<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:42269.wais]
S. Hrg. 109-1015
CONSIDER PENDING NOMINATIONS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
ON
THE NOMINATIONS OF TERRENCE L. BRACY, TO BE A MEMBER OF THE BOARD OF
TRUSTEES OF THE MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE IN NATIONAL
ENVIRONMENTAL POLICY FOUNDATION; DENNIS BOTTORFF, ROBERT DUNCAN, AND
SUSAN RICHARDSON WILLIAMS TO BE MEMBERS OF THE BOARD OF DIRECTORS OF
THE TENNESSEE VALLEY AUTHORITY; WILLIAM SANSOM, HOWARD THRAILKILL, AND
DONALD DePRIEST TO BE MEMBERS OF THE TENNESSEE VALLEY AUTHORITY
__________
FEBRUARY 8, 2006
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island BARBARA BOXER, California
LISA MURKOWSKI, Alaska THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
Andrew Wheeler, Majority Staff Director
Ken Connolly, Minority Staff Director
(ii)
C O N T E N T S
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Page
FEBRUARY 8, 2006
OPENING STATEMENTS
Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee.. 7
Bunning, Hon. Jim, U.S. Senator from the State of Kentucky....... 6
Prepared statement........................................... 32
Cochran, Hon. Thad, U.S. Senator from the State of Mississippi... 2
Frist, Hon. William H., U.S. Senator from the State of Tennessee. 3
Prepared statement........................................... 32
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 9
Isakson, Hon. Johnny, U.S. Senator from the State of Georgia..... 14
Jeffords, Hon. James M., U.S. Senator from the State of Vermont.. 13
Lott, Hon. Trent, U.S. Senator from the State of Mississippi..... 4
Prepared statement........................................... 33
McCain, Hon. John, U.S. Senator from the State of Arizona,
prepared statement............................................. 33
McConnell, Hon. Mitch, U.S. Senator from the State of Kentucky... 3
Prepared statement........................................... 34
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama...... 5
Warner, Hon. John W., U.S. Senator from the Commonwealth of
Virginia....................................................... 16
WITNESSES
Bottorff, Dennis, nominated to be a member of the Board of
Directors of the Tennessee Valley Authority.................... 18
Committee questionnaire...................................... 55
Prepared statement........................................... 52
Responses to additional questions from:
Senator Bunning.......................................... 53
Senator Jeffords......................................... 52
Bracy, Terrence L., nominated to be a member of the Board of
Trustees of the Morris K. Udall Scholarship and Excellence in
National Environmental Policy Foundation....................... 17
Committee questionnaire...................................... 39
Prepared statement........................................... 35
DePriest, Donald, nominated to be a member of the Board of
Directors of the Tennessee Valley Authority.................... 24
Committee questionnaire...................................... 142
Prepared statement........................................... 138
Responses to additional questions from:
Senator Bunning.......................................... 140
Senator Jeffords......................................... 139
Duncan, Robert, nominated to be a member of the Board of
Directors of the Tennessee Valley Authority.................... 19
Committee questionnaire...................................... 72
Letters of Support:
Representative Chandler.................................. 89
Representative Rogers.................................... 91
Representative Whitfield................................. 90
Prepared statement........................................... 69
Responses to additional questions from:
Senator Bunning.......................................... 70
Senator Jeffords......................................... 69
Sansom, William, nominated to be a member of the Board of
Directors of the Tennessee Valley Authority.................... 22
Committee questionnaire...................................... 109
Prepared statement........................................... 106
Responses to additional questions from:
Senator Bunning.......................................... 107
Senator Jeffords......................................... 106
Thrailkill, Howard, nominated to be a member of the Board of
Directors of the Tennessee Valley Authority.................... 22
Committee questionnaire...................................... 130
Prepared statement........................................... 126
Responses to additional questions from:
Senator Bunning.......................................... 128
Senator Jeffords......................................... 127
Udall, Hon. Mark, U.S. Representative from the State of Colorado. 8
Prepared statement........................................... 34
Williams, Susan Richardson, nominated to be a member of the Board
of Directors of the Tennessee Valley Authority................. 21
Committee questionnaire...................................... 95
Prepared statement........................................... 92
Responses to additional questions from:
Senator Bunning.......................................... 93
Senator Jeffords......................................... 92
ADDITIONAL MATERIAL
Fact Sheets:
Morris K. Udall Foundation Overview, January 2006............ 37
TVA in Georgia............................................... 152
CONSIDER PENDING NOMINATIONS
----------
WEDNESDAY, FEBRUARY 8, 2006
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
628, Senate Dirksen Building, Hon. James Inhofe (chairman of
the committee) presiding.
Present: Senators Inhofe, Warner, Thune, Isakson, and
Jeffords.
Senator Inhofe. We will call this hearing to order.
What we are about to witness I think is unprecedented. I
don't want you eight nominees to think this happens all the
time. If you weren't very special, then this wouldn't be
happening today.
While we are waiting, we have a couple more to get here, a
couple more members who wanted to be involved in introductions.
I would just mention with my colleague, Senator Jeffords, that
this is the first meeting we have had this year. Last year we
finished, of course, the Transportation bill. We are very proud
to have passed to the floor both the WRDA bill and the Water
Infrastructure bill. In fact, with the efforts of many members
up here other than myself, we were able to get 78 signatures
out of 100 Senators, asking our majority leader to bring up the
WRDA bill.
I had breakfast, at the prayer breakfast, with Bill Frist
this morning. He is going to be here to participate in this,
and I want everyone to encourage him to bring up the WRDA bill
before he leaves.
[Laughter.]
Senator Inhofe. We have a lot of things. We have the
Endangered Species Reform bill and other things. We are going
to have a very, very busy time here in this Environment and
Public Works Committee.
What I would like to do, I have an opening statement that I
am going to enjoy very much, and I think some of you will, too.
It is talking about a little bit of the history of the TVA and
how it relates to the history of something that happened, an
entity we have in Oklahoma called the Grand River Dam
Authority, kind of a miniature of the TVA, and some of the
corruption we are going through now that the TVA went through
about a decade and a half ago.
But before that, since we have several Senators and their
time is very valuable, I would like to take the ones who are
here in order of seniority, which will start from here and come
this way, for the purpose of introducing whomever they have
come here to introduce. Then I will give my opening statement
and probably your opening statement too, Senator Jeffords, then
we will go on to the opening statements of our nominees.
I have to say this about our nominees, particularly the
seven for the TVA. I have never seen a more impressive bunch of
bios. I have read them all, and I just can't believe that they
are willing to take this time to serve their country. I just
applaud them in advance. I am looking forward to working with
them.
So Senator Cochran, why don't we start with you, with
whatever you have come here to do this morning.
STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM THE STATE OF
MISSISSIPPI
Senator Cochran. Thank you, Mr. Chairman. We appreciate
very much your inviting us to introduce members of the board of
the Tennessee Valley Authority. I am pleased that one of the
new members of the board is from my State of Mississippi. Don
DePriest is a close personal friend of mine. He has been a very
successful businessman in Columbus, MS. He is a native of
Tennessee. He has friends across the mid-South, and he is one
of the finest citizens we have in our State. The Tennessee
Valley Authority is going to be well served, I'm sure, with Don
DePriest serving as a member of the board of TVA.
We have a distinction in our State in which we are very
proud. When the Tennessee Valley Authority was first
established, Tupelo was the first municipality to get service
from this new electric generation and distribution entity. It
provided reasonably priced electric power to that town and then
of course, spread throughout the TVA region. It has continued
to be a very important part of our economy in our State of
Mississippi. Consumers benefit from reasonably priced electric
power, and I am sure this board, with Don DePriest being
involved, will help ensure the continuation of the service and
the outstanding record that TVA has provided.
TVA is an economic development tool as well. There are many
activities of TVA that are largely unnoticed. TVA has done a
great job in supporting agriculture, people who live in small
towns, and rural communities, throughout this region of our
country.
Don DePriest personally is a great success story. He went
to college in Lambuth, TN, and at the University of Memphis. He
came to Columbus and started establishing communication
businesses, and manufacturing companies, in the health care
area and textile area. Some of these businesses have gone on to
be listed on the New York Stock Exchange and other exchanges.
He is involved in investments throughout the world and in
cellular telephone activities in Asia and Europe.
Don DePriest is really quite a success story. I don't know
how he can keep up with all the things in which he is involved
and still have time to serve as the head of our local
manufacturing association in Columbus, MS. He is working as a
volunteer in the Boy Scouts and is active in his church. He and
his wife, Sandra, are well respected throughout Columbus. She
is an Episcopal priest. Their children are talented and smart.
I am really proud to have known him as a friend for these
many years and to recommend him to you today for confirmation.
Senator Inhofe. Thank you, Senator Cochran.
Senator Frist, before you came in, we said that we had a
lot of requests from members, and we are taking them in order
of seniority. We will recognize you now for any comments you
want to make about the nominees.
STATEMENT OF HON. WILLIAM H. FRIST, U.S. SENATOR FROM THE STATE
OF TENNESSEE
Senator Frist. Thank you, Mr. Chairman. I will be very
brief, in fact, I will not be commenting specifically on the
nominees except to say that I know most all of them very well
and have tremendous respect for them. This is exactly the sort
of quality that was envisioned when this initial legislation,
which changed the nature of the board, was proposed.
It is an expanded, modernized board. What we have really
done through legislation which I proposed, I think about 9
years ago now, initially was to modernize this board and bring
it up to date, consistent with any other $7 billion company
that is out there today. It was clear to me in the past from
dealing with the TVA board that it was time to modernize it in
the sense of having a CEO with a board that has the appropriate
range of expertise, of qualifications, of experience. It is a
range, as we will hear in our presentations today.
It was about a year ago that our legislation to modernize
the board passed the Congress. It was enacted into law as part
of the fiscal year 2005 Omnibus Appropriations bill. I think
the quality of these nominees is a real testament to the fact
that there is both a need but also that there will be a huge
positive impact on the operation of TVA in the years ahead.
I of course am especially pleased to recognize the three
nominees from Tennessee: Denny Bottorff, Bill Sansom and Susan
Richardson Williams, all good friends, all of them experienced,
all of them with the qualifications that I expect will be to
the benefit of the TVA region but also the expanded region.
So Mr. Chairman, I simply wanted to come by and say thank
you, thank you for holding the hearing in an expedited way. I
know all my colleagues will be talking on the individual
nominees. But this is exactly what was envisioned when we
passed this legislation a year ago and it will be fulfilled.
Thank you.
Senator Inhofe. Thank you, Senator Frist.
Senator McConnell.
STATEMENT OF HON. MITCH McCONNELL, U.S. SENATOR FROM THE STATE
OF KENTUCKY
Senator McConnell. Thank you, Mr. Chairman. I am here today
on behalf of a nominee from Kentucky, whom I have known since
he was in college at Williamsburg College in southeast Kentucky
in the early 1970s. He subsequently went to the University of
Kentucky College of Law, has studied at Harvard Business
School. He has been an outstanding banker and citizen in my
State for a long time.
Mike has a big job, because this is probably not a
completely appropriate forum to make this point, but Mike has a
big job because Kentuckians are just not very happy with TVA.
TVA rates for Kentucky customers are 30 percent higher than any
other Kentucky power providers. Put another way, if you are
inside the TVA wall, you get high rates. If you are outside and
you are in the service area of an investor utility, for
example, you have lower rates. That cost Kentuckians about $100
million last year.
In addition to that, TVA raised rates on its Kentucky
customers by 7.5 percent last year. That is one of the largest
rates in the history of TVA over a 73-year period. But they did
find an opportunity to give $60 million in bonuses to their
employees last year.
We have had difficulty getting TVA to allow Kentucky
customers the right to purchase power from more affordable
providers. They have refused, in effect, the transmission of
the power on their power lines, flouting a contract to the
contrary they signed in 1997. Sorry to rain on the parade with
a litany of complaints, but Mike is going to go on this board
as a representative of our TVA customers in Kentucky with some
real challenges in order to try to bring about the equity we
have been seeking for a number of years.
I can't think of anyone better to do that, Mr. Chairman. He
is a truly outstanding person, one of the finest people I have
known in my entire life. I think he will be a fine addition to
this newly reconstituted TVA board.
I would just like to ask unanimous consent that my full
remarks on behalf of Mike be inserted into the record.
Senator Inhofe. Without objection.
Senator McConnell. Thank you.
Senator Inhofe. Senator Lott.
STATEMENT OF HON. TRENT LOTT, U.S. SENATOR FROM THE STATE OF
MISSISSIPPI
Senator Lott. Thank you, Mr. Chairman and Senator Jeffords
and the distinguished Senator from Georgia. Thank you very much
for having this hearing and allowing us to appear before you.
I am sorry that Senator Frist did leave, because I wanted
to commend him publicly for his leadership in helping produce
the legislation that made this change in the Mississippi-
Alabama-Kentucky-Tennessee Valley Authority. You will notice
the way I said that. I do think that it is time that we made
that change. This is a $7 billion a year business. It is huge.
It needs to be run more as a business, as well as a service
entity. I think this new board gives us that opportunity, to
have a CEO and board of directors.
So in that vein, I think it is very important that we have
men and women on that board from all the States in the region
that have unique capabilities and business experience. That is
why I am just really delighted to support the nomination of
Donald R. DePriest, who is clearly one of the most outstanding
citizens in our State.
He has been a successful businessman, he is involved in
civic affairs, he has just been supportive of every major
positive effort we have had in our State. I think it is a great
credit to TVA that he is willing to serve in this new position.
He is married to his wife, Sandra, and they have four children,
Sally, Robert, John and Warner. I mention that for the record
because they also are going to make a sacrifice by Don serving
in this position.
He has served as Chairman of the Columbus, Mississippi
Utilities Commission, which is a TVA Authority power
distributor. So he is personally directly knowledgeable about
what TVA does and what its needs and possibilities are. He is a
member of the Mississippi Governor's Venture Capital Task Force
and the State of Mississippi Audit Oversight Committee on
Ethics, all of which will be helpful to him in dealing with the
future at TVA.
He has been a very aggressive business leader. He has been
CEO and Chairman of Charisma Communications, a former Union
Planters Bank director, founder of MicroTek Medical, Inc. and
Boundary Healthcare Products. He currently serves as CEO and
Chairman of MCT Investors and Chairman of MCT Corporation. So
he is an accomplished businessman, but he has taken time to
work in Mississippi with our historic preservation.
He has been president of his area Scout council. He holds a
silver beaver award from Scouts, and those of you in Scouts
know that is their highest honor. The list goes on, everything
up to and including serving as a trustee of the National
Symphony Orchestra. I don't know how he has time to enjoy good
music along with his other achievements.
So I am really delighted that he has been willing to serve
here and the President has selected him to serve on the TVA
board. I am expecting great things from him and this new board.
I believe that the Tennessee Valley Authority will be better
run, more responsibly run, and provide good power and good
services to people in the region. I thank you very much for
allowing me to participate in these hearings.
Senator Inhofe. Thank you, Senator Lott.
Senator Sessions.
STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM THE STATE OF
ALABAMA
Senator Sessions. Thank you, Mr. Chairman. I am pleased
that President Bush has nominated Howard Thrailkill to serve on
the board of directors of the Tennessee Valley Authority. How
big is TVA? Well, it has a $25 billion debt. That ought to tell
us something. That is not a small, little entity. Howard has
the kind of background, skills and interest to play an
important role in making sure that TVA is relevant to the
future.
I think the people of the Tennessee Valley are coming more
and more to understand that the Tennessee Valley Authority is
really contained now. It does not receive outside Federal
dollars. So when moneys are wasted, it is money they have to
pay in their rates. There are no free lunches. It is just a
deal in which we have to keep those costs in a reasonable way,
make good business decisions for the future, and eliminate some
of the errors that have been made in the past that have
actually been the cause of the debt that we now see.
So I think the new board has great potential. I am excited
about it. Alabama has never had a member of the board. Senator
Shelby and I are delighted that we have one now and that we
have one as strong as Howard Thrailkill.
His background as an engineer and successful businessman is
extraordinary. He retired in September as president and chief
operating officer of Adtran, a telecommunications and equipment
maker in Huntsville, AL. Seventeen hundred employees, when they
started they had zero employees. They are one of the world's
great communication technology companies. It is a success story
of an extraordinary nature.
He formerly served as president of the Computer Systems
Division and corporate vice president of Motorola. He was vice
president and general manager of the Composition Systems
Division and Computer Systems Division of Harris Corporation.
Additionally, Howard just completed a tour as chairman of the
Huntsville-Madison County Chamber of Commerce, which is one of
our most progressive and growing areas. In that capacity, he is
known, and in other capacities, as a civic leader who is very
well informed about the entire nature of the Tennessee Valley
Authority.
So we are excited about his appointment. I think he is just
the kind of person that should be on there. I am pleased that
President Bush has seen fit to nominate him, because it
indicates that he too is committed to having directors who have
the capability to engage the top management of the TVA, to ask
the tough questions, to help them make long-term, important
decisions. If we get that kind of leadership, this new
legislation will have been worthwhile.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Sessions.
Senator Bunning.
STATEMENT OF HON. JIM BUNNING, U.S. SENATOR FROM THE STATE OF
KENTUCKY
Senator Bunning. Thank you, Mr. Chairman, Senator Jeffords,
Senator Isakson. I appreciate the opportunity to be here and to
introduce my friend and fellow Kentuckian, Mike Duncan, to be a
nominee for the Tennessee Valley Authority's new board. I have
known Mike for many years and known him to be a man of
integrity and fine character. He takes public service seriously
and he is a man of compassion and fairness.
His educational and philanthropic endeavors to better the
lives of Kentuckians is unmatched. Mike has been past president
of the Kentucky Bankers Association and a director of the
Cleveland Federal Reserve Bank, Cincinnati Branch. His banking
and finance experience will bring a unique perspective when it
comes to TVA's management and accounting of its finances and
debt.
TVA certainly needs a board member who understands
economics to help get its $25 billion in debt under control.
What I like about Mike is that he is not a yes man, or someone
who simply gets going to go along. If there is a problem, Mike
will identify it. He will work hard to fix the problem, even if
it is not a popular solution. Mike takes his endeavors
seriously and I know he will take this job as a TVA board
member seriously, too.
