Congressman Cooper Wants TVA Changes

Nashville Congressman Jim Cooper asked the Tennessee Valley Authority for major changes to the way it does business with its electric cooperatives.

At issue is what’s called capital credits. That’s the excess revenue a co-op can return to its customers – or members, as they’re called. But TVA’s electric co-ops don’t. TVA officials and co-ops say they can’t because of 1935 clause in the contract which says surplus revenue must be used to reduce rates, invest in infrastructure or retire a co-ops’ debt.

Congressman Cooper doesn’t buy it. He sent a letter today to the TVA’s Board of Directors saying they should allow co-ops to return excess revenue to customers.

“Of the 930 co-ops in America, we have about the only 50 in the country that refuse to ever pay a refund, even though we have a few co-ops that are extraordinarily prosperous.”

The co-ops in Tennessee are fighting back. Members of the Tennessee Electric Cooperative Association say their hands are tied and can’t return surplus money to its customers. Middle Tennessee Electrical Corporation, the state’s largest electric co-op with 180,000 members goes further, saying even if they were allowed to pay out dividends, they can’t afford to do so. Spokesman Chris Jones:

“Costs in fuels and commodities, like steel and copper, have increased so much in the past five years, we’ve been operating at a deficit. Now, the way that we cover that is primarily through borrowed funds. So, even though we have a margin, when you look at the real dollars, we are not bringing in more than we’re spending just to operate.”

MTEMC, along with most other mid-state co-ops last decreased its rates 20 years ago in 1988.

Cooper’s criticism prompted a heated congressional hearing into co-op practices.

The U.S. House Agriculture Committee is planning a hearing on the issue July 30th.

Daniel Potter contributed to this report.

WEB EXTRA:

Electric cooperatives across the country were pushed into the limelight last month when Cooper published a paper criticizing their business practices.

In his paper, Cooper used strong language to describe the 1930’s era clause that co-ops say restricts sending back refunds.

“I feel there’s a big cover up that’s been going on. A lot of co-ops do not want the owners of the co-op to know how much they own. All I’m really asking for is disclosure. Sunshine is the best disinfectant. I don’t think there’s anything radical about that. That’s always the way co-ops were supposed to be.”

The TVA Board of Directors next meets on August 20th.