TVA budgets, fixes, and selling securities


Knoxville News points to a 2003 report on options to fix the leaks:

In November 2003, a leak along the bottom of the dike forced TVA to cease depositing fly ash into the pond’s dredge cells.

TVA considered at least eight options to address the leak, according to a Dec. 22, 2003, agency update. Three of the options would have provided a “global fix” to the problem, but high costs were cited as liabilities to pursuing them.

The most expensive option – converting to a dry fly ash collection system – would have cost an estimated $25 million. That’s far less than the $37 million spent to clean up a 2005 Pennsylvania fly ash spill one-tenth the size of the Kingston spill.

Two other proposed global fixes were to construct a synthetic liner for the pond for $5 million and building a cutoff wall around the perimeter of the dredge pond for $2.6 million. In addition to high cost, TVA noted that using a synthetic liner would set a precedent for all other dredge cells.

TVA opted to repair the dike and install “underdrains,” which in a summary of the inspection report the agency likens to residential french drains, “to relieve water pressure.”

Repairs were completed in 2005, but the dike sprang another leak the next year.

Summary of 2007 budget items:

TVA is the largest single producer of power in the country.Their revenue in 07 was $9 Billion, they showed a $385 Million (non taxable) profit after paying $48 Million in bonuses.

They make a total of about $480 Million a year in “tax equivalent” payments to municipalities where they operate. I believe Roane County gets about $1 Million per year from them. That’s been a great deal for them…til now.

The reason that these fixes were never done was because TVA sells securities….the fixes would have cost dollars that would have affected their security sales by moving them closer to true non profit status. Many people do not understand that TVA is a hybrid. It is a gov’t agency but only sort of…..

The fly ash clean up that they just settled cost them $35 Million for a spill 1/10th the size of this one. After paying the piper here they will most likely have to some serious restructuring.

(bolding mine)

Unintended consequences is real, but rarely the complete story. At what point does one intention become unintentional somewhere else. My assumption is that not setting a precedent is a high level decision. The current CEO has a remuneration package of $3.27 million, being a competitive amount for large utilities. And who is to foot the bill for the possible unintended $350 million cleanup? And where else are there problems?