TVA has its problems. It has issues with debt, it is
unregulated by FERC. Some residents in the TVA region, as my
senior Senator from Kentucky has said, pay higher costs for
their electricity than those living outside the TVA fence. This
defeats the purpose of TVA. I know that Mike will help bring
these issues to light and as a board member, he will advocate
common sense solutions.
Mike will help to work to ensure that citizens in the TVA
region will receive reliable, efficient and cheap power for
bettering their lives. I appreciate the Chairman's and Ranking
Member's invitation to introduce Mike Duncan, and I look
forward to a swift confirmation in the committee and on the
floor.
Thank you very much.
Senator Inhofe. Thank you, Senator Bunning.
Before we hear from our last Senator, let me just tell you
nominees, this is unprecedented. I have never seen this many
Senators show up to say so many good things about so many good
people.
Senator Alexander.
STATEMENT OF HON. LAMAR ALEXANDER, U.S. SENATOR FROM THE STATE
OF TENNESSEE
Senator Alexander. Thank you, Mr. Chairman, Senator
Jeffords, members of the committee.
First I would like to compliment Senator Frist and former
Senator Thompson. It was their legislation a few years ago that
caused this to happen. It is exactly the right thing to do, in
my judgment. An $8 billion a year company, the largest public
utility in America, needs a modern governance system and a
chief executive officer. Since its inception in the early
1930s, mid-1930s, TVA has been run by a committee of three.
Most of those members of the committee have been very good
people.
But it is an awkward management process. It would be like
having three committee chairmen or three Governors or three
mayors. This makes much more sense. TVA does have some
problems. But it has also done some things very well. In the
Tennessee Valley region, as a former Governor, I have
especially seen the importance of having large amounts of low-
cost, reliable, clean energy available as we sought to raise
our standard of living. That is important in Kentucky, Alabama
and Mississippi, as well as it is in Tennessee.
I am chairman of the TVA congressional Caucus, and I am
hopeful that with this new board, that our caucus can be more
active and work together better to make sure that people in our
region are better served. We have rapidly rising natural gas
prices. We have rapidly rising gasoline prices. We don't need
rapidly rising electricity prices. And that should be the focus
of TVA.
The three nominees from Tennessee are people that I realize
I have known for at least 30 years in each case. Dennis
Bottorff, Denny Bottorff from Nashville, is widely regarded in
our State as one of our most accomplished executives. He is
from Vanderbilt, he is vice chairman of Vanderbilt University
today. He is an engineer by background and a banker by
profession. He is involved in activities throughout Nashville
and is enormously well respected.
Bill Sansom is from Knoxville. He has been a leader in the
University of Tennessee. He was the top graduate at Citadel, as
a Marine. He was president of the Knoxville Area Chamber of
Commerce when I invited him to come be the transportation
commissioner and then the chief operating officer of the State
Government.
Susan Williams has a distinguished career as well. It is a
little different career. She comes from a TVA family. She may
say this in her testimony. Her father worked for TVA from the
time it was created. She was personnel commissioner in my
cabinet as Governor. She has always been a pioneer among women
in our State. She has a broad background and brings a lot to
the board.
I also ought to say how much I respect the other nominees.
Don DePriest I have known and known about for a long time. He
has been interested in TVA for many years. Mike Duncan, I have
known for a long time. He has a distinguished background. Mr.
Thrailkill, I have not known as long, but I can't think of a
stronger nominee from Alabama.
So I am delighted that we are moving from a committee of
good people to a part-time board, a modern governance structure
and a full time chief executive officer to run the Nation's
largest public utility. I expect the citizens of the Tennessee
Valley and especially my State of Tennessee to benefit from
that by having better incomes and cleaner air and a more secure
future.
Thank you, Mr. Chairman, for your courtesy.
Senator Inhofe. Thank you, Senator Alexander.
That completes our list that will be making comments about
the TVA board. Any of you Senators who would like to stay here,
you are certainly welcome. But we know you have other
obligations. Anyone who wants to join the dais with us is
certainly welcome to do so.
Also, Senator Jeffords, we have Congressman Udall here. We
don't want to sell Terrence Bracy short, because this is
primarily TVA. But if Congressman Udall would like to come
forward to make any comments about the nominee to the
Foundation, you are welcome to do so.
STATEMENT OF HON. MARK UDALL, U.S. REPRESENTATIVE FROM THE
STATE OF COLORADO
Mr. Udall. Thank you, Senator Inhofe. I have a bevy of
Congressmen out there to match the Senators that you had up
here earlier.
[Laughter.]
Mr. Udall. I want to thank Senator Jeffords, my friends,
Senator Thune and Senator Isakson, for holding the hearing
today. I have a statement for the record, and I will just
submit that if I might, and make a couple of comments about the
Udall Foundation.
Senator Inhofe. Of course. Without objection, your entire
statement will be made a part of the record.
Mr. Udall. Thank you, Senator.
I am here to just express my strong support for Terry Bracy
to continue on the Board of Trustees of the Udall Foundation. I
think I speak for most of the Udall family, there are a lot of
Udalls, so I can't claim I speak for every one of them. But we
are all very pleased with what the Foundation has accomplished,
and I know my father would be.
The Foundation focuses on training Native American leaders
to run their governments effectively and efficiently. It also
works with environmental leaders across the spectrum.
I think probably of real interest to this committee is the
environmental mediation work that the Udall Foundation has been
doing across the southwest. I think the model that it has been
able to build is one that we could replicate around the
country.
So I wanted to take the time to come over here today to see
how things are unfolding over here on this side of the Capitol,
and in particular to express my gratitude to Terry Bracy. He
has worked untold hours, unpaid, in a labor of love to keep the
spirit of my father and his good work alive. With that, I would
ask for his confirmation, and I appreciate the opportunity you
are going to give him today to testify.
Senator Inhofe. Thank you, Congressman Udall. We are all
very grateful for what you and your family have done for
America. Thank you so much for being here this morning.
Mr. Udall. Thank you very much, Senator.
OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM
THE STATE OF OKLAHOMA
Senator Inhofe. We would ask now for the nominees to please
take your place at the table. Let's see, I guess we have name
tags here, so we will start with Mr. Bracy, you will be on the
far right.
First, I want to welcome all of our nominees here this
morning. We have seven very well qualified nominees before this
committee. Six have been nominated to serve on the TVA, as we
heard during the introductions, on the TVA's board of
directors. That is Dennis Bottorff, Robert Duncan--Mr. Duncan,
let me ask you a question. Are you related to any of the
Duncans, Jimmy Duncan and so forth?
Mr. Duncan. Yes, we are distant cousins.
Senator Inhofe. Oh, you are? Good. I served with both Jimmy
Duncans and enjoyed it very much over on the other side.
We have Susan Richardson Williams, Bill Sansom, Howard
Thrailkill and Donald DePriest. We also have Terrence Bracy,
who has been renominated to the position of the board of
trustees of the Udall Scholarship Foundation. We have so many
TVA nominees here today because we have restructured the TVA
board. It was restructured not only to modernize it, the old
structure was in place since 1933, but also because there have
been ethical concerns in the past boards.
Before we get into those issues, let me say that I have
been very pleased with the current board, Bill Baxter, Skila
Harris and the recently retired Glenn McCullough. They have all
served the people very well and worked to serve the best
interests of those in the Valley. I want to publicly voice my
gratitude to them.
But in the past, specifically during the tenure of Chairman
Craven Crowell, from 1993 to 2001, there were serious ethical
concerns. It is no secret that there was overwhelming evidence
of cronyism, no-bid contracts and other shady dealings that we
would all consider unethical, excessive and abuse of the
office. The abuse was chronicled by many major publications,
including the Los Angeles Times and Time Magazine.
The TVA inspector general investigated the situation and
called it, ``public perception of favoritism, lack of TVA
oversight and controls which allowed certain consultants to
make excessive profits, over-bill and sometimes be
unaccountable for their services and charges.'' While the laws
may not have been broken, this is characteristic of corrupt
people that get into power and they have all this money that
they have control over that belongs to the public, they all are
very careful not to break any laws. But we know it is wrong.
While the laws were not broken perhaps at that time, it is
clear that these actions were unacceptable. Fortunately, new
leadership at the TVA cleaned up the mess and the TVA was
reformed. That reform continues today with the new board
structure that is represented by these extremely qualified
nominees.
I bring up this ethical issue, not only as a warning to
nominees, but also because my constituents in Oklahoma are
facing something very similar today by the CEO of the Grand
River Dam Authority, headed by a former State Senator, Kevin
Easley. The GRDA was created by the Oklahoma legislature in
1935, and is today very much Oklahoma's version of the TVA. It
manages water systems and produces power for Oklahoma.
Much like the TVA of a decade ago, Chairman Easley appears
to have taken the route of using the GRDA and its customers, my
constituents, I might add, for his own benefit and for the
benefit of his political cronies.
I have a special dog in this fight, in that my father-in-
law, Glade R. Kirkpatrick, was in the State legislature,
Senator Warner, many years ago, in the middle 1930s. He
actually drafted the legislation that created the GRDA. He did
so with the intent of the GRDA to serve the people in the
interests of Oklahoma. Unfortunately, Chairman Easley appears
to be using the people of Oklahoma to fill his appetite for
luxury and excesses.
Let me highlight a few examples of what has been alleged by
those who know the GRDA very well. I ask you nominees to recall
the TVA a decade ago and see what parallels you see. I think
what I am about to describe to you would make an excellent
book. However, it would have to be a novel, because no one
would believe that it could be true.
Let's start off with his creation of his new position.
Chairman Easley, in his final term as State Senator, due to
term limits, co-authored State legislation to overhaul the
GRDA, removing the current board to provide for completely new
appointments. This new board then hired Easley to serve as CEO,
giving him a 3-year contract and a raise of $15,000. His salary
is now above the annual salary set by State law and more than
the Governor of Oklahoma makes.
Let's be sure we understand that Chairman Easley's
legislation, he legislatively created the job that he now
holds. To pay for his excesses, he immediately started raising
more money. Electrical rates went up, user fees went up in the
lakes that were involved. Well, the legislative maneuvers
through legislation sponsored by Chairman Easley, serving as
the State Senator prior to his appointment as CEO, the GRDA was
exempt from traditional State oversight, including the Open
Records Act. That is comparable, I guess, I would say, on the
Federal scale, to the Freedom of Information Act, FOIA.
A total of nine pieces of legislation have been passed by
Easley and colleagues since 2001, eroding the transparency and
limitations of this State agency. But not to worry, don't
worry, because there is oversight. Easley's own mother, State
Senator Mary Easley, currently serves as the Vice Chairman of
the State Senate Energy and Environment Committee, which has
oversight over the GRDA. So Mama's going to watch his every
move.
Now, the unprecedented spending, never happened before,
Chairman Easley purchased a $550,000 jet helicopter used by
Easley and his friends for their own travel. Easley has
purchased three boats since 2004, all valued over $50,000
apiece. His third boat purchase was a $66,213 Cobalt, with a
10-disc CD player and sharkskin cover that Easley assures will
become part of the lake patrol fleet.
Easley also purchased an $11,884 Sea-Doo. That is a little
water toy that Senator Easley rides around the lake, I guess.
All of these new purchases have never before been required for
GRDA operations. Allegations of extravagance in entertainment
and meals and travel have also been made. I say to my friends
who are nominees here today, your past TVA Chairman Crowell and
Mr. Easley have a lot in common: abuse of corporate aircraft,
excessive compensation, no-bid contracts, and the list goes on
and on.
New office space, this is a good one here. You see, the
GRDA, we have 77 counties in Oklahoma. They have jurisdiction
in 24 counties. Oklahoma County, which is the county for
Oklahoma City, is not one of those. GRDA has acquired a 2,200
square foot new office in downtown Oklahoma City. This office
is being leased at over twice the cost of what other State
agencies are paying in rent. Although Easley originally
reported to the press the total cost of renovation was $24,000,
we now find out it has now exceeded $135,000 to date for the
renovations. It is a real play palace located in a trendy club
and entertainment Bricktown area of Oklahoma City. I would
invite all of you to come and visit Oklahoma City and see this
beautiful area of fun and games.
The Bricktown area of Oklahoma City, this property is
located above Hooters Restaurant and Bar, and next door to the
Wild Coconut Tiki Lounge, a very appropriate location for a
quasi-State agency to select to conduct its businesses. By the
way, the new space is only going to accommodate one GRDA
employee.
Since becoming CEO, Easley has allegedly awarded no-bid
sole source contracts to friends and colleagues for lobbying,
marketing and personal services exceeding State limits for such
expenditures. Whether or not any of these actions are in
violation of the law is something that Oklahomans are looking
into. What is not in question is the fact that a culture of
ethical corruption has found a home at the GRDA in my State of
Oklahoma.
Just as with the TVA, I believe that only a change in
leadership at the GRDA will bring about the cultural change to
put it back in business of serving the people and out of
business of the people serving the GRDA. You cleaned up your
house, and now we need to clean up ours. Any time you have a
gigantic budget, virtually no oversight, the temptation will be
there. It is the insatiable appetite of unelected bureaucrats
to spend money that is not theirs. You have corrected your
problem at TVA, and we will do the same.
So it is my hope that the new TVA board that is sitting
here today will continue to make ethical behavior a top
priority, and I am sure you have. I said earlier, at the
beginning of this meeting, I say to my Senators who were not
here at the time, I don't recall in the 20 years that I have
been here ever seeing a more qualified group of nominees as the
seven of you sitting before us today. We are honored to have
you here, willing to share your time, your expertise, and your
abilities to make this a greater country.
With that, I will recognize the Ranking Minority Member,
Senator Jeffords.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe, U.S. Senator from the
State of Oklahoma
I want to welcome all of our nominees here this morning. Today, we
have seven very qualified nominees before this committee: six have been
nominated to serve on TVA's Board of Directors: Dennis C. Bottorff,
Robert M. Duncan Sr., Susan Richardson Williams, Bill Samson, Howard
Thrailkill, and Donald DePriest. We also have Terrence Bracy, who has
been renominated to a position on the Board of Trustees at the Morris
K. Udall Scholarship Foundation.
We have so many TVA nominees here today because we have
restructured the TVA Board. It was restructured, not only to modernize
it--the old structure was in place since 1933 but also because there
have been ethical concerns with past boards. Before we get into those
issues, let me say that I have been very pleased with the current
board; Bill Baxter, Skila Harris, and the recently retired Glenn
McCullough--they have all served the people well and worked to serve
the best interest of those in the Valley. I want to publicly voice my
gratitude to them. But in the past, specifically during the tenure of
Chairman Craven Crowell from 1993 to 2001, there were serious ethical
concerns. It's no secret that there was overwhelming evidence of
cronyism, no bid contracts, and other shady dealings that we would all
consider unethical, excessive, and abuse of the office. The abuse was
chronicled by many major publications, including the Los Angeles Times
and Time Magazine. The TVA Inspector General investigated the situation
and called it ``public perception of favoritism'' and there was ``lack
of TVA oversight and controls which allowed certain consultants to make
excessive profits, overbill and sometimes be unaccountable for their
services and charges.'' While laws may not have been broken, and it is
certainly characteristic of the unethical to be very careful and try
not to break the law, but it is clear that these actions were
unacceptable. Fortunately, new leadership at TVA cleaned up the mess
and the TVA was reformed. And that reform continues today with the new
board structure that is represented by these extremely qualified
nominees.
I bring up this ethical issue, not only as a warning to the
nominees, but also because my constituents in Oklahoma are facing
something very similar today by the CEO of the Grand River Dam
Authority, former State Senator Kevin Easley. The GRDA was created by
the Oklahoma Legislature in 1935 and is today very much Oklahoma's
version of the TVA. It manages water systems and produces power for
Oklahoma. And much like the TVA of a decade ago, Chairman Easley
appears to have taken the route of using the GRDA and its customers, my
constituents, for his own benefit and for the benefit of his political
cronies. I have a special dog in this, my father-in-law, Glade R.
Kirkpatrick, wrote the legislation to create the GRDA and he did so
with the intent of the GRDA to serve the people and interest of
Oklahoma. Unfortunately, Chairman Easley appears to be using the people
of Oklahoma to fill his appetite of luxury and excess. Let me highlight
a few examples of what has been alleged by those who know the GRDA very
well. And I ask you nominees to recall the TVA a decade ago. This would
be a great book, but it would have to be a novel because no one would
believe it.
Chairman Easley, in his final term as State Senator due to term
limits, co-authored State legislation that overhauled the GRDA removing
the current board to provide for completely new appointments. This new
board then hired Easley to serve as CEO giving him a 3-year contract
and a raise of $15,000. His salary is now above the annual salary set
by State law, and more than the Oklahoma Governor makes. Let's be sure
we understand Chairman Easley legislatively created a job for himself
to pay for his excesses the first thing he did was to raise rates and
fees.
Through legislation sponsored by Chairman Easley serving as a State
Senator prior to his appointment as CEO, the GRDA was exempted from
traditional State oversight including the Open Records Act. A total of
nine pieces of legislation have been passed by Easley or colleagues
since 2001, eroding the transparency and limitations of this State
agency. But not to worry, there is oversight. Easley's own mother,
State Senator Mary Easley, currently serves as the Vice-chairman of the
State Senate Energy and Environment Committee which has oversight of
the GRDA. And Mama's watching his every move.
Chairman Easley purchased a $550,000 jet helicopter used by Easley
and his friends for their own travel. Easley has purchased three boats
since 2004 all valued at over $50,000. His third boat purchase was a
$66,213 Cobalt with a 10-disc CD player and a sharkskin cover that
Easley assures will ``eventually'' become part of the lake patrol
fleet. Easley also purchased an $11,884 Sea Doo now that's a little
water toy that he rides. All of these new purchases have never before
been required for GRDA operations. Allegations of extravagant
entertainment, meals, and travel have also been made. So, I say to my
friends who are nominees here today, your past TVA Chairman Crowell and
Mr. Easley have a lot in common. Abuse of corporate aircraft, excessive
compensation, no-bid contracts, and the list goes on.
