U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

42–269 PDF 2008

S. HRG. 109–1015

CONSIDER PENDING NOMINATIONS

HEARING

BEFORE THE

COMMITTEE ON

ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

THE NOMINATIONS OF TERRENCE L. BRACY, TO BE A MEMBER OF

THE BOARD OF TRUSTEES OF THE MORRIS K. UDALL SCHOLARSHIP

AND EXCELLENCE IN NATIONAL ENVIRONMENTAL POLICY FOUNDATION; DENNIS BOTTORFF, ROBERT DUNCAN, AND SUSAN RICHARDSON WILLIAMS TO BE MEMBERS OF THE BOARD OF DIRECTORS

OF THE TENNESSEE VALLEY AUTHORITY; WILLIAM SANSOM, HOWARD THRAILKILL, AND DONALD DEPRIEST TO BE MEMBERS OF

THE TENNESSEE VALLEY AUTHORITY

FEBRUARY 8, 2006

Printed for the use of the Committee on Environment and Public Works

(

Available via the World Wide Web: http://www.access.gpo.gov/congress.senate
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JAMES M. INHOFE, Oklahoma, Chairman

JOHN W. WARNER, Virginia

CHRISTOPHER S. BOND, Missouri

GEORGE V. VOINOVICH, Ohio

LINCOLN CHAFEE, Rhode Island

LISA MURKOWSKI, Alaska

JOHN THUNE, South Dakota

JIM DEMINT, South Carolina

JOHNNY ISAKSON, Georgia

DAVID VITTER, Louisiana

JAMES M. JEFFORDS, Vermont

MAX BAUCUS, Montana

JOSEPH I. LIEBERMAN, Connecticut

BARBARA BOXER, California

THOMAS R. CARPER, Delaware

HILLARY RODHAM CLINTON, New York

FRANK R. LAUTENBERG, New Jersey

BARACK OBAMA, Illinois

ANDREW WHEELER, Majority Staff Director

KEN CONNOLLY, Minority Staff Director

(II)
(III)

CONTENTS

Page

FEBRUARY 8, 2006

OPENING STATEMENTS

Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee ................... 7

Bunning, Hon. Jim, U.S. Senator from the State of Kentucky ............................ 6

Prepared statement .......................................................................................... 32

Cochran, Hon. Thad, U.S. Senator from the State of Mississippi ....................... 2

Frist, Hon. William H., U.S. Senator from the State of Tennessee ..................... 3

Prepared statement .......................................................................................... 32

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 9

Isakson, Hon. Johnny, U.S. Senator from the State of Georgia .......................... 14

Jeffords, Hon. James M., U.S. Senator from the State of Vermont .................... 13

Lott, Hon. Trent, U.S. Senator from the State of Mississippi ............................. 4

Prepared statement .......................................................................................... 33

McCain, Hon. John, U.S. Senator from the State of Arizona, prepared statement ...................................................................................................................... 33

McConnell, Hon. Mitch, U.S. Senator from the State of Kentucky ..................... 3

Prepared statement .......................................................................................... 34

Sessions, Hon. Jeff, U.S. Senator from the State of Alabama ............................. 5

Warner, Hon. John W., U.S. Senator from the Commonwealth of Virginia ....... 16

WITNESSES

Bottorff, Dennis, nominated to be a member of the Board of Directors of

the Tennessee Valley Authority .......................................................................... 18

Committee questionnaire ................................................................................. 55

Prepared statement .......................................................................................... 52

Responses to additional questions from:

Senator Bunning ....................................................................................... 53

Senator Jeffords ......................................................................................... 52

Bracy, Terrence L., nominated to be a member of the Board of Trustees

of the Morris K. Udall Scholarship and Excellence in National Environmental Policy Foundation .................................................................................... 17

Committee questionnaire ................................................................................. 39

Prepared statement .......................................................................................... 35

DePriest, Donald, nominated to be a member of the Board of Directors of

the Tennessee Valley Authority .......................................................................... 24

Committee questionnaire ................................................................................. 142

Prepared statement .......................................................................................... 138

Responses to additional questions from:

Senator Bunning ....................................................................................... 140

Senator Jeffords ......................................................................................... 139

Duncan, Robert, nominated to be a member of the Board of Directors of

the Tennessee Valley Authority .......................................................................... 19

Committee questionnaire ................................................................................. 72

Letters of Support:

Representative Chandler .......................................................................... 89

Representative Rogers .............................................................................. 91

Representative Whitfield .......................................................................... 90

Prepared statement .......................................................................................... 69

Responses to additional questions from:

Senator Bunning ....................................................................................... 70

Senator Jeffords ......................................................................................... 69
Page

