TVA is controversial because it is consequential; let it become insignificant to the public interest, an agency of no particular account, and people will stop arguing about it.

—Gordon Clapp, chairman, Tennessee Valley Authority, 1946-54

Midway through the motion picture Wild River, a government engineer, played by Montgomery Clift, tries to persuade an aged matriarch to move off her land so that the Tennessee Valley Authority can flood it. The engineer, calm and logical, can’t understand why anyone would stand in the way of progress. The old woman, whose family has lived on the land for 200 years, can’t understand why anyone would take it from her. Fed up with the engineer’s efforts, she finally just shuts the door in his face.

Wild River dates from 1960. By that time TVA was a quarter of a century old, and for most Southerners it was a fact of life. Created in the depths of the Great Depression, it had largely succeeded in its original mission. The most significant economic and social experiment in the history of the South, TVA had virtually transformed one of the worst pockets of poverty in the nation. A full generation of Southerners in seven states had grown up depending on the Tennessee Valley Authority for electrical power, for recreation and for jobs. Writing in Fortune magazine in 1934, the Knoxville-born James Agee described the mammoth federal project as “a linkage and veinage of moving waters...muscled with munificence of power that man has scarcely touched.”

By 1960, however, attitudes had begun to shift. Government as Valiant Rescuer had begun to look like Government as Intruder. The hardscrabble farmers of the New Deal had gradually developed into Republicans, suspicious of big government. Agrarians and environmentalists had begun to raise questions about the government’s “munificence.” Instead, they began to see a countryside plowed under and flooded over by heartless bureaucracy. Precious homelands, according to Nashville-based agrarian Donald Davidson, had been sold at “an indecently low price.” A heritage, if a desperate one, had been traded for hydroelectrics.

TVA had provided cheap power, and the power that had helped turn a leached-out, barren valley into the New South, the Sunbelt. At the same time, TVA’s control of power—and power rates—had been virtually unchallenged. It was a public, tax-exempt corporation, but, over the years, it also provided ample opportunities for pork-barreling, deal-making and bureaucratic inefficiency. Southern politicians were dependent upon TVA for the livelihood of their region. Meanwhile, Southern voters were at the mercy of the well-connected politicians who controlled their access to electrical power. For 50 years, TVA had little reason to give heed to its critics. Anyone who opposed the agency—even overwhelming projects such as the construction of 17 nuclear power plants—was an enemy of the people. Then in 1979 came the Three-Mile Island disaster. Big Brother and Mother Nature, it became clear, were not always playing on the same team.

Over the past 15 years—particularly since TVA’s experiments with nuclear power left the agency $27 billion in debt—critics of the Tennessee Valley Authority have become more vocal. With decentralization all the rage in Washington, some congressmen are actively attempting to privatize the sprawling agency. More and more, the very future of TVA seems uncertain. It faces animosity, suspicion and distrust. Last spring, for the first time in its history, TVA saw the need to run TV ads.

One of those ads, for which TVA paid more than $3.2 million, showed an obese man pedaling hard on a stationary bicycle while the lights in his house flickered on and off. “The only way to get cheaper power than TVA,” the voiceover intoned, “is to produce it yourself.” Some consumers—and, more important, some members of Congress—are not so sure anymore.

In Congress the assault on TVA is being led by Wisconsin Republican Scott Klug. The new Congress had barely convened when, on Jan. 4, Klug introduced legislation to privatize TVA. He wrote to his fellow members of Congress, describing TVA as “bloated beyond the scope of its mission.” Among his revelations was the fact that public funds were being used for “such things as boat landings and a resort area called Land Between the Lakes in the Tennessee Valley Authority’s region.”

Klug promised that a privatized TVA would “in the long run” save taxpayers $770 million. In a year when all of Washington was talking about “downsizing” government, he accused TVA of duplicating services already provided by the Army Corps of Engineers, the Fish and Wildlife Service, and the U.S. Forest Service. Taking the side of the environmentalists, Klug argued that the TVA system “reduces the incentives to conserve energy and as a result does not encourage conservation of the region’s natural resources.”

But a funny—and familiar—thing happened to Klug’s bill as it worked its way toward passage. Southern members of Congress, including newly elected Republicans, rallied. Led by the dean of Tennessee Republicans, Jimmy Quillen, Tennessee’s entire congressional delegation—Republican and Democrat—came out in support of TVA. On July 12 Klug’s amendment was defeated, 284-144.

