Tennessee Valley Electric System Advisory Committee
Minutes from the Third Meeting (March 24, 1998)

1.0 OPENING REMARKS

Chairman Derrick opened the meeting at 8:30 a.m. by welcoming all in attendance and offering his thanks for maintaining their interest and working so hard to reach consensus on the issues affecting the Tennessee Valley. He said that in his review of the draft report he was pleased to find so many areas of agreement. And where there was no agreement, he said he was impressed with the honesty and clarity with which the differences in opinions were explained. He said he thought the discussions outlining the various positions would be especially helpful to policy makers in understanding the complexity of the issues at hand.

The Chairman then stated that the goal for the meeting was to reach agreement on the content of the Committee's final report; not necessarily to agree on all the issues, but to be explicit even on the points of disagreement; maybe especially on the points of disagreement. He indicated that a conference call was scheduled for Friday (March 27) to cover any last minute changes that may be needed to finalize the report. Following that conference call, he explained that the report would be revised as necessary to reflect all agreed changes and then presented to the Secretary of Energy Advisory Board officially during a public conference call on March 31.

2.0 PRESENTATION

There being no questions on the work to be done, the Chairman introduced Ms. Miles Mennel; Executive Director of the Association of Tennessee Valley Governments (ATVG). Ms. Mennel explained that ATVG represents 201 counties in the seven states of the Tennessee Valley. She explained that TVA represented a common thread among all members of the organization and that she was especially appreciative of the opportunity to present ATVG's concerns about TVA and restructuring. She described a survey conducted by ATVG last January to assist in developing a consensus on deregulation concerns and actions to be taken to prepare for competition. She said the results from that survey indicate that many think TVA should remain more than just a power company but that clear distinctions must be drawn between TVA's power and non-power activities. She said the ATVG membership supports continuation of TVA programs above and beyond power programs.

When asked whether ATVG believed that power revenues should be used to fund river activities, Ms. Mennel responded that her members support the use of appropriated (federal) funds for those purposes. Most importantly, she emphasized, the members want TVA to continue their stewardship of those programs.

3.0 PUBLIC COMMENTS

Chairman Derrick then opened the floor to public comment. He introduced Lewis E. Wallace who had registered to speak.

Lewis E. Wallace, TVA Retirees Association, representing 19,000 retired TVA employees, said that his association endorsed the legislative proposals agreed upon by the Tennessee Valley Public Power Association (TVPPA) and the Board of Directors of TVA. He thought these proposals should serve as the blueprint for the Advisory Committee's recommendations to the Administration and any subsequent legislation. He said that TVPPA and TVA, together, truly speak for the interests of the people they serve. He summarized the position of his organization on issues involved in deregulation, as follows: the goal should be to assure that the individual consumers receive the full benefits of deregulation; the TVA "fence" should be removed concurrently with repeal of the "anti-cherry picking provision"; TVA/Distributor contracts should be changed to permit partial requirements purchase and shortened terms; recovery of TVA stranded costs should be subject to FERC approval; TVA power is not and should not be subsidized by the tax payer; and, finally, TVA should remain a public power enterprise and continue to operate the Tennessee river as an integrated system for the benefit of the Valley. He complimented the Advisory Committee on its work and thanked the Chairman for permitting him time to present his remarks.

There being no further comment by the public, the Chairman proposed that the Committee undertake a detailed review of the draft report.

4.0 REVIEW OF DRAFT DOCUMENT

Chairman Derrick explained that, while consensus was hoped for on every point, it was not always possible to achieve and that in such instances the individual positions of the dissenters would be extremely useful to the Administration and legislators. He then initiated a page-by-page review of the draft report. He stated that his purpose was to assure that the statements represented in the report truly reflected the positions of the organizations to which they were attributed.

5.0 PUBLIC COMMENT

During the second period set aside for public comment, the Chairman recognized Mr. Scott Morris who had asked to speak.

Scott Morris; Alabama Public Service Commission; stated that the state of Alabama is studying restructuring and has not reached any position but that it would argue against any proposal that would unfairly burden any small residential purchaser. He said he thought it likely that states will consider the notion of a retail mandate quite differently; some states that find themselves among others moving aggressively toward retail competition may feel compelled to act, even though they may otherwise be fairly satisfied with their present state of regulation. He congratulated the Committee for its hard work and the level of detail and candor they had been able to reach in their final report.

6.0 CONTINUED REVIEW OF DRAFT DOCUMENT

Near the end of the review process, Chairman Derrick announced that he had to leave the meeting to make another appointment. He requested that Skila Harris assume the chair's responsibilities.

Following completion of the page-by-page review of the draft report, changes were made at the meeting and revised copies were provided along with a request to each member for a last independent review and instructions to submit any final changes by FAX to Acting Chairman Harris by close of business on Thursday, March 26.

Acting Chairman Harris thanked the members for their hard work and commitment and adjourned the meeting at 4 p.m.