Now, how about this one: GRDA has acquired a 2,200 square foot new
office in downtown Oklahoma City. GRDA serves 24 counties in Oklahoma--
Oklahoma County is not one of them. This is the first time GRDA has
``needed'' an office in Oklahoma City. This office is being leased at
over twice the cost of what other State agencies are paying in rent.
Although Easley originally reported to the press the total cost of the
renovation to be $24,000, GRDA has spent over $135,000 to date for the
renovations. It's a play palace located in the trendy club and
entertainment, Bricktown area of Oklahoma City located above Hooters
restaurant and bar and next to the Wild Coconut Tiki Lounge. A strange
location for a quasi-State agency to select for conducting the business
of its rate payers, don't you think? By the way the new space will
office only one GRDA employee.
Since becoming CEO, Easley has allegedly awarded no-bid, sole
source, and inflated contracts to friends and colleagues for lobbying,
marketing, and personal services--exceeding State limits for such
expenditures.
Whether or not any of these actions are in violation of the law is
something that Oklahomans are looking into, but what is not in question
is the fact that a culture of ethical corruption has found a home at
the GRDA.
Just as it was with the TVA, I believe that only a change in
leadership at the GRDA will bring about the cultural change to put it
back in business of serving the people and out of the business of the
people serving the GRDA. You cleaned up your house, now we need to
clean up ours. Any time you have a gigantic budget with virtually no
oversight, the temptation will be there. It's the insatiable appetite
of unelected bureaucrats to spend the public's money on themselves. You
have corrected your problem at TVA, we need to do the same. It is my
hope that the new TVA board, who is sitting here today, will continue
to make ethical behavior a top priority.
Again, I want to thank the nominees for being here today and I look
forward to getting you all confirmed and serving the interests of this
country.
OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM
THE STATE OF VERMONT
Senator Jeffords. Thank you, Mr. Chairman, for that very
interesting introduction.
Welcome to all of you and your families. I would like to
thank each of the nominees here today for their commitment to
public service. One of our finest public servants, especially
in serving to protect our environment, was Mo Udall, a good
friend of mine. He gave us so much inspiration and wisdom, and
encouraged us to be better environmental stewards. He is
greatly missed, but still very much remembered. The Foundation
that bears his name is a tribute to Mo and a living legacy that
will promote environmental education and preservation for
generations.
Mr. Bracy, I am sure you are very proud to serve on the
board. And Mo would be proud of you for your service and your
work in keeping his name synonymous with environmental
responsibility. With these new nominees at the helm, the TVA
needs to continue to provide its core product, wholesale
electric power, competitively, with efficiency and reliability.
The TVA needs to set a standard for public responsibility
against which private companies can be measured. That standard
needs to include better environmental and fiscal
responsibility.
In 1998, the TVA unveiled a new clean air strategy to
reduce the pollutants that cause ozone and smog. Modern
equipment investments will 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. But the TVA should do more than be
focused on a technological solution. The TVA should also be
increasing the use of renewables and enhancing its commitment
to energy efficiency.
I look forward to hearing from all of the nominees and
learning how they see the future for the organization under the
new board structure. Thank you, Mr. Chairman.
[The prepared statement of Senator Jeffords follows:]
Statement of Hon. James M. Jeffords, U.S. Senator from the
State of Vermont
Welcome to all of you and your families. I would like to thank each
of the nominees here today for their commitment to public service.
One of our finest public servants, especially in serving to protect
our environment, was Mo Udall. He gave us so much inspiration and
wisdom, and encouraged us to be better environmental stewards. He is
greatly missed, but still very much remembered. The Foundation that
bears his name is a tribute to Mo and a living legacy that will promote
environmental education and preservation for generations.
Mr. Bracy, I am sure you are very proud to serve on the Board of
the Udall Foundation, and Mo would be proud of you for your service and
your work in keeping his name synonymous with environmental
responsibility.
With these new nominees at the helm, the TVA needs to continue to
provide its core product--wholesale electric power--competitively,
efficiently and reliably. The TVA needs to set a standard for public
responsibility against which private companies can be measured.
That standard needs to include better environmental and fiscal
performance. In 1998, the TVA unveiled a new clean-air strategy to
reduce the pollutants that cause ozone and smog. Modern equipment
investments will 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. But the
TVA can and should do more than be focused on a technological solution.
The TVA should also be increasing its use of renewables and enhancing
its commitment to energy efficiency.
I look forward to hearing from all of the nominees and learning how
they see the future for the organization under the new board structure.
Senator Inhofe. Thank you, Senator Jeffords, for that
excellent statement.
I would call upon my members to see if there are any other
opening statements.
Senator Isakson.
OPENING STATEMENT OF HON. JOHNNY ISAKSON, U.S. SENATOR FROM THE
STATE OF GEORGIA
Senator Isakson. Thank you, Mr. Chairman.
I have a complete statement for which I would like to ask
unanimous consent be submitted for the record.
Senator Inhofe. Without objection.
Senator Isakson. I want to welcome the board members. I
have had the time to read the resumes of each. They are
extremely qualified and I am going to be delighted to vote for
them in committee.
I will, however, Mr. Chairman, I want to tell you and
Senator Frist, ask for, before we go to the floor, we need to
hold for a second to take a look at some issues that have been
raised to me and that I have raised with some of the other
members, including the discussion I had a long time ago, some
time back, with my distinguished friend from Tennessee, Senator
Alexander. This legislation is great legislation. It creates a
nine-member board, seven of which have to be from States served
by the TVA, two may be from the outside. It is a five-member
staggered board, which is exactly what you need to ensure you
don't get stale and you have some continuity of knowledge, but
you also have new blood.
But it does not necessarily ensure that all the people
served by TVA will in fact be represented on a board of
directors. Going from a three-member executive committee to a
nine-member board of directors portends that the oversight that
the board will provide will be much like that of the oversight
of a corporation to a full-time CT, CEO and its employees.
I want to submit also for the record TVA's Web site, its
references to my State of Georgia that are on that Web site,
which include the fact that 130,000 households in my State, 10
of the fastest growing counties in my State, 15,000 surfeit
acres of water and 300 miles of shoreline are TVA properties in
the State of Georgia. My predecessor, Zell Miller, in fact,
introduced legislation a couple of years ago in anticipation of
this event, trying to find a way to ensure that all the States
would have, over time, representation on the TVA board since
its going to a board of directors type of system.
So Mr. Chairman, I am going to ask you, in your kindness,
and the leader, if they will, to discuss with me before we go
to the floor on this final confirmation, ways that we can
ensure that States like Virginia, North Carolina and Georgia,
who are three of the seven members served by TVA who are not
represented on the board might know that over time there would
be a way to ensure equity of representation of those States
that are served.
My desire to do this is no reflection at all on the
quantity and the content of this distinguished panel. They are
outstanding. I also recognize there is one other appointee left
to come, but I understand that is probably going to be someone
from within the four States that are represented here as well.
So on behalf of the State of Georgia that I represent and
the almost half million people served in my State by the TVA, I
think it is important as we go to this great mechanism of
representation for TVA that we look to the future to ensure
that all the citizens served are over time or in method
represented equitably on the TVA board. I thank the Chairman
for the time.
[The referenced document may be found on pages 152-153.]
[The prepared statement of Senator Isakson follows:]
Statement of Hon. Johnny Isakson, U.S. Senator from the State of
Georgia
Thank you, Chairman Inhofe, for holding this hearing. Today we
undertake one of the most important roles we have as Senators, the role
of ``advise and consent''. I appreciate the opportunity to hear from
all the nominees.
I will, however, today focus my remarks on the nominees for the
Tennessee Valley Authority Board, and specifically on the lack of
diversity in representation amongst that board. Mr. Chairman, some
months back I met in my office with Tom Kilgore, the president and
chief operating officer of the TVA. During that meeting, I expressed to
him my wish that the TVA diversify its board, to include a Georgian.
Mr. Chairman today we have 6 nominees before us and as we speak the
White House is currently in the process of selecting a 7th nominee,
which I have been told from sources familiar with the process will also
be from Tennessee. Each of the nominees before us is well qualified,
but yet again my State of Georgia is not represented on the board. In
fact, the State of Georgia has never been represented on the TVA board.
This current board also does not represent the States of North
Carolina, Virginia, and Mississippi which are all part of the TVA
territory. This is extremely disappointing.
Mr. Chairman, I would like to submit for the record a document that
my staff printed off the TVA Web site. This document is entitled ``TVA
in Georgia'', and is a fact sheet for the year 2004 which I presume is
the latest data available to the TVA. On this sheet it says the
following:
``Distributors of TVA power sold nearly 1.9 billion kilowatt-hours
to more than 123,000 households located in 10 north Georgia counties.''
If we assume that each household houses on average three
individuals, which I believe is a fair assumption, then that equals
369,000 constituents of mine who rely on TVA and yet have never been
given a voice on their board.
Today I am giving them that voice.
Mr. Chairman, it is my intention to introduce legislation to expand
the TVA board to 13 part-time members and to add a requirement that of
these 13 members at least 1 member from each State in the TVA service
area must be on that board.
I am sure that each of these members is well qualified, Mr.
Chairman, and I will vote to move them out of committee when given the
chance. However, I will place a hold on their nominations until I am
given the opportunity by Senate Leadership to explore my options
through legislation or amendments to expand the board to expand the
board to include individuals from each State in the TVA.
Thank you Mr. Chairman, I yield back my time.
Senator Inhofe. Certainly I say to my friend, Senator
Isakson, I give you that commitment, and I would hope that in
your opening statements, some of you may address some of the
concerns that were expressed by Senator Isakson.
We are honored to have the Senator with the most seniority
on this committee, who would be Chairman except that he is
Chairman of the Senate Armed Services Committee, and I am very
grateful for that, here with us today, Senator Warner.
OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE
COMMONWEALTH OF VIRGINIA
Senator Warner. Thank you, Mr. Chairman.
All of us spend lots of time listening around here, but I
really enjoyed your opening statement and indeed, that of the
Ranking Member. I think you said it all, and there is little
left for me to add. But in following Senator Isakson's
observation that our two States are left out of the
representation, I noticed, having studied the distinguished
resumes of all of you--and thank you for stepping forward as
public servants.
Mr. Bottorff, you were in our State for some time. So we
feel that we are going to be represented. Would you kindly
acknowledge, the recorder does not put into the record that you
are nodding yes.
[Laughter.]
Mr. Bottorff. Yes sir. I will acknowledge I had the good
fortune to serve as the president of one of Virginia's major
banks for 4 years. I also want to say that both of my sons were
educated in Virginia's schools. One at the University of
Virginia and the other attended Norfolk Academy. Both received
excellent education and I feel privileged to have lived in
Virginia.
Senator Warner. I think, Senator Isakson, Virginia is
represented on this board.
[Laughter.]
Senator Warner. Perhaps at your convenience some day, you
will take a look at the rate structure as it has been applied
to my State, and I think possibly yours, where the rates are
really not commensurate with the rural cooperative rate
structure. We have a very fine, well-integrated rural
cooperative network in our State.
Then the publicly owned power companies, again, it is just
not what I would call a reasonable explanation of why the TVA
rates should be so far afield of those two indices. So take a
look at that, if you would, early on in your work.
It is refreshing to see how legislation in the Congress can
engender and produce such an extraordinary panel as this to go
in and correct the alleged wrongs of an institution which
really goes back to the early days of our Republic, in many
ways. This was the first of its type. Thank you very much.
I see our good colleague here, have you further to say, my
dear friend?
Senator Alexander. No, thank you. I have had my say and I
am here to listen.
Senator Warner. Thank you. Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Warner.
We have a required question for all of you to answer, and
if you would respond audibly. Are you willing to appear at the
request of any duly constituted committee of Congress as a
witness?
[Witnesses respond in the affirmative.]
Senator Inhofe. Let the record reflect they all responded
in the affirmative.
Do you know of any matters which you may or may not have
thus far disclosed that might place you in any conflict of
interest if you are confirmed in this position?
[Witnesses response in the negative.]
Senator Inhofe. Let the record reflect they all answered in
the negative.
We will start off with you, Mr. Bracy and then we will work
our way down. I would like to invite you to recognize any
members of your families who may be here today prior to your
opening statement. I would ask that you confine your statement
to 5 minutes, since we have so many of you here. The rest of
your statement will be included as part of the record.
STATEMENT OF TERRENCE L. BRACY, NOMINATED TO BE A MEMBER OF THE
BOARD OF TRUSTEES OF THE MORRIS K. UDALL SCHOLARSHIP AND
EXCELLENCE IN NATIONAL ENVIRONMENTAL POLICY FOUNDATION
Mr. Bracy. Mr. Chairman, thank you very much. Let me point
to my wife, Nancy, my son, Michael and my oldest granddaughter,
Eliza.
Senator Inhofe. Welcome, Eliza.
Mr. Bracy. She wants to be a Senator some day.
Mr. Chairman, you have a lot of witnesses here, and with
the TVA board in attendance and our mediation operation at the
Foundation, I view this as a marketing opportunity. But in any
event, let me say that we really appreciate, on behalf of the
Udall Foundation, the relationship that we have had with this
committee, the help and the direction we have received from the
members and the staff, and the participation in our Native
American internship program. In your case, Senator Inhofe, you
were one of the first to take our interns when you were in the
House. It has become a highly regarded and much sought after
program in Indian country.
The long and short of it is that we started off as a
scholarship foundation, much like the Truman and the Goldwater.
It has been a very successful scholarship program. Over the
last 10 years we have given 1,107 academic awards. We are very
proud of that program. It continues to grow.
The second job Congress gave us was to set up a graduate
school for tribal leaders. In the era of self-governance,
Tribes lacked many of the governance skills needed to suceed.
We were asked to organize a graduate school for tribal leaders,
which we have done with in partnership with the University of
Arizona, which has the largest Indian studies department in the
country and the Harvard Project on American Indian Economic
Development. In the last 5 years, more than 1,700 tribal
executives and leaders have enrolled in our executive education
programs. We are very proud of that. NNI is thought of as the
best in the country.
Finally, and most relevant to this committee, you have
twice passed legislation creating at first what we all viewed
as an environmental mediation center in the Federal Government.
We were happy to take this job on. We didn't really know what
we had.
In retrospect, we just had no idea what the market for this
service was. It has just been enormous. We have been involved
in hundreds of cases throughout the country, from the
Everglades to the Hawaiian coral reefs. It is a very quiet
Agency. We have 24 full-time staff working for us in Tucson,
kind of hidden away from the cross-currents of politics. We
have some 260 qualified private mediators from all over the
country on our Roster, which serves as a resource to us and to
other agencies looking for mediators with whom to contract.
You reauthorized the program and increased our resources
reasonably. It is running extremely well. All I can tell you
about the mediation program is that there is more business than
we can handle. We are very grateful to this committee. Senator
Chafee was one of the guiding hands originally, as was Senator
McCain and others who serve on this committee, particularly,
Senator Jeffords. We are very proud of that program. It is an
amazing program. I would encourage you, far beyond my tenure or
our board's tenure, to continue and work with it.
My final appeal is to remind the committee that I don't do
this alone. We have a group of core trustees who have served at
no cost, Anne Udall, Mike Rappoport, and Eric Eberhard, who
head our committees and work tirelessly. I hope that their
nominations will soon come before this committee. Thank you
very much.
Senator Inhofe. Thank you very much, Mr. Bracy.
Mr. Bottorff.
STATEMENT OF DENNIS BOTTORFF, NOMINATED TO BE A MEMBER OF THE
BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY
Mr. Bottorff. Mr. Chairman, members of this committee,
thank you very much for the opportunity to appear before you
today. This is indeed an honor for me to be considered for the
TVA board. I also want to thank the President, President Bush,
for nominating me. I want to acknowledge my fellow Tennesseans,
Senator Lamar Alexander, and Senator Bill Frist, for their
confidence, encouragement and support.
Most of my life, my adult working life, I have spent in the
private sector, 32 years of which were in commercial banking.
As Senator Warner mentioned, 4 of those years were in the State
of Virginia, where I had the good fortune of being president of
one of Virginia's banks. I retired from commercial banking
about 5 years ago. After doing so, I became a venture
capitalist.
During that time period, I really had no time for public
service. The banking career did afford me some time for
community service on a number of not-for-profit boards. The
situation has been changing recently. In the State of
Tennessee, I was given the opportunity to serve as the
inaugural chairman of an instrumentality of the State of
Tennessee, the Tennessee Educational Lottery. That occurred 2
to 3 years ago. I will say, that experience in public service
has been rewarding, but also very challenging, to be part of a
quasi-public organization, not unlike what I view the Tennessee
Valley Authority to be.
We had a very successful launch of the lottery in
Tennessee. All of the net proceeds goes for education. We have
been able to fund all of the scholarships for all the qualified
students and students' applications for college in Tennessee
have gone up by 6 to 7 percent, stimulated by the scholarships
available. So it has been, as I said, very rewarding to see the
affordability of and the accessibility to higher education
increase for the children of Tennessee.
If confirmed, I do welcome this opportunity for a chance to
be more involved in public service as a member of the Tennessee
Valley Authority Board of Directors. In studying the basic
mission of TVA, I am enthused about its mission. I am enthused
about the opportunity to accomplish that mission and the impact
that will have on economic development and the quality of life
of people in the region. Those two themes are the two focuses
of community and more recently, public service to which I have
been attracted.
As I begin to look at the strategic challenges facing TVA,
I recognize full well the importance from transitioning from
the operating board system to a policy board system: the more
modern governance system that we would see today in much of
corporate America. I am hopeful that my service on numerous
boards, private sector boards, not-for-profit boards, and more
recently quasi-public boards, can be helpful to my fellow team
members here, today and those already serving on the board to
navigate that journey. It is a difficult journey to go from an
operating board to a policy board.
So Mr. Chairman, members of this committee, and members of
the Senate, I am willing to serve on the TVA board if
confirmed. What I assure you is I will do so with energy, with
commitment, and with sound stewardship.
Senator Inhofe. Thank you very much, sir.
Mr. Duncan.
