Natural Resources: Such a Lovely Green Valley

(2 of 2)

Power. TVA's power production remains the most controversial part of its operation. Its generating capacity of 12,031,060 kilowatts is the largest of any power system in the nation, amounts to 8% of all U.S. capacity. Through contract distributors, it serves 1,513,400 homes and firms. The average valley resident pays .96¢ per kilowatt-hour; the national average is 2.43¢. The authority deliberately slashed rates to stimulate electrical consumption when it first set up shop, and with spectacular results: from 1933 to 1951 the number of homes in the valley using electricity for the first time jumped from 225,000 to 1,065,000, an increase of 375%, while the national growth was less than 100%. Total demand still is climbing about 10% a year.

The authority has been able to reduce rates partly because high production breeds efficiency. It claims that where private utilities average 4.2 mills to produce each kilowatt-hour sold, TVA's cost is 2.1 mills. As the nation's biggest coal buyer, TVA pays $4.39 a ton for coal to fuel its steam plants, compared to a national average of $6.26. TVA, of course, has had the advantage of not paying federal taxes (although for years it has paid sums to state and local governments) or interest on its initial capital. It now does, however, pay the Federal Government some $45 million a year in amortization and return on the taxpayers' investment, and finances expansion through its own interest-bearing bonds.

Despite TVA's gigantic operations, there is no evidence that nearby private utilities have been hurt. Most of them benefited from a boom in appliance sales when TVA's low rates first spurred electrical use. Competitively lowering rates, the private companies have kept them low—yet the latest studies show that their common stock earnings are twice as high as the U.S. average.

Away from Washington. U.S. taxpayers may always differ as to whether TVA has been worth the $1.757 billion it has cost them so far (although that sum is, for example, barely larger than total U.S. aid to Franco's Spain since 1945). But beyond the matter of dollars, TVA's advocates claim that the project has shown what the residents of a region can accomplish when encouraged. Says present TVA Chairman Aubrey Wagner, recalling 29 years with TVA: "People said to us, you can't go in there and build dams with the labor of those hillbillies. But the thing they didn't realize was that these people, working on the dams, knew they were building their futures. All we have done is to place the tools in the hands of the people here."

Lilienthal says that TVA also proved that it is an advantage to place such complex projects—which require a unified execution—beyond the reach of Washington's many uncoordinated agencies. "TVA is an arm of Government and yet we took it outside, away from Washington, and put it to work in the sticks. We had a valley, a river, an area, not just a plan or a dream—a chance to do something concrete."

One indication of TVA's progress was the remark of a foreign visitor who recently flew over the region. "Oh, isn't it wonderful," he said. "Yes, we must have a TVA. But weren't you lucky to have yours in such a lovely green valley?"