Tennessee Valley Authority

400 West Summit Hill Drive
Knoxville, Tennessee 37902-1499
U.S.A.
Telephone: (865) 632-2101
Web site: http://www.tva.gov

Self-Financed Government Agency
Established: 1933
Employees: 13,000 (2002 est.)Sales: $6.99 billion (2001)
Stock Exchanges: New York
Ticker Symbol: TVC
NAIC: 221111 Hydroelectric Power Generation; 221112 Fossil Fuel Electric Power Generation; 221113 Nuclear Electric Power Generation; 221119 Other Electric Power Generation; 221121 Electric Bulk Power Transmission and Control; 221122 Electric Power Distribution

Established by the U.S. Congress in 1933 as a critical component of President Franklin Roosevelt’s Depression-era “New Deal,” the Tennessee Valley Authority (TVA) was initially created primarily to manage the Tennessee River’s navigation and flood control problems, to encourage reforestation and proper land use, and to foster agricultural and industrial development. In time, the TVA grew to become the nation’s largest public power provider serving more than 8 million customers over an 80,000-square mile region covering the Tennessee Valley. This area includes most of Tennessee and portions of Mississippi, Kentucky, Alabama, Georgia, North Carolina, and Virginia. Following decades of operations as a massive bureaucracy, the TVA has dramatically streamlined itself in recent years in order to boost its competitiveness in preparation for the anticipated onset of deregulation.

The Genesis of the TVA in the Early Twentieth Century

The federal government purchased a site in 1916 on the Tennessee River in Muscle Shoals, Alabama, where a sudden drop in river depth resulted in strong rapids that inhibited ships from progressing further upstream. Dam construction began in this location to produce power for the manufacturing of explosives needed during World War I, but the war had concluded before this new project was operational. During the 1920s, Congress considered whether the property should remain a public site or be sold to the private sector.

Nebraska Senator George W. Norris fought for the property to remain under public control. He had little support from his Congressional colleagues, until the advent of the Depression, when government economic assistance became more widely accepted. President Franklin Roosevelt supported Senator Norris’ plan, and envisioned it as one way to help achieve the success of his “New Deal,” which aimed to save the U.S. economy from the Depression. With a lack of national investment in the Tennessee Valley region, President Roosevelt requested that Congress create “a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.” In agreement with the President’s goal, Congress passed the Tennessee Valley Authority Act on May 18, 1933. Through this legislation, which far exceeded Norris’ initial plan, TVA was established as a federal agency charged with improving the navigation and flood control of the Tennessee River, encouraging reforestation and proper land use in the area, leading regional agricultural and industrial development, and operating national defense-related properties in Muscle Shoals, Alabama.

By June 1934, 9,173 people were already employed by the TVA, and 16 dams were built by the agency between 1933 and 1944. Before the TVA, dams were engineered exclusively for either electricity generation or flood control. The agency was able to address both needs within a single dam, which soon became the global standard.

At the time, the Tennessee Valley included some of the most under-served areas of the South. While 90 percent of Americans in urban areas had electricity by the 1930’s, merely 10 percent of rural Americans enjoyed the same benefit. Most utility companies avoided powering rural areas due to the significant expense of setting up electric lines over such expansive areas, and because of a concern that rural Americans would not be able to afford electricity. This inequity between urban and rural communities in the United States led to President Roosevelt’s resolve that the government must become involved.

Private power companies took issue with the cheaper energy the federally-subsidized TVA provided. President Roosevelt saw the TVA as a benchmark by which the rates of private utility companies could be evaluated. Seen as a threat to the private sector, the TVA was sued by many power companies during the 1930s. One such suit claimed that the government had overstepped its Constitutional powers by creating an electric utility corporation. Testifying before Congress regarding the TVA in 1935, John D. Battle, Executive Secretary of the National Coal Association, stated that, “we are willing to be put out of business if it can be done in a plain straightforward business-like manner, but we do object to our government putting us out of business.” The TVA was victorious in a case ruled on by the Supreme Court in February 1936, and in 1939, the TVA Act was upheld by the Supreme Court as constitutional.

Beyond the electricity generated by newly built dams, the founding of the TVA soon resulted in a variety of other important benefits to the Tennessee Valley. The agency provided farmers with advice to boost crop yields, aided in reforestation and forest fire control, and developed fertilizers. Rather than carrying out a predetermined federal master plan, the TVA aimed to develop the region by working with community members and their state and local agencies.

From its inception until 1938, the three members of the TVA’s board jockeyed for control of the overall vision for the Authority. President Roosevelt removed Arthur E. Morgan as the TVA’s chairman in March 1938 due to internal organizational conflicts, obstruction of the work of the agency, and unsubstantiated allegations Chairman Morgan made against fellow directors.

TVA in the 1940s and 1950s: Becoming the Top United States Electric Utility

In the 1940s during World War II, the TVA conducted a remarkable hydropower construction program, one of the largest ever in the United States, to provide electricity for aluminum plants that supplied the much-needed metal to manufacturers of bombs and planes. The TVA had finished a 650-mile navigation channel as long as the Tennessee River by the conclusion of World War II. It had also become the largest supplier of electricity in the country, although demand still exceeded the capacity of its hydroelectric dams.

During the 1950s, unable to secure federal funding of coal-fired plant construction, the TVA lobbied Congress for the ability to issue bonds. President Dwight Eisenhower was not enamored of the TVA, however, citing the agency in 1953 as an example of “creeping socialism.” Nonetheless, in 1959, Congress passed legislation which made the TVA a self-financing operation, provided that the TVA would restrict its operations to the existing Tennessee Valley region. More than a dozen public operations similar to the TVA had been created around the world since its creation, with thousands of international visitors having visited the Tennessee Valley to learn about the agency’s integrated regional development.