STATEMENT OF ROBERT DUNCAN, NOMINATED TO BE A MEMBER OF THE
BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY
Mr. Duncan. Thank you, Mr. Chairman. I appreciate the kind
remarks from Senator McConnell and Senator Bunning and also
Senator Alexander on my nomination. I also appreciate the
support of other members of the Kentucky delegation.
I thank President Bush for nominating me to the Tennessee
Valley Authority board. I am honored that the President chose
me for this very challenging position. I would like to
recognize the help that we have received from your staff, Mr.
Chairman, and Senator Jeffords, from your staff, in the hearing
today and also the TVA staff in preparing us for this.
Mr. Chairman and Senators, as a young boy growing up in
east Tennessee near the Tennessee-Kentucky border, I never
imagined that I would one day appear before a Senate committee
as a Presidential nominee. Being here today is a highlight in
my life. I was born in a clinic served by the Tennessee Valley
Authority, attended a two-room school provided power by the
TVA, and observed first-hand during the 1950s and 1960s the
difference that the Tennessee Valley Authority made in people's
lives.
My father still lives in Scott County, TN, where
Congressman Duncan and his father originated. Although I do not
live in the part of Kentucky that is served by the Tennessee
Valley Authority, I have a historic appreciation for the role
that TVA has played in the region.
I have chosen to spend my life in rural Appalachia, and I
am fortunate to have been involved in community and economic
development at many different levels. My background enables me
to appreciate TVA's primary mission of generating and
transmitting safe, reliable and affordable power while
respecting the environment and promoting economic development
in the region. My decades of experience as a community banker
provide a perspective in analyzing TVA's operation and
financial efficiencies. I am pleased to see that TVA has an
emphasis on financial flexibility through debt reduction. All
financial issues must be viewed of course through the lens of
changing competition.
The electric utility industry is constantly restructuring,
and TVA's 158 power distributors, customers, 61 directly served
industries and Federal agencies are constantly, as they should
be, looking for lower cost power. Addressing the need to create
clean and safe power is very important. Meeting clean air
standards is essential. I applaud TVA for its continued
investment in modification to the coal-fired plants. I am
confident that TVA can be a leader in environmental
stewardship.
As an attorney, I read most of the recent amendments to the
TVA Act mandating sweeping change as a mandate for management
change. I embrace the enumerated duties that the board is to
undertake and, if confirmed, my obligation is to establish
broad goals, objectives and policies while developing long
range plans.
Arguably, the most important thing that we will do is to
hire a chief executive officer with senior level experience and
hold him or her accountable. To paraphrase President Bush,
being considered for this position is not the ambition of a
lifetime, but it is the opportunity of a lifetime. I promise
that if confirmed, I will make the most of the opportunity by
balancing the needs of the country, the Tennessee Valley
residents and communities in which they live.
I look forward to answering the committee's questions today
and, if confirmed, to working with each of you to ensure the
success of the Tennessee Valley Authority. Thank you, Mr.
Chairman.
Senator Inhofe. Thank you, Mr. Duncan.
Ms. Williams.
STATEMENT OF SUSAN RICHARDSON WILLIAMS, NOMINATED TO BE A
MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE VALLEY
AUTHORITY
Ms. Williams. Good morning. I am honored to be here today,
as well as the rest of my colleagues, as one of President
Bush's nominees to the board of the Tennessee Valley Authority.
I am very grateful to the Tennessee Senator, Senator Alexander,
whom I have known for many years, longer than each of us would
like to remember, I am sure, and to Senator Frist, for their
support. To Congressman Duncan, my Congressman, Congressman
Gordon, who came over this morning, as well.
Mr. Chairman, members of the committee, I really do
appreciate the opportunity to be here today and to appear
before you. The woman you see here today has been shaped and
molded by the Tennessee Valley Authority. I grew up in
Savannah, TN. It is a small town in rural west Tennessee on the
banks of the Tennessee River.
My father, that Lamar mentioned, worked his entire life for
TVA, 45 years, to be exact. Most of it at Pickwick Dam, which
is near Savannah. He was a senior operator, he worked in the
plant. He worked shift work. He belonged to the International
Brotherhood of Electrical Workers. He bought Series E savings
bonds every single month through TVA for my sister and me so we
could go to college.
I can only imagine what he would think if he were here
today to see his daughter nominated for this position. I am a
daughter of the Tennessee Valley, and I consider it an
incredible honor to serve on the board.
Having this background and knowledge of the Tennessee
Valley I think gives me a unique perspective on the history and
on the mission of the Tennessee Valley Authority. I appreciate
what TVA has done for the people of the Valley. I also
recognize that there are challenges facing the new board. I can
tell you that I will work hard to understand the challenges and
make determinations based on sound research and careful
thought.
I have served on the University of Tennessee's board of
trustees for almost 11 years. We obviously have had a lot of
challenges there including large budgets. We have had many
other very, very good challenges over the past several years.
It has been an interesting experience.
I have run a State government agency that oversaw 40,000
employees. I have been in the private sector. I have spent 35
years in the public and private arenas in my career. I feel
like my work, my life's experiences and my knowledge of the
TVA, I think I can make a valuable contribution to the board,
if you choose to confirm me.
I really appreciate the opportunity to be here before you.
I do consider it an honor, and I ask for your confirmation. I
look forward to the questions. Thank you.
Senator Inhofe. Thank you, Ms. Williams.
Mr. Sansom.
STATEMENT OF WILLIAM SANSOM, NOMINATED TO BE A MEMBER OF THE
BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY
Mr. Sansom. Thank you, Mr. Chairman. I am also honored to
be here today and thank you for your time to listen to us and
consider our nomination for this board. I also want to thank
Senator Alexander and Senator Frist for their confidence and
encouragement. I worked for Lamar for almost 5 years, and I
know him well. I hope I can perform this job so you can still
be proud, Senator.
By the way, Senator Isakson, I want to respond, because the
Chairman asked that we respond to your comments, I have about
100 employees in Georgia, I own property in Georgia. I hope my
100 employees in Georgia think I represent them. So I hope I
can help represent you on the TVA board and also make you
proud.
Anyway, I grew up in Tennessee. I also dredged sand and
gravel in the TVA lakes and river. I have been in the towing
business on the river. I recognize the importance of the river
system and its value to the Tennessee Valley and the whole
region. I will continue to work, if confirmed on this board, to
make your decision to change this board a wise decision. I
think you have done a great thing doing this, and I think I
have gotten to know these colleagues here in the last couple of
days. I look forward to working with them and I will give you
some time back.
Thank you for your consideration.
Senator Inhofe. Thank you, Mr. Sansom.
Mr. Thrailkill.
STATEMENT OF HOWARD THRAILKILL, NOMINATED TO BE A MEMBER OF THE
BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY
Mr. Thrailkill. Thank you, Mr. Chairman. It is a great
privilege for me to appear before you and the distinguished
members of this committee as you consider my nomination for the
Tennessee Valley Authority board of directors.
In that regard, I also want to express my gratitude to
Senator Richard Shelby, Senator Jeff Sessions and Congressman
Bud Cramer, who have encouraged me to come before you today. I
would also like to acknowledge a new friend whose thought about
the future of TVA I have quickly gained so much respect for,
and that is Senator Lamar Alexander.
Finally, I must also acknowledge my wife, Donna Thrailkill,
who offers her support by her presence at these proceedings.
Mr. Chairman, I deeply respect the heightened importance of
this particular confirmation hearing, the first to consider
seating a restructured board of directors under broad
amendments to the TVA Act that you have enacted. It is also the
first following the signing of the Energy Policy Act of 2005
after so many years of debate. Therefore, I am mindful of the
formidable obligation and responsibility I must shoulder if you
choose to confirm my nomination.
If you do, you can rely upon my applying the full measure
of my ability, background and experience for this endeavor. In
my view, Congress has given TVA an historic opportunity to
renew and to transform itself. You have pointed the way to a
new horizon. The newly established board will now bear the
responsibility for implementation of your vision, and you
should hold us accountable for doing so.
Having met individually with each of the other current
nominees and the two incumbent board members, I commend them to
you and look forward to serving with them. Upon your
confirmation, I am convinced this board has the breadth of
knowledge and experience to move aggressively and to begin
meeting your expectations. With their business acumen and
maturity, I am confident they will move in a financially and
socially responsible fashion as well.
Working together, I believe this board can guide TVA to
achievement of new standards of excellence in the delivery of
clean, low-cost, reliable electric power to its customers. TVA
should accept nothing less than becoming best of class in this
Nation.
As TVA crafts its future along the path you have charted,
it is clear to me that the innovative application of technology
will be critical to TVA's success. As a practical matter, no
other approach will power continued economic development in the
Tennessee Valley, while simultaneously meeting ever tighter,
more stringent environmental standards for air and water
quality.
Technology is also fundamental to TVA's delivering electric
service to its customers at lowest cost and highest
reliability. There are simply no practical alternatives in my
mind that don't introduce downside consequences that are
unacceptable, in my view. In this environment, I believe my
background as an engineer, technologist and business executive
could provide important balance and perspective that will
augment the backgrounds of the other board members.
Throughout my career in private enterprise, organizations I
have headed were built around large, complex engineering teams
and programs not unlike those that TVA must undertake to
succeed. There is little doubt that the new board will be
called upon to endorse many complex, costly programs whose
success hinges upon correct assessment of technical and
financial alternatives. For more than three decades, that has
been the nature of my work. I offer that experience and
expertise to this effort without reservation.
In closing, I would like to affirm my love for the
Tennessee Valley and the natural beauty of its rivers, lakes,
hills and valleys. Even though my wife and I moved to Alabama
from a home near the Columbia River Basin in Oregon, we have
found a river basin managed by TVA to be no less stunning and
fragile. On many occasions, traveling around the area, I have
simply pulled over and marveled at the incredible vistas we
have in our Valley.
If confirmed, I pledge my strong support of TVA's continued
program of environmental stewardship and responsible management
of the Tennessee River system and resources.
Mr. Chairman, I am energized by the prospect of service as
a member of TVA's board of directors during this critical
period, when energy service providers are moving in new
directions, thank goodness. I firmly resolve that the new TVA
can be and will be worthy of its heritage.
Thank you for your consideration.
Senator Inhofe. Thank you, Mr. Thrailkill.
Mr. DePriest.
STATEMENT OF DONALD DePRIEST, NOMINATED TO BE A MEMBER OF THE
BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY
Mr. DePriest. Thank you, sir.
Mr. Chairman, members of the committee, there is probably
no greater honor than to be asked by the President to serve the
Nation. As President Bush's nominee as a director of the
Tennessee Valley Authority, I am thankful for the opportunity
to serve. Mississippi's two marvelous Senators, Thad Cochran
and Trent Lott, have been unwavering in their support and
encouragement, and I will be forever grateful to them.
I must also acknowledge my friend, Senator Alexander, of
many years, and the support that I have received from Senator
Frist. Congressmen Wicker and Pickering and Governor Barbour
have also offered their assistance and advice. It is generous
of you and the committee to act on these nominations as
promptly as you have, and I deeply appreciate your kindness.
TVA has been important to me for my entire life. I can
remember the day at age 6 when electricity was first turned on
at our house in the country near Dyer, TN. The establishment of
this great institution transformed an impoverished region into
a flourishing and wonderful part of the world. I will do my
part, if confirmed, to see that the Tennessee Valley Authority
continues its mission in an ever-improving way.
I have lived in Columbus, MS since 1963. I moved there from
Memphis to open an industry that continues to operate today and
which depends on the reliable, low-cost electric power that is
provided by TVA's distributor, Columbus Light and Water. I came
to Mississippi from Tennessee, where I am the seventh
generation of my family in the great Volunteer State. Gibson
County Electric Membership Cooperative, now Gibson Electric,
was formed and chaired by my uncle, Charles Garner, for 40
years. So I have a legacy to fulfill and continue and improve
TVA's service.
TVA, as you know, is the largest power generator in the
Nation and must continue to produce large quantities of low-
cost, reliable and clean power. It is a mammoth enterprise that
requires prudent management and financial integrity. It has a
unique capacity to control its own rates and funding sources
and operates primarily like a private enterprise with a public
purpose.
In expanding the board of directors and creating the chief
executive officer, Congress has restructured TVA to meet the
challenges of a growing organization in the power generation
industry. We should keep in mind that TVA is not just an
enterprise, but a leader in electric power and it carries with
its power generation mission the important task of aiding
economic development in the TVA area. This arm of TVA is
critical to America's future. This role means that TVA must
accommodate shifting trends for this industry, promote
employment of citizens within its area, advance technological
development and secure energy sources and protect national
security.
My own experience in building and developing industries and
new technologies should contribute to the decision to advance
the objectives of TVA. I was a board member and chairman of one
of TVA's distributors in Columbus, MS during the turbulent oil
and energy crisis of the 1970s. This experience should be
helpful in my role on the board of TVA.
I must note that the other nominees of the newly expanded
board of TVA are quality, thoughtful people of diversified
skills that will bring depth of experience and a variety of
viewpoints to the organization which is vital to making
decisions that will affect thousands of employees, 158
distributors and millions of users and customers. The board
must deal with issues and opportunities associated with types
of power generation and energy sources, financial planning,
budgeting and execution regarding these issues on a giant
scale.
Management of appropriate debt levels, commensurate with
making appropriate power rates and capital expenditures, human
resources, environmental matters, land uses, legal challenges,
service areas and distributor relations, finding a world class
CEO, corporate governance, mega-sites for industrial and
economic development and countless other challenges must be
effectively solved. This requires the skill sets and experience
gained in dealing with large and diverse organizations and the
new board must possess these skills and be prepared to act with
precision.
If confirmed, I will bring my own experience to bear in
having formed, managed and operated several companies of
national and international scope in telecommunications,
manufacturing and broadcasting. This also includes having
established one of the two original cell phone carriers in all
the major cities in the TVA region.
I respectfully commend you for these hearings and for your
consideration. I hope you find your way to confirm this board
of candidates, Mr. Chairman.
Senator Inhofe. Thank you, Mr. DePriest. I thank all seven
of you for your excellent statements, your opening statements.
I must say to the six nominees to the TVA that I am a little
bit prejudiced. I spent 30 years of my life in the real world
in paying for all this fun they are having up here, so I
appreciate others willing to come in and participate.
I was going to ask you how you are going to respond to the
needs of those States that are not represented on this board,
but I will let Senator Isakson do that. First of all, Mr.
Bracy, let me tell you that both Senator Jeffords and I had the
honor of serving in the House with Mo Udall, and what a high
regard we had for him. I remember him very, very well.
You have been there since the inception, I guess, of the
Foundation. Is there anything you want to share with us that
was not in your opening statement as to maybe where you want to
go in the next few years?
Mr. Bracy. Mr. Chairman, I think that we try to stick to
our knitting. What we try to do as an organization is fill the
cracks in the system. We are a small organization in a
governmental context, with many, many big organizations. But
what our advantage is as a small organization is we can find
the cracks in the system and we can fill them.
One of the real cracks in the system is Indian health care.
More and more money is being spent on this, but you don't see
the needle moving. When you go out to the reservations, the
diabetes is worse than it has ever been. Some of the health
care facilities have been improved on many of the reservations,
thanks to members of this committee and others. But we don't
really see progress in terms of the overall health of the
Native American community. We are very concerned about that as
a board. That is certainly one of the things we want to focus
on in the next few years.
Senator Inhofe. Good. To the six of you that are nominated
for the TVA, I would ask, you heard me describing some of the
problems that you had in your past and we currently have in
Oklahoma. It will be your responsibility to choose a director,
someone who is going to be running this and answering to you.
What do you have in mind in terms of what type of person you
are looking for and what safeguards do you think you could put
in place to keep from resurrecting some of the unethical
activities of the past? Anyone who wants to respond, starting
with you, Mr. Bottorff.
Mr. Bottorff. I had the good fortune of chairing three
search committees, one of which was for the chancellor of
Vanderbilt University. The process that seems to work is to
start with defining the knowledge, skills and attributes that
are necessary. Those knowledge, skills and attributes need to
link with the strategic mission of the organization. So what I
would do is encourage us as a board to try to understand the
strategic challenges and then define the basic characteristics,
knowledge, skills and attributes required of the CEO.
In terms of the ethics, a friend of mine once said, ``In
God we trust, everybody else we audit.''
[Laughter.]
Mr. Bottorff. Seriously, to have good ethics an
organization must start with a good value statement. Then you
must monitor behavior to ensure it complies with those values.
There are a lot of good systems that are in place and are many.
I would hope that we would employ some of those systems.
Senator Inhofe. Any other want to comment on that?
Mr. Duncan. I would agree with my colleague. I think we
have some guidance from the statute that you provided us, and
we have to look to that for senior level experience and some
other things that you put in there. I think we have to
understand the skill set.
On the ethics issue, I totally agree. This is a matter of
personal accountability. We all have to take individual
responsibility for the ethical issues that we face and know
that the ground changes over a period of time, just as Congress
is considering ethics today. I do think that our primary
responsibility as a board is going to be to hire the chief
executive officer and hold that person accountable for the
organization.
Senator Inhofe. Yes, ethics is at the forefront. I think we
joke around a little bit, but it is something that is there and
something that can creep back in. It is just, as I said, the
insatiable appetite of unelected bureaucrats to spend somebody
else's money is always there, for their own benefit.
Ms. Williams or anybody else care to respond as far as the
directors are concerned?
Ms. Williams. I would just say, Mr. Sansom and I have both
served on the University of Tennessee board and search
committees there, and certainly know what goes on looking for
management. I think ethics is very important to me. Personally,
I have lived in the Tennessee Valley all my life--I have lived
in Knoxville the last 18 years, so I know what you are speaking
of. I am absolutely committed to getting the right person.
Senator Inhofe. Good. Anybody else? Thank you very much.
Senator Jeffords.
Senator Jeffords. Mr. Bracy, the U.S. Institute for
Environmental Conflict Resolution is an integral part of the
Udall Foundation, as you know. Its premise is simple: it is
better to resolve Federal environmental disputes through
mediation rather than through litigation.
Since Congress created the Institute in 1988, it has built
an impressive record of accomplishments. Just a few months ago,
the White House, the Office of Management and Budget and the
Council on Environmental Quality issued a memorandum
encouraging Federal agencies to draw on the services of the
U.S. Institute to increase the effective use of the
environmental conflict resolution.
