From the New Deal to a New Century
The Tennessee Valley Authority is the nation's largest public power provider and a corporation of the U.S. government. TVA was established by Congress in 1933 to address a wide range of environmental, economic, and technological issues, including the delivery of low-cost electricity and the management of natural resources. TVA’s power service territory includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia, covering 80,000 square miles and serving more than 9 million people. TVA sells electricity to 155 power distributor customers and 56 directly served industries and federal facilities.
Initially, federal appropriations funded all TVA operations. Appropriations for the TVA power program ended in 1959, and appropriations for TVA’s environmental stewardship and economic development activities were phased out by 1999. TVA is now fully self-financing, funding operations primarily through electricity sales and power system financings.
A short history of TVA
President Franklin Roosevelt needed innovative solutions if the New Deal was to lift the nation out of the depths of the Great Depression, and TVA was one of his most innovative ideas. Roosevelt envisioned TVA as a totally different kind of agency. He asked Congress to create “a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.” On May 18, 1933, Congress passed the TVA Act.
From the start, TVA established a unique problem-solving approach to fulfilling its mission: integrated resource management. Each issue TVA faced — whether it was power production, navigation, flood control, malaria prevention, reforestation, or erosion control — was studied in its broadest context. TVA weighed each issue in relation to the whole picture.
From this beginning, TVA has held fast to its strategy of integrated solutions, even as the issues changed over the years.
Even by Depression standards, the Tennessee Valley was in sad shape in 1933. Much of the land had been farmed too hard for too long, eroding and depleting the soil. Crop yields had fallen along with farm incomes. The best timber had been cut. TVA built dams to harness the region’s rivers. The dams controlled floods, improved navigation and generated electricity. TVA developed fertilizers, taught farmers how to improve crop yields and helped replant forests, control forest fires, and improve habitat for wildlife and fish. The most dramatic change in Valley life came from the electricity generated by TVA dams. Electric lights and modern appliances made life easier and farms more productive. Electricity also drew industries into the region, providing desperately needed jobs.
During World War II, the United States needed aluminum to build bombs and airplanes, and aluminum plants required electricity. To provide power for such critical war industries, TVA engaged in one of the largest hydropower construction programs ever undertaken in the United States. Early in 1942, when the effort reached its peak, 12 hydroelectric projects and a steam plant were under construction at the same time, and design and construction employment reached 28,000.
By the end of the war, TVA had completed a 650-mile (1,050-kilometer) navigation channel the length of the Tennessee River and had become the nation’s largest electricity supplier. Even so, the demand for electricity was outstripping TVA’s capacity to produce power from hydroelectric dams. Political interference kept TVA from securing additional federal appropriations to build coal-fired plants, so the utility sought the authority to issue bonds. In 1959, Congress passed legislation making the TVA power system self-financing.
The 1960s saw unprecedented economic growth in the Tennessee Valley. Farms and forests were in better shape than they had been in generations. Electric rates were among the nation’s lowest and stayed low as TVA brought larger, more efficient generating units into service. Expecting the Valley’s electric power needs to continue to grow, TVA began building nuclear plants as a new source of economical power.
1970s and 1980s
Significant changes occurred in the economy of the Tennessee Valley and the nation, prompted by an international oil embargo in 1973 and accelerating fuel costs later in the decade. The average cost of electricity in the Tennessee Valley increased fivefold from the early 1970s to the early 1980s. With energy demand dropping and construction costs rising, TVA canceled several nuclear plants, as did other utilities around the nation.
To become more competitive, TVA began improving efficiency and productivity while cutting costs. By the late 1980s, TVA had stopped the rise in power rates and paved the way for a period of rate stability that would last for the next decade.
Energy conservation became an economic necessity for homeowners and businesses alike, and TVA became a national leader in promoting energy conservation.
As the electric-utility industry moved toward restructuring, TVA began preparing for competition. It cut operating costs by nearly $800 million a year, reduced its workforce by more than half, increased the generating capacity of its plants, stopped building nuclear plants, and developed a plan to meet the energy needs of the Tennessee Valley through the year 2020.
At the same time, TVA continued to provide its core product — wholesale electric power — competitively, efficiently and reliably. It aimed to set a standard for public responsibility against which private companies could be measured. It also moved to more flexible contracts with its distributor customers to meet their needs in an increasingly competitive marketplace.
In 1998 TVA unveiled a new clean-air strategy to reduce the pollutants that contribute to ozone and smog. Additional control equipment was added to help states and cities in the Tennessee Valley meet new, more stringent air-quality standards while providing greater flexibility for industrial and economic growth in the region.