Not surprisingly, TVA’s most vocal defender was Fifth District Congressman Bob Clement, who had served as TVA chairman in the late ’70s. Clement called Klug’s amendment “an ill-advised, uncompassionate course of action” that would “reduce economic growth, cause environmental degradation, devastate the families of the 1,600 employees whose jobs will be eliminated, and raise more questions than it answers.”

On the floor of the House, Clement recounted the story of the old farmer who stood up in church one morning to give a testimonial: “The greatest thing on this earth is to have the love of God in your heart,” the old farmer said. “And the next greatest thing is to have electricity in your house.”

Clement had struck the sentimental chord that Klug had not understood. For many Southerners, faith in TVA is a matter of the heart rather than the head. Klug has promised to continue in his crusade for a privatized TVA, and he has the support of House Speaker Newt Gingrich, but he might do well to remember the story of Clement’s dirt-road farmer. As Larry Stein, chairman of TVA’s new Center for Rural Policy, explains, “It’s safe to be against some of the particulars of many of [TVA’s] programs. But it’s deadly for a politician—of any party—to be against them in concept.”

Over the past 20 years, TVA’s management record has been anything but sparkling, and its power rates no longer seem as cheap as they once did. Under its charter, TVA is required to set rates high enough to produce revenues equal to expenses. Last year, TVA made $5.4 billion, which exceeded its expenses by $151 million. But almost $400 million of those “revenues” existed only on paper, including items such as the depreciation on nuclear power facilities in Watts Bar, Tenn., and Browns Ferry, Ala. The agency must also write off another $6.2 billion on three nuclear plants upon which work has been effectively terminated. An August 1995 report from the U.S. Government Accounting Office asserted that TVA’s rates, “while low, are not the lowest compared to neighboring utilities.”

The GAO report concluded that TVA would need to increase its rates 9 to 12 percent and that “resolving TVA’s financial problems will be costly and require painful decisions.” The report also concluded that TVA is facing at least a 10 percent annual increase in expenses. But increased rates will, very likely, drive customers to the competition. In order simply to tread water, TVA will eventually have to increase the utility rates of its remaining customers.

None of this is news to the TVA’s three-member board of directors, which currently includes Clinton appointees Craven Crowell and Johnny Hayes and Bush appointee William Kennoy. Crowell’s predecessor as TVA chairman was Marvin Runyon, who now serves as U.S. Postmaster General. Runyon, a notorious budget cruncher, cut the TVA work force in half, from 35,000 to 16,500, and refinanced many of TVA’s debts to reduce the agency’s interest payments. Now, however, the debts are starting to rise again.

Technically, TVA receives no federal funds for the operation of its power plants. Its power service is supposed to support itself from fees charged to consumers, about $37 million per year. Nevertheless, TVA’s power program has an advantage over its competition, since it is the only utility company in the nation that is exempt from local, state and federal taxes. TVA is required to return 5 percent of its revenue to governments in its service area, but other utilities may pay taxes amounting to as much as 15 percent.

When Crowell, former chief of staff for U.S. Sen. Jim Sasser, was appointed to the TVA Board in 1993, he attempted to salvage the agency’s reputation by halting construction on three nuclear plants and by instituting energy conservation programs. Nevertheless, TVA customers were turning to other energy providers. The agency’s image was on a downward slide.

The situation only got worse when The Metro Pulse, a Knoxville newsweekly, reported last summer that Crowell had allegedly attempted to cut an under-the-table deal to convince the Bristol (Va.) Utilities Board not to take its business to a less expensive supplier. According to Bristol Utilities Board chairman Tom Adams, The Metro Pulse said, Crowell had donated $5.5 million in federal funds to the City of Bristol. Of those monies, Adams told the , $3.5 million went to help build a landfill, while $2 million went into other economic-development projects. TVA also allegedly gave the city two tracts. One was to be used as an industrial park; the other was to become a golf course.

TVA Public Relations Director John Moulton denies any wrongdoing on the part of the agency. TVA, Moulton says without hesitation, has frequently offered financial assistance to its customers. The money to Bristol, he insists, was intended for the municipality’s overall economic development.

