SUBCOMMITTEE RECESS Senator HATFIELD. The subcommittee will stand in recess subject to the call of the chairman. [Whereupon, at 10:36 a.m. Monday, March 28, the subcommittee was recessed to reconvene at 10 a.m. Monday, April 11.] ENERGY AND WATER DEVELOPMENT MONDAY, MAY 16, 1988 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 2:32 p.m. in room SD-192, Dirksen Senate Office Building, Hon. Jim Sasser presiding. Present: Senators Sasser and Cochran. TENNESSEE VALLEY AUTHORITY STATEMENT OF MARVIN RUNYON, CHAIRMAN OPENING REMARKS Senator SASSER. The subcommittee will come to order. This afternoon we are continuing our hearings on the fiscal year 1989 budget requests, and today we have before us the Tennessee Valley Authority. We are particularly pleased to have with us this afternoon the new Chairman of the Board of the Tennessee Authority, Mr. Marvin Runyon, who is joined by his fellow Directors Charles Dean and John Waters. Gentlemen, we welcome you before the committee. This is no new experience for Mr. Dean and Mr. Waters. This is, I believe, your maiden voyage before the Energy and Water Development Subcommittee of the Senate, Mr. Runyon, and we are delighted to have you here. Let me just take a few moments with some remarks before you present your testimony. The hearings today take place during a time of great change at the TVA. Mr. Runyon, as the new Chairman, has moved swiftly to implement changes that he feels will address the problems of the agency. Just 2 weeks ago, Chairman Runyon announced a plan to freeze TVA power rates for a 3-year period and eliminate the current $300 million deficit in the power budget. I have praised the goals expressed in an announcement as both ambitious and commendable. It is clearly in the best interest of the people of the Tennessee Valley to have low, competitive electricity rates. I also noted at the time of the Chairman's announcement that it is too early really to evaluate at that time the details of Chairman Runyon's plan, but I hope today that we can discuss some of the details, and then we can explore ways to minimize the negative impact of the layoffs and other cost cutting measures that may be necessary to keep electrical rates level in the Tennessee Valley area. TVA is more than just a utility company; it is the heart of the region's economy. The agency simply must seek ways to avoid economic upheaval to communities and to avoid the personal financial devastation of its employees. The actions that this Board takes are not taken in a vacuum. The changes that Chairman Runyon and his colleagues on the Board will make have repercussions throughout the Tennessee Valley area. Gentlemen, I hope that you will proceed with a somber recognition that what you do affects the lives of literally tens of millions of people in the Southeastern region of the United States. The root of many of the problems that have made this dramatic move by the TVA necessary, as we all know, is the troubled nuclear program. I must say to you that I have been greatly encouraged by the good news that has come out of the nuclear program recently. I understand that the technical problems at Sequoyah have been taken care of, and just last Friday unit 2 went on line and is operating at about 35 percent of capacity. I applaud the efforts at Sequoyah and I am confident that this Board is doing everything possible to get TVA nuclear program generating power once again. I might say to you that the suspicion, anxiety, and the negative publicity that has surrounded TVA's nuclear program has hurt the credibility of the agency's natural resource management programs, and these programs are funded with nonpower dollars by the Congress. I have long believed that these programs must be the centerpiece of TVA's primary mission if it is to live up to its statutory obligation to promote the economic development of the Tennessee Valley area. While all of TVA's natural resource management programs are important, the problems that are caused by the unprecedented 4-year long drought have highlighted the need to expand TVA's water quality programs. I reminded the Board at last year's of my strong interest in seeing the Tennessee Valley Authority adjust its priorities to put a greater emphasis on managing water quality and I look forward to hearing today the new Chairman's thoughts about this vitally important agenda. The Tennessee Valley Authority must, at the very least, maintain its efforts in resource management and economic development. It is now working with a budget that has been reduced by over 50 percent during the 8 years of this administration. This year, the President proposes a further cut of 25 percent from last year's budget. Nobody ever said that the Tennessee Valley Authority should not take its fair share of the cuts during a time of fiscal austerity, but the TVA has taken its fair share of the cuts and more. I intend to work very hard here in the U.S. Senate this year to see that TVA's budget is at least as large in 1989 as it was in 1988. We all share the same goal-to return the Tennessee Valley Authority to the luster of its glory years when it was a model for public works programs not only across this nation but all across the world, when it was visited by the leaders of other nations, particularly by the leaders of the emerging nations, and viewed as a model of economic development and power production that they wished to take home with them. Today's hearing will explore ways to help achieve the goal of return TVA to its days of glory of the past. Gentlemen, we have the defense authorization bill on the floor of the Senate. Unhappily there are going to be a series of votes this afternoon and the first one just started, which is the reason that some of our other Senators are not here. I am going to run to the floor and vote very quickly, and I will be back here in less than 10 minutes, and then we will get underway. Hopefully, we can proceed uninterrupted from that point. Thank you. The subcommittee will stand in recess. [A brief recess was taken.] Senator SASSER. Gentlemen, we will turn now to the testimony of the Chairman of the Tennessee Valley Authority, Mr. Marvin Runyon. Mr. Runyon, you may proceed as you choose. TESTIMONY OF MARVIN RUNYON Mr. RUNYON. Thank you very much, Mr. Chairman. I appreciate the opportunity to appear before you today to present the administration's fiscal year 1989 budget request for TVA. Before discussing the specific elements of the budget, it may be helpful to the subcommittee for me to review several matters of interest. REVIEW OF TVA OPERATIONS Since becoming Chairman, I have been involved in an extensive examination and review of all aspects of TVA's operations. I have talked with more than 10,000 TVA employees and met with business, community, and elected officials throughout the region. I have also studied the TVA's past performance and future plans. I have discussed my findings with my colleagues on the Board and TVA's newly formed Management Committee. We recently spent 21⁄2 days working together as a team to chart three objectives for TVA. Our first objective is to operate a more competitive power system by holding our firm power rates constant for 3 years. This means no rate increases. Our second objective is to provide better services to the people of the region from federally funded programs by reducing overhead costs. Our third objective is to establish a more businesslike organization and focus it on efficiency, productivity, and accountability. To reach these objectives, we will have to reduce personnel, cut overhead costs, limit the scope of some of our activities as a power system, and organize ourselves in a more businesslike manner. We are working to turn TVA into a model of quality and productivity in business and government. Put quite simply, we are committed to demonstrating that a government-owned corporation can compete in terms of quality and productivity with any company in America. |