Strip mining and coal burning increased significantly in the 1950s as the TVA worked to meet energy demand—actions that a later chairman of the TVA, S. David Freeman (1978-1981), cited in Environment in April 1985 as causing “environmental problems that spoiled land, degraded waters, and polluted air.” Chairman Freeman added that although the TVA’s dams protected against flooding, they also created lakes that in turn flooded farmland.

The Advent of the TVA’s Nuclear Power Program in the 1960s

In the early 1960’s, the TVA developed “Land Between the Lakes,” a 170,000-acre national park on a 40-mile strip of wooded land located between two reservoirs in western Kentucky and Tennessee. This outdoor education and recreation area attracts 2 million visitors annually.

The Tennessee Valley experienced strong economic growth throughout the 1960s, as farms and forests were in top condition and residents enjoyed some of the lowest electric rates in the nation. To address the continued growth in demand for economical power, the TVA designed a colossal plan in 1966 calling for the eventual construction of 17 nuclear power plants throughout the region.

Energy Crisis and Environmental Cleanup in the 1970s

The international oil embargo in 1973 dramatically altered the Tennessee Valley’s economy, along with that of the rest of the country. Fuel costs continued to rise for the remainder of the decade. In some regions of the Tennessee Valley, alternative energy sources were virtually eliminated over the years, and this became clear with the spiraling energy costs of the 1970s. Many environmentalists opposed the TVA’s coal and nuclear power programs, and environmental organizations initiated lawsuits against the TVA with a variety of allegations—including violations of the National Environmental Protection Act of 1969 and the Endangered Species Act of 1973. A serious fire at the Browns Ferry, Alabama nuclear plant in 1975 could have resulted in a catastrophe, but the situation was controlled before reaching that level. The TVA had become the worst United States sulfur dioxide polluter by 1977 (2 million tons emitted annually and one-tenth of U.S. emissions), putting it in violation of the Clean Air Act. In 1978, the TVA began a billion-dollar cleanup initiative to reduce sulfur dioxide emissions from its 12 coal-fired plants. Six years later, sulfur dioxide emissions were cut in half and all plants had become compliant with the Clean Air Act.

Company Perspectives:

In keeping with its mission of generating prosperity in the Tennessee Valley, TVA’s leadership standard is to deliver excellence in business performance and public service by supplying low-cost reliable power, supporting a thriving river system, and stimulating economic growth across a seven-state region of the southeastern United States.

A Move Toward Conservation in the Late 1970s and Early 1980s

By the end of the 1970s, the TVA’s new leadership headed by Chairman S. David Freeman began to steer the agency in a new direction with conservation programs, experiments in alternative energy sources like solar power, and strengthened relationships with the international community. The TVA started to focus on conservation rather than power-plant construction as a top priority for its customers—offering free audits and low-interest financing in order to foster the winterization of buildings to save energy. The agency’s investment in nuclear power was also reduced significantly. Soil erosion due to inferior farming techniques, a problem in the early years of the TVA, returned as a concern in the 1970s and 1980s, which led the TVA to offer technical advise on the problem once more. This work resulted in 1.2 million tons of topsoil saved each year. With the TVA’s tree planting projects, the valley reached a forestation level of 60 percent. The TVA’s renewed commitment to conservation was also exemplified in a 1983 board policy that halted construction of additional dams or structures along the Tennessee River, and ended the channeling of more streams in the Tennessee Valley.

Hard Times for the TVA’s Nuclear Program in the mid-1980s

By the early 1980s, Tennessee Valley electric rates were five times higher than a decade earlier. As was the case with other U.S. utilities, several nuclear plant construction projects were terminated due to lower energy demand and higher construction costs, with billions already spent on these sites. The TVA’s management of its nuclear power program came under serious attack in the mid-1980s. The agency had received 12 Nuclear Regulatory Commission fines since 1980, and was under Congressional investigation for alleged mismanagement and cover-ups. The TVA had to shut down its five functioning reactors in 1985, due to tough new federal nuclear regulations. The TVA’s plans to recover from these closings were in disarray, and responsibility for the nuclear power program had been shared across multiple divisions, making it difficult to proceed with an integrated plan. Eventually, the TVA obtained new consultants and staff with expertise in nuclear power. During 1988, almost one-third of the TVA’s 33,000 employee workforce was laid off and management salaries were frozen. By 1989, two nuclear reactors were operational. The massive borrowing practices of the TVA, keeping the agency on the verge of bankruptcy, led to $20 billion of nuclear debt. Congress placed a debt ceiling of $30 billion on the TVA.

1990s: The TVA’s Return to Nuclear Power

In an effort to return to a stronger position in the industry, the TVA’s Chairman Marvin Runyon focused the agency on cutting costs and boosting efficiency and productivity. Electric rates stabilized in the late 1980s, and this stability continued well into the 1990s. Much of the TVA’s lauded 1985 energy conservation program was scrapped, in favor of a renewed interest in nuclear power to meet anticipated growth in energy demand, much to former Chairman S. David Freeman’s dismay. By 1991, three inactive nuclear reactors went back on-line after years of inactivity.

In May 1992, the TVA purchased emissions allowances from Wisconsin Power and Light, considered one of the cleanest operations in the United States This type of transaction, enabling the TVA to emit 10,000 tons of sulfur dioxide, became permissible under the 1990 Clean Air Act and was cheaper than using alternative fuels. The TVA’s 1992 net income of $120 million had fallen significantly from the previous year’s total of $286 million. By 1993, having exceeded requirements of the Clean Air Act, the TVA earned its own emissions allowances for its use and sale.

