The TVA - Debt, Reports, Propaganda and Benefits - Could be a Love-Hate Relationship in the Southland - A Report

Old TVA logo, Fair Use Rights for news and criticism

A byline to this could be - Never Allow So Called Conservative Politicians in the TVA Area to Say They Support Conservative Values, Ever Again. Every federal elected legislator and 99% of the elected state legislators in the TVA support the socialist organization we call the TVA.

Every so often, about once a quarter the TVA places forward financial statements and follows up with copious propaganda regarding these statements. There is an effort to report and deceive at the same time. Reporting the condition of OUR TVA is important, being deceptive about it is hiding the truth about its failures facilitates a growing governmental turn to corporate fascism.

My Report

Opening Remarks - TVA Debt - There is no doubt that under TVA's current CEO, Bill Johnson, TVA's debt picture has improved, but is the Federal power agency still in trouble, to my way of thinking yes. Any private corporation would have gone under years ago because of the waste, abuse and down right deceit.

There have been two relevant bits of news about TVA's debt which has surfaced within the past week. Those who follow the TVA's financial actions should see a clear pattern which has developed. Instead of news agencies reporting factual events regarding TVA debt they are falling prey to TVA propaganda, this is bothersome. I think, rather than report the truth, they are afraid of TVA's reaction to them, and possibly large financial institutions actions pointed at a civilian news groups accurate reporting .

>By the numbers - Why these conclusions?

>1. Chattanooga Times Free Press article on June 5, 2015: http://www.timesfreepress.com/news/business/aroundregion/story/2015/jun/05/privatizing-tvwould-raise-ratesstudy-criticiz/308025/   The article summary -
"A new study commissioned by the Economic Policy Institute suggests that selling or privatizing the Tennessee Valley Authority would raise power costs and hurt economic development and research in TVA's seven-state region...The liberal think tank is not often at odds with President Barack Obama and supportive of the positions of conservative Southern Republicans. But on the question of cutting federal ties to America's biggest government utility, researchers for the Economic Policy Institute are in agreement with Tennessee's GOP lawmakers and against an Obama administration plan to phase out the federal role in the New Deal agency created in 1933 by President Franklin Roosevelt..."

  (a) EPI, Dr. Yudken's comments - ""Over its 80-year existence, the TVA has had an excellent track record in almost every area of its operation, and its success has delivered substantial benefits throughout the Tennessee Valley," Dr. Joel Yudken, an economist and principal of High Road Strategies LLC, concluded in a 44-page study of TVA's finances. "The TVA is addressing its serious financial problems and its new leadership is preserving its capabilities as a system that provides wide-ranging benefits to the region and people it serves.""

 Big claim, "excellent track record," but is it true? The answer is, in my opinion, NO, Yudken's opinion is fallacy mixed with fact. Reason, TVA's debt with interest and commitments exceeds its assets. But, TVA has improved its slide into the financial abyss by approximately $2 billion dollars concerning its bond debt. But is TVA's financial picture a slight of hand accounting trick perpetuated by this so called "liberal think tank" of financial genius which the Time Free Press mentions? My opinion, YEP.

   (b) Nuclear Power is "Cleaner Energy" (pg11) One other important point, in the EPI Yudken report, nuclear energy is placed into the category of clean energy. Falling in lock step with the NEI, Nuclear Enrgy Institute, special interest position. Nuclear power is not clean in any sense of the the word clean or cleaner. Nuclear power has produced and continues to produce millions upon millions of pounds of deadly radioactive waste with no definitive solutions for its disposal.

   (c) Coal vs Nuclear power is a false mantra facilitated by nuclear special interest groups.The replacement of coal fired generation with nuclear power is not a move into cleaner energy. It increases risks of a disaster on the scale of Fukushima Daiichi or greater.
EPI Report - http://media-cdn.timesfreepress.com//news/documents/2015/06/04/862405499801752.pdf

But that is not all, anyone who ignores the fact that TVA has wasted over $20 billion dollars due to unnecessary nuclear power construction, and intentionally ignores that fact in a report, "ain't right."

>2. On June 2, 2015 TVA distributed an 8K Report concerning a change to one of TVA's $1,000,000,000.00, one billion dollar, loans. That change, linked below, states as follows:

"On June 2, 2015, TVA executed an amendment to its $1,000,000,000 credit agreement dated as of June 25, 2012, and amended as of December 12, 2012, with The Bank of New York Mellon, Bank of America, N.A., Canadian Imperial Bank of Commerce, New York Agency, First Tennessee Bank National Association, Morgan Stanley Bank, N.A., and Toronto Dominion (New York) LLC.

