Logo of the TVA
Flag of the TVA
|Traded as||NYSE: TVC|
|Founded||September 18, 1933|
|Headquarters||Knoxville, Tennessee, U.S.|
|Bill Johnson, CEO|
|Revenue||$11.56 billion USD (FY 2013 ending September 30, 2013)|
|$1.453 billion USD (FY 2013)|
|$271 million USD (FY 2013)|
The Tennessee Valley Authority (TVA) is a federally owned corporation in the United States created by congressional charter on May 18, 1933, to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development to the Tennessee Valley, a region particularly affected by the Great Depression. The enterprise was a result of the efforts of Senator George W. Norris of Nebraska. TVA was envisioned not only as a provider, but also as a regional economic development agency that would use federal experts and electricity to more quickly modernize the region's economy and society.
TVA's service area covers most of Tennessee, portions of Alabama, Mississippi, and Kentucky, and small slices of Georgia, North Carolina, and Virginia. It was the first large regional planning agency of the federal government and remains the largest. Under the leadership of David Lilienthal ("Mr. TVA"), the TVA became a model for America's efforts to help modernize agrarian societies in the developing world.
The Tennessee Valley Authority was initially founded as an agency to provide general economic development to the region through power generation, flood control, navigation assistance, fertilizer manufacturing, and agricultural development, but has evolved primarily into a power utility. Despite its shares being owned by the federal government, TVA operates exactly like a private corporation, and receives no taxpayer funding.
TVA provides electricity to approximately ten million people through a diverse portfolio which includes nuclear, coal-fired, natural gas-fired, hydroelectric, and renewable generation. TVA sells its power to 154 local power utilities, 5 direct industrial and institutional customers, and 12 surrounding utilities. In addition to power generation, TVA provides flood control with its 29 hydroelectric dams, which allow for recreational activities, and provides navigation and land management along rivers within its region of operation. TVA also assists governments and private companies on economic development projects.
TVA has a nine member board of directors, each nominated by the United States President and confirmed by the United States Senate. The part time members serve five year terms and receive an annual stipend of $45,000 ($50,000 for the chairman). The board members choose the chief executive officer (CEO).
During the 1920s and the Great Depression years, Americans began to support the idea of public ownership of utilities, particularly hydroelectric power facilities. The concept of government-owned generation facilities selling to publicly owned distribution utilities was controversial and remains so today. Many believed privately owned power companies were charging too much for power, did not employ fair operating practices, and were subject to abuse by their owners (utility holding companies), at the expense of consumers. During his presidential campaign, Roosevelt claimed that private utilities had "selfish purposes" and said, "Never shall the federal government part with its sovereignty or with its control of its power resources while I'm president of the United States." By forming utility holding companies, the private sector controlled 94 percent of generation by 1921, essentially unregulated. (This gave rise to the Public Utility Holding Company Act of 1935 (P.U.H.C.A.)). Many private companies in the Tennessee Valley were bought by the federal government. Others shut down, unable to compete with the TVA. Government regulations were also passed to prevent competition with TVA.
In the 1920s, a major battle erupted over building an electric power system in the Tennessee Valley, based on the World War I federal dam at Muscle Shoals, Alabama. It would generate electricity and produce fertilizer. Senator George Norris of Nebraska blocked a proposal from Henry Ford in 1920 to use the dam to modernize the valley. Norris deeply distrusted privately owned utility companies. He did get Congress to pass the Muscle Shoals Bill, but it was vetoed as socialistic by President Herbert Hoover in 1931. The idea behind the Muscle Shoals Bill in 1933 became a core part of the New Deal's TVA.
Even by Depression standards, the Tennessee Valley was economically dismal in 1933. Thirty percent of the population was affected by malaria, and the average income was only $639 per year, with some families surviving on as little as $100 per year. Much of the land had been farmed too hard for too long, eroding and depleting the soil. Crop yields had fallen along with farm incomes. The best timber had been cut, with another 10% of forests being burnt each year.
