Lawsuit Against TVA Alleges Sham Transactions

Fortnightly Magazine - June 1 1997
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Five utility companies have filed a lawsuit in U.S. District Court in Birmingham against the Tennessee Valley Authority to bar it from making sales to unauthorized third parties for resale outside TVA's service territory, claiming such sales violate the TVA Act.

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"TVA is under more intense attack from private utilities than at any time in its history," said TVA Chair Craven Crowell at an April 15 at a meeting of the TVA Caucus in Washington, D.C.

The lawsuit alleges that TVA is engaging in sham transactions with East Kentucky Power Co-op., Louisville Gas and Electric Co., and Cinergy Corp., by using them to "launder" TVA power. Fourteen neighboring companies are authorized to purchase TVA power under a 1959 Bond Act, which prohibits TVA from selling power on the open market. Although the three utilities named in the lawsuit are authorized to purchase TVA power, the lawsuit alleges that electricity is merely being passed through other buyers.

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