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?

IS TVA HEADED FOR THE BIG CRASH? - Debt and the Bellefonte Financing Scheme Creates Bankruptcy Risk

Will the Bellefonte financing scheme bring down the TVA?  (ARTICLE UPDATED: Jan 30, 2012)

Business Insider lists the TVA at #6 in their list at high risk for bankruptcy. The house of cards nearing a tumble?  http://www.businessinsider.com/the-next-17-big-companies-that-are-at-risk-of-bankruptcy-2012-1#tennessee-valley-authority-6  Business Insider rates the  "Financial distress (failure) probability of the TVA at 11.82%."

"One other way TVA has looked to raise money is by selling off facilities, and leasing them back. Thomas (John Thomas CFO, TVA) argues that’s not as cheap as using bonds, and he says customers ultimately bear the added expense." http://www.keyumc.org/2011/11/tva-could-replace-30b-debt-limit-with-coverage-ratio/ 

A TVA spokesman has stated said he could not provide details about John Sevier Combined Cycle Generation LLC because of a nondisclosure agreement. Chief Financial Officer John Thomas said of the LLC, "it is a group made up of large, institutional investment companies." John Sevier Combined Cycle Generation LLC is a corporation registered in Delaware. The sale of the combined cycle gas plant was complete in September of 2011 in secret. There was no mention of such a transaction at the November 2011 TVA Board meeting in Starkville Ms. (Bank of America Merrill Lynch, Barclay's Capital and Morgan Stanley were the joint book-running managers for the sale and other TVA bond sales.) http://www.ubs.wallst.com/ubs/mkt_story.asp?docKey=1329-L1E8CAE2G-1&first=0


 In part from KnoxvilleBiz.com- TVA plans more lease purchase deals; who will pay? Ratepayers-"...the financing cost for TVA for the $1 billion amounts to about 5 percent, with TVA paying $10 million a year for 30 years, for a total of $300 million, for which it would immediately get the use of the $1 billion."

Specific details of the sale are secret due to the signing of a non-disclosure agreement. Details such as the terms of the contract and what determines a default are secret. This is a slap in the face to accountable, open government and what appears to be a violation of the Federal Sunshine Act.

The Federal Sunshine Act states: "§ 552b. Open meetings

(a)For purposes of this section—

(1)the term “agency” means any agency, as defined in section 552(e) ^[1] of this title, headed by a collegial body composed of two or more individual members, a majority of whom are appointed to such position by the President with the advice and consent of the Senate, and any subdivision thereof authorized to act on behalf of the agency..."  Note: "any subdivision thereof authorized to act on behalf of the agency..." Currently there is no committee meeting of the TVA open to the public although various committees act in behalf of the TVA..

More lease projects planned costing the ratepayers- "TVA also plans to do a lease-purchase deal with its Watts Bar Unit 2 nuclear reactor and Thomas said that will probably occur late this year, which also is when the project is expected to be completed. TVA plans to sell the John Sevier plant plus the Watts Bar reactor to help fund completion of the $4.9 billion Bellefonte nuclear reactor in Northern Alabama." http://www.knoxnews.com/news/2012/jan/22/tva-plans-more-lease-purchase-deals-like-john/


From The Chattanooga Times Fee Press,  Dec 1, 2011 article by Dave Flessner concerning TVA's lease purchase plans. "S&P credit analyst Theodore Chapman said the risk on TVA's $1.2 billion of outstanding long-term leases on buildings and generation facilities is even greater than TVA bonds.
"We believe that the debt service associated with these leases, which are paid as operating expenses of TVA's electric system, is 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 TVA's name as government-sponsored enterprise debt," S&P said in its analysis."  http://timesfreepress.com/news/2011/dec/01/debt-crisis-casts-doubt-on-tvas-long-term/


