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The Tennessee Valley Authority (TVA) is a federally-owned corporation in the United States that was created in 1933 to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee River Valley, a region that was particularly hard hit by the Great Depression. The TVA was envisioned as more than a provider of electricity, but rather a regional planning agency that would address many issues in a large region. The TVA's jurisdiction covers most of Tennessee, large parts of Alabama, Mississippi and Kentucky, and small slices of Georgia, North Carolina and Virginia. It is a geopolitical entity with a territory the size of a major state, and with some of the powers of a state (such as eminent domain), but unlike a state in having no citizenry or elected officials. It was the first large regional planning agency of the federal government and remains the largest, and most controversial, today.
President Franklin Delano Roosevelt signed the act creating the TVA on May 18, 1933.
In the years following the Great Depression, the US Congress took steps to alleviate the plight of the farmers and the unemployed and one of those steps was the development of Federally owned power. One of the major schemes was established on the Tennessee River under the Tennessee Valley Authority Act of 1933. Under this law the Federal Government provided electric power to States, counties, municipalities and nonprofit cooperatives. It was a part of the Federal initiatives to provide navigation, flood control, strategic materials for national defense, electric power, relief of unemployment and improvement of living conditions in rural areas. The TVA was more than just a power supplier.
In its power supply role it was given authority to enter into long term (20 years) contracts for the sale of power to government agencies and private entities. It can also construct electric power transmission lines to areas not otherwise supplied and establish rules and regulations for electricity retailing and distribution. The TVA is both supplier and regulator.
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Overview
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Today the TVA is the nation's largest public power company, providing electric power to nearly 8.5 million customers in the Tennessee Valley. It acts primarily as an electric power wholesaler, selling to 158 retail power distributors and 61 directly served industrial or government customers. Power comes from dams providing hydroelectric power, fossil-fuel plants, and nuclear power plants.
During the 1920s and the Great Depression years the public of the USA became disenchanted with privately owned power and began to support the concept of government ownership of utilities, particularly hydroelectric power facilities. The concept of government owned generation facilities selling to publicly owned distribution utilities was a controversial political issue and remains so today Hubbard, pp 5-27.
Many believed that the privately owned power companies were charging too much for power, did not employ fair operating practices and were subject to abuse by their owners, utility holding companies, at the expense of consumers. Roosevelt said in his presidential campaign the private utilities had "selfish purposes" and said, "Never shall the Federal Government part with its sovereignty or with its control of its power resources while I'm President of the United States." By forming utility holding companies, the private sector controlled 94% of generation by 1921, essentially unregulated (this situation gave rise to Public Utility Holding Company Act of 1935 (PUHCA)). Many private companies in the Tennessee Valley were bought out by the federal government. Others shut down due, unable to compete with TVA. Regulations were also created that prevented competition with TVA.
On the other hand there were conservatives who believed that the Government should not participate in the electricity generation business because they feared that government ownership leads to the misuse of hydroelectric sites. The TVA was one of the first federal hydropower agencies, and today most of the nation's major hydrological systems are federally managed. Attempts to create TVA-like regional agencies failed, such as a proposed Columbia Valley Authority for the Columbia River.
Regional power consumers may benefit from lower-cost electricity supplied from TVA's network of 29 power-producing hydro power facilities. Supporters of TVA, though, point out that the agency's management of the Tennessee River system without appropriated federal funding saves federal taxpayers millions of dollars annually. Opponents, such as Dean Russell in The TVA Idea, in addition to condemning the project as being socialist, argued that the TVA created a "hidden loss" by preventing the creation of "factories and jobs that would have come into existence if the government had allowed the taxpayers to spend their money as they wished." Defenders note that the TVA is overwhelmingly popular in Tennessee among conservatives and liberals alike, as Barry Goldwater discovered in 1964 when he proposed selling off the agency.
One study says that public utilities are inadequate on maintenance. They note that federally owned power systems spends significantly less than private systems on this. They report that the TVA "spends only 5% of its revenues on maintenance." And, they say that as a consequence ability to produce power suffers. Privately owned dams produce 20% more electricity than federally owned ones. They also report that TVA charges more to its preferred customers (publicly owned utilities and cooperatives) than private utilities charge to the same class of customers. Also, they note when the public purchases bond issues from the TVA, they do not have an eye on the viability of the project but are, rather, basing their investment decision on the fact that repayment is guaranteed by taxing the public. (CBO, Should the Federal Government Sell Electricity)
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Constitutional issues
The U.S. Constitution gives the federal government the authority to "regulate commerce...among several states..." but does not expressly authorize the government to enter the electricity production business. The Supreme Court ruled the TVA constitutional, noting that regulating commerce among the states includes regulation of streams, and that controlling floods is required for keeping streams navigable. The argument before the Court was that electricity generation was a by-product of navigation and flood control and therefore could be considered constitutional. It was on the basis of this claim, that electricity would be incidentally produced rather than being the purpose of TVA, that the TVA was declared constitutional. (Russell)
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1930s
Even by Depression standards, the Tennessee Valley was in sad shape in 1933. Much of the land had been farmed too hard for too long, eroding and depleting the soil.