President Franklin Delano Roosevelt signed the Tennessee Valley Authority Act (ch. 32, Pub.L. 73-17, 48 Stat. 58, enacted May 18, 1933, codified as amended at 16 U.S.C. § 831, et seq.), creating the TVA.
TVA was designed to modernize the region, using experts and electricity to combat human and economic problems. TVA developed fertilizers, taught farmers ways to improve crop yields and helped replant forests, control forest fires, and improve habitat for fish and wildlife. The most dramatic change in Valley life came from TVA-generated electricity. Electric lights and modern home appliances made life easier and farms more productive. Electricity also drew industries into the region, providing desperately needed jobs.
The development of the dams displaced more than 15,000 families. This created anti-TVA sentiment in some rural communities. Many local landowners were suspicious of government agencies, but TVA successfully introduced new agricultural methods into traditional farming communities by blending in and finding local champions.
Tennessee farmers would often reject advice from TVA officials, so the officials had to find leaders in the communities and convince them that crop rotation and the judicious application of fertilizers could restore soil fertility. Once they had convinced the leaders, the rest followed.
At its inception, TVA was based in Muscle Shoals, Alabama, but later moved its headquarters to Knoxville, Tennessee, where they remain today. At one point, TVA's headquarters were housed in the Old Federal Customs House at the corner of Clinch Avenue and Market Street. The building is now a museum. TVA was one of the first federal hydropower agencies, and today most of the nation's major hydropower systems are federally managed. Other attempts to create similar regional corporate agencies have failed, such as a proposed Columbia Valley Authority for the Columbia River in the Pacific Northwest.
The Authority hired many area unemployed to conduct conservation, economic development, and social programs, such as a library service that operated for the surrounding area. The professional staff headquarters was composed of experts from outside the region. By 1934, TVA employed more than 9,000 people. The workers were categorized by the usual racial and gender lines of the day. TVA hired a few African Americans for janitorial or other low-level positions. TVA recognized labor unions; its skilled and semi-skilled blue collar employees were unionized, a breakthrough in an area known for corporations hostile to miners' and textile workers' unions. Women were excluded from construction work. TVA's cheap electricity attracted textile mills to the area, and they hired mostly women as workers.
During World War II, the U.S. needed greater aluminum supplies to build airplanes. Aluminum plants required large amounts of electricity. To provide the power, TVA engaged in one of the largest hydropower construction programs ever undertaken in the U.S. By early 1942, when the effort reached its peak, 12 hydroelectric plants and one steam plant were under construction at the same time, and design and construction employment reached a total of 28,000. In its first eleven years, TVA constructed a total of 16 hydroelectric dams. The largest project of this period was the Fontana Dam. After negotiations led by Vice-President Harry Truman, TVA purchased the land from Nantahala Power and Light, a wholly owned subsidiary of Alcoa, and built Fontana Dam. Also in 1942, TVA's first coal-fired plant, the 267 megawatt Watts Bar Steam Plant began operation.
The government originally intended the electricity generated from Fontana to be used by Alcoa factories. By the time the dam generated power in early 1945, the electricity was directed to another purpose in addition to aluminum manufacturing, as TVA also provided much of the electricity needed for uranium enrichment at Oak Ridge, Tennessee, as required for the Manhattan Project and the making of the atomic bomb.
By the end of the war, TVA had completed a 650-mile (1050-kilometer) navigation channel the length of the Tennessee River and had become the nation's largest electricity supplier. Even so, the demand for electricity was outstripping TVA's capacity to produce power from hydroelectric dams, and so TVA began to construct coal-fired plants. Political interference kept TVA from securing additional federal appropriations to do so, so it sought the authority to issue bonds. Several of TVA's coal fired plants, including Johnsonville, Widows Creek, Shawnee, Kingston, Gallatin, and John Sevier, began operations in the 1950s. Coal surpassed hydroelectricity as TVA's top generating source in 1955. On August 6, 1959 President Dwight D. Eisenhower signed into law an amendment to the TVA act which made the agency self-financing.