“We don’t see any impropriety at all,” Moulton insists. “It was a matter of negotiating with Bristol and telling them why TVA is the supplier of choice and showing them what else TVA offers. TVA is more than a utility. We don’t see that trying to keep Bristol as a customer is anything to hide.”

Crowell has stated publicly that, in the marketplace, TVA will inevitably have to cope with competition from other utilities. In a speech to the American Public Power Association in February, he announced that, in order to tackle that almost certain competition, TVA would seek permission from Congress to do business beyond the “fence” that now restricts its operations to a seven-state Southern region.

Such a move would be a mixed blessing for TVA. Some critics argue that, if TVA were set free to face true competition, the results would be the same as if the agency had been privatized. Because TVA is a public agency, it now enjoys exemptions from some restrictions that govern other power suppliers. If the “fence” were removed, some observers say, the exemptions might be removed as well.

Already, TVA’s problems have a lot in common with the problems that plague private corporations in an age of advancing competition and changing technology. It may have to cope with those challenges in the same way a private business would cope with them—by spending money.

For example, TVA estimates that it now needs to produce an additional 6,200 megawatts of power to serve its customers. As a cost-effective means of obtaining the power, TVA’s directors made plans to convert a dormant nuclear facility into a coal- or gas-fueled plant. They hoped to finance the project by working in partnership with a major petrochemical company. When no partner came forward, however, Crowell announced that TVA would go it alone. He would not estimate what the project would cost.

Crowell, Kennoy and Hayes, like just about everybody else associated with TVA, clearly realize that the agency is faced with serious problems. For the last several months, TVA staffers have been trouping around Alabama, Tennessee, Kentucky and Mississippi, holding a series of public meetings to discuss “Energy Vision 2020,” a proposed 25-year plan to help the agency increase its energy production. The meetings, however, seem to be only ostensibly about “Energy Vision 2020.” The real agenda, apparently, is the fate of TVA itself.

A Sept. 19 public hearing in Nashville drew nearly 100 people, some of whom suggested a variety of solutions to the agency’s ills. Public relations executive John Van Mol, speaking on behalf of the Tennessee Valley Industrial Committee, which represents the 32 largest industries in the Tennessee Valley, urged TVA not to raise its rates. The key factor in keeping his clients’ loyalty, Van Mol said, would be “the price we have to pay for electricity.”

Meanwhile, Ed Brooks, representing the Tennessee Southern Railroad, cautioned TVA officials not to think too far ahead. “We have a power crisis now, not in the future,” said Brooks. To prevent losing industrial customers, he urged TVA to convert some of its nuclear plants to coal fire plants.

The crowd at the public hearing was skeptical about the report, skeptical about TVA’s optimistic projections, and scornful of the agency’s disastrous history with nuclear power. Some audience members called for an end to nuclear power—period.

Equally controversial, however, is a project that, on the surface, seems benign and well-intentioned: Last fall, Crowell announced plans for the Center for Rural Studies. Established with grants of $300,000 each from TVA and the Electric Power Research Institute, the center’s stated purpose is “to fund studies and programs relating to issues and problems of rural communities and to benefit rural inhabitants of the Tennessee Valley Region.” Already, adverse publicity has forced Crowell to restructure his plans for the Center.

Larry Stein, who, like Crowell, is an alumnus of the Sasser staff, serves as chairman of the Center, which is headquartered in Nashville. He describes the Center as a “think-and-do tank” that will get TVA back on track toward its original goal of promoting economic opportunity in rural areas.

Stein has developed a five-year plan for the new center. One of his first proposed projects is a joint effort with the National Rural Electric Cooperative Association. Working together with the association, TVA will study how co-ops can use new telecommunications services to their benefit, ultimately bringing rural America and its farming communities onto the Internet. The plan is not so farfetched as it sounds. Agriculture is the major industry in only six counties in the entire TVA system, but a great many small farms are scattered throughout the region. Stein maintains that access to the Internet, with its crop reports and price information, could be a major boost to agricultural efficiency. The Center even plans to publish a book entitled The Farmer’s Guide to the Internet.

Other potential projects include water and wastewater treatment in rural areas, a study of employer-employee relations in rural areas, and an intense study of the social and economic makeup of 13 Southern states. According to Stein, the Center will attempt to short-circuit the potentially devastating effect that global agreements such as NAFTA and GATT may have on the many small Tennessee Valley communities dominated by a single business or industry. “What happens when the businesses go south of the border or to Asia because the wages are lower there? What happens to these towns that have depended upon the industries?” Stein asks. “We hope to be able to come up with strategies that not only keep the companies in town, but help the towns survive.”

