TVA's Nuclear Fuel Sale and Leaseback Arrangement Needs Further Analysis and Congressional Oversight
EMD-82-52
Published: Mar 18, 1982. Publicly Released: Mar 18, 1982.
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Highlights
As part of a continuing oversight of the Tennessee Valley Authority (TVA), GAO evaluated the financial soundness of the TVA sale and leaseback of nuclear fuel. GAO was requested to include as part of its evaluation: (1) a complete chronology of the events leading up to the sale and leaseback agreement; (2) information on whether this is a standard utility practice and a comparison of the TVA agreement with other utility agreements; and (3) an analysis of the financial transactions between the Seven States Energy Corporation, which purchased the nuclear fuel, and the Federal Financing Bank (FFB).
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| The legislative oversight committees of Congress should review and establish an approval mechanism for similar type transactions in the future because of their potential impact on the Federal Government's overall borrowing. The current transaction will need additional money by the late 1980's, when TVA exceeds the $2 billion loan commitment approved. Congressional review should decide if an increase is warranted. |
Closed – Not Implemented
|
The recommendation impacts on the use of the Federal Financing Bank by TVA. This is a highly controversial area and it will be difficult to obtain action. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Tennessee Valley Authority | TVA should include as part of its ongoing analysis a 30-year benefit and cost study which assesses the full cost of the transaction to TVA and to the ratepayer. In conducting this study, TVA, at a minimum, should include: the most current demand forecast including the low, medium, and high forecast; the current nuclear power plant construction schedule; the cost of money including sources of financing when the $2 billion Federal Financing Bank ceiling is reached; and the full effect of deferring interest. |
Closed – Not Implemented
TVA has stated it does not intend to perform the analysis because the arrangement can be terminated upon 120 days notice. As TVA reviews its operation on a continuing basis, it will evaluate the arrangement.
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Topics
Congressional oversightElectric utilitiesFuel salesLeasing policiesNuclear energyNuclear fuelInterest ratesFinancial statementsFinancial servicesInventories