IAM Cites Flaws in TVA Privatization Proposal

The Norris Dam, a Tennessee Valley Authority hydroelectric facility on the Clinch River in northeast Tennessee, was one of the first public works projects created by the New Deal. (Credit: TVA Web Team)

The IAM joins Republican and Democratic lawmakers in opposing a fiscal 2014 budget proposal to sell the Tennessee Valley Authority (TVA), a federally-owned power agency, to a private company.

“Privatization will diminish the critical role that the TVA plays, not only as a provider of inexpensive electricity and economic development, but also as an environmental steward of the Tennessee River watershed,” wrote IAM International President Tom Buffenbarger in a letter to President Obama and Congress. “The proposal to privatize the TVA is based on the premise that such action would ‘help put the nation on a sustainable fiscal path.’ The IAM believes that this logic is fundamentally flawed.”

The TVA has much to celebrate in its 80 years of serving most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.

For generations, the TVA has provided low-cost, reliable energy from the Great Smokey Mountains to the banks of the Mississippi River. It’s been a way of life and a driver of economic development in the once gravely-impoverished region since President Franklin D. Roosevelt signed it into law as a part of the New Deal in 1933.

More than 13,000 people, many in family-wage union jobs, are employed there. It has generated approximately $11.2 billion in revenue, and, since 2005, is responsible for saving or creating over 300,000 jobs and spurring $32 billion in business investments.

It’s that kind of success that makes it puzzling, says Buffenbarger, that at a time when jobs are slow to come back after the Great Recession and energy costs are creeping ever upward, Washington is considering privatization.

“As a self-financed government corporation, the TVA receives no federal dollars and pays its own debt,” said the IAM President. “Yet somehow its debts are considered part of the national deficit. Selling it to a private company would undoubtedly raise energy costs for millions of working families and make little to no impact in reducing the national deficit.”

Both Republican and Democratic members of Congress agree.

“There is no assurance that selling TVA to a profit-making entity would reduce electrical bills in Tennessee, and it could lead to higher electricity rates,” said Sen. Lamar Alexander (R-TN).

Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-OR) said federally-owned power agencies like the TVA “have been a bedrock of local economies.” For many communities, low-energy costs are the only attraction for industry.

Among the states the TVA serves, Mississippi is dead last in the country in terms of gross domestic product, according to the Bureau of Economic Analysis. Tennessee, Alabama, Arkansas and Kentucky fare only slightly better.

As an editorial in the Knoxville News Sentinel reads: “TVA might turn 80 years old this year, but it has not outlived its usefulness.”