The TVA continued to pursue adding additional nuclear power capacity in 1994, with three reactors operational at the time. Two reactors in Watts Bar, Tennessee remained under construction, originally budgeted at $625 million 22 years previously, with $7.7 billion spent as of 1994. In February 1995, the TVA announced plans to terminate its three remaining nuclear reactor construction projects, which would have required at least another $8.8 billion to complete, if not more. This decision brought an end to a 28-consecutive-year program of nuclear reactor construction. The TVA sought partners to help convert one of those sites into a gas-firing plant. One reactor at Watts Bar was still able to begin operations later that year, with commercial power generation starting the following year.

Key Dates:

1916:

The United States federal government purchases a Tennessee River site in Muscle Shoals, Alabama, for damn construction—to become part of the Tennessee Valley Authority (TVA).

1933:

The Tennessee Valley Authority Act passed by the U.S. Congress.

1939:

The TVA Act upheld by the U.S. Supreme Court as constitutional.

1959:

The U.S. Congress passes legislation making the TVA a self-financing agency.

1966:

The TVA develops a plan to create a system of nuclear power plants.

1975:

Fire at the TVA’s Browns Ferry, Alabama, nuclear power plant.

1978:

Billion-dollar cleanup effort by the TVA to reduce sulfur dioxide emissions from coal-fired plants.

1983:

The TVA board halts new construction of dams or structures along the Tennessee River.

1985:

Five functioning TVA nuclear reactors shut down due to regulatory concerns.

1995:

Termination of three remaining TVA nuclear reactor construction projects.

1999:

The U.S. Department of Energy announces plan to produce radioactive tritium gas at a TVA nuclear reactor for use in nuclear weapons. Congressional appropriations to the TVA’s non-power programs are eliminated.

2002:

The TVA board approves restarting Browns Ferry nuclear reactor.

The U.S. General Accounting Office questioned the TVA’s long-term sustainability in 1995, but with its recent change in direction, the TVA was optimistic about its prospects for achieving a more competitive position. As the $208 billion electric power industry moved towards deregulation as an inevitability, the TVA formed a Public Power Alliance with Municipal Electric Authority of Georgia, Old Dominion Electric Cooperative of Virginia, and the Municipal Energy Agency of Mississippi in order to serve as an effective lobbying entity and to share strategies and innovations with each other. A deregulated industry would create a free market environment where customers and distributors could openly select utilities regardless of their location in the country.

Regaining Competitive Position in the Late-1990s

During the 1990’s, the TVA significantly reduced its operating costs, cut its workforce by more than 50 percent, and boosted plant capacity, earning the company a third place ranking for lowest production costs by a major electric utility in 1997. Early that year, the TVA Chairman Craven Crowell offered, but soon retracted, a suggestion that Congress spin off the TVA’s non-power-related operations to other public agencies and eliminate the federal funding it received for those programs—enabling it to focus on the electric utility industry. The TVA had been receiving just over $100 million from Congress each year, which was less than 2 percent of the agency’s $5.7 billion budget. The TVA’s private utility competitors argued that the public agency’s indirect subsidies, mostly tax exemptions, totaled $1.2 billion annually—making it difficult for private utilities to compete. Southern lawmakers were shocked that such a proposal could be suggested by someone within the TVA, rather than by the agency’s opponents, as was usually the case. They worried that this situation would lead Congress to eventually sell off the TVA as a private utility, which might bankrupt the organization due to the agency’s $27 billion of debt.

In July 1997, the TVA settled a lawsuit with several private utilities that accused the TVA of selling electricity beyond its limited region mandated by Congress. As part of the settlement, the TVA promised to cooperate in future deregulation efforts by the electric industry. With especially high energy demands during the summer of 1997, the TVA found that purchased power was not as reliable as it needed. This led the TVA to plan on establishing firm contracts with others for power and exploring the possibility of purchasing other utility operations entirely to guarantee reliability.

The U.S. Department of Energy decided in 1999 it would eventually produce radioactive tritium gas at one of the TVA’s nuclear reactors for use in nuclear weapons—anticipated to begin during 2003. This would mark the first time a commercial U.S. nuclear reactor would be used for military purposes—a prospect that led critics of the decision to express grave concern about the blurring of the separation between civilian and military operations. The TVA switched to cleaner coal for its plants in June 1999, helping the agency adhere to environmental regulations. In September, the TVA announced it would not raise rates for the following year, and planned to keep rates stable for the following decade through increased productivity and controlled operating costs.

The Environmental Protection Agency (EPA) charged the TVA in November with violating pollution regulations of the Clean Air Act in seven coal-fired plants, with a cleanup that would cost upwards of $1 billion. The TVA challenged the EPA’s interpretation of the Clean Air Act, and a U.S. Court of Appeals ordered in 2002 that the two parties use a mediator to resolve the issue, though this approach failed which put the case back to the court. The TVA’s Congressional appropriations were terminated for fiscal year 1999, though the TVA was permitted to refinance some of its high interest debt, which will result in significant savings in the future. Despite the loss of Congressional appropriations, the TVA posted net income of $119.3 million in 1999.

In 2000, a new Public Power Institute was formed by the TVA, marking a return to its past conservation and energy development initiatives. The TVA began to explore means to produce electricity drawn from the sun, wind, and landfill gas sources, while charging customers a premium price for “green power.” A $3.4 million wind-powered generator construction project was announced in September 2000 for Knoxville, Tennessee, and demand for cleaner energy continued to grow. Five nuclear reactors were operational in 2000, although $10 billion of investment from terminated reactors had not yet been written off. Debt reduction was not progressing as rapidly as planned, but $1.7 billion had been cut since 1996’s debt cap of $27 billion.