Crop yields had fallen along with farm incomes. The best timber had been cut. TVA developed fertilizers, taught farmers how to improve crop yields, and helped replant forests, control forest fires, and improve habitat for wildlife and fish. The most dramatic change in Valley life came from the electricity generated by TVA dams.
Electric lights and modern appliances made life easier and farms more productive. Electricity also drew industries into the region, providing desperately needed jobs.
None of this was easy. The development of the dams involved people moving from their homes and the flooding of their land. This naturally led to resentment and an anti-TVA sentiment among some rural communities. Local landowners were naturally suspicious of government agencies. But the TVA successfully introduced new agricultural methods into traditional farming communities. They did this by blending in and finding local champions.
A Tennessee farmer would not take advice from an official in a suit and tie. The TVA people had to find the leaders in the communities and convince them that crop rotation and the judicious application of fertilizers were the ways to restore the soil's fertility. Once they had convinced the leaders, the rest followed.
Beginning with its inception, the TVA was based in Knoxville, Tennessee in the old Federal Customs House at the corner of Clinch Avenue and Market Street.
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Employment policy
The TVA hired local workers who were given primarily manual labor jobs in the construction of the dams. The unemployed were hired for conservation, economic development, and social programs such as a library service that operated for the surrounding area. The professional staff headquarters was composed of experts from outside the region. The workers were categorized into the usual racial and gender lines of the day. The TVA hired a few African-Americans for janitorial positions. The TVA recognized labor unions; its skilled and semi-skilled blue collar employees were unionized, a breakthrough in an area known for corporations hostile to miners' unions and textile unions. Women were excluded from construction work, although the TVA's cheap electricity attracted textile mills that hired mostly women. Long 1999
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1940s
During World War II, the United States needed aluminum to build airplanes, and aluminum plants required huge amounts of electricity. To provide the power the TVA engaged in one of the largest hydropower construction programs ever undertaken in the United States. Early in 1942, when the effort reached its peak, 12 hydroelectric projects and a steam plant were under construction at the same time, and design and construction employment reached a total of 28,000.
TVA also provided much of the electricity needed for uranium separation using Calutrons at the Y-12 National Security Complex at Oak Ridge, as required for the Manhattan Project.
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1950s
By the end of the war, TVA had completed a 650-mile (1,050-kilometer) navigation channel the length of the Tennessee River and had become the nation's largest electricity supplier.
Even so, the demand for electricity was outstripping TVA's capacity to produce power from hydroelectric dams.
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1960s
The 1960s were years of unprecedented economic growth in the Tennessee Valley. Electric rates were among the nation's lowest and stayed low as TVA brought larger, more efficient generating units into service. Expecting the Valley's electric power needs to continue to grow, TVA began building nuclear reactors as a new source of cheap power.
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1970s and 1980s
Significant changes occurred in the economy of the Tennessee Valley and the nation, prompted by an international oil embargo in 1973 and accelerating fuel costs later in the decade.
The average cost of electricity in the Tennessee Valley increased fivefold from the early 1970s to the early 1980s.
With energy demand dropping and construction costs rising, TVA canceled several nuclear plants, as did other utilities around the nation.
Marvin T. Runyon became chairman of the Tennessee Valley Authority in January 1988. He claimed to reduce management layers, cut overhead costs by more than 30%, achieve cumulative savings and efficiency improvements of $1.8 billion. He said he revitalized the nuclear program, and instituted a rate freeze that continued for ten years.
The 1970s saw the last and most controversial of the TVA's large dam-reservoir projects, Tellico Dam.
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1990s
As the electric-utility industry moved toward restructuring and deregulation, TVA began preparing for competition.
It cut operating costs by nearly $800 million a year, reduced its workforce by more than half, increased the generating capacity of its plants, stopped building nuclear plants, and developed a plan to meet the energy needs of the Tennessee Valley through to the year 2020.
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2000s
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TVA has recently made news by again reducing its workforce and by beginning new campaigns to improve its public image. It has also received acclaim from pro-nuclear organizations for its work to restart a previously mothballed nuclear reactor at Brown's Ferry (unit 1). (As of 2006, TVA is the owner and operator of the Browns Ferry, Sequoyah and Watts Bar nuclear power plants.) In 2004, TVA implemented recommendations from the Reservoir Operations Study (ROS) in how it operates the Tennessee River system (the nation's fifth largest).
