Not-so-new frontiers of privatization

Half a century ago, selling the Tennessee Valley Authority was regarded as a free-marketeers’ politically impossible dream. Now guess who’s for it — and who’s against. (Hint on the latter: R-Tenn.) [Knoxville News via Future of Capitalism]

P.S. More on this welcome Obama initiative from Chris Edwards: “former Cato chairman Bill Niskanen was barred by Congress for even looking into TVA reform when he was on President Reagan’s CEA.” So progress marches on. And: Fortune 1933 article on TVA.


  • I used to live in TVA land. There is no doubt that the utility enjoys tremendous popular support in the areas it serves. Most people believe that their electric rates will rise if TVA is privatized, although this is far from certain. It is true that electricity rates in TVA states( primarily Tennessee, Alabama, Mississippi and Kentucky) are somewhat on the low side (around 7-9 cents/kwh, US average about 9.6 cents/kwh), but many states are lower, especially if they produce energy. TVA pays market prices for the oil, coal, gas, uranium and equipment it buys, so there’s no saving there. But Senator Alexander is being a bit coy by saying there is no taxpayer liability for TVA debts. It is true that there is no statutory provision for such liability, but it is widely assumed that the Federal government would never allow TVA to default on debt, since it is 100% government-owned.

    Anyway, I wonder if this move by the Obama administration isn’t a form of payback to a region that mostly votes Red. Since everything Obama does seems to politicized, it would make sense. It’s the Chicago way!

    One anecdote. Back in the 1950’s, there was a television program called General Electric Theater, hosted by Ronald Reagan. GE fired Reagan in 1962 after he called TVA a problem of “big government.” It seems GE was a major equipment vendor to TVA.