Privatizing the TVA?

Jun 17, 2002

According to documents the Bush administration was forced to release, Enron, before it went bankrupt, was moving to have the Tennessee Valley Authority (TVA) broken up and handed over to privately owned companies–like Enron.

In early 2001 Enron Chairman Ken Lay threatened TVA Chairman Craven Crowell, saying that unless Crowell did what Lay demanded, he would have Crowell fired. This was the same stunt that Lay had pulled at the Federal Energy Regulatory Commission (FERC). And, just as at the FERC, Lay asked Bush to replace the TVA chairman with someone more to Lay’s liking. Bush complied, anointing an Enron crony to head the TVA.

So, what was Enron–as well as other big energy companies–trying to get hold of?

The TVA is a power company, today supplying electricity to over eight million people in parts of seven states around the Tennessee River basin: Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee and Virginia. But the TVA is much more than that. In 1933, the federal government established the TVA to plan and develop the 41,000 square mile region of the Tennessee River basin, including some of the poorest areas of the south. They had long suffered from devastating floods, poor and overworked farmland and a lack of electricity. There was little or no private investment. Privately owned utilities wouldn’t string the power lines, since it wasn’t profitable enough. Despite the objections of private utility companies, the federal government stepped in and built a series of dams and reservoirs. These dams provided power for electricity, controlled the flow of water and stopped the devastating floods. They also made the rivers useable for commerce and transport. In other words, the TVA was the key to the economic development of the entire region. Whole industries located there, from the manufacture of aluminum and nitrate fertilizer, to new port facilities.

TVA also gave the people of this region access to electricity for the first time. It transformed their lives, allowing farm families to bring in electrical machinery to run their farms. It also allowed farm families to have lighting and electrical appliances in their homes for the first time.

Of course, the purpose of the TVA was first of all to open up the region for investment, and the federal government often ran roughshod over the poor farmers. People living in areas that were flooded by the new reservoirs lost their land, receiving little or no compensation. When the U.S. entered World War II, the government used the power generated by the TVA to set up war industries, most famously the facilities for making the first atomic bombs at Oak Ridge.

However, the TVA was an enormous step forward, one that only the government had the means to carry out.

Certainly, today, there is much to be desired about how the TVA is run. It continues to run old, coal-fired plants that belch tremendous amounts of pollution. Its nuclear power plants are considered unsafe. But the reforms proposed by companies like Enron have nothing to do with making it more efficient, safer and cleaner. On the contrary, as the people of California can attest, these so-called reforms would not result in more investment in the TVA, but only more expensive electricity and other services. The difference would go into the pockets of the capitalists.

Private capital which would not invest to build TVA now wants to drain off profit from it.