The 1960s were years of further unprecedented economic growth in the Tennessee Valley. Electric rates were among the nation's lowest and stayed low as TVA brought larger, more efficient generating units into service. Expecting the Valley's electric power needs to continue to grow, TVA began building nuclear reactors as a new source of cheap power. During this decade (and the 1970s), TVA was engaged in what was up to that time its most controversial project - the Tellico Dam Project. The project was initially conceived in the 1940s but not completed until 1979.
Significant changes occurred in the economy of the Tennessee Valley and the nation, prompted by an international oil embargo in 1973 and accelerating fuel costs later in the decade. The average cost of electricity in the Tennessee Valley increased fivefold from the early 1970s to the early 1980s.
TVA's first nuclear reactor, Browns Ferry Unit 1, began operation in 1974. In the early 1970s, TVA set out to construct a total of 17 nuclear reactors, due to a projection of further increase in power demand. However, ten of these reactors were cancelled in the 1980s. On August 6, 1981 the Tennessee Valley Authority Board voted to defer the Phipps Bend plant, as well as to slow down construction on all other projects. The Hartsville and Yellow Creek plants were cancelled in 1984 and Bellefonte in 1988.
The 1970s saw the last and most controversial of the TVA's large dam-reservoir projects, Tellico Dam. The Tellico Dam project was initially delayed because of concern over the snail darter. A lawsuit was filed under the Endangered Species Act and the U.S. Supreme Court ruled in favor of protecting the snail darter in Tennessee Valley Authority v. Hill.
Marvin T. Runyon became chairman of the Tennessee Valley Authority in January 1988. He claimed to reduce management layers, cut overhead costs by more than 30%, and achieved cumulative savings and efficiency improvements of $1.8 billion. He said he revitalized the nuclear program and instituted a rate freeze that continued for ten years.
As the electric-utility industry moved toward restructuring and deregulation, TVA began preparing for competition. It cut operating costs by nearly $950 million a year, reduced its workforce by more than half, increased the generating capacity of its plants, and developed a plan to meet the energy needs of the Tennessee Valley through the year 2020.
In 1996, Watts Bar Unit 1 began operation. This was the last commercial nuclear reactor to begin operation in the 20th century.
In 2002, TVA began work to restart a previously mothballed nuclear reactor at Browns Ferry Unit 1, which was completed in May 2007. In 2004, TVA implemented recommendations from the Reservoir Operations Study (ROS) in how it operates the Tennessee River system (the nation's fifth largest). In 2005, the TVA announced its intention to construct an Advanced Pressurized Water Reactor at its Bellefonte site in Alabama (filing the necessary applications in November 2007), and in 2007 announced plans to complete the unfinished Unit 2 at Watts Bar.
On December 22, 2008, an earthen dike at TVA's Kingston Fossil Plant broke, spreading one billion gallons of wet coal ash across 300 acres (1.2 km2) of land and into the tributaries of the Tennessee River. While TVA's culture at its fossil fuel plants was not the cause of the Kingston Spill, the culture contributed to the spill, as was noted in the TVA Office of the Inspector General's report, Inspection 2008-12283-02, Review of the Kingston Fossil Plant Ash Spill Cause Study and Observations About Ash Management.
As of 2013, TVA carries $25 billion in debt, near the $30 billion debt limit imposed by Congress. In April 2011 TVA reached an agreement with the Environmental Protection Agency (EPA), four state governments, and three environmental groups to drastically reduce pollution and carbon emissions. Under the terms of the agreement, TVA was required to retire at least 18 of its 59 coal-fired units by the end of 2018, and install scrubbers in several others or convert them to make them cleaner, at a cost of $25 billion by 2021. As a result TVA has closed several of its coal fired power plants in the 2010s, converting some of them to natural gas. These include John Sevier in 2012, Shawnee Unit 10 in 2014, Widows Creek in 2015, Colbert in 2016, Johnsonville and Paradise Units 1 and 2 in 2017, and Allen in 2018.