Heading Towards Deregulation in the Twenty-First Century

The TVA’s board voted in May 2001 to invest in the upgrading of two nuclear power plants in order to meet growing demand for electricity and avoid relying on outside providers. Having been among the nation’s worst nuclear programs in the 1980’s, the TVA had made significant progress in the 1990s and, by 2001, was ranked in the top quartile in the United States Partnering with the British corporation Innogy PLC, the TVA also announced plans to construct a $25 million energy storage plant—the first of its kind in the United States—using regenerative fuel cell technology to store energy in bulk. In July 2001, President George W. Bush named TVA board member Glenn McCullough to replace outgoing Chairman Craven Crowell. Later in the year, Chairman McCullough voiced his support for an electric utility deregulation bill that would provide competition and choice throughout the TVA’s current region, and this bill was under consideration by Congress in 2002.

The TVA wrote off $3.4 billion in assets from unfinished nuclear reactors, resulting in a $3.3 billion deficit for fiscal year 2001. With a $7.1 billion budget adopted for fiscal year 2002, the TVA launched a $2.5 billion capital spending plan—its largest since the mid-1990s—focused on new transmission lines, pollution reduction from coal-fired plants, and increased productivity from current and future plants. At this point, residential customers’ rates had only been raised once since 1987. Chairman McCullough pledged to improve industrial rates, which had been kept at an average level over the years.

In April 2002, the TVA partnered with Southern Co. of Atlanta, Entergy of New Orleans, and Midwest Independent Transmission System Operator of Carmel, Indiana in an agreement to provide “seamless wholesale power trading” in the Southeast and Midwest, providing uniform access and more effective transmission of electricity. In May, the TVA’s board approved restarting the Browns Ferry nuclear reactor, the agency’s oldest, which was shut down in 1985 due to safety concerns and would cost an estimated $1.8 billion to restart. Repairs were slated to begin in 2003, with the reactor expected to restart in 2007. A 2002 U.S. General Accounting Office study of the TV A found that its customers rates were between 14 and 22 percent less than competitors, and that the agency functions with a smaller staff than other electric utilities.

The Tennessee Valley Authority has faced a variety of significant challenges and controversies over the course of its lengthy history. Although the TV A began as a dynamic new model for regional integrated resource development and ballooned into an immense bureaucratic agency with billions in debt that remain today, it has transformed itself in recent years into a much leaner operation that appears to be committed to debt reduction and is preparing for the arrival of deregulation.

Further Reading

Dumaine, Brian, “Nuclear Scandal Shakes the TVA,” Fortune, October 27, 1986, p. 40.

Freeman, S. David, “The Nine Lives of TVA,” Environment, April 1985, pp. 6-11.

Higgins, Benjamin, “The American Frontier and the TVA,” Society, March/April 1995, p. 34.

Hodge, Clarence Lewis, The Tennessee Valley Authority: A National Experiment in Regionalism, New York: Russell & Russell, 1968.

Martin, Roscoe C., TVA: The First Twenty Years, Knoxville: University of Alabama Press and University of Tennessee Press, 1956.

Moore, J. R., The Economic Impact of TVA, Knoxville: University of Tennessee Press, 1967.

Neuse, Steven M., “TVA at Age Fifty: Reflections and Retrospect,” Public Administration Review, November/December 1983, pp. 491-499.

Sheffield, Christopher, “TVA Looks to New Alliances, Both Foreign and Domestic,” Mississippi Business Journal, November 25, 1996, p. 18.

Upbin, Bruce, “The Tennessee Valley Anachronism,” Forbes, May 19, 1997, p. 52.

—Christopher W. Frerichs

TENNESSEE VALLEY AUTHORITY

The Tennessee River, the largest tributary to the Ohio River, drains approximately 41,000 square miles of the eastern United States. With its headwaters in southwestern Virginia, the river flows southwesterly through Knoxville, Tennessee, dipping into northeastern Alabama before turning westward across the full length of the state then northward through western Tennessee into western Kentucky where its meets the Ohio River. The watershed also includes parts of North Carolina, Georgia, and Mississippi.

At the beginning of the twentieth century, the Tennessee River area was one of the poorest in the nation. Floods regularly inundated much of the region in late winter and early spring, logging had stripped the hills of forests, and poor farming techniques led to exceptional topsoil erosion rates. Many rural settlements had no electricity. The population was steadily dwindling as people left seeking employment.

During World War I (1914–1918) the U.S. government built two nitrite plants and a hydroelectric dam on the Tennessee River at Muscle Shoals, Alabama for munitions production. Following the war, the project was largely neglected. Nebraska Senator George Norris lobbied extensively for government operation of the unused facilities for local benefit. Congress twice passed legislation, in 1928 and 1931, only to be vetoed by Presidents Calvin Coolidge (1923–1929) and Herbert Hoover (1929–1933).

With newly-elected President Franklin D. Roosevelt (1933–1945) and Congress tackling a dramatic round of New Deal reform legislation early in 1933, known as the Hundred Days, Norris reintroduced his legislation. Opportunities for large-scale government planning projects offering employment relief keenly interested Roosevelt. The President took Norris' bill and dramatically enlarged the scope of it. The resulting Tennessee Valley Authority Act of 1933 created an unprecedented strategy of regional government planning and development. A novel concept, the newly created Tennessee Valley Authority (TVA) was conceived as an independent corporate agency, a federally owned corporation combining the power of government with the flexibility of private business. The act created a three-member board, appointed by the President, to oversee the autonomous program.

