I would like to recognize Austin Carroll, the Manager of the Hopkinsville Electric System, who due to time constraints of the Committee will only be allowed to submit his testimony for the record. Austin, I look forward to reviewing your testimony and appreciate your efforts.
I have introduced S. 1323, the TVA Customer Protection Act to shine the light on the Tennessee Valley Authority. We all grew up thinking if you had TVA power, you were lucky. Unfortunately, the nearly 212,000 Kentucky families in 30 counties who receive power from TVA are finding out that's not the case. Despite operating as a monopoly, TVA has racked up $26 billion in debt and provides power at rates higher than that of regulated utilities in Kentucky.
TVA would like Kentuckians to believe that membership has its privileges. However, over the next five years, TVA's Kentucky ratepayers will pay a whopping $250 million more for their power than if they were served by Kentucky Utilities, which is federally regulated.
As you can see from the bar chart, Kentuckians captured inside the TVA fence are paying electricity rates which are higher than customers of Kentucky's regulated utilities. In 1997, TVA raised rates by seven percent, which sharply contrasts with power rates of regulated utilities which have decreased by an average of eight percent.
In short TVA's rates are high and going higher. and its competitors are low and aging lower.
As a self-regulated monopoly, TVA has not been accountable to its captive ratepayers. As a result, TVA has accumulated a mountain of debt that has forced TVA rates upward. TVA should be accountable to the people they serve, and my bill will provide the relief to those forced to pay TVA's uncompetitive rates.
The bill requires TVA to fully disclose and justify all rates, charges and costs as "just and necessary," as required under the Federal Power Act -- just as Kentucky's other regulated utilities must do.
It would also make TVA a "public utility" subject to the authority of the Federal Energy Regulatory Commission. This would result in TVA customers enjoying the same independent regulatory protections as customers of other large utilities. For instance, TVA customers could challenge rates, rather than be forced to accept rates set by the TVA board.
Finally, it would help customers hold the line on new deficit spending to ensure that TVA justifies all new construction of costly new generating facilities. This is not a cap on generation, but again a requirement that TVA demonstrate that its customers have a real need for this added capacity and that it is the most affordable solution for the valley.
Over the past several years, the General Accounting Office undertook two studies on TVA's desperate financial situation. In 1995, GAO concluded that TVA's financial condition "threatens its long-term viability and places the federal government at risk."
In 1997, GAO found that TVA's fiscal situation poses a threat to its future competitiveness as well as a risk to taxpayers.
Only through years of unaccountability and fiscal irresponsibility could a monopoly power, with total authority to set rates, ever have reached this level of debt.
We need to shine the light on TVA's power rates. My legislation will do that by providing the ratepayer with a clear picture of TVA's rates and for the first time make the agency accountable for its charges and costs.
I don't pretend to know all the answers as to why TVA is an inefficient and costly power provider. However, it's painfully clear that in Kentucky, TVA's customers are getting a raw deal from this New Deal program. I hope that this legislation will give customers the tools they need to get a better deal from TVA.