On October 10, 2018, a federal jury sided with the workers in finding that the TVA failed to keep workers safe during the December 22, 2008, coal ash spill, which left many of them dead and sick.
In 2018, TVA opened a new cybersecurity center in its downtown Chattanooga Office Complex. Over twenty IT specialists monitor emails, Twitter feeds and network activity for cybersecurity threats and threats to grid security. Across TVA's digital platform there are 2 billion activities that occur each day. The center is manned 24 hours a day to spot any threats to TVA's 16,000 miles of transmission lines.
With a generating capacity of approximately 35 gigawatts (GW), TVA has the sixth highest generation capacity of any utility company. TVA's power mix as of 2018 is 6 coal-fired power plants, 29 hydroelectric dams, three nuclear plants (with seven operating reactors), nine simple cycle natural gas combustion turbine plants, nine combined cycle gas plants, 1 pumped storage hydroelectric plant, 1 wind energy site (plus contracts to purchase Midwest wind power), and 15 small solar energy sites. In fiscal year 2018, nuclear generation was about 40% of TVA's total, coal 26%, natural gas 20%, hydroelectric 10%, and wind and solar 3%. TVA currently purchases from external power producers about 15% of the power it sells. Purchased power is from natural gas combined cycles, coal, wind, and other renewables. The cost of Purchased Power is part of the "Fuel Cost Adjustment" (FCA) charge that is separate from the TVA Rate. Watts Bar Nuclear Plant produces tritium as a byproduct for the U.S. National Nuclear Security Administration, which requires tritium for nuclear weapons (for "boosted" fission primaries and for fusion secondaries).
Nuclear power plants
At Buffalo Mountain in Oliver Springs, Tennessee, TVA operates three wind turbines with a combined generation capacity of 2 MW and purchases the output of 15 additional wind turbines owned by Invenergy that have a combined capacity of 27 MW. As of 2013, the agency had purchased agreements from power generated from wind farms outside its service area:
Biogas from the Maxson wastewater treatment plant in Memphis is burned in Allen Fossil Plant, accounting for a generating capacity of 4 MW.
TVA is one of the largest operators of electric transmission in the US with an approximately 16,000-mile (26,000 km) corridor of transmission (13,000 miles (21,000 km) of which is greater than 161kv).
TVA's headquarters are located in downtown Knoxville, with large administrative offices in Chattanooga (training/development; supplier relations; power generation and distribution) Nashville, Tennessee (economic development), and Muscle Shoals, Alabama.
TVA has conveyed approximately 485,420 acres (1,964.4 km2) of property for recreation and preservation purposes including public parks; public access areas and roadside parks; wildlife refuges; national parks and forests; and other camps and recreation areas, which comprises approximately 759 different sites.
To qualify for a TVA Megasite certificate the qualifications are at least 1,000 acres, with interstate access, the potential for rail service, environmental impact study, and utility service capable of serving a major manufacturing facility. Seven TVA Megasites have been developed so far with capital investments of over $5 Billion.
TVA was heralded by New Dealers and the New Deal Coalition not only as a successful economic development program for a depressed area but also as a democratic nation-building effort overseas because of its alleged grassroots inclusiveness as articulated by director David Lilienthal. However, the TVA was controversial early on, as some believed it's creation was an overreach by the federal government.
Supporters of TVA note that the agency's management of the Tennessee River system without appropriated federal funding saves federal taxpayers millions of dollars annually. Opponents, such as Dean Russell in The TVA Idea, in addition to condemning the project as being socialistic, argued that TVA created a "hidden loss" by preventing the creation of "factories and jobs that would have come into existence if the government had allowed the taxpayers to spend their money as they wished." Defenders note that TVA is overwhelmingly popular in Tennessee among conservatives and liberals alike, as Barry Goldwater discovered in 1964, when he proposed selling the agency. Historian Thomas McCraw concludes that Roosevelt "rescued the [power] industry from its own abuses" but "he might have done this much with a great deal less agitation and ill will". New Dealers hoped to build numerous other federal utility corporations around the country but were defeated by Wendell Willkie and the Conservative coalition in Congress. The valley authority model did not replace the limited-purpose water programs of the Bureau of Reclamation and the Army Corps of Engineers. State-centered theorists hold that reformers are most likely to succeed during periods such as the New Deal era, when they are supported by a democratized polity and when they dominate Congress and the administration.
