Bass Fishing Beats Billions From TVA Sale for Tennessee
Scott Lee, an ardent fisherman from Oak Ridge, Tennessee, has an opinion as to whether Barack Obama should sell the federally chartered Tennessee Valley Authority (TVA) to private investors: Don’t do it.
Lee ticks off reasons shared by many of the utility giant’s 9 million power users. Cheap power is one, and jobs is another. TVA employs 12,700 people across its seven-state region. The third is his favorite: The company knows how to nurture largemouth bass and please the fishermen who prize them.
Lee has come, on a pristine April morning, a golden haze on the water, redbud and dogwood trees abloom in greening hills, to a boat launch on Watts Bar Lake, 45 minutes west of TVA’s Knoxville, Tennessee, headquarters. He’s one of about 20 anglers who have signed up for an outreach in public relations that helps to explain why about two-thirds of Tennesseans oppose a TVA sale even if it helps reduce the national debt. The deal could raise an estimated $30 billion to $35 billion, estimates Travis Miller, a Chicago-based analyst at Morningstar Inc. (MORN)
John Justice, a TVA fisheries biologist, is leading a public leg of the utility’s annual sports fish survey, commanding a fleet of three flat-bottomed boats each equipped with a stun device. TVA observer boats, one holding Lee, are tagging along.
The stun boats poke about the rock- and stump-filled Watts Bar shoreline, sending out just enough current to knock fish silly and send them immobilized to the surface. They are netted and stowed in aerated live wells where, at the end of each run, they are weighed, measured and checked for disease before being plunked, with seemingly no ill effects, back into the lake.
The data from this daylong outing is punched real time into a weather-proof Panasonic Corp. (6752) equivalent of an iPad. Considering that TVA invites fishermen to 22 other such surveys each year along a goodly portion of its 11,000 miles (17,600 kilometers) of shoreline, and that it’s been doing this since 1995, these might be the most counted fish on earth.
Lee is thrilled. One of the last sweeps of the morning -- of a single Watts Bar cove half the size of a football field -- yields 101 bass and crappie, some of them whoppers. Lee gets to see where they all were hiding. It just reinforces his fear that TVA in private hands wouldn’t be as fish-friendly.
“I don’t see the point of a sale,” he said. “Yeah, sure, it could probably be run a little more efficiently. But I have a favorable opinion the TVA. I would consider myself a satisfied customer.”
That’s the desired response for the 39-year-old Justice, who will later report that the total Watts Bar Lake count exceeded 1,000 fish. “This year’s sample is shaping up to be really good,” he said after the cove count. “Not too many power companies would go through this regimen to make sure the fisheries are OK.”
He’s right. The authority is an odd duck, a nonprofit, federally chartered utility conceived by Franklin D. Roosevelt as a Depression-era public works program to create jobs and electricity, and pull a chunk of Appalachia out of its scenic poverty.
Denounced from the outset by conservative critics as a socialist enterprise, it has evolved, despite an uneven environmental record and the occasional allegation of cronyism, into a government entity that even heavily Republican Tennessee can embrace. That’s why the notion to offload the utility, floated as a revenue-raising idea in the Obama administration’s fiscal 2014 budget proposal unveiled in early April, gets little traction here.
Power rates 28 percent below the national average alone earn TVA the “mother love” of a politically conservative region, said S. David Freeman, a former TVA chairman.
“The TVA congressional delegation is like a lioness protecting her young ’uns,” said Freeman, who was appointed by President Jimmy Carter to TVA’s board in 1977. “They will kill you if you mess with TVA.”
The late Barry Goldwater learned the hard way. In his unsuccessful presidential run in 1964, the Arizona Republican senator managed to carry several southern states and got walloped in Tennessee after he campaigned to privatize it.
TVA has its blemishes and modern-day critics.
Last year, a federal judge ruled the utility was responsible for the December 2008 spill of more than 1 billion gallons of toxic coal ash from TVA’s Kingston power plant into the surrounding community and the Emory River. It has spent tens of millions of dollars to settle claims and undertaken a four-year cleanup.
In 2009, TVA’s inspector general concluded after a nine-month investigation that TVA had given preferential treatment to wealthy and influential people, including some well-placed politicians, seeking to buy prime TVA lakefront property. He ordered the program scrapped.
Still, such blunders haven’t been able to undermine a sense, augmented by efforts like the TVA’s fish surveys, that the utility does more good than harm. Scott Lee finds company in the Tennessee chapter of the Sierra Club which, despite its quarrels with the utility, sees TVA as a solid, even forward-looking steward of the Tennessee Valley’s sports fishery resources and a competent manager of the public lands under its control.
“We’ve been very fortunate to have these recreation facilities and fairly good management of the shorelines for so many years,” said Scott Banbury, Sierra Tennessee’s conservation chairman.
The 80-year-old TVA has sweeping reach. It is the owner of 29 hydropower plants, 11 coal plants and three nuclear plants, by output the third-largest utility in America with annual revenue of more than $11 billion. It operates 49 dams and reservoirs, nine carved out of the Tennessee River, the rest from tributaries. They are controlled by a state-of-the-art, computer-driven telemetry system so sophisticated that a single operator in Knoxville can judge and adjust water levels almost anywhere in the system.
“We’re a lot of different things to 9 million people but the one big thing we can do is to maintain those competitive rates,” said Bill Johnson, TVA’s chief executive officer of about 100 days. A lanky man with an easy demeanor, Johnson flared into the headlines in July when he was named the CEO of North-Carolina-based Duke Energy Corp. (DUK) after it had merged with the smaller Progress Energy utility Johnson ran.
