The Tennessee Valley Authority (TVA), the nation’s largest public power utility, stands at a historic junction shaped by the convergence of political, financial, and operational challenges not seen since the 1950s. Established in 1933 as part of President Franklin D. Roosevelt’s New Deal, TVA has long been a monument to economic development and energy production in the southeastern United States, but TVA’s legacy is in flux amid mounting external political pressures, destabilizing actions crippling its Board of Directors, and power generation challenges that raise questions about its financial future, governance, and strategic priorities.
Political Turbulence and Leadership Uncertainty
The instability of TVA stems mainly from the recent actions of President Donald Trump, who has dismissed two Board members – Biden appointees Chairman Joe Ritch and Michelle Moore – without public justification. The TVA Board of Directors is the sole regulator that provides oversight of TVA. The President has placed TVA’s Board of Directors in a non-quorum position, meaning the Board lacks enough members to enact key decisions like approving the anticipated final Integrated Resource Plan (IRP), approving future budgets, or initiating new power plant projects. With no known new Board nominees currently under consideration, TVA is constrained to continue on its current trajectory. Requiring Senate confirmation, past TVA Board nominees have taken over a year to be confirmed once announced.
The highly unusual and blatantly partisan firings started with Moore. Days later, the TVA Board hired a new CEO, Don Moul, while there was still a quorum. Days after that, Trump fired Chairman Ritch. While no official justification was provided, these actions follow a highly critical opinion piece published in Power magazine on March 20 by Tennessee’s U.S. Senators Marsha Blackburn and Bill Hagerty. The op-ed can be best characterized as the Senators engaging in ill-informed, reckless micromanagement of TVA’s Board and executive team in an attempt to drive TVA toward unproven and costly new nuclear projects. Their public criticism of TVA’s leadership seeking an immediate commitment to small modular reactors (SMRs) has raised concerns about undue interference from government officials with no expert knowledge that places TVA’s 10 million customers at undue financial risk.
Executive Transition Amid Financial Constraints
Further instability comes from TVA undergoing a significant transition in its executive leadership, with Don Moul replacing current Chief Executive Officer (CEO) Jeff Lyash on April 9 and Tom Rice replacing long-serving Chief Financial Officer (CFO) John Thomas on January 27, after John Thomas announced his retirement in December 2024. While the incoming CEO Moul has a background in nuclear power, it appears that the Tennessee Senators were not happy with the selection process. Former CFO John Thomas had a 20-year history in leadership at TVA and was widely seen as a key “puppet master” of the executive team and Board of Directors. His departure comes at a time when TVA is undertaking an aggressive multibillion-dollar new fossil gas power generation build-out while facing a critical financing hurdle: its congressional debt cap of $30 billion. Unless Congress raises this limit, TVA may struggle to finance new plants, including nuclear projects requiring significant upfront investment. This financial limitation adds to the uncertainty surrounding TVA’s ability to execute long-term energy plans.
Other significant unexplained leadership changes in the past week include the removal of David Fountain, TVA’s General Counsel and designated ethics official responsible for administering TVA’s agency-wide ethics program, and Carol Eimers, TVA’s vice president and chief human resources officer. Both Fountain and Eimers disappeared from the TVA Enterprise Leadership webpage over the weekend without any communication about their status.
Operational Challenges and Reliability Concerns
TVA is experiencing significant operational setbacks in addition to its financial and political problems. Three of its seven nuclear reactors—accounting for 42% of its nuclear generation capacity—are offline at this time. Two large nuclear units at Watts Bar and Sequoyah have been offline for extended periods, including during winter peak usage, with no clear timeline for their return to service. Units at TVA’s Browns Ferry site have been on and off in the past few months. This unexpected loss of power generation has forced TVA to purchase electricity from external sources at a premium, driving up costs and raising concerns about reliability as demand continues to grow.
The outages also raise questions about TVA’s ability to expand its nuclear fleet effectively. If TVA already struggles to maintain its existing reactors, embarking on a costly and uncertain SMR expansion could further destabilize the utility’s financial and operational footing.
Elon Musk and the xAI Factor
In 2024, Elon Musk’s xAI Artificial Intelligence (AI) startup announced plans for a supercomputer to support his Grok chatbot and other AI training opportunities. The initial announcement projected a 100,000 graphic processing units (GPU) configuration requiring approximately 150 MW of electrical power from the Memphis Light Gas and Water (MLGW) local power company in Memphis. MLGW is also TVA’s largest power customer. After winning local government support for the project, xAI shared publicly that the company was now going to increase the size of the computer cluster by ten times to a million GPUs, which dramatically increased the power demand to over 1000 MW of electrical power. This will clearly put a significant strain on the Memphis power system.
TVA and MLGW have approved one new electrical substation for the current xAI facility. Each large substation over 100 MW requires TVA Board approval. xAI has a request for a second substation that is currently under consideration and study. TVA’s Board has not publicly approved the second request. Now that the TVA Board does not have a quorum, it is unclear if a new substation can be approved. In March, xAI announced the purchase of a second large building of over a million square feet in south Memphis. This building will house additional computer infrastructure with a high electrical power demand and will likely require at least a third electrical power substation to support its operation.
Musk and the xAI staff have prided themselves on the speed at which they are able to build out the xAI cluster. Musk wants xAI to be a leader in AI and has had a long-running feud with Open AI’s Sam Altman, creator of Chat GPT and seen by many as a leader in the AI space. While the xAI team on the ground in Memphis has thus far been publicly complimentary of MLGW and TVA’s responsiveness in meeting their rapidly expanding needs for electrical power, it is unclear how long this can be sustained.