The development of TVA was shaped to a substantial degree by its first administrative board. Arthur Morgan, Harcourt Morgan (no relation), and David Lilienthal argued about the focus and purpose of the agency while it faced court challenges from opponents. Arthur Morgan, the first chairman, wanted to emphasize planning and efforts to eliminate poverty and he wanted electric rates to be set at levels comparable to private industry. Lilienthal was a strong supporter of public ownership and he wanted the agency to compete aggressively with private power companies. Harcourt Morgan, who opposed government planning, allied with Lilienthal and thus TVA emphasized dams for flood control navigation and power generation. In 1936 the Supreme Court upheld the agency's authority to generate and sell electricity at Wilson Dam and in 1939 it held that the agency was constitutional. By then Roosevelt had dismissed Arthur Morgan as chair of the TVA board due to the feuding among the board members and he appointed Harcourt Morgan in his place. When Lilienthal became chairman in 1941, TVA was the leading producer of electricity in the entire nation; that position the agency has maintained.

Designed to be administered through integral regional management, the TVA began with the construction of multipurpose dams and reservoirs. Eventually, a system of forty-two dams affected the economies of seven states. With the increased demand for electrical power, the TVA began constructing steam-generating facilities in the 1940s. By the 1970s large steam plants, fed with coal from extensive strip mining operations, produced over 80 percent of TVA's power. In 1959 the TVA power program became self-financing, running at a profit in the 1960s as the nation's largest electricity producer. Since that time, the TVA paid dividends and repayments to the U.S. Treasury and made payments to states and counties in place of taxes.

During World War II (1939–1945) TVA completed additional dams to generate electricity for aluminum manufacture and the initially secret atomic facilities at Oak Ridge, Tennessee. In keeping with the agency's integral approach to problems, the completion of the dams also completed a 650 mile navigation channel that connected eastern Tennessee with the Ohio River and then down the Mississippi to the sea. The system today includes twenty-nine hydroelectric dams on the Tennessee River and its tributaries.

TVA's efforts led to electrification and a great deal of economic development of what had been a rural backward area during the 1930s and 1940s. By the 1950s demand for electricity in the region exceeded the capacity of the agency's hydroelectric dams. In 1959 Congress authorized TVA to issue bonds to fund the construction of coal-fired plants, using the extensive coal reserves of the region. In the late 1990s TVA operated eleven coal-fired power plants. TVA's power operations were also made self-supporting and federal funds were appropriated only for the non-power areas of the agency. The region continued to experience significant growth in industry and population.

The availability of abundant power at low rates attracted many businesses and industry to the region. To enhance commercial traffic and recreation, the TVA dredged the Tennessee River from its mouth upstream and created a navigation channel over 600 miles in length. The new system of inland waterways greatly facilitated the hauling of coal, construction materials, petroleum, forest products, and grain. By the 1960s per capita income had risen dramatically and population decline had ended due to hundreds of thousands of new jobs

Besides successfully bringing rural electrification and power for businesses to an area twice the size of the Tennessee Valley, other significant TVA programs included flood control, soil conservation, agriculture education through demonstration farms, fertilizer research and production, and recreational developments including the 170,000 acre "Land Between the Lakes" recreational area.

Through its early years, the TVA maintained a respected image promoting a popular image of progress. The TVA became a model for other nations, particularly developing Third World nations. However, increasing attacks over environmental issues grew in the 1960s. But TVA ran into problems in two areas: For one thing, the rise of the environmentalist movement brought a consciousness of the cost to the natural surroundings of such a large and ambitious project. Many considered the TVA a symbol of heavy-handed human conquest over the environment including initial population displacements and removal of thousands of acres of rich bottomlands from potential agricultural production through reservoir flooding. The Tellico Dam construction led to a highly publicized confrontation over environmental issues. A major violator of the Clean Air Act, the TVA spent $1 billion to remove sulfur dioxide emissions from its 12 coal-burning plants and for strip mine reclamation.

Another problem arose with the project to build nuclear facilities to produce electrical power. In the 1960s TVA began construction of several nuclear power plants to meet expected future growth in demand for power. These plants were plagued with problems and cost overruns, some due to the changes in the regulatory environment after the incident at Three Mile Island. Several of the plant projects were abandoned and not completed; three were completed and they remain in operation. The nuclear plants added significantly to TVA's debt and they also renewed opposition to the agency. Safety issues soon arose, triggering a Nuclear Regulatory Commission investigation in 1975. Back on track as a national pacesetter in nuclear plant construction, fourteen plants were under construction by the early 1980s at the cost of over $1 billion annually. Few actually became operational and the TVA was left in debt for billions of dollars by the 1990s.

In spite of these problems, in many ways the TVA was remarkably successful in achieving its original objectives of economic development in a severely depressed region. The TVA's electricity production was also useful as a "yardstick" gauge of the reasonableness of rate-requests charged to consumers by other utilities across the nation. Some observers note that this was the aspect of the system that earned it the enmity of the public utilities. Private utility companies saw the TVA as a threat and unsuccessfully challenged its constitutionality before the Supreme Court.

Roosevelt had envisioned similar authorities in many other river basins. However, the political climate was never again conducive to such projects. Congress was unwilling to grant such autonomy to a federally funded organization. A living legacy of the New Deal, TVA remained the most ambitious development project ever undertaken by the federal government.

Topic overview

The Tennessee Valley Authority is . . . the most ambitious regional development project ever undertaken by the United States government. . . . It encompassed dam construction, flood control, navigation, power generation and distribution, agricultural development, industrial development, resettlement, housing, community development, and indirectly, health and education. . . . Roosevelt regarded the TVA as the first step towards a system of national planning . . . Franklin Roosevelt had intended TVA to be the first of many regional authorities.

higgins, benjamin, "the american frontier and the tva," society, march/april, 1995.

See also: New Deal

FURTHER READING

Crease, Walter L. TVA's Public Planning: The Vision, the Reality. Knoxville, TN: University of Tennessee Press, 1990.

Durant, Robert F. When Government Regulates Itself: EPA, TVA, and Pollution Control in the 1970s. Knoxville: University of Tennessee Press, 1985.

