NCPA - National Center for Policy Analysis


May 21, 1997

Politics, rather than economic rationale, accounts for the Tennessee Valley Authority's lingering presence in power generation, critics claim. The Depression-era relic is a burden on American taxpayers and even the people it was created to serve.


  • Americans subsidize TVA to the tune of $4 billion a year -- even though only eight million live inside the 80,000 square-mile area the monopoly serves.
  • TVA pays no federal or state income or property taxes -- although it is required to pay 5 percent of revenues to Tennessee and six surrounding states.
  • Surprisingly, Nashville residents could purchase electricity from nearby Kentucky Utilities Corp. for about one cent per kilowatt hour less than the nickel an hour they must now pay for TVA power.
  • They are forbidden the advantage, however, because current law prevents power from being brought into TVA's market territory.

One recent study put the value of all the indirect subsidies to TVA at $3.7 billion for 1993. Without these benefits, the monopoly would have to charge its customers 3 cents more per kilowatt-hour.

That would make its juice almost as expensive as in some of the high-cost northeastern states.

Source: Bruce Upbin, "The Tennessee Valley Anachronism," Forbes, May 19, 1997.

Source: Editorial, "AIDS: Fighting the Last War?" Investor's Business Daily, May 21, 1997.


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