Bonds in this deal not protected by implicit federal government support: From "Market Watch-Wall Street Journal, Jan 10, 2012: Fitch Ratings has assigned a rating of 'AA' to the John Sevier Combined Cycle Generation LLC (LLC or the Lessor) lease note obligations... The notes are secured by basic lease rent payments to be made by theTennessee Valley Authority (TVA) whose obligation to make rent payments is absolute and unconditional. Noteholders are also granted a first mortgage interest in the assets under the lease. The rating of the LLC notes reflects TVA's absolute and unconditional obligation to make basic rent payments. However, Fitch does not believe that the implicit federal government support enjoyed by the global power bonds, (rated 'AAA', with a Negative Outlook by Fitch) extends to TVA's lease rent obligations. "  http://www.marketwatch.com/story/fitch-rates-john-sevier-combined-cycle-generation-llc-lease-note-obligations-aa-outlook-stable-2012-01-10

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.

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.

>>>>>

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.

>>>>>

 

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

 

S. David Freeman News Conference in Chattanooga

Former TVA Director blasts the current TVA leadership in the direction it is taking the TVA. http://www.timesfreepress.com/news/2008/jun/12/tennessee-freeman-urges-more-tva-nuclear-review/?breakingnews The video: http://www.timesfreepress.com/news/2008/jun/12/video-nuclear-debate/

The Bottom Line, bring in the worlds nuclear reactor waste to the southeast and continue on with a nuclear TVA will result in a death blow to the TVA. Citizens are not going to tolerate our land as a burying place and reprocessing center for the worlds nuclear reactor waste, nor the painting of a terrorist target on the southeast.

An interview with Mr. Freeman: http://globetrotter.berkeley.edu/people3/Freeman/freeman-con0.html

The "Quaint Essential" Move to End the TVA

Why the Tennessee Valley Authority Must Be Reformed or "Why Yankees hate our power."

Update: Mar 29, 2011. Unfortunately the active link to this information has been removed from the web. However, here is a synopsis. Below you will find a Christian Science Monitor article concerning the bloated debt of the TVA due to mismanagement and unnecessary investments into nuclear energy.

"Tennessee Report--Still Draining the Nation" http://www.tnreport.com/2009/09/still-draining-the-nation/

"PRESS CONFERENCE: RESTRUCTURE TVA"


----------------------------------

Rep. Rodney Frelinghuysen (R-NJ), Senator Jack Reed (R-RI), Rep.

Bob Franks (R-NJ) and the Northeast-Midwest Institute on Tuesday,

September 15, will hold a press conference to discuss pending

appropriation and policy issues facing the Tennessee Valley Authority

and to release RESTRUCTURE TVA: WHY THE TENNESSEE VALLEY AUTHORITY

MUST BE REFORMED. The session was postponed from last week.



The Institute's 54-page monograph explains that the nation's

largest electric utility suffers an enormous $29-billion debt,

mismanagement, and falling political support at the very time that

lawmakers are restructuring the nation's electric utility industry and

transforming the way consumers buy electricity. It also describes

TVA's taxpayer subsidies and exemptions from federal and state laws

and regulations, its role as one of the nation's largest air

polluters, its six-figure bonuses and secret retirement funds for top

executives, and its non-competitive consulting contracts to cronies of

those officials. The report calls for restructuring this outmoded

government agency.

More information: http://www.csmonitor.com/Commentary/Opinion/2009/0225/p09s01-coop.html

This should be a plain message for the TVA Board and it's executives, do not squander our resources. This should also serve as a warning for citizens of the valley, particularly politicians who have "nuclear tunnel vision." There is a move to end the TVA. Ending the TVA would have a serious negative economical impact on the Tennessee Valley Region of the Southeast. Debt due to expensive nuclear power plants is a sure fire way to end the TVA.

Is that the buzzards of Nu-Start circling. I bet they would love to pick up the pieces of a bankrupted TVA for pennies on the dollar?!

The move in 2010 has been renewed due to deceitful mismangement of the TVA.