The Center for Rural Studies is likely to make its greatest impact by simply collecting such data. Congress is now in the process of saddling the states with the decision-making responsibility for what once were a number of federal programs, including welfare. When states receive welfare bloc grants, however, they will also receive the responsibility for making sure the needy are accurately counted. According to Stein, the Center hopes to provide each state with raw data necessary for managing the programs.

When plans for the Center for Rural Studies were announced, the project was greeted with almost universal favor. Even some skeptics conceded that it looked like TVA was attempting to get back to its original mission. Then details about the establishment of the Center began to emerge.

While TVA and the Electric Power Research Institute provided start-up money for the Center, its operating funds will come from a $30 million settlement TVA received from Gulf Oil Co. in a 1984 uranium price-fixing case. The Center is operated under the terms of a trust agreement with TVA.

However, the agreement also allows TVA’s three board members to name themselves to the Center’s management committee. The board members exercised that option and named Crowell chairman of the committee. That’s where the Center’s PR problems began. As it turned out, the trust agreement provided the Center’s chairman an unlimited term of office. Thus, Crowell could have remained in control of the Center’s $30 million endowment, even after his term as TVA chairman expires in 2002.

Learning of Crowell’s double appointment, The Metro Pulse accused him of creating a “fiefdom.” Meanwhile, other newspapers were speculating that the Center might become a “political sanctuary” for former Sasser aides. The fanfare over the establishment of the Center was being drowned out by criticism and hints of scandal.

Crowell and Stein vehemently denied the accusations and pointed out that the Center would operate under the strict scrutiny of its trustee, Union Planters National Bank, and would be under the oversight of the IRS. Nevertheless, in July of this year, Crowell agreed to amend the Center’s trust agreement with TVA. Now his terms as chairman of the Center for Rural Studies and chairman of TVA are scheduled to end at the same time.

In the wake of such criticisms, TVA is faced with the challenge of surviving in a world where its name is no longer greeted with sighs of unquestioning gratitude, a world where environmental concerns, advancing technology and distrust of big government do not make life easy for a sprawling federal agency. Some TVA customers, once fiercely loyal, are now investigating other power sources.

When Nashville Electric Service’s new president, Matthew Cordaro, arrived in town three years ago, he came directly from New York. Cordaro actively cooperated with TVA on Energy Vision 2020 and even chaired a subcommittee for the Tennessee Valley Public Power Association’s formal review of the plan. Nevertheless, he arrived in Nashville unencumbered by a legacy of growing up in the Tennessee Valley and a heritage of viewing TVA as the region’s messiah and redeemer. Cordaro, hired to make money for NES, began looking around, seeking out the best power bargain for his customers.

“I’ve been concerned about the future of TVA since the first day I got here from New York,” Cordaro says. “I’ve been in this industry for 30 years, and I’m very aware of the warning signs that you have to act on to prepare yourself against problems in the future.”

With deregulation and competition in the air, Cordaro sees TVA making an honest attempt to “be competitive and keep rates low.” But he also maintains, as do many other observers, that the agency’s reputation and finances have been damaged by its investment in nuclear power. “At some point there’s going to have to be some recovery of the money invested in [nuclear power], and that could significantly affect rates,” Cordaro says. “I have to look out for NES, and that means being able to look elsewhere for power, if necessary.”

Cordaro acknowledges that Crowell and his fellow board members have made strides toward modernizing TVA, but he also agrees with critics of the agency who argue that its status as a “government-run corporation” has insulated it against the realities that private industries routinely face. In an age when TVA will have to compete in the open market, those are realities the agency will inevitably have to face.

“I think it is true that TVA was lulled into a false sense of security and that that security influenced some of the decisions that were made,” Cordaro says. “For so long they were able to escape the punitive results that take place in a private environment.”

In the last reel of the movie Wild River, the mountain matriarch is forcibly removed from her land, her home is burned, and her land is flooded. As consolation, she is moved to a modern new home that overlooks the “new” river. Within a few days she is dead. Melodrama at its best. TVA might be bringing light and heat and progress to the valley, director Elia Kazan seemed to be saying in 1960, but it will exact its price too.