However, the President's budget proposes less than $700,000
to fund the Institute this fiscal year 2007 as compared to $1.9
million appropriated by Congress this year. Mr. Bracy, if the
Congress were to enact the President's proposed funding levels,
please describe the impact that would have on the ability of
the U.S. Institute to fulfill its mission.
Mr. Bracy. Well, Senator, let me first put it in
perspective. You all have created this Institution, we have
tried to manage it well for you. You have revisited this twice
in terms of what the authorized level and needed level is. We
agree with what you have done.
The cost of one major environmental lawsuit in the United
States today exceeds the total appropriation for all our
mediation services. One lawsuit. We have settled hundreds of
things.
So the impact would be, I think, something that the
committee would not be very happy about. We would certainly
have to abandon many, many of the cases that we are involved
in. We might even have to lay off staff. This kind of
recommendation has come up here before. Once I was quietly
complaining about this to a member of the Senate, and he said
to me, well, you know, sometimes they send budget items up here
that they know we are going to approve.
Given the OMB directive to the Federal agencies to go ahead
and use our services as much as possible, I think that some
recognition has to be given that we need the resources to do
the job.
Senator Jeffords. Thank you. I would like to work with you
to make sure that that gets done.
Mr. Bracy. Thank you, Senator.
Senator Jeffords. Mr. Bottorff, the new Energy Policy Act
of 2005 encourages the development of distributed generation by
allowing individuals to connect windmills or solar panels at
their home to the grid and expanding combined heat and power
projects by standardizing the interconnection process. Do you
think this legislation should apply only to the TVA?
Mr. Bottorff. Senator, I really haven't had a chance to
look at that, but I will.
Senator Jeffords. I would appreciate it if you would,
because we are very interested.
Mr. Duncan, would you support the TVA in electing to
voluntarily adopt further measures to increase energy
efficiency at its projects and among its ratepayers and
increase the supply of electricity in the region?
Mr. Duncan. Senator, obviously that is something that we
should consider. I do not have enough information to give you a
specific answer at this time. I generally understand the issue
of efficiency. On the one hand, we are generating electricity
and trying to sell electricity. On the other hand, we are
asking people to conserve. I think you can do both.
Senator Jeffords. I would like to continue to discuss that
with you. I will as we go on.
Mr. Duncan. I would be happy to do that.
Senator Jeffords. Ms. Williams, in addition to hydropower,
what portion of TVA's generation base should come from
renewable energy sources?
Ms. Williams. That is a very good question, and something
that I am very interested in. I know Senator Alexander spent a
good deal of time looking at that issue as well. I can't give
you a specific percentage. It is a small percentage right now,
in TVA. Obviously, renewables are important. We need to, I
think, increase those. Obviously, we have had issues with clean
air, and that is something that could be very helpful in the
Valley.
Again, I don't know the percentage, but I think it should
be increased.
Senator Jeffords. I would appreciate your looking into some
of these issues. I am deeply interested in this. We will be
back to you.
Ms. Williams. Yes, sir. I understand that. I can commit to
you that we will do that.
Senator Jeffords. Mr. Sansom, the effective of
restructuring of the electric production and transmission
industry in our country on reliable delivery of electric power
will continue with lessons learned from the blackout in New
York, the California crisis and the reliability struggles
elsewhere. TVA must continue its earnest efforts to ensure
reliable power delivery.
What else do you feel that TVA can do with neighboring
utilities to ensure that we do not suffer additional regional
blackouts?
Mr. Sansom. Obviously that is important. In fact, I was
just visiting Oak Ridge National Lab last week. They have
people working on that same issue, of transmission, power loss
in transmission. I think it is obviously something TVA has to
be involved in. I don't know all the answers yet, not that I
ever will, on how to work with other utilities in that regard.
But we will sure pay attention to that, and we know it's
important.
Senator Jeffords. We will be following up.
Mr. Thrailkill, TVA announced plans in 1997 to cut its debt
in half by the year 2007 and increase rates for its
distributors specifically in order to reduce its debt. TVA has
acknowledged that it will not meet its debt reduction targets
and is only on a track to make a small dent in the overall
debt. As part of the TVA board, do you plan to meet the
original plan of reducing TVA's debt?
Mr. Thrailkill. Senator, I do not have a specific target
for reducing the debt. But I certainly know that that is
something that needs to be addressed by this board. I am
convinced that once we look at the financial affairs of this
company in great depth, this Congress with its great wisdom has
asked that we put together a strong audit committee and that we
write a strategic plan.
I think those two mechanisms will ensure that we start to
approach those issues in a very sensible and business-like
fashion, and I pledge to you I will work hard toward that
direction.
Senator Jeffords. I appreciate your saying that. We will be
working hard to look after you.
Senator Inhofe. Senator Jeffords, I know you have one more
question, but if you could hold that for just a moment until we
go around to the rest of the panel, we will come back to that.
Is that all right?
Senator Jeffords. OK. I only have one more, but that's all
right.
Senator Inhofe. All right. Senator Isakson.
Senator Isakson. Thank you, Mr. Chairman. I want to repeat
what I said at the outset of my remarks, that this is a
tremendous group of nominees, and I look forward to voting for
your confirmation out of committee.
The reason that I raise the representation issue is that if
not raised now, and it rises to a level of your attention after
you go on the board, then it would be a mistake on my part not
to see to it we've dealt with it forthrightly. I am glad the
Hackney Company has 100 Georgians working for them. It was wise
of you to hire all them. I want to thank you for that.
I am delighted that Mr. DePriest has the practical
experience with municipal electric and cooperative deliveries.
As you know, TVA sells power through five either municipal or
electric cooperatives in Georgia. Being familiar with
cooperatives, because I am a cooperative customer myself, as
many of you may or may not know, cooperatives go to a great
extent to ensure inclusion on the part of those that pay them
in policy matters and coming before and meeting with the
executives of the cooperative authority on a timely basis.
When TVA converts, as it should, and I commend Senator
Frist for this creation, from a tightly knit three-member
executive committee to a nine-member board, although you are
appointed, you take on much more of a representative form of a
governing body, if you will. In my State of Georgia, aside from
the statistics that I mentioned in terms of the number of
people served, the vital infrastructure and aesthetic beauty of
lakes, their shorelines and other things directly controlled by
TVA are something people in Georgia would be very disappointed
if they did not feel like they had a seat at the table when
vital decisions are made.
So rather than a question, it is like poor Judge Alito and
Judge Roberts, you ask them what kind of a decision they are
going to make before they are in a position to make a decision,
they can't prejudice themselves. So I am not going to ask you
to prejudice yourself. However, I want to make this point. This
is two-thirds of the future board sitting in the room, if the
makeup stays at nine members. This is six, my Georgia math
tells me that is two-thirds.
You could in yourselves make a decision. You are getting
ready to be a part of hiring a CEO. If part of the hiring of
that CEO is equitable representation of those that are served
but do not have a board member, I would sure feel a lot better
to know that that was an issue that was on his or her radar
screen, for example.
Second, if you are going to be a board that represents
several States, but only a few of the States are on the board,
you might want to find a mechanism for those States to have
advisory capacity within your own creation, so that when issues
come forward to you, there is a mechanism for them to flow to
the board that reflects the parochial interests of each of the
States.
I can't address the States of North Carolina and Virginia.
But I can address the State of Georgia, and I would presume
their interests to be the same. There are going to be issues
dealing with electric energy in the years to come that are
going to be crucial to have customer buy-in and community buy-
in. The absence of representation on a board like TVA and the
reason for the reach that we went to to expand that board now
is to ensure those are as smooth, timely and as cooperative as
possible.
So I know you can't commit yourself to something before you
have the opportunity to do it. But I am going to commit myself
to make sure we have some dialog before we get to that
confirmation to ensure that you are aware and others are aware
that there must be a mechanism for a smooth flow of information
to and from all those served. I am open as I can be to being as
cooperative as I can be to being a part of that solution.
I don't apologize for raising the issue, because I have
been on the board of banks that are audited. I was the first
load management customer of a major cooperative. I have worked
closely with electric generation in my 30 years in public life.
I have seen issues like this not raised until it was too late
and the problems were a whole lot bigger than they were if you
raise them on the front end.
Last, Ms. Williams, were you part of hiring Pat Summitt?
[Laughter.]
Ms. Williams. I actually worked with Pat Summitt as
associate women's athletic director for 8 years. She is my
hero.
Senator Isakson. If you can get her to TVA, you all will
make a good decision.
[Laughter.]
Ms. Williams. I have tried to get her to run for Governor a
couple of times.
[Laughter.]
Senator Isakson. Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Isakson.
Senator Jeffords, you had one more question in your line of
questioning, if you would like to ask that now, it would be an
appropriate time.
Senator Jeffords. Mr. DePriest, what will you do to ensure
that TVA aggressively reduces air pollution and aims to achieve
at least the 1990 levels of carbon dioxide emissions?
Mr. DePriest. I am not specifically familiar with the 1990
levels, but I am fully committed to producing clean power. In
the area of producing power from coal energy, I would be very
interested in coal gasification that would include the carbon
recapture. So I believe that I will be a voice on this board,
if confirmed, for very much clean power with every technology
that we can find. I assure you that we will examine each one of
those technologies.
Senator Jeffords. Thank you for that answer. I will be
following up with you.
Senator Inhofe. Thank you, Senator Jeffords.
Senator Alexander, do you have any questions you would like
to ask the panel?
Senator Alexander. Thank you, Mr. Chairman, for inviting me
to sit in, although I am not a member of the committee. I won't
ask any questions. I would just say this. If the shareholders
of the TVA are the citizens of the Tennessee Valley Authority
region and the citizens of the United States, I think any
shareholders in America would be fortunate to have as directors
a group of men and women this distinguished and broad-gauged
and serious about their purpose. I look forward to working with
them.
Senator Inhofe. I certainly agree with that comment.
Let me just ask one further thing. Senator Sessions brought
up the issue of the debt. Does anyone have any comment to make
about how we are going to address that?
Mr. Bottorff. As a banker maybe I should comment. You might
guess that my bias is prudence and conservatism in terms of
debt levels. When I look at TVA, I will say I haven't really
had a chance, though, to study cash-flows, coverage ratios.
It's balance sheet, strengths, sensitivities and to define
really what ought to be the debt capacity.
I also think that looking at TVA's balance sheet, it is
very different than an investor-owned utilities balance sheet.
What is important to understand, in any capital intensive
industry is its cost of capital. We need to really understand
the differences in TVA's balance sheet versus investor-owned
utilities to determine its true cost of capital. That coupled
with its debt capacity will have major impact on TVA's funding
strategy.
So I come at the question from a conservative standpoint. I
need to understand the facts before commenting specifically on
TVA's debt service capabilities.
Senator Inhofe. An other comments on that issue?
Senator Jeffords or Senator Isakson, do you have any
further questions?
Senator Jeffords. No, no further questions.
Senator Inhofe. Again, it is an honor to have this very
distinguished panel before us. We are looking forward to
working with you in the future. In fact, Senator Jeffords said
something that is interesting to me quietly a minute ago. He
said that maybe we should go down and look at this thing. I
have to tell you, I have never been there. So you may have some
visitors.
With that, we are adjourned.
[Whereupon, at 11:06 a.m., the committee was adjourned.]
[Additional statements submitted for the record follow.]
Statement of Hon. Jim Bunning, U.S. Senator from the State of Kentucky
Thank you, Mr. Chairman. I appreciate having the opportunity to
introduce my friend and fellow Kentuckian, Mike Duncan, to be a nominee
for the Tennessee valley authority's new board.
I have known Mike for many years. He is a man of integrity and fine
character. He takes public service seriously. And he is a man of
compassion and fairness. His educational and philanthropic endeavors to
better the lives of Kentuckians is unmatched.
Mike has been past President of the Kentucky Bankers Association
and Director of the Cleveland Federal Reserve Bank's Cincinnati Branch.
His banking and finance experience will bring a unique perspective when
it comes to TVA's management and accounting of its finances and debt.
TVA certainly needs a board member who understands economics to help it
get its $25 billion in debt under control.
What I like about Mike is that he is not a `yes man' or someone who
simply `goes along to get along'. If there is a problem, Mike will
identify it. And he will work hard to fix the problem, even if it is
not a popular solution.
Mike takes his endeavors seriously, and I know he will take the job
as a TVA boardmember seriously, too.
TVA has problems. It has issues with its debt. It is unregulated by
FERC.
Some residents in the TVA region even pay higher costs for their
electricity than those living outside the TVA fence. This defeats the
purpose of TVA.
I know that Mike will help bring these issues to light as a
boardmember and he will advocate commonsense solutions.
Mike will work to help ensure that citizens in the TVA region will
receive reliable, efficient and cheap power to better their lives.
I appreciate the Chairman's and Ranking Member's invitation to
introduce Mike Duncan. I look forward to his swift confirmation in the
committeeq and on the floor.
Thank you, Mr. Chairman.
__________
Statement of Hon. William H. Frist, U.S. Senator from the
State of Tennessee
Mr. Chairman, I am delighted to be here today to welcome the first
nominees to serve on the expanded, modernized Board of Directors of the
Tennessee Valley Authority.
Nearly 10 years ago, shortly after I came to the Senate, I started
working on legislation to reform the TVA Board. In my dealings with TVA
as a Senator, it quickly became clear to me that the existing Board
structure of three, full-time Board members, and no chief executive
officer, was not working effectively. TVA needed a Board that operated
like the Board of Directors of any other large, $7 billion a year
corporation. Its Board members needed to have more business and
management experience, with less emphasis on political experience. And
it needed a CEO to manage its day-to-day operations.
I am proud to say that, a little over a year ago, my legislation to
modernize the TVA Board passed the Congress and was enacted into law as
part of the fiscal year 2005 Omnibus Appropriations bill. The nominees
who are here today to testify are the first group nominated by the
President to serve on the new, expanded, part-time Board. They are an
extremely well-qualified group. They have exactly the kind of business
skills and management expertise that I had in mind in drafting my
reforms. And I believe that the new Board structure will ensure that
they, and the new CEO that they hire, are more accountable to the
ratepayers and the citizens of the Tennessee Valley.
I am especially pleased, of course, that the President has
nominated three distinguished Tennesseans to serve on the new Board--
Denny Bottorff, Bill Sansom, and Susan Richardson Williams. They are
truly excellent choices, with solid business backgrounds and lengthy
records of leadership in their communities, and I am confident that
they will serve with distinction if they are confirmed. I also have the
pleasure of knowing several of the other nominees from other states,
and I am excited about the future of TVA because they are such an
experienced, highly qualified group.
Mr. Chairman, I want to thank you again for moving forward on these
nominations so expeditiously, and for allowing me to be here this
morning. I look forward to working with you and all of my colleagues to
make sure that we get these very qualified nominees confirmed by the
Senate as quickly as possible. Thank you.
Statement of Hon. Trent Lott, U.S. Senator from the State of
Mississippi
Mr. Chairman, it is my honor and privilege to introduce my friend,
the Hon. Donald R. DePriest, a fellow Mississippian and nominee of the
President of the United States to become a member of the Tennessee
Valley Authority Board of Directors.
Don is lucky to live in the great State of Mississippi. He lives
there with his wife Sandra with whom he has four lovely children:
Sally, Robert, John and Warner, who has the firmest handshake in the
State!
Don has dedicated himself to the State of Mississippi through his
service as Chairman of the Columbus, Mississippi Utilities Commission,
a Tennessee Valley Authority power distributor, as a member of the
Mississippi Governor's Venture Capital Task Force, and of the State of
Mississippi Audit Oversight Committee of Ethics.
Don has complemented his service to Mississippi with his work in
the private sector. He was founder, CEO and Chairman of Charisma
Communications; a former Union Planters Bank director; and founder of
Microtech Median Inc. and Boundary Healthcare Products. He currently
serves as CEO and Chairman of MCT Investors; and Chairman of MCT
Corporation.
Don is not only an accomplished businessman, but also an
outstanding member of his community as a Rotarian, a founding member of
the State of Mississippi Historic Preservation Commission, and as
president of the Boy Scout Council.
Don holds the Silver Beaver Award from the Boy Scouts of America
and has served multiple terms on the Atlanta Regional Panel for the
Selection of White House Fellows. In 1974, the U.S. Small Business
Administration awarded him the ``Businessman of the Year'' award for
Mississippi. He is also a trustee for the National Symphony Orchestra.
As you can see, Don's gift for Communication and his deep
understanding of the relationship between Government, community and
business make him not only well qualified, but also deserving and
prepared to serve as a Tennessee Valley Authority Board Member.
__________
Statement of Hon. John McCain, U.S. Senator from the State of Arizona
Mr. Chairman, thank you for this opportunity to offer my strong
support for the reappointment of Terry Bracy to the Udall Foundation
Board of Trustees.
As this committee knows, the Morris K. Udall Foundation was
established by Congress in 1992 to honor the legacy of Morris Udall and
his commitment to the preservation of the Nation's natural environment.
The Foundation has been a great success and I know that Mo would be
very proud of its many accomplishments in advancing important programs
in environmental and Native American policy.
The Udall Foundation has competitively awarded hundreds of
scholarships to college students throughout the United States. The
Foundation also has developed and carried out a very successful native
American Indian Summer Congressional Internship Program, and is well
along in the effort to establish the Native Nations Institute that was
authorized by Congress in 2000 to provide leadership and governance
training for tribal officials. The Udall Foundation has also
established and successfully operated the U.S. Institute for
Environmental Conflict Resolution, created to assist in the resolution
of federal environmental, natural resources, and public lands conflicts
and controversies through facilitated negotiation, mediation, and
collaborative problem-solving. It is so appropriate that the Conflict
Resolution Institute is housed under the Morris K. Udall umbrella, as
Mo was so adept at helping find common ground to forge resolutions from
often diverse view points--resolutions that were of benefit not only to
Arizona, but the Nation.