However, it has been shown that in river policy, the strength of opposing interest groups also mattered. The TVA bill was passed in 1933 because reformers like Norris skillfully coordinated action at potential choke points and weakened the already disorganized opponents among the electric power industry lobbyists. In 1936, however, after regrouping, opposing river lobbyists and conservative coalition congressmen took advantage of the New Dealers' spending mood by expanding the Army Corps' flood control program. They also helped defeat further valley authorities, the most promising of the New Deal water policy reforms.developing world to follow, conservative critics charged it was a top-heavy, centralized, technocratic venture that displaced locals and did so in insensitive ways. Thus, when the program was used as the basis for modernization programs in various parts of the third world during the Cold War, such as in the Mekong Delta in Vietnam, its failure brought a backlash of cynicism toward modernization programs that has persisted.
Then-movie star Ronald Reagan had moved to television as the host and a frequent performer for General Electric Theater during 1954. Reagan was later fired by General Electric in 1962 in response to his publicly referring to the TVA (TVA being a major customer for GE turbines) as one of the problems of "big government". Some claim that Reagan was instead fired due to a criminal antitrust investigation involving him and the Screen Actors Guild. However, Reagan was only interviewed; nobody was actually charged with anything in the investigation.
In 1963, U.S. Senator and Republican presidential candidate Barry Goldwater was quoted in a Saturday Evening Post article by Stewart Alsop as saying, "You know, I think we ought to sell TVA." He had called for the sale to private companies of particular parts of the Authority, including its fertilizer production and steam-generation facilities, because "it would be better operated and would be of more benefit for more people if it were part of private industry." Goldwater's quotation was used against him in a TV ad by Doyle Dane Bernbach for President Lyndon Johnson's 1964 campaign, which depicted an auction taking place atop a dam. It was voiced over as follows: "In a Saturday Evening Post article dated August 31, 1963, Barry Goldwater said, 'You know, I think we ought to sell TVA.' This is a promise: President Johnson will not sell TVA. Vote for him on November 3. The stakes are too high for you to stay home."
In 1981 the TVA Board of Directors broke with previous tradition and took a hard line against white-collar unions during contract negotiations. As a result, a class action suit was filed in 1984 in U.S. court charging the agency with sex discrimination under Title VII of the Civil Rights Act based on the large number of women in one of the pay grades negatively impacted by the new contract. An out-of-court settlement of the lawsuit was reached in 1987, in which TVA agreed to contract modifications and paid the group $5 million but admitted no wrongdoing.
TVA faced multiple constitutional challenges. The Supreme Court of the United States ruled TVA to be constitutional in Ashwander v. Tennessee Valley Authority, 297 U.S. 288 (1936). The Court noted that regulating commerce among the states includes regulation of streams and that controlling floods is required for keeping streams navigable; it also upheld the constitutionality of the TVA under the War Powers Clause, seeing its activities as a means of assuring the electric supply for the manufacture of munitions in the event of war. The argument before the court was that electricity generation was a by-product of navigation and flood control and therefore could be considered constitutional. The CEO of the Tennessee Electric Power Company (TEPCO), Jo Conn Guild, was vehemently opposed to the creation of TVA, and with the help of attorney Wendell Willkie, challenged the constitutionality of the TVA Act in federal court. The U.S. Supreme Court again upheld the TVA Act, however, in its 1939 decision Tennessee Electric Power Company v. TVA. On August 16, 1939, TEPCO was forced to sell its assets, including Hales Bar Dam, Ocoee Dams 1 and 2, Blue Ridge Dam and Great Falls Dam to TVA for $78 million.