TVA for Sale?

A new privatization push comes from an unexpected direction: the left

From the standpoint of news-cycle timing, the Washington, D.C.-based Coalition for Green Capital nailed it. General Motors' new stock offering on Wall Street was fresh in its media frame, a rousing success story about how the federal government can actually get back much of the taxpayer money it had invested in a massive (socialist, as conservatives are fond of saying) economic rescue project. Just two days later, the Coalition managed to land a story in some major Tennessee newspapers that basically asked, "Why not try the same thing with that massive (socialist) economic rescue project known as the Tennessee Valley Authority?"

Thus came the latest pitch in a game that has been going on almost as long as TVA has been around, i.e., the "Let's Kill Creeping Socialism by Putting the Country's Largest Publicly-Owned Power Company Up for Sale" game. The difference this inning is that the pitcher is on one of Washington's progressive green teams. Meanwhile, the valley's green team, not to mention at least one local chamber of commerce, is not playing along. As the Tennessee Sierra Club's longtime TVA watchdog, Louise Gorenflo, says, "We have spent decades trying to hold TVA's feet to the fire. It has never been easy, but better the devil you know than the devil you don't."

On its face, the auction question might seem to have been brewed up by a Tea Party anti-"big government" committee in a back room at Fox News. In fact, the new wave of congressional "No-We-Can't"-ers, who will soon take hold of the Republic's purse strings, typically hold in high suspicion, if not outright contempt, the agenda of the group now posing the TVA question. The Coalition for Green Capital represents an assemblage of entrepreneurs, investors, attorneys, financial experts, and policy wonks from the energy efficiency, wind, and solar energy industries. They take credit for doing the legwork that almost carried off the passage of the American Clean Energy Leadership Act, variously referred to as the climate-change bill, the green-jobs bill, or the carbon cap-and-trade bill. Its detractors variously referred to it as the global-warming-myth bill, or, of course, the one-world-socialist-communist-nazi-government bill.

The legislation ultimately came to naught in the Senate because Republicans said "No," while several Democrats from coal- and manufacturing-dependent states rolled over.

And then they were rolled over in this month's elections, spurring the Beltway greens to devise ways to reach out to the new kids in town. Therein might lay the motivation of Coalition CEO Reed Hundt, former FCC chairman during the Clinton administration, to toss out the S-word again as Tea Party bait. Last month he told the Wall Street Journal, "TVA is not ‘like socialism'—it actually is an artifact from a short period of socialism in our history." But if Hundt thought that singing this song in thoroughly red-stated TVA-land would be TVA's undoing, he is off key.

In many respects, the Beltway greens and the Valley greens are on the same page. It is as abundantly clear to a D.C. green policy wonk as it is to a Tennessee Sierra Club member that the U.S. economy needs to be weaned off its oil and coal addictions and rebuilt on a foundation of clean and efficient energy. The national and local greens agree that in the real world of tax and finance policy, the government makes or breaks investments in any projects that create jobs, be they clean or dirty. They point out that the present tax situation is biased against starting up renewable energy businesses. As a way to create the climate of relative certainty required to attract investment, they advocate for 10 years of tax breaks for clean energy investments, as well as low-cost government-backed loans for energy efficiency and renewable energy projects.

The Beltway and the Valley greens begin to part ways over how to pay for these green programs. The Coalition anticipates that the proceeds from a TVA auction would provide a tidy nest egg for a new "non-profit federal corporation" to make low-cost loans to hatch green jobs. But Tennessee Environmental Council Chairman Don Safer thinks that its liquidation would be "throwing out the baby with the bath water."

"We've spent years getting a ‘non-profit federal corporation' named TVA to do a lot of what the Coalition proposes," Safer says. "In the last few years they [TVA] have taken clean energy more seriously."

TVA's Generation Partners program, which provides technical support and incentives for the installation of renewable energy systems, is one example.

Safer maintains that TVA's "obsession with nuclear power" to meet such a large chunk of its demand has hamstrung its renewable and energy efficiency programs. This brings up another major bone of contention with the Beltway greens. The Coalition has stated its willingness to classify nuclear energy as "clean energy," with regulatory, tax, and financial incentives along the lines of what it wants afforded to wind, solar, and energy efficiency projects. After decades of pleading with and cajoling TVA for a nuclear stand-down, calling it "clean energy" is a non-starter for the loyal opposition.

Liquidating this socialist artifact is also a non-starter for that bastion of free enterprise, the Knoxville Area Chamber Partnership. Even the prospect of a for-profit, investor-owned power company taking over the non-profit, government-owned TVA is not seen as being all that good for business in the Valley, according to Chamber spokesperson Garrett Wagley.

"It might be good for the for-profit power company," Wagley says, "but it could hurt us from an economic development standpoint since energy rates would likely go up."

Wagley explains that because TVA is non-profit and also has an economic development mission, it can keep rates relatively low to attract businesses, while also investing net revenues in other business recruitment programs, including those for green enterprises. Wagley credits TVA as a key player in recruiting solar panel component manufacturers Wacker-Chemie and Hemlock Semiconductor to Tennessee in the last two years. The solar companies are expected to invest over $3 billion in Tennessee while initially employing 1,000 workers, with the potential for 1,000 more.

Socialism indeed.