The Act establishing the Foundation created a Board of Trustees
comprised of 13 members, almost all of whom are nominated by the
President and confirmed by the Senate. Terry Bracy has been Chairman of
the Board of Trustees for the Udall Foundation since 1994 and I am
pleased to lend my strong support to his renomination. I have known
Terry since 1982 when Mo Udall introduced us. Terry was one of Mo's
closest friends and advisors throughout his life. Earlier he had served
as perhaps Mo's key aide for 10 years before becoming Assistant
Secretary of Transportation. Terry's leadership at the Foundation has
been essential at every stage, from ensuring its solid inception to
helping to advance its accomplishments and building continually upon
its many successes. The Foundation has a promising future, and that is
in large part due Terry's leadership and tireless dedication.
Mr. Chairman, Terry's contributions to the Foundation have been
remarkable, and I urge the committee's support for his reappointment to
the Morris K. Udall Foundation Board of Trustees.
Statement of Hon. Mark Udall, U.S. Representative from the
State of Colorado
Mr. Chairman and Members of the committee, I want to express my
strong support for Terrence L. Bracy and to urge the committee to
recommend that the Senate advise and consent to his nomination for
continued membership on the Board of Trustees of the Morris K. Udall
Foundation.
Since the inception of the Foundation in 1994, Terry has served as
a Foundation trustee, providing outstanding leadership and direction in
the development of the Foundation's education programs and the U.S.
Institute for Environmental Conflict Resolution.
Having previously been the chief legislative aide to my father,
Representative Mo Udall, and then having served as Assistant Secretary
of Transportation, Terry has brought invaluable government experience
to the Foundation's board, provided essential guidance and support to
senior staff on important management issues, and devoted untold hours
of unpaid work to the Foundation.
I believe his continued membership on the board is vital for the
continued success of the Foundation, especially because the board now
includes a large number of recently-appointed trustees with more
limited experience with the operations of the Foundation.
The Foundation has developed an array of scholarship, fellowship,
and internship programs. I understand that more than 1,100 academic
awards have been made to students in all 50 States who represent the
next generations of environmental and Native American leaders.
In addition, since 1998 the Foundation has worked to promote
alternative dispute resolution of environmental conflicts as a way to
reduce litigation, and more recently has been charged by Congress to
take steps to improve the skills of Native American leaders seeking to
help their tribes' efforts at effective self-governance. Toward that
end, the new Native Nations Institute has provided executive training
to more than 1,700 leaders from more than 340 tribes.
Terry has been involved in all these efforts and I think his
continued involvement as a Member of the Board of Trustees will greatly
assist in their success.
I urge approval of his nomination.
__________
Statement of Hon. Mitch McConnell, U.S. Senator from the
State of Kentucky
Mr. Chairman, Ranking Member Jeffords, Fellow Senators, it is my
great honor and privilege today to introduce you to Mike Duncan, the
President's nominee to be the newest member of the Board of Directors
of the Tennessee Valley Authority.
I have known Mike for many years, and during the course of these
hearings, I believe this distinguished committee will come to know what
I know: that he is an intelligent, experienced, capable man of
integrity who will bring all his talents and energy to the much-needed
task of reforming the TVA.
Mike's professional experience is exactly what the TVA needs to
correct its course. After graduating with honors from the University of
the Cumberlands, he earned a degree from the University of Kentucky Law
School and completed an executive education program at the Harvard
Business School.
He is an accomplished business manager, having served as the
Chairman and Chief Executive Officer for several financial
institutions--the Community Thrift Holding Company, the Community
Holding Company, Inez Deposit Bank, and Inez Deposit Bank FSB. All of
these positions have left Mike extremely well versed in corporate
governance and business management.
Mike was selected to become the White House Assistant Director of
Public Liaison in 1989 and 1990, a position where he became accustomed
to using the skills of outreach and communication that will be vital to
his position at the TVA.
He has also served as the President and Chairman of the Kentucky
Bankers Association, giving him an understanding of the financial tools
necessary to rescue the TVA from its overwhelming debt.
Mike's many civic activities include service as the chairman of the
Center for Rural Development from 2002 to 2004, service on the
Appalachian Regional Commission in 2004, and service on the White House
Conference on Small Business in 1995. Every one of these positions has
given him insight into the types of problems the TVA faces.
In short, Mike's qualifications for this position are not a mystery
to me at all. Over the decades of his professional career, and of our
friendship, he has proven to me his honesty, intelligence, creativity,
energy and organizational skills. What is a mystery to me is why he is
interested in this position. Taming the wild beast that is the TVA will
surely be the hardest professional challenge he has ever faced.
Quite frankly, the TVA is broken. Created to solve the problems of
a long-ago era, it has failed to even begin to grapple with the
problems of today. The Nation's largest public power company is
currently $26 billion in debt.
The TVA is failing to provide its Kentucky customers with power at
a fair, competitive price. TVA's rates in Kentucky are 30 percent
higher than other power providers in the Commonwealth, costing
Kentuckians who are forced to use TVA $100 million more per year than
they would pay if they could use other providers.
Rather than providing relief for these Kentuckians, TVA raised its
rates by 7\1/2\ percent last October--one of the largest rate hikes in
the bureaucracy's 73-year history. And now they are considering even
greater rate increases. Even more outrageous, while TVA is sticking
these rate hikes to their customers, they celebrated their record of
financial mismanagement by awarding over $60 million in bonuses last
year. Clearly, this is an entity in need of new management.
TVA has shown contempt for its customers by refusing, despite
contracts they signed in 1997, to allow them the right to purchase
power from more affordable providers. They refuse to allow transmission
of this power along their power lines--thus holding many Kentucky
communities hostage, and costing Kentucky families trapped inside the
TVA fence needless extra money on their monthly bills.
Despite his assurances for over a year that this flouting of a
contract signed in good faith would be stopped, the current chairman of
the TVA Board has yet to make an honest effort to fix this problem.
TVA has been completely unresponsive to the concerns of its
Kentucky customers. As a new Board member, Mike Duncan's Herculean task
will be to turn around the TVA's legacy of mismanagement, fraud, and
feeble responsiveness. TVA must change.
Mike's confirmation can be the first step. He has the knowledge,
the energy, the talent, and the patience the challenge requires. In
fact, Mike likes challenges. Anyone who would take this assignment has
to. I am convinced that Mike is the best person to take the giant,
stale, bureaucratic lemon that is the TVA and begin to turn it into
sweet lemonade.
I appreciate the committee's expeditious handling of Mike's
nomination, and I look forward very much to his confirmation. I hope
this committee will see Mike as TVA's best hope for becoming a
responsible, stable power supplier in the Valley. Thank you for
allowing me to testify on his behalf.
__________
Statement of Terrence L. Bracy, Nominated to be a Member of the Board
of Trustees of the Morris K. Udall Scholarship and Excellence in
National Environmental Policy Foundation
Mr. Chairman and members of the committee, thank you for this
hearing and for all you have done to support the activities of the
Udall Foundation. Our role is to educate and mediate, and to do so with
the spirit of civility and integrity that shaped the 30-year
Congressional career of Mo Udall. I was proud to have him as a friend
and lucky to have him as a mentor. Everything we have attempted as a
Foundation was begun by asking a simple question: How would Mo Udall
have approached this challenge?
Inspired by Mo's creativity and good humor, the Foundation board
has found its way to unanimity in all of its decisions. As new
challenges and assignments have come our way, under Democratic and
Republican Administrations, our trustees have moved together to adopt
policies and budgets which fulfilled our common responsibilities. Many
of our trustees have given generously of their time and intellect, all
without compensation, to develop the institution you envisioned. I hope
and believe we have served you well.
Attached to my statement is a fact sheet, which lays out our record
for the first 10 years. I will not repeat the details, but a few
accomplishments are worthy of note. The Udall Foundation has developed
a family of scholarship, fellowship, and internship programs which have
become among the most popular on the campuses of American universities.
To date, 1107 academic awards have been made to students in all 50
States. In these scholars, we seek to identify and recruit the next
generations of environmental and Native American leaders and to teach
them the overarching values of civility, integrity and consensus.
In 1998, you approved legislation that challenged us to build
within the Federal Government a new agency to promote alternative
dispute resolution of environmental conflicts. This was a logical
response by Congress to relieve court dockets crowded with expensive
and complicated lawsuits that took years and millions of dollars to
resolve. I remember Chairman Chafee telling me at the time that he
didn't know if this approach would work, but it was sure worth trying.
The committee approved a public/private partnership under which the
Foundation was directed to build a core staff at our headquarters in
Tucson, but then reach out to the private mediation community. Today we
have a core staff of 24 at the U.S. Institute and more than 260
qualified private environmental mediators available for contract
services or referrals in 46 States. This partnership has given our
small agency vast outreach and explains why we have been involved in
hundreds of cases, ranging from the Everglades to the Hawaiian corral
reefs. We are grateful that the reauthorization bill you approved in
2003 significantly increased our resources.
We were also charged by legislation authored in the Indian Affairs
Committee to build what is now known as the Native Nations Institute.
Self-governance has brought the tribes many benefits but also many
challenges. Of course, most tribes do not benefit from gaming revenues
and are very poor. Often Native leaders have lacked the governance
training and skills needed to succeed, and we were asked to take steps
to fill that gap. NNI, as we call it, has over the last 5 years
provided executive training to more than 1,700 Native leaders from more
than 340 tribes, even as its youth programs, including the first-ever
Native American congressional internship program, is seeking to
identify and educate the leaders of the next generation.
Looking ahead, we ask for your continued support. As a relatively
small and new institution within the Federal family, we have the
ability to find the cracks in the system and fill them with creative
thinking. Some of that thinking has been ours, and indeed some has been
yours. We will continue to keep you and the committee staff fully
informed of our activities and, as in the past, we will seek additional
resources from you only when they are absolutely needed.
As we celebrate our first 10 years of operation, the trustees and
our elite staff will be meeting for 4 days in April to lay plans for
the decade ahead. Among the items already identified is the growing
deficit in Indian health care, the need to recruit a new generation of
career civil servants in environmental agencies, and a re-emphasis on
one of Mo Udall's favorite topics, ethics. As always, we are most
interested in any new ideas that the committee may generate.
Mr. Chairman, I hope and believe that we are developing an
institution of growing importance and influence whose actions would
make this committee and Mo Udall proud. I'll be pleased to answer any
questions.
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Statement of Dennis Bottorff, Nominated to be a Member of the Board of
Directors of the Tennessee Valley Authority
Mr. Chairman and members of the committee, I want to thank you for
this opportunity to appear before you. It is indeed an honor for me to
be considered by you for an appointment to the Board of Directors of
the Tennessee Valley Authority.
I also want to express my appreciation to President Bush for
nominating me and to my fellow Tennesseans, the Majority Leader,
Senator Bill Frist and Senator Lamar Alexander for their support and
confidence.
I have spent most of my adult working life in the private sector.
Thirty two years of which have been as a commercial banker and the five
years after my retirement from banking as a venture capitalist.
My banking career also afforded me many opportunities for community
service through membership on numerous not-for-profit boards. But time
constraints have not allowed me to enter public service. That is
changing and I was recently appointed to the inaugural chairmanship of
an instrumentality of the State of Tennessee; the Tennessee Educational
Lottery Corporation. I have found that position both challenging and
very rewarding. With the highly successful launch of the lottery, we
have been able to fund scholarships for all of the qualifying high
school graduates; thereby, improving the affordability of and
accessibility to higher education for Tennessee children.
I welcome the opportunity to become even more engaged in public
service as a member of the TVA Board of Directors.
In studying TVA's basic mission, I am enthused about the impact
fulfilling that mission can have on the economic development and
quality of life of the region. These have been two areas of interest in
my other positions of community and public service. Areas for which I
have a great passion.
As I begin to understand the strategic challenges facing TVA, I
recognize the importance that effectively transitioning from an
operating board to a policy board will have on addressing those
challenges. I believe my experience as both an operating executive and
as a member of numerous boards; private, not-for-profit and quasi-
public, will be helpful to the team as we successfully navigate the
journey.
Mr. Chairman, members of the committee, and members of the Senate,
I am willing to serve as a member of the TVA Board. If confirmed, I
assure you I will do so with energy, dedication and sound stewardship.
__________
Responses from Dennis Bottorff to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. If I am confirmed, a major part of my responsibility will
be to assure that TVA is taking the steps necessary to provide an
adequate supply of reliable, low-cost, clean power for the people and
businesses in the Tennessee Valley Region. This will require careful
and conservative assessments of which, among the alternative means of
power supply, would be the more fiscally responsible for TVA to pursue.
The cost of capital and allocation of risk are significant issues in
deciding whether to add new capacity, and I commit to carefully review
all aspects of these issues if I were to consider adding power
generating capacity in the future.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. I have not yet had the opportunity to learn exactly what
processes TVA currently uses to make these types of acquisition and
investment decisions. If confirmed, I can assure you that I would
become fully acquainted with those processes and determine if any
changes would be warranted. With regard to competition generally, I
believe it can be a very important tool to help assure that low-cost
decisions are made, while still acquiring the type and quality of
generation resources required to maintain the reliability of the TVA
power system.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I would be committed to carefully studying
the costs and efficiency of TVA's operations and TVA's load growth,
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to assure that power rates provide sufficient
revenues and operating costs are at appropriate levels and to define
the appropriate debt capacity of TVA. I would then work diligently to
assure that TVA makes continuous progress towards improving and
maintaining efficiency and financial flexibility to enable TVA to make
all necessary investments in the power system, including those for
pollution control, in a timely manner.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. Before offering unqualified support for any particular
TVA program, I would first like to have the opportunity, if confirmed,
to learn more specifically about that program and how it is operating.
However, with respect to the Green Power Switch program, I can say,
from what I have publicly heard to date, that it sounds like a
worthwhile approach toward encouraging investment in renewable
generation in the Tennessee Valley Region through voluntary measures.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am not personally aware that such a disparity in TVA
rate levels by region exists. If confirmed, as part of my specific duty
to establish TVA's electric power rates, I will examine TVA's existing
rate structure and rate-making process in greater detail to make
certain that TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I do not currently have enough information about the
plans for, and status of, TVA's pollution control compliance efforts to
offer an informed opinion or make specific commitments concerning such
efforts. I do recognize that environmental stewardship, along with low-
cost power and technological innovation, is among TVA's important
objectives and missions, and I also recognize that I have an obligation
to ensure that TVA complies with applicable laws, including
environmental laws. If confirmed, I will have the opportunity learn
more about TVA's pollution control compliance actions and be in the
position to assure that TVA is taking the appropriate steps in this
area.
______
Responses from Dennis Bottorff to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. It is my understanding that access to TVA transmission
system service is a very important issue for distributors of TVA power
generally, as well as for those located in Kentucky. Unfortunately, I
have not had the opportunity to study the details of this situation
sufficiently to be able to commit to a particular resolution to the
varying points of view on this issue at this time.
I can assure that, if confirmed to the TVA Board, I would be
committed to promptly devote my efforts to assure that TVA is seeking
ways to address the interests of TVA's distributor customers who wish
to have transmission access in a manner that would both be fair to all
power customers in TVA's seven-state region and keep TVA on a sound
financial basis.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. I believe in taking a conservative approach to debt
levels. If confirmed, I would be committed to carefully studying TVA's
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to define the appropriate debt capacity of TVA. I
would then work diligently to assure that TVA makes continuous progress
towards reaching financial flexibility. I recognize that managing TVA's
debt in a fiscally conservative way is key to assuring TVA's financial
soundness in the future.
I recognize that there has been disappointment with TVA's progress
in meeting the debt reduction goals that it set forth in 1997.
Unfortunately, it is not possible to change the past. But, I can
commit that I would oversee TVA's financial progress--to better assure
that TVA will be able to provide reliable power at competitive rates,
both now and into the future.
With regard to accounting procedures, if confirmed to the TVA
Board, the Board will be establishing an Audit Committee, which, among
other things, will be focused on overseeing TVA's accounting policies
to assure that they are appropriate and transparent as to TVA's true
financial condition.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a State public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. I do not yet have sufficient information about the
details of TVA's ratemaking process and experience with it to form an
opinion as to whether having an outside entity regulate TVA would be
better in terms of helping TVA fulfill its mission and objectives.
If I am confirmed to the TVA Board, it is clear that the TVA Act
would place the duty upon the Board to establish the electricity rates
charged by TVA in keeping with TVA's overall mission and objectives,
including the objective that power be sold at rates that are as low as
are feasible.
I can say without reservation that this duty would be one of the
Board's more important ones--because TVA's provision of reliable, low-
cost power is a critical factor in enhancing the economic vitality and
development of the Tennessee Valley Region.
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Statement of Robert Duncan, Nominated to be a Member of the Board of
Directors of the Tennessee Valley Authority
Thank you Mr. Chairman. I appreciate the kind remarks from Senators
McConnell and Bunning on my nomination. I also appreciate the support
of members of the Kentucky Congressional Delegation.
I thank President Bush for nominating me to the Tennessee Valley
Authority Board. I am honored he chose me for this challenging
position.
I appreciate the help of the Committee on Environment and Public
Works and the TVA staff in preparing me for the confirmation hearings.
I thank my wife Joanne, son Rob, and daughter-in-law Valerie for
their support and assistance. I regret that they could not be present
today.
Mr. Chairman and Senators, as a young boy growing up near the
Tennessee-Kentucky border, I never imagined I would one day appear
before a Senate committee as a presidential nominee, and being here
today is a highlight of my life. I was born in a clinic served by the
Tennessee Valley Authority, attended the first year of school in a two-
room building powered by TVA, and observed first hand during the 1950s
and 1960s the difference TVA made in people's lives. My father still
lives in Scott County, TN. Although I do not live in the part of
Kentucky served by TVA, I have a historic appreciation of its role in
the region.
I have chosen to spend my life in rural Appalachia and I am
fortunate to be involved with community and economic development at
many levels. My background enables me to appreciate the TVA's primary
mission of generating and transmitting safe, reliable and affordable
electricity while respecting the environment and promoting economic
development.
My decades of experience as a community banker provide a unique
perspective in analyzing TVA's operational and financial efficiencies.
I am pleased to see TVA's emphasis on financial flexibility through
debt reduction. All financial issues must be viewed through the lens of
changing competition. The electric-utility industry is constantly
restructuring and the TVA's 158 power distributors customers and 61
directly served industries and Federal Agencies are constantly looking
for lower cost power.
