Obama White House says getting rid of TVA not a priority

The Obama Administration, after an extensive review, has decided, at least for now, not to sell or otherwise divest of the Tennessee Valley Authority, which among other things is one of the largest power producers in the U.S.

TVA is a wholly-owned government corporation and as such is included in the U.S. budget. The Obama Administration’s 2014 budget proposal directed the Office of Management and Budget to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divesture of TVA in part or as a whole. Lazard Frères & Co. LLC, an international financial advisory and asset management firm, was retained by TVA to assist in this review. The Lazard report recommended against divestiture.

TVA noted in its Feb. 4 Form 10-Q filing with the SEC that on Feb. 2, President Obama submitted his Fiscal Year 2016 Budget Request, which contains the following language regarding TVA: “Since its creation in the 1930s during the Great Depression, the Federally-owned and operated Tennessee Valley Authority (TVA) has been producing electricity and managing natural resources for a large portion of the Southeastern United States. TVA’s power service territory includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia, covering 80,000 square miles and serving more than nine million people. TVA is a self-financing Government corporation, funding operations through electricity sales and bond financing. Since the Administration announced in the 2014 President’s Budget its intentions to undertake a strategic review of options for addressing TVA’s financial situation, the agency has taken significant steps to improve its operating and financial performance and has committed to resolve its capital financing constraints. The Administration supports TVA’s ongoing initiatives and will continue to monitor TVA’s performance, including the achievement of critical milestones contemplated in TVA’s long-term financial plan and the pursuit of efforts to enhance governance and increase transparency of TVA’s decision-making on important agency actions. While the strategic review of TVA has concluded, the Administration continues to believe that reducing or eliminating the Federal Government’s role in programs such as TVA, which have achieved their original objectives, can help mitigate risk to taxpayers.”

“We are pleased the administration has completed its strategic review of TVA and supports our ongoing efforts for continuous improvement in our operational and financial performance,” said TVA President and CEO Bill Johnson in a Feb. 2 statement. “This work will be essential in continuing the benefits of the public power model through which TVA provides substantial economic and other value for the region.”

TVA is on track to reduce its operating and maintenance costs by a sustainable $500m by the end of FY2015 in September in order to keep rates as low as possible while continuing its economic development and stewardship programs.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.