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Financial News

Fortnightly Magazine - March 1 1995

so, however, he neglected to provide even that modicum of external control that any garden-variety board of directors gives to a private corporation.

TVA's board is empowered to make all internal managerial decisions (and what for other utilities would be external regulatory decisions) by majority vote without any independent review or even explanation. Until 1974, TVA board meetings were closed to both the press and the public. It was not until 1993 that agendas for TVA's board meetings were circulated early enough to allow prior public comment.

Every independent review of TVA in the past two decades (from President Reagan's 1980 transition team report to a study by Alex Radin, an establishment Democrat who formerly headed the American Public Power Association) has concluded that TVA's autonomous, dual-purpose board ought to be replaced by an expanded part-time board (em one clearly separated from managerial decisionmaking, representing those served by TVA, and responsible for the debts of the TVA power system.9

Roosevelt tried to keep politics from subverting his TVA experiment. At the time, such structural insurance made sense. For a while it seemed to work. But today, no competent student of public utilities or administration would recommend TVA's autonomous, paternalistic strongman theory of governance and management (dependent on a Presidential pork barrel) as a sensible way to govern and control a large regional power system. TVA's nuclear record supports that view only too well.

End the Debt Limit

No persuasive reason remains to impose a debt limit on TVA. Although TVA's lopsided balance sheet certainly suggests a strategy of avoiding borrowing and reducing debt, even a self-imposed limit on total debt below the current $30-billion level, given the challenges the agency faces, is likely to prove unwise and inefficient.

Moreover, Congress and the debt limit have failed to provide effective external control and accountability. Like the Congressional debt limit it is patterned on, TVA's internal limit is cosmetic (em giving the appearance of control without repairing the underlying defects that created the need for the constraints in the first place.

As a first step, our representatives in Congress should amend the TVA act to provide an enlarged, regional, part-time board, clearly separated from managerial decisions. And, while they're at it, they should also remove the TVA debt limit. t

Allan G. Pulsipher is director of the policy analysis program, Center for Energy Studies, Louisiana State University, Baton Rouge, LA, and professor at LSU's Institute for Environmental Studies.

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