Grant, Nancy L. TVA and Black Americans: Planning for the Status Quo. Philadelphia: Temple University Press, 1990.

Hargrove, Erwin C. Prisoners of Myth: The Leadership of the Tennessee Valley Authority, 1933–1990. Princeton: Princeton University Press, 1994.

Hubbard, Preston J. Origins of the TVA: The Muscle Shoals Controversy. Nashville: Vanderbilt University Press, 1961.

Miller, Barbara A., and Richard B. Reidinger, eds. Comprehensive River Basin Development: The Tennessee Valley Authority. Washington, DC: World Bank, 1998.

Neuse, Steven M. David E. Lilienthal: The Journey of an American Liberal. Knoxville, TN: University of Tennessee Press, 1996.

Selznick, Philip. TVA and the Grass Roots: A Study in the Sociology of Formal Organization. New York: Harper & Row, 1966.

Tennessee Valley Authority Act (1933)

Kyle A. Loring

On May 18, 1933, President Franklin D. Roosevelt signed the Tennessee Valley Authority Act (TVAA) (P.L. 73-17, 48 Stat. 58) as part of his New Deal legislation to invigorate the economy of the Tennessee Valley in particular, and the United States generally. Congress defined the act's purpose as "maintaining and operating properties now owned by the United States in the vicinity of Muscle Shoals, Alabama, in the interest of national defense and for agricultural and industrial development, and to improve navigation in the Tennessee River and to control the destructive flood waters in the Tennessee River and Mississippi River basins."

To do so, the act established the Tennessee Valley Authority (TVA), a unique federal corporation that erected massive dams and gained world renown for its engineering achievements. The TVA has since constructed over sixty-five dams and expanded to producing other forms of electricity, providing agricultural assistance to farmers, and promoting environmental stewardship.

In 1916, the federal government purchased Alabama's Muscle Shoals region of the Tennessee River to build a dam to enable passage by ship and harness electricity from the thirty mile long, 40-foot drop in elevation. When World War I (1914–1919) ended, so did the need for this electricity. During the 1920s, however, Nebraska Senator George Norris continued to press for development of the Tennessee River Valley, introducing six bills in Congress to provide economic growth in the area. Finally, with the advent of the Great Depression and a public citizenry clamoring for large-scale government intervention, Senator Norris gained President Roosevelt's support. The Tennessee Valley Authority Act created the TVA with a mission to improve "the economic and social well-being of the people living in said river basin." (TVAA, Section 23).

The TVA is a federal corporation that blends government authority with a private enterprise problem-solving approach, and it has become the largest public power system in the United States. This power system currently includes three nuclear power plants, eleven coal-fired plants, twenty-nine hydroelectric dams, five combustion-turbine plants, and about 17,000 miles of transmission lines. TVA electricity produced in these facilities now reaches over eight million residents of the Tennessee Valley.

The Tennessee Valley runs through seven Southern states: Tennessee, Kentucky, Virginia, North Carolina, Georgia, Alabama, and Mississippi. At the time of the TVA's creation, electricity was available to fewer than three percent of the region's households, the average Tennessee Valley farmer earned about one-third the national average, and education expenditures reached only about one-third of the national average. During the eight years that followed passage of the act, household electricity use grew from six thousand houses to nearly five hundred thousand. The TVA also instructed local farmers on demonstration farms on the use of improved fertilizers, increasing agricultural production. In addition, the newly abundant electricity attracted industries to the Tennessee Valley, especially aluminum producers during World War II (1939–1945).

Early in its existence, the TVA gained fame primarily for its dambuilding expertise and its construction of some of the world's largest structures. In its first twenty years, the TVA erected twenty multipurpose dams to support flood control while generating electricity. By 1950 the TVA had attracted many international admirers and its chairman, David Lilienthal, wrote TVA: Democracy on the March, which was later translated into fourteen languages. China consulted with the TVA because of its international reputation soon after World War II, when China began to plan the Three Gorges Dam to control the flow of the Yangtze River.

Throughout its existence, the TVA has met with strong opposition from both electric companies and environmentalists. Soon after Congress created the TVA, electric companies grew wary of the business threat of inexpensive federal electricity, and they filed lawsuits claiming the federal government exceeded its constitutional authority by entering into the electric utility business. In 1935 John Battle, executive secretary of the National Coal Association, expressed industry sentiments in congressional testimony when he stated that "we are willing to be put out of business it if can be done in a plain straightforward business–like manner, but we do object to our Government putting us out of business." In 1936, in Ashwander v. TVA, the United States Supreme Court upheld both the constitutionality of the act and the TVA's electricity sales and distribution.

The TVA met its greatest resistance in 1978 in TVA v. Hill, when a law school professor filed a lawsuit on behalf of a small fish, the snail darter. In 1959, Aubrey "Red" Wagner, the TVA's general manager, had planned a new initiative that would begin with Tellico Dam, a structure that would trap the last thirty-three free-flowing miles of the Little Tennessee River. Prior to this initiative, the TVA had fallen into low morale. It had constructed more than sixty-five dams and slowed 2,500 linear miles of river, exhausting nearly all of the possible locations for dams. Although the TVA had shifted much of its energy production to coal and nuclear-powered plants, it could not easily relinquish its mission to build dams. Wagner planned a new series of developments to reinvigorate the TVA, including Tellico Dam, which would serve as the focal point of a model industrial city on the shores of the new reservoir. The high cost/benefit ratio and adverse environmental impact of the proposal led to an outcry from both local farmers and the fledgling environmental movement.

