TVA Financing Schemes, Memories of Enron

(Updated, Jan 19, 2012) How will the TVA finance Bellefonte (TVA photo to the left)? A question which has now been answered, the formation of a Delaware registered corporation(s), its name: "John Sevier Combined Cycle Generation LLC plans to issue $900 million of 30-year secured bonds in the U.S. debt markets on Tuesday, according to a person familiar with the issue." http://online.wsj.com/article/BT-CO-20120110-706518.html  A shill corporation of the TVA? But that ain't all folks, Watts Barr Nuclear LLC will be next involving near 3 billion dollars.

John Sevier Combined Cycle Generation LLC (photo by TVA). TVA sells the Combined Cycle Gas plant, then leases it back and we the people and businesses pay for the TVA Boards lack of control and financial management. Not only do we pay for its construction cost and financing we will pay for the $1 billion dollars in revenue to be paid to the newly formed LLC. (Update: per terms of the new Construction Management contract, the TVA will pay an additional $188 million to the new owners for Construction Management.)

The "ponzi scheme" explained: "A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation." http://en.wikipedia.org/wiki/Ponzi_scheme

TVA, electricity for all, by any means and regardless of the cost. Historical TVA logo to the right. The John Sevier Combined Cycle Generation LLC is a "shill corporation" formed for no other reason than to circumvent a Congressional mandated debt limit of $30 billion. TVA's "actual debt value" is near $28 billion dollars.

 "John Sevier Combined Cycle Generation LLC plans to issue $900 million of 30-year secured bonds in the U.S. debt markets..." another link- http://www.ubs.wallst.com/ubs/mkt_story.asp?docKey=1329-L1E8CAE2G-1&first=0

The parties to the sale of John Sevier Combined Cycle Gas Generation Facility. (Click on image for an expanded view.)

A sale by the TVA, then a leaseback to the TVA by the  John Sevier Combined Cycle Generation LLC,  registered in Delaware on Jan 3, 2012. It is reported the new LLC is to receive 1 billion dollars in revenue proceeds for their troubles. We the ratepayers will foot the bill. The TVA reports the decision to sell the plant was made at the executive level with the TVA Board delegating the authority for the sale and leaseback of the power generation asset at the August 2011 board meeting. The sale and leaseback deal was accomplished secretively in September 2011. A review of the August 2011 meeting video reveals no specific authority stated in the public meeting regarding a delegation of selling power generation assets then leasing them back. It was discussed but not specifically authorized in the public meeting.

UPDATE Feb. 25, 2012 : A review of the Aug. 18, 2011 TVA Board Meeting Minutes, aquired via a Sierra Club Freedom of Information Act request, reveals an authorization for $4,400,000,000 in "alternative financing agreements." Expenditures for leases, clean air, new power generation facilities...Authorization to sale and lease back. The terms and specifics were never discussed in the open meeting.

                              TVA's Ponzi Scheme - a reminder of ENRON?

Report Links: Market Watch report. http://www.marketwatch.com/story/fitch-rates-john-sevier-combined-cycle-generation-llc-lease-note-obligations-aa-outlook-stable-2012-01-10   
Alcrastore Research: http://www.alacrastore.com/research/s-and-p-credit-research-Summary_John_Sevier_Combined_Cycle_Generation_LLC_Tennessee_Tennessee_Valley_Authority_Wholesale_Electric-929099

Standards & Poors listed abstract concerning this transaction:

Abstract:	Standard&Poor's Ratings Services assigned its 'AA-' rating and stable outlook to John Sevier Combined Cycle Generation LLC (John Sevier LLC), Tenn.'s series 2012 secured notes, issued for the Tennessee Valley Authority (TVA; AA+/Negative). The rating is aligned with TVA's stand-alone credit profile of 'aa-' because the John Sevier LLC lease is based on TVA's general creditworthiness. Applying our government-related entity (GRE) criteria, we believe that the debt service associated with the lease, along with other existing lease-leaseback arrangements that are unconditionally paid as operating expenses of TVA's electric system, is potentially less likely to receive extraordinary financial support from the federal government in periods of distress compared to debt issued directly by TVA and that is denominated in [U.S. notes.]
Brief Excerpt:	RESEARCH Ratings Definitions PDF Summary: John Sevier Combined Cycle Generation LLC, Tennessee Tennessee Valley Authority; Wholesale Electric Publication date: 10-Jan-2012 Primary Credit Analyst: Theodore Chapman, Dallas (1) 214-871-1401;...
Report Type:	Summary
Ticker:	3015A
Issuer:	Tennessee Vy Auth
Sector:	Global Issuers, Public Finance, Structured Finance
Country:	United States

What is to prevent the sale and leaseback of all of TVA's assets? I wonder if the shill corporation scheme could be used to reduce the Federal Deficit? Lets form U.S. Military Bases LLC, sell bonds worth $100 trillion dollars. The Fed could do that for every federal owned facility. We the people would no longer be the owners, the "neu corporate entity" would be the owners.  The bureaucrats and politicians may raise and spend more money in the scam 'till the cows come home with governmental sale leaseback schemes such as this. Schemes such as this may only occur when irresponsible government officials show no concern about debt or Open Government; the TVA board should be ashamed of themselves for their abject neglect of the principles of open government.

The TVA's "shill" corporation, the John Sevier Combined Generation LLC, is an excuse to increase the debt of the TVA over and beyond what the law allows. 

 Who are the officers of this newly formed Delaware corporation, past TVA Board of Directors?

The TVA is not a corporation which may operate beyond the authority of the laws governing the governmental entity's operations. Allowing its corporate executives to sell and lease property without the direct approval of the board of directors appears to violate the intent of the TVA Act concerning the sale of its generation assets.

Next shill corporation, Watts Bar Nuclear, LLC. Instead of a $900 million scheme it will be near a $3 billion scheme costing the ratepayers. Where and when will the debt circumvention schemes stop?

Why is the TVA acting like ENRON?  The Congressional mandated $30 billion debt limit is the answer. TVA can't afford to build Bellefonte due to its $28 billion actual debt value. It must create a schemes to circumvent law for the enrichment of the multinational nuclear corporations and their political puppets. Who will pay for the Bellefonte nuclear sinkhole and the enrichment of politicians and the multinational corporations - we the citizens and businesses of the TVA area will pay the additional debt load with ever rising electrical rates.