Addressing the need to create clean and safe power is very
important, and meeting clean air standards is essential. I applaud
TVA's continuing investment in modifications to its coal-fired plants.
I am confident that TVA can be a leader in environmental stewardship.
As an attorney, I read the most recent amendment to the TVA Act
mandating sweeping change of the agency's management. I embrace the
enumerated duties of the board and understand, if confirmed, that my
obligation is to establish broad goals, objectives and policies while
developing long range plans. Arguably, our most important decision is
to hire a Chief Executive Officer with senior level experience and hold
him or her accountable.
To paraphrase President Bush, being considered for this position is
not the ambition of a lifetime, but it is the opportunity of a
lifetime. I promise, if confirmed, I will make the most of the
opportunity by balancing the needs of the country, the Tennessee
Valley's residents and the communities in which they live.
I look forward to answering the committee's questions today, and if
confirmed, to working with each of you to ensure the success of the
Tennessee Valley Authority.
______
Responses from Robert Duncan to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. I am pleased to see TVA's emphasis on financial
flexibility through debt reduction. TVA is responsible for providing an
adequate supply of reliable, low-cost, clean power for the residents
and businesses of the Tennessee Valley Region. If confirmed, I will
consider growth in the region, cost of capital, alternative power
sources and competition when considering additional generating
capacity.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. I have insufficient information on TVA's competitive
bidding process to fully answer the question, but I generally believe
competitive bidding leads to better financial results. The process must
provide for differences in quality and reliability as well as price. It
is imperative that the process be fair and transparent.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I am committed to implementing the new TVA
statute. The Board will establish broad goals, objectives, and policies
while developing long range plans. Arguably, our most important
decision is to hire a Chief Executive Officer and hold him or her
accountable. The Board will create committees, conduct public hearings,
establish electricity rates, and approve the annual budget. I applaud
TVA's continuing investment in modifications to its coal-fired plants.
I am confident that TVA can be a leader in environmental stewardship.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. Generally, I support TVA's Green Power Switch program,
but I lack sufficient information to evaluate its operation. I
encourage volunteer measures to create investment in renewable
generation.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am unaware of TVA charging higher electricity rates in
some portions of the service territory. I am aware that other power
companies offer lower rates to customers who border the TVA. If
confirmed, I will examine the existing rate structure and ratemaking
process to ensure TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I recognize that environmental stewardship, along with
low-cost power production and technological innovation, is part of
TVA's objectives and missions. I also recognize an obligation to ensure
compliance with all laws including environmental statutes and
regulations. I have insufficient information to specifically answer
your question about TVA's plans for plant controls and timetables. If
confirmed, I pledge to learn more about TVA's pollution control
compliance and to direct and monitor future actions.
______
Responses from Robert Duncan to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. If confirmed to the TVA Board I will work promptly and
diligently to offer a solution for the Kentucky distributors' needs for
transmission service. All financial issues must be viewed through the
lens of changing competition. Access to TVA's transmission system is an
important issue for all TVA customers. I will work with other members
of the Board to address the issue in a manner that is fair and fiscally
responsible.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. If confirmed I will work to ensure that TVA follows
proper accounting measurers and I will advocate responsible debt
reduction. The newly constituted TVA Board is required to create an
audit committee that will focus on overseeing TVA's accounting policies
to assure they are appropriate and transparent. I am pleased to see
TVA's emphasis on financial flexibility through debt reduction.
Although TVA did not meet its initial targets for debt reduction, I
believe the new Board will take a conservative approach to debt levels.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a state public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. I have insufficient information to advocate or oppose an
outside entity regulating TVA. The legislation establishing the TVA and
recent amendments allow the Board to establish electric rates and
conduct public hearings. I am not familiar with TVA's current
ratemaking process, but I will carefully examine the process in light
of your question. I believe the expanded board and delegation of
authority to a Chief Executive Officer will strengthen the ratemaking
process.
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Statement of Susan Richardson Williams, Nominated to be a Member of the
Board of Directors of the Tennessee Valley Authority
Good morning. I am honored to be here today as one of President
Bush's nominees to the Board of the Tennessee Valley Authority. I am
very grateful to Tennessee's Senators, Majority Leader Bill Frist and
Lamar Alexander and to my Congressman John Duncan, Jr., for their
support.
Mr. Chairman and members of the committee, I appreciate the
opportunity to appear before you today. The woman you see here has been
shaped and molded by the Tennessee Valley Authority. I grew up in
Savannah, TN, a small town in west Tennessee on the banks of the
Tennessee River. My father worked his entire life for TVA, 45 years at
retirement, most of it as a Senior Operator at Pickwick Dam near
Savannah. He was a shift worker who belonged to the International
Brotherhood of Electrical Workers. He bought Series E savings bonds
every month through TVA so that my sister and I could attend college. I
can only imagine what he would think if he were here today to see his
child nominated to serve on the TVA Board. I am a daughter of the
Tennessee Valley and would consider it an incredible honor to serve on
this Board.
Having this background and knowledge of TVA gives me a unique
perspective on the history and mission of the agency. I appreciate what
TVA has done for the people of the Valley but I also recognize that
there are challenges facing this new Board. I can tell you that I will
work hard to understand the challenges and make determinations based on
sound research and careful thought. I have served on the University of
Tennessee's Board of Trustees for almost 11 years and have run a State
government agency overseeing over 40,000 employees. My 35-year career
has been in both the public and private arenas. Based on my work, my
life's experiences and my knowledge of TVA, I believe I can make a
valuable contribution to the Board of the Tennessee Valley Authority if
you choose to confirm me.
Thank you again for this opportunity and I look forward to
answering any questions you may have for me.
__________
Responses from Susan Richardson Williams to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. As a general rule, I support public/private partnerships
if they make sense for both entities. If I am confirmed, a major part
of my responsibility will be to assure that TVA is taking the steps
necessary to provide an adequate supply of reliable, low-cost, clean
power for the people and businesses in the Tennessee Valley Region.
This will require careful and conservative assessments of which, among
the alternative means of power supply, would be the more fiscally
responsible for TVA to pursue. The cost of capital and allocation of
risk are significant issues in deciding whether to add new capacity,
and I commit to carefully review all aspects of these issues if I were
to consider adding power generating capacity in the future.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. If confirmed, I will have the opportunity to learn
exactly what processes TVA currently uses to make these types of
acquisition and investment decisions. I can assure you that, after
becoming fully acquainted with those processes, I would assess whether
any changes would be warranted. With regard to competition generally, I
believe it can be a very important tool to help assure that low-cost
decisions are made, while still acquiring the type and quality of
generation resources required to maintain the reliability of the TVA
power system.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I would be committed to carefully studying
the costs and efficiency of TVA's operations and TVA's load growth,
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to assure that power rates provide sufficient
revenues and operating costs are at appropriate levels and to define
the appropriate debt capacity of TVA. I would then work diligently to
assure that TVA makes continuous progress towards improving and
maintaining efficiency and financial flexibility to enable TVA to make
all necessary investments in the power system, including those for
pollution control, in a timely manner.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. If confirmed, I look forward to the opportunity to learn
more specifically about the Green Power Switch program and how it is
operating. I can say, from what I have publicly heard to date, that it
sounds like a worthwhile approach toward encouraging investment in
renewable generation in the Tennessee Valley Region through voluntary
measures.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am not personally aware that such a disparity in TVA
rate levels by region exists. If confirmed, as part of my specific duty
to establish TVA's electric power rates, I will examine TVA's existing
rate structure and rate-making process in greater detail to make
certain that TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I do not currently have enough information about the
plans for, and status of, TVA's pollution control compliance efforts to
offer an informed opinion or make specific commitments concerning such
efforts. I do recognize that environmental stewardship, along with low-
cost power and technological innovation, is among TVA's important
objectives and missions, and I also recognize that I have an obligation
to ensure that TVA complies with applicable laws, including
environmental laws. If confirmed, I will have the opportunity learn
more about TVA's pollution control compliance actions and be in the
position to assure that TVA is taking the appropriate steps in this
area.
______
Responses from Susan Richardson Williams to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. It is my understanding that access to TVA transmission
system service is a very important issue for distributors of TVA power
generally, as well as for those located in Kentucky. Unfortunately, I
have not yet had the opportunity to study the details of this situation
sufficiently to be able to commit to a particular resolution to the
varying points of view on this issue at this time.
I can assure that, if confirmed to the TVA Board, I will be
committed to putting this issue on my personal TVA study agenda
promptly to assure that TVA is seeking ways to address the interests of
TVA's distributor customers who wish to have transmission access in a
manner that would both be fair to all power customers in TVA's seven-
state region and keep TVA on a sound financial basis.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. I take a conservative approach to managing my own debt
and I believe TVA should take a conservative approach to its debt
levels. If confirmed, I would be committed to carefully studying TVA's
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to define the appropriate debt capacity of TVA. I
would then work diligently to assure that TVA makes continuous progress
towards reaching financial flexibility. I recognize that managing TVA's
debt in a fiscally conservative way is key to assuring TVA's financial
soundness in the future.
I recognize that there has been disappointment with TVA's progress
in meeting the debt reduction goals that it set forth in 1997.
Unfortunately, it is not possible to change the past. But, I can
commit that I would oversee TVA's financial progress--to better assure
that TVA will be able to provide reliable power at competitive rates,
both now and into the future.
With regard to accounting procedures, if confirmed to the TVA
Board, the Board will be establishing an Audit Committee, which, among
other things, will be focused on overseeing TVA's accounting policies
to assure that they are appropriate and transparent as to TVA's true
financial condition.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a state public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. If confirmed, I will have the opportunity to gain
sufficient information about the details of TVA's ratemaking process
and experience with it. With that information and experience, I would
be in a better position to form an opinion about whether having an
outside entity regulate TVA would be better in terms of helping TVA
fulfill its mission and objectives.
It is clear that the TVA Act would place the duty upon the Board to
establish the electricity rates charged by TVA in keeping with TVA's
overall mission and objectives, including the objective that power be
sold at rates that are as low as are feasible.
I can say without reservation that this duty would be one of the
Board's more important ones--because TVA's provision of reliable, low-
cost power is a critical factor in enhancing the economic vitality and
development of the Tennessee Valley Region.
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Statement of William Sansom, Nominated to be a Member of the Board of
Directors of the Tennessee Valley Authority
I'm honored to appear before you today and be considered as a
member of this new nine member TVA Board. I want to thank Senator Bill
Frist and Senator Lamar Alexander for their support and encouragement.
I appreciate President Bush recommending me as one of the new board
members to your committee and the Senate.
I think you have made a wise decision to change the board
structure, and I'll do all I can to make that a right decision for you
and the TVA customers. I'll support TVA's missions including providing
reliable, competitive and environmentally clean electricity to the
people in this region.
I've dredged sand and gravel and operated towboats on the Tennessee
River, plus done a lot of water skiing on the TVA lakes. I recognize
the navigation requirements, the need to protect the environment,
provide flood prevention, and effectively use our water resources.
I look forward to helping set up this new board and providing
leadership and strategic direction for TVA.
I think this board can be thoughtful, objective, inquiring and
deliberate about issues facing TVA today, and I look forward to working
with you and your goals for TVA and making intelligent business
decisions.
Thank you for this opportunity to appear before you today and your
consideration.
______
Responses from William Sansom to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. If I am confirmed, a major part of my responsibility will
be to assure that TVA is taking the steps necessary to provide an
adequate supply of reliable, low-cost, clean power for the people and
businesses in the Tennessee Valley Region. This will require careful
and conservative assessments of which, among the alternative means of
power supply, would be the more fiscally responsible for TVA to pursue.
The cost of capital and allocation of risk are significant issues in
deciding whether to add new capacity, and I commit to carefully review
all aspects of these issues if I were to consider adding power
generating capacity in the future.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. I have not yet had the opportunity to learn exactly what
processes TVA currently uses to make these types of acquisition and
investment decisions. If confirmed, I can assure you that I would
become fully acquainted with those processes and determine if any
changes would be warranted. With regard to competition generally, I
believe it can be a very important tool to help assure that low-cost
decisions are made, while still acquiring the type and quality of
generation resources required to maintain the reliability of the TVA
power system.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I would be committed to carefully studying
the costs and efficiency of TVA's operations and TVA's load growth,
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to assure that power rates provide sufficient
revenues and operating costs are at appropriate levels and to define
the appropriate debt capacity of TVA. I would then work diligently to
assure that TVA makes continuous progress towards improving and
maintaining efficiency and financial flexibility to enable TVA to make
all necessary investments in the power system, including those for
pollution control, in a timely manner.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. Before offering unqualified support for any particular
TVA program, I would first like to have the opportunity, if confirmed,
to learn more specifically about that program and how it is operating.
However, with respect to the Green Power Switch program, I can say,
from what I have publicly heard to date, that it sounds like a
worthwhile approach toward encouraging investment in renewable
generation in the Tennessee Valley Region through voluntary measures.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am not personally aware that such a disparity in TVA
rate levels by region exists. If confirmed, as part of my specific duty
to establish TVA's electric power rates, I will examine TVA's existing
rate structure and rate-making process in greater detail to make
certain that TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I do not currently have enough information about the
plans for, and status of, TVA's pollution control compliance efforts to
offer an informed opinion or make specific commitments concerning such
efforts. I do recognize that environmental stewardship, along with low-
cost power and technological innovation, is among TVA's important
objectives and missions, and I also recognize that I have an obligation
to ensure that TVA complies with applicable laws, including
environmental laws. If confirmed, I will have the opportunity learn
more about TVA's pollution control compliance actions and be in the
position to assure that TVA is taking the appropriate steps in this
area.
______
Responses from William Sansom to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. It is my understanding that access to TVA transmission
system service is a very important issue for distributors of TVA power
generally, as well as for those located in Kentucky. Unfortunately, I
have not had the opportunity to study the details of this situation
sufficiently to be able to commit to a particular resolution to the
varying points of view on this issue at this time.
I can assure that, if confirmed to the TVA Board, I would be
committed to promptly devote my efforts to assure that TVA is seeking
ways to address the interests of TVA's distributor customers who wish
to have transmission access in a manner that would both be fair to all
power customers in TVA's seven-state region and keep TVA on a sound
financial basis.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. I believe in taking a conservative approach to debt
levels. If confirmed, I would be committed to carefully studying TVA's
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to define the appropriate debt capacity of TVA. I
would then work diligently to assure that TVA makes continuous progress
towards reaching financial flexibility. I recognize that managing TVA's
debt in a fiscally conservative way is key to assuring TVA's financial
soundness in the future.
I recognize that there has been disappointment with TVA's progress
in meeting the debt reduction goals that it set forth in 1997.
Unfortunately, it is not possible to change the past. But, I can
commit that I would oversee TVA's financial progress--to better assure
that TVA will be able to provide reliable power at competitive rates,
both now and into the future.
With regard to accounting procedures, if confirmed to the TVA
Board, the Board will be establishing an Audit Committee, which, among
other things, will be focused on overseeing TVA's accounting policies
to assure that they are appropriate and transparent as to TVA's true
financial condition.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a state public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. I do not yet have sufficient information about the
details of TVA's ratemaking process and experience with it to form an
opinion as to whether having an outside entity regulate TVA would be
better in terms of helping TVA fulfill its mission and objectives.
If I am confirmed to the TVA Board, it is clear that the TVA Act
would place the duty upon the Board to establish the electricity rates
charged by TVA in keeping with TVA's overall mission and objectives,
including the objective that power be sold at rates that are as low as
are feasible.
I can say without reservation that this duty would be one of the
Board's more important ones--because TVA's provision of reliable, low-
cost power is a critical factor in enhancing the economic vitality and
development of the Tennessee Valley Region.
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Statement of Howard Thrailkill, Nominated to be a Member of the Board
of Directors of the Tennessee Valley Authority
Thank you, Mr. Chairman. It is a great privilege for me to appear
before you and the distinguished members of this committee, as you
consider my nomination for the Tennessee Valley Authority Board of
Directors. In that regard, I also want to express my gratitude to
Senator Richard Shelby, Senator Jeff Sessions and Congressman Bud
Cramer who have encouraged me to come before you today. Finally, I must
also acknowledge my wife, Donna Thrailkill, who offers her support by
her presence at these proceedings.
Mr. Chairman, I deeply respect the heightened importance of this
confirmation hearing, the first to consider seating a restructured
Board of Directors under broad amendments to the TVA Act, as recently
enacted by Congress. It is also the first following passage of the
Energy Policy Act of 2005, after so many years of debate. These are
fundamental changes in direction for TVA and the Nation. Therefore, I
am mindful of the formidable obligation and responsibility I must
shoulder, if you choose to confirm my nomination. If you do, you can
rely upon my applying the full measure of my ability, background and
experience to this endeavor.
In my view, Congress has given TVA an historic opportunity to renew
and to transform itself. You have pointed the way to a new horizon. The
newly established Board will now bear the responsibility for
implementation of your vision, and you should hold it accountable for
doing so.
Having met individually with each of the other current nominees and
the two incumbent Board members, I commend them to you and look forward
to serving with them. Upon your confirmation, I am convinced this Board
has the breadth of knowledge and experience to move aggressively and
begin meeting your expectations. With their business acumen and
maturity, I am confident they will move in a financially and socially
responsible fashion as well.
Working together, I believe this Board can guide TVA to achievement
of new standards of excellence in the delivery of clean, low-cost,
reliable electric power to its customers. TVA should accept nothing
less than becoming ``best of class'' in this Nation.
As TVA crafts its future along the path you have charted, it is
clear to me that the innovative application of technology will be
critical to TVA's success. As a practical matter, no other approach
will power continued economic development in the Tennessee Valley,
while meeting ever tighter environmental standards for air and water
quality. Technology is also fundamental to TVA's delivering electric
service to its customers at lowest cost and highest reliability. There
are simply no practical alternatives that don't introduce downside
consequences that are unacceptable in my view.
In this environment, I believe my background as an engineer,
technologist and business executive could provide important balance and
perspective that will augment the backgrounds of other Board members.
