A study by the financial services firm Lazard suggests the federal government’s sale of the Tennessee Valley Authority could be expensive, disruptive and current TVA customers might end up paying more for electricity.
In his last two budgets, President Barack Obama has suggested the possibility of unloading the TVA and its $26.3 billion debt. The TVA hasn’t received government funding since 1999, but its debt still counts against the federal government’s deficit.
However, the Lazard study says the TVA is in the process of righting its financial ship and the savings realized by purging it from the government’s purview would be minimal. At the same time, the report predicts the sale of the agency to local governments or private utilities could result in a 13 percent increase in electrical rates.
Another disincentive involves the complexity of the TVA, which sells electrical power, but also maintains lands for recreational use and regulates water levels throughout the Tennessee Valley. “It is unclear how TVA’s non-power mission and activities would logically fit within a divested TVA structure,” the report claims. “Any reductions in the scope of the non-power mission and activities could potentially have a negative impact on the region.”
The study, which appears today on a Securities and Exchange Commission filing, was paid for by the TVA.