Tennessee Valley Authority Privatization Act

[Jake]

Nay on both

They are quite broad. I may try working up an amendment offering up 51% of the TVA to an IPO.

How is the Senate reviewing offers and then passing legislation to finalize a deal vague? At all?

[CheeseWhiz]

Aye on Both.

[Jake]

Aye on both

[minionofmidas]

4-2-2 so far.

[Platypus]

Aye on both

[MasterJedi]

Both of these amendments have enough votes to pass.

[Sam Spade]

I have been asked to interject myself into this conversation to answer Al's questions.

Expect answers by tomorrow.

[Filuwaúrdjan]

Hey, you aren't a Senator

...but by this point answers would be fine from anyone...

[DanielX]

Aye on Both

[Sam Spade]

Here are the best answers I can give with what I have found.

1. What is the current value of the TVA? An estimate will do.

Very hard to estimate cost of power plants for some reason.  I haven't found an applicable site.  There are 11 fossil plants, 29 hydroelectric plants and 3 nuclear reactors in their arsenal, so to speak.

I am going to put a rough guesstimate at somewhere in between $50 and $100 billion for the whole operation.

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The TVA at this point is self-financing.  Roughly $7 billion dollars is pumped in each year from the federal government, and the TVA returns $8 billion dollars in revenue.  Last year, the revenues from the TVA to the feds were roughly $800 million.

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Electricity prices are competitive and (as far as I have been able to research) below national average.

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There are about 5-6 energy companies that would be interested in buying the TVA, were it to privatize.  They would be on sound economic footing, frankly, as they already are on sound economic footing.

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Unknown.  The government (imo) has run the Tennessee Valley Authority well, but there is nothing that says that any one of the private companies interested in TVA would not do likewise.  These are large corporations, with good safety records and many years in the field.  They are also all familiar with the running of both fossil fuel, hydroelectric, and nuclear power sources.

I cannot say anything in terms of whether electricity prices would rise or fall.  Markets dictate that, as well as the interests of the private corporations, which is unknown at this time.

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As I stated earlier, it will be a one-time savings of somewhere between $50 billion to $100 billion for FY 2007.  The TVA does currently make money for the feds, last year it was around $800 million.  This figure may rise and may fall.

Hope this helps.

[Colin]

Well if this is making $800 million dollars for the Federal Government every year I see now need as of now to privatize it unless someone can give me a convincing argument otherwise.

[Emsworth]

Well if this is making $800 million dollars for the Federal Government every year I see now need as of now to privatize it unless someone can give me a convincing argument otherwise.

Instead of making $800 million next year by keeping the TVA, we can make up to $100 billion by selling it. That would wipe out a quarter of the federal budget deficit, and free up money that can be used for a variety of other programs.

Furthermore, privatization of other agencies like the TVA has been performed before, and with great success (as Supersoulty previously indicated).

Finally, in general, private individuals should be running businesses, not the government.

[Jake]

Well if this is making $800 million dollars for the Federal Government every year I see now need as of now to privatize it unless someone can give me a convincing argument otherwise.

Well, we'd need to keep it producing at its current level for 1250 years to make an equivalent amount.

[MasterJedi]

Well if this is making $800 million dollars for the Federal Government every year I see now need as of now to privatize it unless someone can give me a convincing argument otherwise.

Well, we'd need to keep it producing at its current level for 1250 years to make an equivalent amount.

What Jake said here is one major reason to sell.

[Sam Spade]

Well if this is making $800 million dollars for the Federal Government every year I see now need as of now to privatize it unless someone can give me a convincing argument otherwise.

Well, we'd need to keep it producing at its current level for 1250 years to make an equivalent amount.

What Jake said here is one major reason to sell.

Actually it is 125 years, not 1250. 

And there's no guarantee that it would sell for $100 billion.  The $50 billion to $100 billion is a range figure.  Market forces will determine what the real amount is.

[MasterJedi]

Unless anybody says anything in about 24 hours I'll probably open up the final vote on this.

[CheeseWhiz]

Unless anybody says anything in about 24 hours I'll probably open up the final vote on this.