Throughout my career in private enterprise, organizations I have headed
were built around large, complex engineering teams and programs not
unlike those TVA must undertake to succeed. There is little doubt that
the new Board will be called upon to endorse many complex, costly
programs whose success hinges upon correct assessment of technical and
financial alternatives. For more than three decades, that has been the
nature of my work, and I offer that experience and expertise to this
effort without reservation.
In closing I would like to affirm my love for the Tennessee Valley
and the natural beauty of its rivers, lakes, hills and valleys. Even
though we moved to Alabama from a home near the Columbia River basin in
Oregon, my wife and I have found the river basin managed by TVA to be
no less stunning and fragile. On many occasions while traveling around
the area, I have pulled over and marveled at the incredible vistas we
have in our valley. If confirmed, I pledge my strong support for TVA's
continued program of environmental stewardship and responsible
management of the Tennessee River system and resources.
Mr. Chairman, I am energized by the prospect of service as a member
TVA's Board of Directors during this critical period when energy
service providers are moving in new directions. I firmly believe that
the new TVA can be and will be worthy of its heritage.
Thank you for your consideration.
______
Responses from Howard Thrailkill to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. If I am confirmed, a major part of my responsibility will
be to assure that TVA is taking the steps necessary to provide an
adequate supply of reliable, low-cost, clean power for the people and
businesses in the Tennessee Valley Region. This will require careful
and conservative assessments of which, among the alternative means of
power supply, would be the more fiscally responsible for TVA to pursue.
The cost of capital and allocation of risk are significant issues in
deciding whether to add new capacity, and I commit to carefully review
all aspects of these issues if I were to consider adding power
generating capacity in the future.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. I have not yet had the opportunity to learn exactly what
processes TVA currently uses to make these types of acquisition and
investment decisions. If confirmed, I can assure you that I would
become fully acquainted with those processes and determine if any
changes would be warranted. With regard to competition generally, I
believe it can be a very important tool to help assure that low-cost
decisions are made, while still acquiring the type and quality of
generation resources required to maintain the reliability of the TVA
power system.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I would be committed to carefully studying
the costs and efficiency of TVA's operations and TVA's load growth,
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to assure that power rates provide sufficient
revenues and operating costs are at appropriate levels and to define
the appropriate debt capacity of TVA. I would then work diligently to
assure that TVA makes continuous progress towards improving and
maintaining efficiency and financial flexibility to enable TVA to make
all necessary investments in the power system, including those for
pollution control, in a timely manner.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. Before offering unqualified support for any particular
TVA program, I would first like to have the opportunity, if confirmed,
to learn more specifically about that program and how it is operating.
However, with respect to the Green Power Switch program, I can say,
from what I have publicly heard to date, that it sounds like a
worthwhile approach toward encouraging investment in renewable
generation in the Tennessee Valley Region through voluntary measures.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am not personally aware that such a disparity in TVA
rate levels by region exists. If confirmed, as part of my specific duty
to establish TVA's electric power rates, I will examine TVA's existing
rate structure and rate-making process in greater detail to make
certain that TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I do not currently have enough information about the
plans for, and status of, TVA's pollution control compliance efforts to
offer an informed opinion or make specific commitments concerning such
efforts. I do recognize that environmental stewardship, along with low-
cost power and technological innovation, is among TVA's important
objectives and missions, and I also recognize that I have an obligation
to ensure that TVA complies with applicable laws, including
environmental laws. If confirmed, I will have the opportunity learn
more about TVA's pollution control compliance actions and be in the
position to assure that TVA is taking the appropriate steps in this
area.
______
Responses from Howard Thrailkill to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. It is my understanding that access to TVA transmission
system service is a very important issue for distributors of TVA power
generally, as well as for those located in Kentucky. Unfortunately, I
have not had the opportunity to study the details of this situation
sufficiently to be able to commit to a particular resolution to the
varying points of view on this issue at this time.
I can assure that, if confirmed to the TVA Board, I would be
committed to promptly devote my efforts to assure that TVA is seeking
ways to address the interests of TVA's distributor customers who wish
to have transmission access in a manner that would both be fair to all
power customers in TVA's seven-state region and keep TVA on a sound
financial basis.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. I believe in taking a conservative approach to debt
levels. If confirmed, I would be committed to carefully studying TVA's
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to define the appropriate debt capacity of TVA. I
would then work diligently to assure that TVA makes continuous progress
towards reaching financial flexibility. I recognize that managing TVA's
debt in a fiscally conservative way is key to assuring TVA's financial
soundness in the future.
I recognize that there has been disappointment with TVA's progress
in meeting the debt reduction goals that it set forth in 1997.
Unfortunately, it is not possible to change the past. But, I can
commit that I would oversee TVA's financial progress--to better assure
that TVA will be able to provide reliable power at competitive rates,
both now and into the future.
With regard to accounting procedures, if confirmed to the TVA
Board, the Board will be establishing an Audit Committee, which, among
other things, will be focused on overseeing TVA's accounting policies
to assure that they are appropriate and transparent as to TVA's true
financial condition.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a State public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. I do not yet have sufficient information about the
details of TVA's ratemaking process and experience with it to form an
opinion as to whether having an outside entity regulate TVA would be
better in terms of helping TVA fulfill its mission and objectives.
If I am confirmed to the TVA Board, it is clear that the TVA Act
would place the duty upon the Board to establish the electricity rates
charged by TVA in keeping with TVA's overall mission and objectives,
including the objective that power be sold at rates that are as low as
are feasible.
I can say without reservation that this duty would be one of the
Board's more important ones--because TVA's provision of reliable, low-
cost power is a critical factor in enhancing the economic vitality and
development of the Tennessee Valley Region.
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Statement of Donald DePriest, Nominated to be a Member of the Board of
Directors of the Tennessee Valley Authority
Mr. Chairman, members of the committee. There is probably no
greater honor than to be asked by the President to serve the Nation,
and as President Bush's nominee as a Director of the Tennessee Valley
Authority, I am thankful for the opportunity to serve. Mississippi's
two marvelous Senators, Thad Cochran and Trent Lott, have been
unwavering in their support and encouragement, and I will be forever
grateful to them. Congressmen Wicker and Pickering, as well as Governor
Barbour, have offered their assistance and advice. It is generous of
you, Mr. Chairman, and members of the committee, to take the time to so
promptly address our nominations. I appreciate your kindness.
TVA has been important to me for my entire life. I can remember the
day at age 6, electricity was first turned on at our house in the
country near Dyer, TN. The establishment of this great institution
transformed an impoverished region into a flourishing and wonderful
part of the world. I will do my part, if confirmed, to see that the
Tennessee Valley Authority continues its mission in an ever improving
way.
I have lived in Columbus, MS, since 1963. I moved there to open an
industry that continues to operate today, and which depends on
reliable, low-cost electric power provided by Columbus Light & Water, a
TVA distributor. I came to Mississippi from Tennessee, where I am the
seventh generation of my family in the State. Gibson County Electric
Membership Co-Operative, now Gibson Electric, was formed and chaired by
my uncle, Charles Garner, for 40 years. So I have a legacy to fulfill
in continuing and improving TVA's service.
The Tennessee Valley Authority is the largest power generator in
the Nation, and must continue to produce large quantities of low-cost,
reliable and clean power. It is a mammoth enterprise that requires
prudent management and financial integrity. It has a unique capacity to
control its own rates and funding sources, and operates primarily like
a private enterprise with a public purpose. In expanding the Board of
Directors and creating the Chief Executive Officer, Congress has
restructured TVA to meet the challenges of a growing organization in
the power generation industry. We should keep in mind that TVA is not
just an enterprise, but a leader in electric power, and it carries with
its power generation mission the important task of aiding economic
development in the TVA area. This arm of TVA is critical to America's
future. This role means that TVA must accommodate shifting trends for
this industry, promote employment of citizens within its area, advance
technological development, secure energy sources, and protect national
security.
My experience in building and developing industries and new
technologies should contribute to the decision to advance the
objectives of TVA. I was a board member and Chairman of one of TVA's
distributors in Columbus, MS, during the turbulent oil and energy
crisis of the 1970s. This experience should be helpful in my role on
the Board of TVA.
I must note that the other nominees to the newly expanded board of
TVA are quality, thoughtful people of diversified skills that will
bring depth of experience and a variety of viewpoints to the
organization, which is vital to making decisions that affect thousands
of employees, 158 distributors, and millions of users/customers. The
board must deal with issues and opportunities associated with types of
power generation and energy sources, financial planning, budgeting and
execution regarding these issues on a giant scale. Management of
appropriate debt levels commensurate with making appropriate power
rates and capital expenditures, human resources, environmental matters,
land use, legal challenges, service areas and distributor relations,
finding a world-class CEO, corporate governance, megasites for
industrial/economic development, and probably countless other
challenges must be effectively solved. This requires the skillsets and
experience gained in dealing with large and diverse organizations, and
the new board must possess these skills and be prepared to act with
precision. If confirmed, I will bring my own experience to bear in
having formed, managed, and operated several companies of national and
international scope in telecommunications, manufacturing, and
broadcasting. These include having established one of the two original
cellular carriers in all the TVA region's major markets.
To summarize my thoughts about TVA's future and its challenges:
1. TVA must continue to produce large amounts of low cost,
reliable, and clean power while positioning itself as a technology
leader in these areas. TVA should maintain excess emergency generating
capacity, and must have back-up plans at all times to insure there is
never a service interruption.
2. The Tennessee Valley Authority is in a unique position with its
form of organization/governance, rate making, and power generating to
have the highest credit rating. TVA must keep this rating by being
consistent with proper debt levels and capital expense.
3. TVA should maintain the best of relations with all of its people
(publics). This includes distributors, industrial customers, trade
groups, all levels of government, economic development organizations,
employees/labor unions, and others.
4. The organization must take the lead in encouraging energy
conservation at all levels.
5. TVA must maintain/take the lead in nuclear power generation,
coal gasification (including work on carbon recapture) and other
technologies that produce clean power.
6. The management of the Tennessee River system must be constantly
revisited and strategic plans kept in place and implemented for this
valuable economic and recreational resource.
7. The highest standards of corporate governance should
consistently be maintained, and the professional standards of the
organization, from top to bottom, must set the mark for confidence for
public or private companies.
8. The board must always keep in mind that the people own this
organization, and that the public good prevails. The conduct of the
business of TVA must be performed with this as the guiding principle.
Mr. Chairman, I thank you and all members of this committee for
your work and kind consideration in this confirmation process, and, if
I am confirmed, I pledge to fulfill the duties of this board position
in a vigorous and energetic way, always keeping first in my mind the
needs of TVA's owners.
______
Responses from Donald DePriest to Additional Questions from
Senator Jeffords
Question 1. Do you think that TVA, which has more than $24 billion
in debt, should take on additional debt to finance new powerplants when
private industry is willing to accept the financial risk of
constructing new plants?
Response. If I am confirmed, a major part of my responsibility will
be to assure that TVA is taking the steps necessary to provide an
adequate supply of reliable, low-cost, clean power for the people and
businesses in the Tennessee Valley Region. This will require careful
and conservative assessments of which, among the alternative means of
power supply, would be the more fiscally responsible for TVA to pursue.
The cost of capital and allocation of risk are significant issues in
deciding whether to add new capacity, and I commit to carefully review
all aspects of these issues if I were to consider adding power
generating capacity in the future.
Question 2. Do you feel that TVA should institute some kind of
competitive bidding for new projects to ensure that the taxpayers of
the Tennessee Valley region are paying the lowest possible price for
their power, and that new generation is constructed in a cost-effective
manner?
Response. I have not yet had the opportunity to learn exactly what
processes TVA currently uses to make these types of acquisition and
investment decisions. If confirmed, I can assure you that I would
become fully acquainted with those processes and determine if any
changes would be warranted. With regard to competition generally, I
believe it can be a very important tool to help assure that low-cost
decisions are made, while still acquiring the type and quality of
generation resources required to maintain the reliability of the TVA
power system.
Question 3. What will you do to ensure that TVA is being operated
as a very efficient business so that financial resources are available
to continue its investments in state-of-the-art air pollution control
technology?
Response. If confirmed, I would be committed to carefully studying
the costs and efficiency of TVA's operations and TVA's load growth,
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to assure that power rates provide sufficient
revenues and operating costs are at appropriate levels and to define
the appropriate debt capacity of TVA. I would then work diligently to
assure that TVA makes continuous progress towards improving and
maintaining efficiency and financial flexibility to enable TVA to make
all necessary investments in the power system, including those for
pollution control, in a timely manner.
Question 4. Do you support TVA's Green Power Switch program, which
allows families and companies to voluntarily accept a small surcharge
on their monthly bill in order to purchase blocks of electricity
generated from renewable sources?
Response. Before offering unqualified support for any particular
TVA program, I would first like to have the opportunity, if confirmed,
to learn more specifically about that program and how it is operating.
However, with respect to the Green Power Switch program, I can say,
from what I have publicly heard to date, that it sounds like a
worthwhile approach toward encouraging investment in renewable
generation in the Tennessee Valley Region through voluntary measures.
Question 5. TVA is an $8 billion entity. TVA charges higher
electricity rates in some portions of the service territory. An uneven
playing field makes increased energy costs even more painful. Would
you, as a member of the TVA Board, seek to make uniform TVA customers'
rates?
Response. I am not personally aware that such a disparity in TVA
rate levels by region exists. If confirmed, as part of my specific duty
to establish TVA's electric power rates, I will examine TVA's existing
rate structure and rate-making process in greater detail to make
certain that TVA's rates are fair.
Question 6. The TVA currently has 11 coal-fired powerplants in its
system. Of these 11, 5 plants are currently without any modern
pollution controls at all. Many emitting units within the TVA system
remain uncontrolled today and EPA predicts that even with its latest
rules, nearly 50 units in the TVA system will not have scrubbers by
2015. These powerplants are large sources of emissions emitting
millions of pounds of pollution into the air. What are TVA's specific
plans for installing controls on these powerplants? Will you commit to
controlling all of these plants within a specific timeframe?
Response. I do not currently have enough information about the
plans for, and status of, TVA's pollution control compliance efforts to
offer an informed opinion or make specific commitments concerning such
efforts. I do recognize that environmental stewardship, along with low-
cost power and technological innovation, is among TVA's important
objectives and missions, and I also recognize that I have an obligation
to ensure that TVA complies with applicable laws, including
environmental laws. If confirmed, I will have the opportunity learn
more about TVA's pollution control compliance actions and be in the
position to assure that TVA is taking the appropriate steps in this
area.
______
Responses from Donald DePriest to Additional Questions from
Senator Bunning
Question 1. Kentucky TVA customers pay more for power than Kentucky
customers who use other utilities. Because of this, many Kentucky TVA
utilities have elected to exercise the rights they have under their
contracts with TVA and leave the system in order to secure cheaper
power from other suppliers for their customers. Senator Bunning, along
with Senator McConnell, introduced legislation last year to provide
FERC authority to require TVA to provide transmission line access to
these Kentucky utilities. They have been working with TVA on this issue
for over a year now. TVA has repeatedly said it would work with
Senators Bunning and McConnell and so far they have not provided a
proposal to the satisfaction of the Senators to resolve this critical
issue for the Kentucky distributors. If you are confirmed to the TVA
Board, will you pledge to work promptly and diligently to craft a
resolution on the Kentucky distributor's need for transmission service
from TVA?
Response. It is my understanding that access to TVA transmission
system service is a very important issue for distributors of TVA power
generally, as well as for those located in Kentucky. Unfortunately, I
have not had the opportunity to study the details of this situation
sufficiently to be able to commit to a particular resolution to the
varying points of view on this issue at this time.
I can assure that, if confirmed to the TVA Board, I would be
committed to promptly devote my efforts to assure that TVA is seeking
ways to address the interests of TVA's distributor customers who wish
to have transmission access in a manner that would both be fair to all
power customers in TVA's seven-state region and keep TVA on a sound
financial basis.
Question 2. TVA's debt now stands at over $25 billion. One of the
main reasons Senator Bunning supported expanding the TVA Board was my
hope that it would help TVA get its accounting books and finances in
order. TVA said 10 years ago it would cut its debt in half by 2007, but
it hasn't made a lot of progress towards that goal. The President's
Fiscal Year 2007 Budget states that TVA will reduce its debt by 30
percent by 2016. So basically, a decade after its first target date TVA
will achieve only 60 percent of its initial debt reduction target. If
you are confirmed to the TVA Board, will you work to ensure that TVA
follows proper accounting measures and significantly reduces its debt?
Response. I believe in taking a conservative approach to debt
levels. If confirmed, I would be committed to carefully studying TVA's
cash flows, coverage ratios, balance sheet strengths and sensitivities
and other factors to define the appropriate debt capacity of TVA. I
would then work diligently to assure that TVA makes continuous progress
towards reaching financial flexibility. I recognize that managing TVA's
debt in a fiscally conservative way is key to assuring TVA's financial
soundness in the future.
I recognize that there has been disappointment with TVA's progress
in meeting the debt reduction goals that it set forth in 1997.
Unfortunately, it is not possible to change the past. But, I can
commit that I would oversee TVA's financial progress--to better assure
that TVA will be able to provide reliable power at competitive rates,
both now and into the future.
With regard to accounting procedures, if confirmed to the TVA
Board, the Board will be establishing an Audit Committee, which, among
other things, will be focused on overseeing TVA's accounting policies
to assure that they are appropriate and transparent as to TVA's true
financial condition.
Question 3. TVA has announced it plans to increase rates in the
near future. This rate increase comes after a 7.4 percent increase just
4 months ago. While most utilities have some form of outside oversight,
such as a state public service commission and FERC, TVA does not. Are
you opposed to an outside entity regulating TVA?
Response. I do not yet have sufficient information about the
details of TVA's ratemaking process and experience with it to form an
opinion as to whether having an outside entity regulate TVA would be
better in terms of helping TVA fulfill its mission and objectives.
If I am confirmed to the TVA Board, it is clear that the TVA Act
would place the duty upon the Board to establish the electricity rates
charged by TVA in keeping with TVA's overall mission and objectives,
including the objective that power be sold at rates that are as low as
are feasible.
I can say without reservation that this duty would be one of the
Board's more important ones--because TVA's provision of reliable, low-
cost power is a critical factor in enhancing the economic vitality and
development of the Tennessee Valley Region.
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