Given Musk’s close association with President Trump and the fact that TVA may for an extended period be unable to approve projects at the pace of Musk and xAI’s ambitions, this may become an additional factor in discussions on TVA’s future.
The Future of TVA: Federal Ownership or Divestiture?
As the current administration prepares its budget for the 2025–2026 fiscal year, speculation has emerged that it may recommend divesting all or part of TVA from the federal government’s assets. This possibility raises fundamental questions about TVA’s future: What would divestiture look like? Will some or all of TVA’s assets be sold off to a private utility, or could there continue to be a regional public power model more independent of the federal government? Could TVA’s transmission grid be operated in a manner that allows more access and competition between power generation suppliers, and would any of these options result in lower costs or improved reliability for customers in the Tennessee Valley?
Historically, privatization of TVA has for many in the Tennessee Valley been a “third rail,” amounting to words that should not be uttered aloud. The widely varying 153 local power companies, ranging from large municipal utilities to small cooperative power providers, rarely agree on anything and have generally resisted the discussion. If pressed, many believe they are the rightful “heir apparent” of the TVA system as they claim to have paid for the system over the years through purchasing power from TVA. I’m skeptical this view will be persuasive to President Trump’s team in their current rampage through all that is the federal government.
Any major restructuring of TVA would require an act of Congress. It is unclear whether the administration could sell TVA assets without congressional action. If TVA’s assets were sold or restructured by Congress, a range of options would be on the table. Over the years, especially from the 1980s onward, there have been several proposals from different administrations (Reagan, Clinton, Obama) to sell all or parts of TVA to reduce the federal government’s footprint and debt.
President Obama’s 2014 budget, for example, suggested exploring selling TVA’s transmission assets or even privatizing TVA entirely, citing that TVA had achieved financial self-sufficiency and could be better managed privately. In “Delivering Government Solutions in the 21st Century” (2018), the first Trump administration revived the idea of selling TVA’s transmission assets (not the entire TVA). The document suggests divesting TVA’s transmission assets as part of a broader push to reform federal involvement in electricity markets.
Divesting Federal Transmission Assets:Department of Energy and Tennessee Valley Authority
Summary of Proposal: This proposal would sell the transmission assets owned and operated by the Tennessee Valley Authority (TVA) and the Power Marketing Administrations (PMAs) within the Department of Energy, including those of Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration. Eliminating or reducing the Federal Government’s role in owning and operating transmission assets, and increasing the private sector’s role, would encourage a more efficient allocation of economic resources and mitigate unnecessary risk to taxpayers. (page 66)
It is beyond the scope of this post to cover the complete landscape of potential futures for electric power generation and distribution in the Tennessee Valley, but it should be emphasized that it is not just a binary option between keeping the current dysfunctional structure or selling all the assets to a private utility provider. These two options can be considered bookends with a wide range of options in between. We can look to current utility ownership and governance models across the country for examples and can even explore combinations or new models that would make sense for this point in time and for the Valley in particular.
To start with a few examples from various parts of the country, one option would be for ownership of TVA’s power generation and transmission assets to be transferred to a new generation and transmission cooperative (G&T) that is controlled regionally similar to Oglethorpe in Georgia or Tri-State serving the western states of New Mexico, Colorado, and Wyoming. An example that has similarities to the current TVA structure exists in the Pacific Northwest where the Bonneville Power Authority (BPA) is guided by a Northwest Power and Conservation Council with a regionally selected Board that sets power plans.
On the private side, in addition to a private investor-owned entity buying and managing all of TVA’s assets, options include selling assets with a requirement that the new owner join or form a market with the benefits of competition between suppliers and independent transmission planning and operations. There are several flavors of these markets across the country, and TVA already abuts two of the largest in the country: PJM and MISO.
Regardless of whether a privately owned TVA joins a market or stays vertically integrated, it would be regulated by each of the seven states in which it currently operates. That means resource planning and rate cases overseen by the Tennessee PUC, Kentucky PSC, Virginia SCC, North Carolina Utilities Commission, Georgia PSC, Alabama PSC, and Mississippi PSC. This may sound like alphabet soup, but it would bring regulation of TVA closer to the people it serves while complicating its mission by requiring it to get approval for its plans and rates by this many regulators. TVA’s neighbor to the east, Duke Energy, already struggles to get its two state commissions (North and South Carolina) to approve the same resource plans. Aligning that process across seven states would be no easy task. In addition to state regulation, private ownership would mean new federal regulatory requirements, including requirements meant to speed up interconnection of new generation resources and to implement smart transmission planning at the regional level.
This summary only touches the surface of what is possible and does not address the dams and management of the Tennessee River system for flood control, navigation, and recreation. Does that stay with a scaled-down version of TVA or go to the Army Corps of Engineers like most river systems in the United States? There are key important issues like honoring the retirement commitments to former TVA employees. Large questions remain about the future of the 153 local power companies and if there is a need for so many or if there could be efficiencies gained by some mergers.
These are tough questions that will take thoughtful discussion and debate. As a longtime participant in TVA-related matters for over 35 years, I have never seen TVA in such a precarious position. At the same time, I’m not convinced that defaulting to defending the status quo is what is needed at this moment, as I have also never seen TVA so insular and out of touch with the families and businesses it serves. Our collective economic and environmental challenges ahead are daunting. A thoughtful and rigorous discussion and debate is indeed needed. If the current structure is the best, so be it, but if we need a structure that results in better service to our region and the nation, we should embrace change for the better. One thing I can assure you, in these tumultuous times, sticking our proverbial heads in the sand and wishing it away is not an option. Any decision will have lasting implications for the 10 million people currently served by TVA.