Before you do, could someone show me what the final version looks like?  Thanks.

[Ebowed]

Tennessee Valley Authority Privatization Act

1. The Tennessee Valley Authority shall be sold to private persons or corporations.
2. The Secretary of the Treasury is hereby authorized to make necessary rules and regulations relating to the process of privatization.
3. The privatization of the Tennessee Valley Authority shall be completed before the year 2007.
4. The government of Atlasia shall look for a proper buyer or buyers to sell the TVA to.
5. The Senate shall review all offers for purchase and must pass legislation authorizing the sale before the sale is finalized.

[CheeseWhiz]

Thanks Ebowed

[Democratic Hawk]

While I probably would have favoured partial privatization since questions have been raised regarding it's profitability and the amount of revenue raised from its sale, would some profit sharing agreement as part of the contract of sale not be feasible?

For example, by stipulating a profit sharing agreement over perhaps the first 50 years could raise a little revenue

I thought perhaps 10 years @ 25%, reducing by 5% every 10 years thereafter.

Assuming annual profits of $800m, this would work out as follows:

10 years @ 25% would raise $200m pa (a total of $2bn)
10 years @ 20% would raise $160m pa (a total of $1.6bn)
10 years @ 15% would raise $120m pa (a total of $1.2bn)
10 years @ 10% would raise $80m pa (a total of $800m)
10 years @ 5% would raise $40m pa (a total of $400m)

Total revenues raised over 50 years would therefore be $6bn. Of course, remaining profits will remain subject to any applicable federal taxes

Also, I think some stipulation should be made protecting employees' exsiting contracts

Perhaps, should the Bill pass, the Secretary of the Treasury could incorporate this into any necessary rules and regulations regarding the terms of the privatization. After all, given the inevitable rise in share prices once privatised, shareholders will be getting a bargain

Dave 'Hawk'

[Filuwaúrdjan]

No energy company would agree to that sort of thing; running the TVA really wouldn't be worth their while if that had to agree to profit sharing.

[Democratic Hawk]

No energy company would agree to that sort of thing; running the TVA really wouldn't be worth their while if that had to agree to profit sharing.

It was just a thought considering that I expect them to do very well out of it

Dave

[Filuwaúrdjan]

It was just a thought considering that I expect them to do very well out of it

Ah, but they wouldn't do very well out of it if they had to agree to profit sharing

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O.K... a question to Senators only (let's not have anyone else do your job for you...)

Can any of you come up with a reason to sell the TVA that doesn't boil down to:

a) "the Government shouldn't be running this sort of thing anyway"
b) "we can get a one off payment that we aren't certain of the value of and that would make only a small dent in the deficit" (and, without putting too fine a point on it, that anyone thinks that this is a good reason to sell the TVA is a genuinely damning indictment of the [lack of] knowledge about public finances here).

Because so far I've yet to see one

[Democratic Hawk]

It was just a thought considering that I expect them to do very well out of it

Ah, but they wouldn't do very well out of it if they had to agree to profit sharing

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O.K... a question to Senators only (let's not have anyone else do your job for you...)

I guess in effect my suggestion (since that's all I can do for now ), is effectively the same as selling off 75% and retaining 25%

Dave

[CheeseWhiz]

O.K... a question to Senators only (let's not have anyone else do your job for you...)

How come you keep trying to exclude citizens from these debates?  I really don't see how it's bad at all for the average Atlasian to participate and answer these questions, we are elected to serve them after all.  Well, unless you're trying to show how much those who support this don't know, (which is looking more and more like what you're doing,) and in that case, I think it's pretty low.  If that's not what you're doing, I apologize, but it does seem like that.

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Okay, I have to ask, why are these bad points?  Sure, the first is ideologic, but isn't it at least partially ideologic for you to want to keep TVA?

The second is valid because we need to get rid of the deficit, it's important, and finally we have something most people can agree on privatizing, and if it goes well will wipe out a quarter of our deficit, and even if it doesn't go as well as we like, the little things add up.  Not only libertarians support this, but people like Jake, MasterJedi and, I think, Supersoulty, so why exactly do you oppose it?