TVA is one of the largest producers of electricity in the United States and acts as a regional grid reliability coordinator. TVA's power mix as of 2004 was 11 fossil-powered plants, 29 hydroelectric dams, three nuclear power plants (with five reactors and one restarting), and six combustion turbine plants. Fossil fuel plants produced 62% of TVA’s total generation in fiscal year 2005, nuclear power 28%, and hydropower 10%. *.
TVA's current headquarters are located in downtown Knoxville. TVA also maintains large administrative offices in Chattanooga and Nashville, Tenn.; and Muscle Shoals, Ala.
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TVA as National Symbol and Political Football
The (TVA) was heralded by New Dealers and the New Deal Coalition not only as a successful economic development program for a depressed area but also as a democratic nation-building effort overseas because of its alleged grassroots inclusiveness as articulated by director David Lilienthal. The TVA was controversial in the 1930s. Historian Thomas McGraw concludes (1971 p 157) that Roosevelt "rescued the power industry from its own abuses" but "he might have done this much with a great deal less agitation and ill will." New Dealers hoped to build numerous other TVAs around the country but were defeated by Wendell Willkie and the Conservative coalition in Congress. The valley authority model did not replace the limited-purpose water programs of the Bureau of Reclamation and the Army Corps of Engineers. State-centered theorists hold that reformers are most likely to succeed during periods such as the New Deal era, when they are supported by a democratized polity and when they dominate Congress and the administration. However (O'Neill 2002) shows that in river policy the strength of opposing interest groups also mattered. The TVA bill was passed in 1933 because reformers like Norris skillfully coordinated action at potential choke points and weakened the already disorganized opposing electric power industry lobbyists.(Hubbard 1961) In 1936, however, after regrouping, opposing river lobbyists and Conservative coalition Congressmen took advantage of the New Dealers' spending mood by expanding the Army Corps' flood control program. They also helped defeat further valley authorities, the most promising of the New Deal water policy reforms.
When Democrats after 1945 proclaimed the TVA as a model for Third World countries to follow, conservative critics charged it was a top-heavy, centralized, technocratic venture that displaced locals and did so in insensitive ways. Thus, when the program was used as the basis for modernization programs in various parts of the Third World during the Cold War, such as in the Mekong Delta in Vietnam, its failure brought a backlash of cynicism toward modernization programs that has persisted. (Ekbladh 2002) When Barry Goldwater attacked the TVA in his 1964 presidential campaign, the backlash among Republicans in Tennessee weakened the party; later conservative candidates avoided the issue.
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Further reading
Richard A. Colignon. Power Plays: Critical Events in the Institutionalism of the Tennessee Valley Authority (1997)
Creese, Walter L. TVA's Public Planning: The Vision, the Reality. U. of Tennessee Press, 1990.
David Ekbladh, "'Mr. TVA': Grass-Roots Development, David Lilienthal, and the Rise and Fall of the Tennessee Valley Authority as a Symbol for U.S. Overseas Development, 1933–1973" Diplomatic History Summer 2002 Vol. 26 Issue 3 pp 335-374
Erwin C. Hargrove and Paul H. Conkin, eds. TVA Fifty Years of Grass-Roots Bureaucracy (1963)
Erwin E. Hargrove, Prisoner of Myth: The Leadership of the Tennessee Valley Authority, 1933-1990 (1994)
Preston J. Hubbard, Origins of the TVA: The Muscle Shoals Controversy, 1920-1932 Vanderbilt University Press, 1961
David Lilienthal. TVA: Democracy on the March (1944) promoted TVA for cheap power, grassroots regional democracy, environmental conservation, and the peaceful use of energy. Called it model for rest of USA and Europe.
Jennifer Long; "Government Job Creation Programs-Lessons from the 1930s and 1940s" Journal of Economic Issues. Volume: 33. Issue: 4. 1999. pp 903+ on TVA in Knoxville
Michael J. McDonald and John Muldowny. TVA and the Dispossessed: The Resettlement of Population in the Norris Dam (1982), highly critical of TVA
Thomas K McCraw. TVA and the power fight, 1933-1939 (1971)
Steven M. Neuse. "TVA at Age Fifty- Reflections and Retrospect" Public Administration Review, Vol. 43, No. 6 (Nov. - Dec., 1983) , pp. 491-499
Steve M. Neuse. David E. Lilienthal: The Journey of an American Liberal (1996).
O'Neill, Karen M. "Why the TVA Remains Unique: Interest Groups and the Defeat of New Deal River Planning." Rural Sociology 2002 67(2): 163-182. Issn: 0036-0112
Russell, Dean. The TVA Idea, The Foundation for Economic Education, Irving-On-Hudson, New York, 1949.
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See also
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