What Could TVA Do, If No One Was Looking?

Recently, two southeastern utilities found themselves facing scandal head-on as major projects fell apart, leaving the utility – and potentially customers – covering lost costs that add up to billions of dollars. Both Southern Company’s Kemper County integrated gasification combined cycle plant and SCE&G’s VC Summer nuclear plant serve as important reminders that decision making at the utility level is not infallible and bad decisions can have real effects on our pocketbooks.

Southern Company and SCE&G made these huge miscalculations and planning mistakes despite oversight from utility regulators, which in many states takes the form of public service commissions (PSCs). Combining input from utilities, customers, and energy policy experts, PSCs decide how utilities can pass costs along to customers based on whether the expense was prudent and necessary. PSC hearings are often run much like a court room, with testimony, cross examination and submissions of evidence.

That’s why Tennessee Valley Authority ratepayers should be worried by TVA’s recent proposal to move some of its decision making activities behind close doors. As the Kemper and V.C. Summer debacles illustrate, even when utility decisions are subject to thorough regulatory oversight, they are not immune to failure. More often than not, however, utility regulators, like public service commissions, are able to help utilities’ identify economic risks and ensure impacts to rate payers are minimum. But what about when a utility is not subject to utility regulators, like TVA???

Unlike Southern Company and other investor owned utilities, TVA is not subject to oversight by traditional utility regulators because it is a federal agency. Instead, TVA is overseen by nine Board members who are appointed by the President and confirmed by the Senate. TVA is subject to internal review from its Office of Inspector General and receives limited outside input from stakeholder groups it assembles (like its Integrated Resource Planning groups, energy efficiency and renewable energy stakeholder committees).

However, TVA customers do have one primary access point that allows them to peak behind the curtain: the National Environmental Policy Act (NEPA). NEPA became effective in 1970 (under Nixon) and has been dubbed by some as “the environmental Magna Carta” – leading more than 100 countries to enact similar environmental policies. NEPA requires all federal agencies to perform environmental impact analysis for any major action, in order to determine the course that would have the least negative impact on health, land and water. There is a mandatory public comment period for any NEPA analysis document, forcing agencies like TVA to involve the public in decisions that may otherwise have been kept behind closed doors.

The importance of NEPA and its effect on how decisions are made at TVA cannot be understated. Without NEPA, a government utility like TVA would be able to operate in the darkness and without oversight, potentially making disastrous economic decisions like Kemper and VC Summer.

Without the mandatory public notice and comment period…

This is why the newly proposed changes to TVA’s NEPA procedures could be cause for concern. For the first time in almost 35 years, TVA is proposing a suite of changes to how it approaches NEPA compliance and environmental analysis. Although TVA will still be required to comply with NEPA generally, if these proposed changes become official policy, TVA will have an enormous amount of discretion to decide when and if it should inform the public of its decisions.

Perhaps the most troubling piece of the proposal is the addition of 31 Categorical Exclusions (CatEx). CatExes are defined as agency actions that has been determined to not individually or cumulatively affect the quality of the human environment. Some of TVA’s proposed CatExes are non-controversial, like adding educational and information programs or placing gravel on walking trails in TVA’s recreation areas. But a significant amount of the proposed new CatExes should give anyone living and using electricity in the Tennessee Valley pause.

Below is a snapshot of the more controversial issues TVA is seeking to remove from NEPA environmental analysis requirements:

  • Purchase or lease of existing combustion turbine or combined-cycle natural gas plants. (Proposed CatEx 21)
  • Installation or modification (but not expansion) of groundwater withdrawal wells, or plugging and abandonment of groundwater or other wells. (Proposed CatEx 35)
  • Modifications to the TVA rate structure (i.e. rate change). (Proposed CatEx 47)

If you live in the Tennessee Valley, we encourage you to learn more about these proposed changes and share your thoughts with TVA – while they are still listening with open ears.

TVA will be taking public comment on its proposed NEPA changes until September 5. If you’d like to submit a comment, you can do so by clicking here. You can also comment in person at the TVA Board of Directors meeting on August 23.

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