The amendment, among other things,

(1) extended the maturity date of the credit agreement from June 25, 2017, to June 2, 2020,

(2) gave TVA the option to extend the maturity date by one year up to two times, subject to lender approval,

(3) reduced the TVA credit rating threshold that would allow the lenders to stop making credit extensions from lower than A3 or A- to lower than Baa1 or BBB+,

(4) reduced the TVA credit rating threshold that would allow the lenders to terminate their commitments and require the prepayment of loans and other obligations in full and the cash collateralization of all letter of credit obligations from lower than A3 and A- to lower than Baa1 and BBB+, and

(5) reduced the TVA credit rating threshold that would trigger an event of default from lower than Baa2 and BBB to lower than Baa3 and BBB-. A copy of the amendment is filed as Exhibit 10.1." (linked below)

Since when is a billion dollar 3 year credit extension good for rate payers? Is this a sign for things to come, for instance a lowering of the credit rating, again?

>3. When a financial report is issued by the TVA, the TVA immediately follows up with "painting a rosy picture" propaganda article, and the local media complies with the propaganda ministry's request and all fall in lock step with the wonderful flute tunes of the pied piper of propaganda's writings.

Looking at TVA's last 10 K report reveals the seriousness of the problem. Debt + interest exceeds assets.

   April 2015 - This is an article I sent around in April, after Bill Johnson's comments:
CEO Bill Johnson attempts to paint a rosy picture. But when the numbers are crunched there is trouble in the TVA. Bragging about being under the debt cap does not restructure the fact TVA's debt and obligations far exceed assets. http://www.timesfreepress.com/news/business/aroundregion/story/2015/apr/23/tva-debt-stays-below-federal-cap/300288/

Crunching the numbers - Here is the real picture based on the data supplied in TVA's 2014 10K Report.

 Total Statutory debt - $23.6 billion; 2014 VIE (Sevier Ponzi scheme, gas plant financing) Debt - $1.3 billion.
 Total interest on both debt catagories $23.7 billion.
 Total bond, VIE debt with interest is $48.6 billion of your dollars.
 TVA's total assets as reflected on their financial statement - $45.6 billion dollars.

Debt with interest exceeds assets, for a normal business that spells T-R-O-U-B-L-E, with or without a capital "T."

Ladies and Gentleman, that is not counting Pension obligations, nuclear decommissioning obligations, leases and future fuel purchases, which is another obligation of approximately $20-25 billion.

Link to TVA Financials, 10K etc - (pg 61, 82 and others) http://www.snl.com/IRWebLinkX/FinancialDocs.aspx?iid=4063363

>4. Why Deceit? TVA is NUCLEAR POWER'S last bastion of support, where future projects may be built. Only a federal agency which is not supported by stock holders may get away with the blatant deceit and irresponsibility demonstrated as a result of nuclear power investments and the massive waste perpetuated by banks, multi-national corporations, bureaucrats and politicians supportive of nuclear power and the multinational nuclear defense industry.

   (a) Building of electric power generation should not result in the building of deceit, ignorance, sickness and death. The replacement of coal fired generation with nuclear power is not acceptable and in no way or form is it clean, cheap or reliable. Only in the TVA area may government and corporations act in unison to literally sicken and kill people without the people revolting against disgusting practices and policies of corporate fascism and its deceitful practices.

  (b) Health -The cancer incidence and death rates are staggering, the nuclear death industry contributes to the declining health of the area (past and present). Regulatory actions do not consider public health, nor the fact that the nuclear industry has and is killing and sickening folks in the TVA region, particularly in East Tennessee. The nuclear industry has dumped hundreds of thousands of pounds of deadly radioactive materials in the past and continues to do so in the present. Public reports on the dumping of highly radioactive nuclear materials are readily available and accessible on the web.

   (c) Defense Mission - nuclear weapons - Nuclear Weaponry in the U.S. is dependent on the TVA, nuclear weapon's support missions include the production of tritium for thermo-nuclear weapons. Tritium is in our water, plants, animals and in us, the people.

A large portion of  East Tennessee is Red and Orange, indicating increased cancer incidence rates over the rest of the nation. Source National Cancer Institute, current statistics reported. http://statecancerprofiles.cancer.gov/map/map.withimage.php?47&001&001&00&0&01&0&1&4&0#results

>5. Very Short Conclusion -  With all of that said, the EPI report makes good points about many positive aspects of TVA's current management and its initial mission to the good people of the Tennessee River Valley. However, the report does not accurately describe or disclose the full picture for decision makers and rate payers.

