Business & Lobbying

Unions fear a ‘New Deal’ sell-off

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Labor unions are going on the attack against a proposal buried deep in President Obama’s budget that they charge is a move to privatize the Tennessee Valley Authority (TVA).

 Established in 1933 and still owned by the federal government, the TVA is one of the lasting legacies of Franklin Delano Roosevelt’s “New Deal,” providing electricity to more than 9 million people in seven Southern states.

{mosads}But while the utility is now self-financing, the government could pocket a hefty profit by selling its stake.

 Obama proposed studying that option in his last two budgets, angering a trio of major labor unions that have thousands of members at TVA facilities.

 “Right now, the Tennessee Valley Authority now provides the most reliable, low-cost source of energy across the South,” said Greg Junemann, president of the International Federation of Professional and Technical Engineers (IFPTE). “There’s no reason to do this, unless it’s forming some sort of political partnership that no one can quite figure out.”  

Junemann said 2,500 IFPTE members work for the TVA, and said he worries privatizing the company could see them tossed out of work.

 “They will lose their jobs,” Junemann said. “We know what happens. Some private company comes in and says HR will give you a call on Monday and you’re out.”

 One administration official stressed to The Hill that there’s no current plan to have the federal government divest of the TVA.

 “The administration is not proposing to divest of the Tennessee Valley Authority at this time. The administration supports the TVA’s ongoing operating and financial initiatives and intends to closely monitor the TVA’s performance,” said the official.

 Still, the White House has expressed concern in its budget plans that the TVA’s spending on capital investments could exceed its $30 billion cap on debt. In response, it has called for studying the possibility of divesture of the government-owned power company.

 The president first announced the proposal in last year’s budget plan, saying the administration “intends to undertake a strategic review of options for addressing the TVA’s financial situation, including the possible divestiture of the TVA, in part or as a whole.”

 In this year’s budget, the administration said it “continues to believe that reducing or eliminating the federal government’s role in programs such as the TVA, which have achieved their original objectives, can help mitigate risk to taxpayers.”

 That language was included over the strenuous objections of labor unions, which approved a resolution at the AFL-CIO convention in September urging Washington to reject all efforts to privatize the TVA.

 Along with the engineers, the International Association of Machinists (IAM) and the International Brotherhood of Electrical Workers (IBEW) are all worried their members’ jobs could be at risk if the TVA goes private.

 “That’s always a worry, whenever there’s a transition like this,” said Jim Spellane, an IBEW spokesman. “The first place they will look to take the costs out on is the backs of the workers.” 

 The IBEW represents 3,000 people who work at the TVA, as well as another 2,000-4,000 people working on the company’s construction projects at any given time, according to Spellane.  

 Lobbyists for the three unions are working together against the proposal, visiting congressional offices as recently last week to drum up opposition among lawmakers.

 The Building and Construction Trades Department, AFL-CIO, has also warned Obama not to pursue a sell-off.

 “TVA has proven to be immensely popular. It has provided tens of millions of people throughout the Valley with consistently good service for roughly eight decades. Its prices are lower than those of many private corporations.  And it has been a fantastic community partner in providing jobs and career training opportunities,” said Sean McGarvey, president of the Building Trades, in a statement last week.

 “In light of these facts, we challenge the administration to present a case as to why this is nothing more than a poorly crafted, poorly intended, never to be realized, budget gimmick that won’t save money, but will cost jobs.”

 One union official said the White House’s support for divesting of the TVA appears to be waning, despite the budget provision. 

“The enthusiasm for the TVA privatization proposal in this year’s budget proposal is much less than last year’s,” said Frank Larkin, the IAM’s communications director. “It appears to be dying a slow and well-deserved death.” 

 The IAM represents more than 1,000 workers employed by the TVA.

 The Tennessee Valley Authority is a billion-dollar business, projecting to bring $10.8 billion in total revenue for fiscal 2015. Federal appropriations used to fund the company, but by 1999, the TVA became completely self-sustaining through its own electricity and bond sales.

 The White House worries, however, that the TVA will shoot past its own debt ceiling of $30 billion, considering it already holds roughly $25 billion in outstanding debt. The authority’s bonds, however, do not have the federal government’s full faith and credit, so the company’s IOUs do not count against the U.S. debt limit.

 Along with union opposition, the administration has to contend with Republican senators who represent states served by the TVA.

 “The president’s budget writers should spend more time figuring out how to reduce runaway entitlement spending, instead of thinking up new ways to sell TVA,” said Sen. Lamar Alexander (R-Tenn.) in a statement.

 Other Senate offices contacted by The Hill seemed less than supportive in divesting of the utility.

 Sen. Roger Wicker (R-Miss.) said he “continue[s] to remain skeptical of how this would reduce federal spending,” while Sen. Thad Cochran (R-Miss.) said he opposed federal divesture from the TVA on the grounds that it would “create chaos in the TVA region.”

 Other lawmakers said they were open to the idea.   

 “As I’ve said before, I think it’s valuable to evaluate from time to time reforms that could cause TVA to function more effectively for taxpayers and ratepayers,” said Sen. Bob Corker (R-Tenn.).

 In the meantime, IFPTE officials have wanted to get their hands on a copy of the administration’s strategic review of options regarding divestiture of the company.

 In November, the union filed a Freedom of Information Act request to the Office of Management and Budget asking for all emails, memos and any other written correspondence between outside groups and the agency related to the TVA. The IFPTE has yet to receive a response.

 Nevertheless, there doesn’t appear to be a single document laying out the White House’s strategy on reforming the TVA.

“There is no formal ‘strategic review’ document, but rather, it is an ongoing deliberative process,” said the administration official.

 The official said administration plans “to engage with Congress and TVA’s stakeholders on a longer-term solution that minimizes future federal involvement in TVA.”

Tags Bob Corker Lamar Alexander Roger Wicker Thad Cochran

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