The opposition gained a legal tool to combat the construction of Tellico Dam in 1973, when Congress enacted the Endangered Species Act (ESA). The act contained stringent safeguards to ensure the continued existence of endangered or threatened species. Section 7 of the ESA prohibited government action leading to the destruction of habitats critical to such species. As a result, a lawsuit was filed against the TVA alleging that the construction of the Tellico Dam would destroy the habitat critical to the snail darter's continued survival. The Supreme Court initially upheld this challenge and halted the Tellico Dam project. In 1979, however, a small rider snuck into the large Energy and Water Development bill that protected Tellico Dam from the prohibition on its completion. The TVA completed it in mid-1979.

See also: Federal Powers Acts; Rural Electrification Act.

BIBLIOGRAPHY

Tennessee Valley Authority. "A Short History of the Tennessee Valley Authority History." <http://www.tva.gov/abouttva/history.htm>.

Freeman, Marsha. "The World Needs the TVA, Not the IMF." Executive Intelligence Review, (June 12, 1998).

Lilienthal, David E. TVA: Democracy on the March. New York: Harper & Brothers, 1944.

Plater, Zygmunt J.B. "Environmental Law in the Political Ecosystem—Coping with the—Reality of Politics." Pace Environmental Law Revue 19 (2002): 423–88.

"TVA: Electricity for All." <http://newdeal.feri.org/tva/index.htm#2>.

Tennessee Valley Authority

The Tennessee Valley Authority (TVA) was created as a federal corporation in May 1933 in order to develop the Tennessee River and its tributaries for the purpose of navigation, flood control, and the production and distribution of electricity. It also provided reforestation, erosion control, industrial and community development, improved farming techniques, fertilizer development, and establishment of recreational facilities. Today it remains a principal manager of water resources across a large, regional river basin.

First Two Decades

The TVA achieved success quickly by using a unique problem-solving approach toward resource management. Each issue was broadly studied and weighed in relation to other issues. Before the TVA, land in the Tennessee Valley had been eroded from excess farming and deforestation. Farming was at subsistence levels, at best; and employment levels in 1933 were below the rest of the country, even at the worst of the Great Depression (1929–1939).

The Norris Dam on the Clinch River was one of the first dams built by the TVA. The dam—named after Senator George William Norris of Nebraska, the creator of the TVA—was completed in 1936.

The TVA created desperately needed jobs for thousands of workers with the construction of dams on the Tennessee River and its tributaries. In addition, the TVA taught farmers how to improve crop yields, produced fertilizers, helped replant forests, controlled forest fires, and improved wildlife and fish habitats.

The generation of electricity from TVA hydropower dams made the most striking change in life within the valley as electric lights and appliances made area businesses and farmers more productive. The presence of electricity also brought new industries into the region, adding more jobs. TVA activities helped to improve the area's economy by increasing wages, improving public health, and adding employment opportunities.

During World War II (from 1939 to 1945), the United States used aluminum to build airplanes, weapons, and other necessary war materials. In response, the TVA began one of the largest U.S. hydropower construction programs ever undertaken in order to provide electricity for aluminum plants. At the zenith of the TVA war effort early in 1942, twelve hydroelectric projects and a steam plant were simultaneously under construction, and employment totaled 28,000 workers.

After the Depression and war years, the TVA continued its presence in the Tennessee Valley with the building of low-cost, coal-fired and nuclear power plants to supplement its hydroelectric power. It also developed recreational areas and reservoirs, expanded its electricity transmission and distribution system, and contributed to valley society in general.

Fifty Dams

Today, the fifty dams operated and maintained by the TVA control floods, provide electricity, increase water supply, and provide recreational lakes. In addition, the nine major dams on the main course of the Tennessee River create a series of lakes that form one long navigation channel from Knoxville, Tennessee, to Paducah, Kentucky. The channel has a length of 1,045 kilometers (650 miles) and an average depth of about 2.7 meters (9 feet). About 34,000 barges annually travel the Tennessee River—the equivalent of two million semi-trailer trucks on the roads.

Twenty other TVA dams function on tributaries of the Tennessee River, storing excess water in flood season and lowering flood levels on the Ohio, Mississippi, and Tennessee Rivers. The flood-controlling efforts of the TVA prevent an estimated $194 million in annual damage to areas adjoining the Tennessee River, as well as another $21 million in possible losses along the Mississippi and Ohio Rivers.

Hydropower.

The TVA is the largest U.S. public power company with twenty-nine hydroelectric dams These dams distribute electricity over an area of about 207,000 square kilometers (80,000 square miles), consisting of 8 million users within Tennessee, and portions of Mississippi, Georgia, North Carolina, Kentucky, Virginia, and Alabama. The TVA system annually produces over 125 billion kilowatt-hours of electricity, more than 90 times the electricity produced in 1933.

Ongoing Programs

In cooperation with state and other agencies, the TVA conducts research and development programs in watershed protection, water and air quality control, and wildlife and fish preservation. In addition, in cooperation with citizen associations, the TVA encourages the economic development of Tennessee Valley tributary areas. Its innovative loan and industrial-incentive programs allow regional companies to expand and outside companies to relocate to the Tennessee Valley. More than one hundred communities with flood problems have been helped by the TVA, which has offered technical guidance and built improved channels and detention dams.

The TVA protects and improves water quality and aquatic life in the Tennessee River system. Engineers and scientists monitor water conditions and identify pollution problems in specific watersheds. These teams of experts work with landowners, government officials, interest groups, and local communities and businesses to find ways to protect water quality without limiting the river's other uses. In 1994, TVA initiated a Clean Water Initiative, under which scientific teams identify pollution problems in specific watersheds and help organize local coalitions to find solutions.

see also Bureau of Reclamation, U.S.; Dams; Hydroelectric Power; Planning and Management, History of Water Resources; Reservoirs, Multipurpose; River Basin Planning; Supply Development.

