We’ve been silent here on the TVA sludge mess in East Tennessee, mainly due to other distractions (a la Barack Obama), but this story from today’s Tennessean gives us a good perspective on the issue as it stands. In short, a TVA dike near Harriman broke two and half weeks ago, spilling tons of coal ash into the nearby Emory River and destroying 12 homes. Now, Erin Brockovich of Pacific Gas and Julia Roberts fame, is here to tear things up, or something. For background, check here and here. Today’s story is concerned with who will end up paying for the cleanup. From the Tennessean:

TVA’s ratepayers will be saddled with the cost to clean up a massive coal ash slide at an East Tennessee power plant, the agency’s chairman said.

The tab, likely to be tens of millions of dollars or more, will include the cost of extra workers, overtime pay, heavy machinery, and housing and supplies for families chased from their homes, along with the lawsuits that have begun to pile up.

“This is going to get into rates sooner or later,” Tennessee Valley Authority Chairman Bill Sansom told The Associated Press on Wednesday. “We haven’t even thought about going to Washington for it.”

But Bill, even the porn industry‘s getting into the bailout business! At least the TVA, as a federal corporation, has some legitimacy to appealing to the federal government for emergency funds. Something’s still up here, and it’s not the environmental disaster that’s got me bothered (though that’s certainly an issue).

Where’s the regulation of this federal corporation? Though we’re dealing with energy and not home mortgages, this episode in Harriman reminds me of those other federal corporations Fannie Mae and Freddie Mac. There’s a slight difference in classification (Fannie and Freddie are government-sponsored enterprises while the TVA is actually owned by the feds), but the spirit is the same behind them all. Both the TVA and Fannie Mae are byproducts of the New Deal, during which time government involvement in private enterprise was all the rage. The former was introduced as a way to bring electricity to the poorest pockets of America and the latter as a method of providing liquidity in the mortgage market.

I’ve not enough knowledge of economic history, so whether or not these were absolutely necessary measures at the time is hard for me to answer. The TVA is certainly sacred here in Tennessee, and it seems that it has done well in providing electricity to folks in the region. Episodes like this sludge spill, however, indicate that the government has not been regulating its corporation well enough. The Tennessean reported that residents said “baby busts” preceded the big break for a long time, and the only solution were quick fixes that didn’t target the problem of outdated infrastructure (sound familiar, New Orleans?).

Environmentalists are quick to jump on this issue as a need for increased regulation, and they are right when it comes to the TVA. Government regulation of government enterprises is not only a good idea, it’s critical to having federal corporations in the first place. If we insist on maintaining GSEs and the like, intense scrutiny by the owners (the federal government and ipso facto the American people) is needed. Private corporations have an obligation to themselves to keep disasters like this from happening, but only voters can pressure their government to be responsible for federal enterprises.

In light of all these residual effects of outdated and perhaps misguided attempts to manage markets and influence behavior through behemoth government, is Obama’s “new New Deal” really the answer?

Tweet

environment, government regulation, tennessee