TVA Board meetings reports, it is important to note, in no case are full financial disclosures given in regards to long term debt interest or a full disclosure of all financial obligations, including pension plan shortfalls and facilities decommissioning costs at TVA Board Meetings. Such is the case within the EPI Report. http://arklite.blogspot.com/search/label/TVA%20Board%20Meeting

TVA's current financial update: June 2015 Investor Update

TVA's full update and presentation lists

http://www.snl.com/irweblinkx/presentations.aspx?iid=4063363

Fair Use for non-profit news reporting “By jove, I think I see Airstrip One, jolly good. The sun over Oceania is rising.”

TVA PENSION PLAN TROUBLES

The expense of nuclear power has led to massive debt for the TVA. Is TVA on the verge of PENSION DEFAULT? Where is TVA's pension money going??

"TVA continues to withhold pension funding even as it collects funds specifically to cover pension costs from its ratepayers. Based on information I received from TVA through a Freedom of Information Act request, TVA expects to collect $528 million from its ratepayers in the current fiscal year, ending Sept. 30, 2014, to cover pension costs but plans to contribute only ...$250 million to the pension plan. In addition, TVA collected $539 million in the fiscal year ended Sept. 30, 2013, and $530 million the previous fiscal year to cover pension costs, but contributed none of these funds to the employees' pension plan...It is unclear why TVA continues to withhold adequate funding from its employees' pension plan...it would be irresponsible for Congress to allow TVA to proceed unchallenged with its current pension funding policy."
http://www.pionline.com/article/20140526/PRINT/305269990/tva-falls-through-cracks-as-plan-funding-deteriorates?template=print
(Posted under the provisions of Section 107, U.S. Copyright Office Fair Use Rule - Non-profit, environmental & open government education: "Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered fair, such as criticism, comment, news reporting, teaching, scholarship, nonprofit educational purposes and research. Link: http://www.copyright.gov/fls/fl102.html )

TVA Quarterly Board Meeting, Apr. 18, 2013 at Columbia, Tn. - Special Disclosure on TVA Nuclear Decommissioning Fund Status

 

AGENDA

 

BEST/MATRR short video of Listening Session




BEST/MATRR short video of the Board Meeting, Finance highlights



TVA's videos and presentation of the Apr. 18, 2013 Quarterly Board Meeting
Links:
News Release
TVA Presentation (PDF)
Video of listening session (Windows Media)
Video of meeting (Windows Media)
Video shown at meeting (Windows Media)

TVA Privatization
The TVA has been ablaze with discussion as of late concerning President Obama's budget proposal concerning the TVA. Bloomberg on the issue: http://www.bloomberg.com/news/2013-04-11/obama-mulls-sale-of-tennessee-valley-authority-in-budget-plan.html "President Barack Obama is considering the sale of all or part of the Tennessee Valley Authority (3015A), the largest publicly owned U.S. power company, in a deal that may raise as much as $35 billion as the administration seeks to reduce the national debt."

"A potential sale is part of a “strategic review” of the Knoxville, Tennessee-based nonprofit, which faces increasing capital costs, according to the administration’s fiscal 2014 budget proposal released yesterday. A sale may yield $30 billion to $35 billion in cash and reduced government debt obligations, said Travis Miller, a Chicago-based analyst for Morningstar Inc. (MORN) "

TVA leadership welcomes debt review: http://www.timesfreepress.com/news/2013/apr/19/tva-leaders-welcome-debt-review/  "President and CEO Bill Johnson and board Chairman Bill Sansom said they believe TVA is "a good business model" that is funded totally by ratepayers, not taxpayers.
"We'll cooperate and participate, and we're glad to see the review. In the meantime, we've got to focus and direct management's attention on running the place right," Sansom said at a board meeting Thursday in Columbia, Tenn."

Nuclear Decommissioning - NRC's out of date plan and policy: http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/decommissioning.html

TVA Funds - Nuclear decommissioning trust fund balance at the end of fiscal 2012 (Sept. 30, 2012) $1,165,216,096;  2011 was $945,961,913; 2009 was $660.5 million. Information provided via request to TVA.