Johnson was fired hours later by the same board that appointed him in favor of Duke’s longstanding CEO, Jim Rogers. The coup set off an investigation by the North Carolina Utilities Commission and ended in a settlement in December that shook up Duke management and will force it to pick a successor to Rogers by the end of this year.
Johnson, meanwhile, walked away with a severance package and deferred compensation worth about $45 million. Asked about this he said, trying not to smile, “That last job was pretty quick but it paid well for the time I spent.”
He has longer term ambitions in his new role. He notes that the TVA’s motto -- “Built for the People of the United States” -- conjures up a mission instead of a mere job.
“That will inspire you,” said Johnson. “Ours is a mission that is easy to identify with and get behind, the idea that you are actually serving the people.”
Johnson is fully in tune about how cheap power rates help TVA’s favorable ratings. “Energy costs are a big part of that,” said Johnson. “We need to continue to concentrate on low-cost, reliable, ever-cleaner power. That’s really our focus.”
TVA gets no government funding, he noted. “Our only source of revenue to fund the entire mission is electricity rates. We’d like to have more people come here and charge them lower rates. It’s simple but the simpler the better.”
A lawyer by training, Johnson ticks off the route to cleaner energy over the next five years. While 43 percent of its power still comes from coal, TVA has recently shuttered or will shutter about a dozen of its oldest coal plants. It will also be spending more than $1 billion to equip its Gallatin, Tennessee, coal-fired plant with clean-air scrubbers. The utility also hopes to get on line by year-end 2015 a mothballed nuclear plant that it said will enhance its green portfolio. Hydroelectric generating stations supply as much as 10 percent of TVA’s power output every year.
As for the idea of a sale, “It was unexpected,” said Johnson. “But we are a creation of the government and this is within the owner’s prerogative. And actually, in the private world you do this all the time. It’s not a surprising idea to justify our existence by demonstrating the value we create every day.”
Of that analyst’s estimate that TVA could fetch as much as $35 billion in cash and reduced debt, Johnson said it will be complicated to put a number on it because of all of its moving parts.
Johnson also said TVA does some things that might be difficult to transfer to private enterprise. For example, as a byproduct of its nuclear power plants, TVA manufactures an unspecified amount of tritium -- a radioactive isotope of hydrogen used to enhance the explosive yield of thermonuclear weapons -- for the U.S. Defense Department.
TVA has about $26 billion in outstanding debt. Some inkling of its worth may be revealed in the provision, as part of the Obama budget announcement, that “requires somebody to do a review of our strategic objectives,” according to Johnson. “We’ve not had enough conversations with the Office of Management and Budget yet to know who that will be or what that looks like.”
As its fish surveys show, TVA is aware of the breadth and interests of its constituency outside of cheap power. Tennessee issued almost 1.4 million fishing and boating licenses last year in a state with 6.3 million residents. Several thousand of the permits went to residents in neighboring states. They come to fish not just the TVA’s vast lake system full of bass and crappie but some of the best cold-water trout streams in North America.
Thus, it’s no surprise that the utility weighs the perquisites of its fishing community in deciding the timing and volume of water releases from its vast reservoirs for hydroelectric generation. “If we don’t, fishermen are on the phone calling their congressmen,” said Travis Brickey, a TVA spokesman.
There are limits to the environmental admiration. The percentage of power it gets from coal is still way too high for Sierra Club and other green groups. After trying for months to talk the utility out of spending that $1 billion on scrubbers to extend the life of its Gallatin coal plant, Sierra joined a coalition led by the Tennessee Environmental Council that filed suit against TVA on April 25.
The suit contends that the utility violated the National Environmental Policy Act by failing to adequately consider alternatives to the scrubbers, including buying readily available renewable energy from third parties that might replace Gallatin’s coal-generated capacity. TVA declined to comment on the lawsuit. Gallatin burns about 13,000 tons of coal a day, producing enough power for 300,000 homes.
In a statement accompanying the lawsuit, Abigail Dillen, an attorney with Earthjustice, one of the groups that joined the litigation, said, “The decision to spend more than a billion dollars on a coal plant is a lost opportunity to invest in the clean energy solutions of the future.”
Even so, the 6,489-member Tennessee chapter of the Sierra Club still thinks privatizing TVA would be a mistake. The fear is it would potentially allow corporate owners to “liquidate its assets by selling off TVA’s public lands along the Tennessee River and tributaries,” Tennessee Sierra said in a prepared statement.
A half hour drive north from Knoxville will get you into the scenic hill country of Norris, named for George Norris, the Nebraska U.S. senator who was pivotal in helping Roosevelt win approval for the TVA in Congress. With a population of 1,600, Norris sits tucked up above the Norris Dam, a 265-foot-high (80.7 meters), 1,860-foot-long concrete edifice that forms the 33,840-acre Norris Lake. It was the first of the TVA projects to be completed.
The town of Norris was founded in the mid-1930s as the dam’s work camp, and a handful of TVA employees still live there. A journey up Oak Street reveals a scrum of 600-square-foot houses that are only slightly modified from their original work camp days.
It only takes a short visit to Norris’ sole diner, the Hensley Happenings Cafe, to learn that pro-TVA sentiment here still runs deep.
“Why would anybody want to sell the TVA?” asked Sarah Roberts, the cafe’s food services manager whose father, a nuclear engineer at nearby Oak Ridge, owns the place. “What are you going to gain by it?”
Tommy Mariner, who teachers ROTC at the local high school, has rushed in, in a full khaki uniform festooned with ribbons, to buy one of the Hensley’s locally famous cherry pies before rushing off to school. He’s overheard Roberts’ conversation and has a theory.
“It’s just Obama trying to take a dig at the Republicans,” he said. “But it won’t ever happen.”