to come. As comprehensive .industry restructuring is crafted in Washington and nationwide over the next few years, it is essential that the process is carried out with the greatest deliberation and caution. The stakes are too high to pro-ceed any other way. Four years ago, my colleagues on the TVA board, Johnny Hayes and Bill Kennoy, and I embarked on a deliberate, step-by-step plan to put the TVA on track for the new era and the next millennium. At that time, the TVA was attempting to build four nuclear units, the debt was increasing by about $2 billion a year, and there was no strategic plan for the future.
We decided to complete one nuclear unit at Watts Bar and stop construction of three other units. Our nuclear plants now perform at record levels, well above the national average. The TVAs fossil and hydro plants, meanwhile, have increased their productivity by some 20 percent systemwide.
These are remarkable achievements by the men and women of the TVA. Thanks to their efforts, our power system is operating better today than it has since the 1960s.
By ending the TVAs nuclear construction. program, we were able to decrease significantly our capital expenditures. This year, for the first time in 35 years, we are not increasing the TVAs debt. Because of these decisions, the TVA is at a turning point in its financial history. It is now possible for the TVA to adopt a l0-year financial plan to ensure that it will be competitive in the 21st Century. Distributors of TVA power and others have endorsed this plan.
Today, 34 percent of TVAs revenues go toward interest. Under our plan, we will cut the debt in half by 2007 and permit the TVA to cut its costs in the long run.
Its never easy to raise our prices or to lay off valuable employees who, through no fault of their own, are losing their jobs. But it is imperative that we make the right decisions for the TVAs future.
If we dont take action now, this burden will be greater on our children and our grandchildren. By acting now, our financial plan is expected to lower the price of TVA power by 15 percent after 2007.
A financially strong and efficient TVA is essential for continued economic growth and creation of job opportunities in the region. In the past four years, the TVA board has made every major decision with the goal of preparing the authority for the challenges and opportunities of deregulation.
As we move forward, our focus continues to be one that enhances the TVA as a national asset, while identifying a prominent role for the TVA in a deregulated marketplace. Our success in deregulation depends on a strong partnership with TVAs distributor customers, particularly Memphis Light, Gas & Water Divisionour largest customer.
The selection of Herman Morris to lead LG&W into the future was an excellent decision. His experience and knowledge of the business and dedication to economic progress in the Memphis area will make it possible for LG&W and the TVA to work together to achieve common goals.
In deregulationwhenever and however it arriveswe believe that the TVAs historical obligations to the public good of economic development, environmental leadership, electric system reliability and universal access will be preserved. I am confident there will be a role for the TVA and public power in deregulation that private power companies and Congress can accept.
Public power is ideally suited to be an advocate for, and to protect, the fundamental public interest in electricity generation, transmission and distribution.
It is my hope, desire and intent that the TVA, as a public power entity, remain a national asset into me next century. It is my belief that our best days are yet to come.
Craven Crowell is Chairman of the Tennessee Valley Authority
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