TVA's Nuclear Decommissioning Fund status in its annual SEC 10K report will not be found and the report listing is confusing. TVA's 2012 10K Annual Financial Report reflects deferred costs, page 98. No where in the financial report are the actual decommissioning funds on hand listed. Pg 73 contains a discussion. http://investor.shareholder.com/tva/secfiling.cfm?filingID=1376986-12-43

 

"GAO investigated 12 reactors’ trust funds, comparing company-prepared site-specific decommissioning cost estimates to NRC’s formula. For nine reactors, NRC’s formula resulted in funds below the companies’ estimates. In one case, a company believed it needed $836 million, which was $362 million more than NRC’s formula figure. GAO also noted NRC’s funding formula was more than 30 years old." http://cen.acs.org/articles/91/i13/Nuclear-Retirement-Anxiety.html

"Decommissioning a Nuclear Plant Can Cost $1 Billion and Take Decades:" http://www.reuters.com/article/2011/06/13/idUS178883596820110613

TVA's nuclear decommissioning funds on hand are not sufficient and rely on NRC's 30 year antiquated policy. Current TVA nuclear plant decommissioning fund status below as reported to the NRC.

Nuclear decommissioning trust fund balance at the end of fiscal 2012 (Sept. 30, 2012) $1,165,216,096.

Current long operating nuclear plant decommissioning costs per plant are estimated to be $800-$900 million per reactor. TVA is seriously lacking in their decommissioning fund.  (Decommissioning Trust Fund Balance provided by TVA. The table reflects the official report provided the NRC.) 

Silly "AFP" - here is the You Tube address: http://youtu.be/paxDogM6MjU they post this video on You Tube, a Google entity, but AFP will not allow a You Tube video to be played on Google Blogger?

A Close Look at TVA Debt by the Experts.

Can you spell T-R-O-U-B-L-E for the TVA. The following are articles explaining the seriousness of the financial situation of the TVA.

The first article is from the Journal of Strategic Management Education. http://home.earthlink.net/~roubidoux/TVA_9-17-03.pdf A very striking point is the financial forecasting by the TVA concerning their debt. The TVA debt in 1997 was $27 billion. TVA's forecast in 1997 stated their debt would be reduced to $14 billion by 2007. Remarkably, TVA has not met their debt forecast, their debt is $22.6 billion as of December 31, 2007 according to the TVA's Form 10Q, December 31, 2007. In short the article states the TVA is in serious trouble. "There is a long history of inefficient management, poor forecasting performances and...[a] real threat of bankruptcy if it were not for the implicit guarantee of outstanding debt by the Federal Financing Bank." However, "...since the guarantee is implicit not explicit in the bond agreement, there is no assurance that bond holders will obtain the full value of their debt holdings should the TVA's financial situation deteriorate." The article goes on to recommend privatization in stages before a financial collapse occurs.

In the next article, http://www.rsmenergy.com/AugustReport.PDF a similar concern is expressed. It describes the TVA as: "The TVA-Taxpayers ENRON...The Bush administration has criticized TVA for its excessive debt and lack of plans to reduce it. TVA has now announced a plan to avoid going further into debt by having its distributors issue tax-free bonds, and then prepay TVA for future power deliveries." To top off TVA problems there is this: "If TVA’s near useless assets were written down to value, TVA would be insolvent (liabilities exceed assets)." TVA's leaseback and prepay plans are also problematic. "Both these leaseback and prepay plans have substantially the same impact as debt on TVA’ s financial condition. In fact, this is very costly debt at that. Further, the distributors will become more financially leveraged. So rather than developing and implementing a plan to work itself out of debt, TVA is digging itself and its distributors deeper into financial trouble."

Moves to privatize the TVA are described in these articles: http://www.knoxnews.com/news/2008/may/11/bill-calls-federal-oversight-tva/ and http://www.nemw.org/tvareport.htm Private utility companies have seen the TVA as unacceptable competition backed by the Federal Financing Bank. Due to new construction of new nuclear plants by the TVA it appears the competition surrounding the Tennessee Valley Region may get their wish, financial insolvency of the TVA. Of course, Nu-Start is waiting in the wings to purchase the assets of a financial insolvent TVA.

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Addition: Financial Reports link http://www.tva.gov/finance/reports/forwardlooking_sec.htm

Click on the accept button and it will take you to the Financial Reports of the TVA. The 10Q reports are the quarterly filings, the May 12, 2008 is the last 10Q quarterly filing. On page 32 of that report you will find the total debt and debt interest for the TVA.

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The question remains, how will the TVA pay for their proposed reactors at Bellefonte?