TVA continued to strengthen its position as an energy leader in price, reliability, efficiency and environmental stewardship as it helped lead the utility industry into the 21st century.
During the first decade of the 21st century, TVA continued its focus on energy, environment and economic development while adapting to changes in its business environment and governance structure. TVA introduced the first green power program in the Southeast when it launched the Green Power Switch® program on Earth Day 2000.
In 2004, the corporate governance structure was changed by Congress for the first time in TVA’s history through legislation that established a nine-member part-time board in place of the three-member full-time board. The first directors nominated under the expanded-board legislation took office in March 2006. To meet growing power demand, the last of the three reactor units at Browns Ferry Nuclear Plant was returned to service as scheduled in May 2007. The plant was honored the following month with a visit by President George W. Bush, who spoke about the importance of nuclear power in the nation’s energy future. In August 2007, plans were approved to complete construction of Watts Bar Nuclear Unit 2. TVA established an environmental policy in 2008 supporting the production of cleaner and still-affordable electricity with objectives to lower carbon emissions and work in partnership with stakeholders to further the region’s environmental quality.
On Dec. 22, 2008, a storage pond dike failed at the Kingston Fossil Plant in East Tennessee, releasing about 5.4 million cubic yards of coal ash, covering about 300 acres, mostly TVA-owned land, and spilling into the Emory River. TVA, local, state and federal agencies responded diligently. Plans were put into action to restore and improve the affected area and eliminate wet storage of ash at TVA fossil plants.
In 2010, TVA adopted a bold corporate vision to become one of the nation’s leading providers of low-cost, cleaner energy by 2020. With this vision, TVA is working to improve its core business in the areas of low rates, high reliability and responsibility, and meet the region’s needs for the future through three specific goals:
- Lead the nation in improving air quality
- Lead the nation in increased nuclear production
- Lead the Southeast in increased energy efficiency
TVA is pursuing its vision for 2020 while staying focused on its service-based mission: delivering reliable, low-cost electricity, environmental stewardship, river management, technological innovation and economic development across the region.
In 2011, an integrated resource plan, TVA’s Environmental and Energy Future, was completed to help guide decision-making for fulfilling the goals to achieve the vision. In November 2011, plans were approved for completing one of the two partially built reactors at the Bellefonte nuclear plant site by 2020. The transmission system achieved 99.999 percent reliability in 2011 for the 12th consecutive year. Since 2010, energy efficiency initiatives by TVA and local power companies have reduced electricity consumption by 765 gigawatt-hours, which is the equivalent energy to power 50,000 area households for an entire year.
TVA affirmed its commitment to improve the region’s environment. Under agreements with the Environmental Protection Agency and others in 2011, plans were adopted to retire 18 of TVA’s 59 coal-fired units by the end of 2017. Since 1977, TVA has invested more than $5.3 billion in clean air technology, achieving a 90 percent reduction in sulfur dioxide emissions and more than 86 percent for nitrogen oxide emissions. Under the agreements, sulfur dioxide emissions will be reduced further to 97 percent and nitrogen oxide emissions to 95 percent below peak levels. In early 2012, an assessment of the work remaining to complete Watts Bar Unit 2 established a schedule for completion by December 2015.
TVA’s economic development efforts continue to support sustainable growth. TVA works with its customers and strategic partners to grow the region’s industrial base and support the retention and expansion of existing businesses and industries. Since 2005, TVA economic development support has helped to create or retain more than 300,000 jobs and $32 billion in business investment in the region. TVA’s strategic work to attract and retain jobs has earned a top 10 ranking for economic development among North America’s utilities by Site Selection magazine, a national publication, each year from 2006 through 2012.
More on TVA history
The New Deal Network website has a wealth of information about the early days of TVA.
The website's partners and sponsors include the Franklin and Eleanor Roosevelt Institute, the Franklin D. Roosevelt Library, the Institute for Learning Technologies at Columbia University, and IBM.
The site features photographs and textsincluding speeches, letters, and other historic documentsfrom the New Deal period. One of the primary links is TVA: Electricity For All. It includes information on the origins of TVA, the people who built the dams, the changes that electricity meant for the region's residents, and Lorena Hickoks Letters from the Field. (Hickok was a journalist who traveled through the Valley in June 1934 recording her impressions of area residents reactions to TVA for Harry Hopkins, one of President Roosevelts closest advisers, and Eleanor Roosevelt.)
For more information on TVAs history, contact Patricia Bernard Ezzell, TVA Historian, by sending an e-mail to her attention at firstname.lastname@example.org or calling her at 865-632-6461.