[Congressional Record Volume 149, Number 21 (Wednesday, February 5, 2003)]
[Senate]
[Pages S1982-S1983]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LOTT:
  S. 308. A bill to impose greater accountability on the Tennessee 
Valley Authority with respect to capital investment decisions and 
financing operations by increasing Congressional and Executive Branch 
oversight; to the Committee on Environment and Public Works.
  Mr. LOTT. Mr. President, the Tennessee Valley Authority has long 
served as an engine for economic development in my part of the country 
and has enjoyed widespread support for its efforts to provide power 
that is needed to fuel the economy and enhance the quality of life of 
those it serves. It is my desire to assist the TVA in continuing its 
legacy and carrying out its mission. To provide that assistance, the 
Congress, the Administration, and the TVA itself must determine whether 
TVA's policies, practices, and long-term strategies are consistent with 
the realities of today's marketplace.
  The TVA is at a crossroads in its illustrious history. The United 
States taxpayer and the power consumers in the TVA service area have 
provided the capital necessary to develop, finance, and operate one of 
the largest, if not the largest, public power systems in history. The 
TVA is now facing a number of challenges with respect to its existing 
generating system in the form of environmental compliance, aging and 
obsolete plants, and the urgent need to provide additional generating 
capacity to meet the demands of the future. It is my belief that the 
United States taxpayer is unwilling and unable to continue to bear the 
financial burden and risks associated with addressing these challenges.
  The reality of the marketplace for energy and the political 
imperatives with which we are confronted mandate that any new financing 
strategies and supplemental sources of capital be considered and 
utilized by the TVA. Likewise, we need to review and analyze the short-
term and long-term financing and risk management strategies employed by 
the TVA with respect to its almost $26 billion of debt.
  Last year, we witnessed the results of risky and sometimes corrupt 
corporate financing and management practices. Although I have no reason 
to believe that TVA has been involved in any

[[Page S1983]]

such practices, I believe we have a responsibility to the taxpayers to 
examine the financing and disclosure practices of the TVA to ensure 
that their investment is being protected. I note that TVA has utilized 
short-term financing facilities and derivative securities as hedging 
and interest rate management techniques. We need to better understand 
the risks and rewards associated with these strategies.
  The legislation that I am introducing today would require that the 
TVA provide the Congress and the Administration with a 10-year business 
outlook and strategic plan with respect to its development and 
financing needs, as well as an analysis of its ongoing financing and 
risk management strategies. During the period in which the TVA is 
responding to this Congressional mandate, the TVA would be required to 
cease and desist from incurring new obligations or entering into any 
arrangements for the development or financing of new, additional, or 
replacement plant, equipment, or capacity. Likewise, during this period 
the TVA would be required to gain the concurrence of the Director of 
the Office of Management and Budget and the appropriate Senate and 
House Committee leaders before undertaking any additional financing or 
refinancing activities. The legislation specifically provides for the 
necessary flexibility for the TVA to continue normal operations and 
fund necessary maintenance activities while complying with this 
Congressional mandate.
  I strongly support the TVA and I recognize its importance to the 
economic health of several States in the southeastern United States, 
including my own. Indeed, the TVA is a critical component of the 
infrastructure that supports the economy of the entire United States. 
It is my desire in introducing this legislation that the TVA be 
positioned to meet the challenges of the 21st Century. Introduction of 
this legislation is the first step to help the TVA achieve that goal.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 308

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TENNESSEE VALLEY AUTHORITY.

       (a) Definitions.--In this section:
       (1) Authority.--The term ``Authority'' means the Tennessee 
     Valley Authority.
       (2) Board.--The term ``Board'' means the Board of Directors 
     of the Authority.
       (3) Committee leader.--The term ``Committee leader'' means 
     the chairman and ranking member of each of the Committee on 
     Appropriations and the Committee on the Environment and 
     Public Works of the Senate and the Committee on 
     Appropriations and the Committee on Transportation and 
     Infrastructure of the House of Representatives.
       (4) Director.--The term ``Director'' means the Director of 
     the Office of Management and Budget.
       (5) Plan.--The term ``Plan'' means the Ten-Year Business 
     Outlook and Strategic Plan submitted under subsection (b).
       (b) Plan.--Not later than 90 days after the effective date 
     of this section, the Authority shall submit to the Director 
     and each of the Committee leaders, for their concurrence, a 
     Ten-Year Business Outlook and Strategic Plan for the 
     Authority that includes, at a minimum--
       (1) estimates of--
       (A) the power demand in the service area of the Authority 
     during the 10-year period following the date of the plan;
       (B) the assets that the Authority anticipates will be 
     available to meet that demand; and
       (C) capital expenditures that will be required to meet that 
     demand;
       (2) a strategy and criteria for the development and 
     financing of new nuclear and nonnuclear power supply sources, 
     including a strategy for competitive sourcing and partnering 
     with the private sector for the development and financing of 
     new nuclear and nonnuclear power facilities; and
       (3) a strategy for managing the financing, refinancing, and 
     repayment of the existing indebtedness of the Authority, 
     including a specific debt repayment schedule to which the 
     Board is specifically committed.
       (c) Financing Strategies.--The provisions of the Plan 
     relating to financing strategies under subsection (b)(3) 
     shall include a recitation of the policies of the Board with 
     respect to--
       (1) the use of short-term and long-term debt;
       (2) the use of derivative or other financing instruments; 
     and
       (3) risk management strategies.
       (d) Limitations.--
       (1) In general.--The Authority shall not, until the date, 
     if any, on which the Director and each of the Committee 
     leaders issue a written concurrence to the Plan--
       (A) expend any internally generated capital or otherwise 
     undertake any investment in, or enter into any arrangement 
     that would result in the development or financing of, new, 
     additional, or replacement plant, equipment, or capacity; or
       (B) without the written concurrence of the Director and 
     each of the Committee leaders, undertake any financing of 
     additional indebtedness or refinancing of debt of the 
     Authority in any public or private market.
       (2) Effect.--This subsection does not preclude the 
     Authority from expending available funds, in the exercise of 
     the independent judgment of the Authority, for the repair, 
     maintenance, or necessary renovation to preserve the 
     operating capacity and efficiency of existing units and 
     related facilities.
       (e) Effective Date.--This section takes effect on January 
     31, 2003.
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