Summary: The Tennessee Valley Authority (TVA) is $26 billion in debt and has invested $14 billion in nonproducing nuclear assets that are not included in its electricity rates. As a result, TVA has far more financing costs and deferred assets than its likely competitors have, which gives TVA little flexibility to meet competitive challenges. To the extent that TVA cannot compete effectively and improve its financial condition, the federal government may have to pick up the tab for some of TVA's debt. TVA's troubled financial condition has been caused largely by construction delays, cost overruns, and operational shutdowns in its nuclear program. TVA's links to the federal government and its high debt limit have allowed it to borrow the billions of dollars needed for its nuclear construction program. Although no cash crisis exists today, GAO believes that TVA's financial condition threatens its long-term viability and places the federal government at risk. GAO highlights several options that could reduce risk to federal taxpayers and help prepare TVA to compete in the electricity market.