William Arthur Atkins

Bibliography

Neal, Harry Edward. The People's Giant: The Story of TVA. New York: J. Messner,1970.

Internet Resources

Tennessee Valley Authority. Homepage of the Tennessee Valley Authority. <http://www.tva.gov/>.

TENNESSEE VALLEY AUTHORITY

TENNESSEE VALLEY AUTHORITY. The Tennessee Valley Authority (TVA), a federal corporation responsible for power generation in the Tennessee Valley, serves roughly 8.3 million people through 158 municipal and cooperative power distributors. TVA furnishes power to an 80,000-square-mile area, including the state of Tennessee and parts of Kentucky, Virginia, North Carolina, Georgia, Alabama, and Mississippi, thus making the corporation one of America's largest electrical power producers.

Born of President Franklin D. Roosevelt's innovative solution to help stimulate the area's economy during the Great Depression, the TVA development began after World War I (1914–1918). A government-owned dam and nitrate-producing facility at Muscle Shoals, on the Tennessee River in northwestern Alabama, became the seedling of the audacious experiment. Nebraska Senator George W. Norris hoped at the time to build more dams similar to the Wilson Dam at Muscle Shoals, bringing public control to the Tennessee River. Almost single-handedly, Norris held the dam in government ownership until President Roosevelt's vision expanded it into a broader concept of multipurpose development and regional planning. On 18 May 1933, Congress responded to Roosevelt's prodding and enacted the Tennessee Valley Act.

TVA was to be more than a flood control and power agency. It was seen as having a wide mandate for economic development, recreation, reforestation, and the production of fertilizer. But the agency was in sad shape at its start. The best timber had already been cut, the land had been farmed too long, and crop yields were declining.

Controversy also surrounded TVA. Private utilities fought the agency's power policies, and an internal feud between Chairman Arthur Morgan and directors David Lilienthal and Harcourt Morgan unsettled TVA's direction until 1938.

Nevertheless, the agency pushed forward. By 1941, it operated eleven dams with six more under construction, and it was selling low-cost electric power to 500,000 consumers throughout six states. TVA technicians developed fertilizers, and 25,000 demonstration farms taught local citizens the benefits of more scientific farming. Additionally, the agency helped replant forests, controlled forest fires, and improved habitat for wildlife. During World War II (1939–1945), 70 percent of TVA power went to defense industries, among them the Oak Ridge atomic project. At the war's end, TVA had completed a 652-mile navigation channel, becoming the largest electricity supplier in the United States.

Attacked for being too radical, TVA also found itself criticized for being too conciliatory to established interests and ideas. Director Lilienthal claimed that TVA practiced "grassroots democracy" by reaching out in a massive educational effort to involve the rural population of the valley. However, critics saw mostly manipulation in this approach.

The 1960s saw unprecedented growth in the Tennessee Valley. At the same time, TVA began building nuclear plants as a new source of power. The agency survived reproach from both conservatives and environmentalists and, by the early 1970s, claimed an impressive record. In 1972, an estimated $395 million in flood damages had been averted by TVA dams. Power revenues came to $642 million, of which TVA returned $75 million to the U.S. Treasury. Along with industrial customers, 2 million residential consumers used TVA power.

The TVA manages an integrated, technically advanced system of dams, locks, and reservoirs in the Tennessee River watershed. The balanced system facilitates navigation, controls flooding, and provides hydropower to benefit users. As of 2002, it included three nuclear generating plants, eleven coal-fired plants, twenty-nine hydraulic dams, five combustion turbine plants, a pumped-storage plant, and roughly 17,000 miles of transmission lines, making the TVA the largest public power system in the nation. TVA's generation mix consisted of 63 percent coal, 31 percent nuclear, and 6 percent hydroelectric.

The agency serves 158 local municipal and cooperative power distributors that deliver power to homes and businesses within the seven-state area. Also involving itself in technical assistance to communities and industries, TVA conducts economic research and analysis, industrial research, and conceptual site engineering and architectural services. It also provides technical and financial support to small and minority-owned businesses as well as working with regional industrial development associations to recruit new industry and develop strategies for creating jobs.

Preserving wildlife habitat, TVA oversees more than 122,000 acres of public land designated for natural-resource management. Forty percent of it is administered by other agencies, while the remainder falls under TVA management. The agency launched the Natural Heritage Project in 1976, with the help of the Nature Conservancy, to analyze and manage biodiversity on TVA lands and to improve compliance with federal environmental regulations. The project monitors threatened and endangered plant and animal species in the TVA service area. Since its beginnings, the Natural Heritage Project has supplied environmental data on TVA activities ranging from transmission-line construction to economic development.

TVA has also developed a land-use system of 10,700 acres classified as TVA Natural Areas. The specified sites are designated as Habitat Protection Areas, Small Wild Areas, Ecological Study Areas, or Wildlife Observation Areas and include limitations on activities that could endanger important natural features.

Throughout the Tennessee Valley, TVA operates roughly 100 public recreation facilities, including campgrounds, day-use areas, and boat-launching ramps.

BIBLIOGRAPHY

Callahan, North. TVA: Bridge Over Troubled Waters. South Brunswick, N.J.: A. S. Barnes, 1980.

Chandler, William U. The Myth of TVA: Conservation and Development in the Tennessee Valley, 1933–1983. Cambridge, Mass.: Ballinger, 1984.

Conkin, Paul K., and Erwin C. Hargrove. TVA :Fifty Years of Grass-Roots Bureaucracy. Chicago: University of Illinois Press, 1983.

Creese, Walter L. TVA's Public Planning: The Vision, The Reality. Knoxville: The University of Tennessee Press, 1990.

Tennessee Valley Authority Web Site. Home page at http://www.tva.com/.

KymO'Connell-Todd

See alsoNew Deal andvol. 9:Power .