IV

Sansom, William, nominated to be a member of the Board of Directors of

the Tennessee Valley Authority .......................................................................... 22

Committee questionnaire ................................................................................. 109

Prepared statement .......................................................................................... 106

Responses to additional questions from:

Senator Bunning ....................................................................................... 107

Senator Jeffords ......................................................................................... 106

Thrailkill, Howard, nominated to be a member of the Board of Directors

of the Tennessee Valley Authority ...................................................................... 22

Committee questionnaire ................................................................................. 130

Prepared statement .......................................................................................... 126

Responses to additional questions from:

Senator Bunning ....................................................................................... 128

Senator Jeffords ......................................................................................... 127

Udall, Hon. Mark, U.S. Representative from the State of Colorado ................... 8

Prepared statement .......................................................................................... 34

Williams, Susan Richardson, nominated to be a member of the Board of

Directors of the Tennessee Valley Authority ..................................................... 21

Committee questionnaire ................................................................................. 95

Prepared statement .......................................................................................... 92

Responses to additional questions from:

Senator Bunning ....................................................................................... 93

Senator Jeffords ......................................................................................... 92

ADDITIONAL MATERIAL

Fact Sheets:

Morris K. Udall Foundation Overview, January 2006 .................................. 37

TVA in Georgia ................................................................................................. 152
(1)

CONSIDER PENDING NOMINATIONS

WEDNESDAY, FEBRUARY 8, 2006

U.S. SENATE,

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room 628,

Senate Dirksen Building, Hon. James Inhofe (chairman of the committee) presiding.

Present: Senators Inhofe, Warner, Thune, Isakson, and Jeffords.

Senator INHOFE. We will call this hearing to order.

What we are about to witness I think is unprecedented. I don’t

want you eight nominees to think this happens all the time. If you

weren’t very special, then this wouldn’t be happening today.

While we are waiting, we have a couple more to get here, a couple more members who wanted to be involved in introductions. I

would just mention with my colleague, Senator Jeffords, that this

is the first meeting we have had this year. Last year we finished,

of course, the Transportation bill. We are very proud to have

passed to the floor both the WRDA bill and the Water Infrastructure bill. In fact, with the efforts of many members up here other

than myself, we were able to get 78 signatures out of 100 Senators,

asking our majority leader to bring up the WRDA bill.

I had breakfast, at the prayer breakfast, with Bill Frist this

morning. He is going to be here to participate in this, and I want

everyone to encourage him to bring up the WRDA bill before he

leaves.

[Laughter.]

Senator INHOFE. We have a lot of things. We have the Endangered Species Reform bill and other things. We are going to have

a very, very busy time here in this Environment and Public Works

Committee.

What I would like to do, I have an opening statement that I am

going to enjoy very much, and I think some of you will, too. It is

talking about a little bit of the history of the TVA and how it relates to the history of something that happened, an entity we have

in Oklahoma called the Grand River Dam Authority, kind of a miniature of the TVA, and some of the corruption we are going through

now that the TVA went through about a decade and a half ago.

But before that, since we have several Senators and their time

is very valuable, I would like to take the ones who are here in

order of seniority, which will start from here and come this way,

for the purpose of introducing whomever they have come here to

introduce. Then I will give my opening statement and probably
2

your opening statement too, Senator Jeffords, then we will go on

to the opening statements of our nominees.

I have to say this about our nominees, particularly the seven for

the TVA. I have never seen a more impressive bunch of bios. I have

read them all, and I just can’t believe that they are willing to take

this time to serve their country. I just applaud them in advance.

I am looking forward to working with them.

So Senator Cochran, why don’t we start with you, with whatever

you have come here to do this morning.

STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM

THE STATE OF MISSISSIPPI

Senator COCHRAN. Thank you, Mr. Chairman. We appreciate

very much your inviting us to introduce members of the board of

the Tennessee Valley Authority. I am pleased that one of the new

members of the board is from my State of Mississippi. Don

DePriest is a close personal friend of mine. He has been a very successful businessman in Columbus, MS. He is a native of Tennessee.

He has friends across the mid-South, and he is one of the finest

citizens we have in our State. The Tennessee Valley Authority is

going to be well served, I’m sure, with Don DePriest serving as a

member of the board of TVA.

We have a distinction in our State in which we are very proud.

When the Tennessee Valley Authority was first established, Tupelo

was the first municipality to get service from this new electric generation and distribution entity. It provided reasonably priced electric power to that town and then of course, spread throughout the

TVA region. It has continued to be a very important part of our

economy in our State of Mississippi. Consumers benefit from reasonably priced electric power, and I am sure this board, with Don

DePriest being involved, will help ensure the continuation of the

service and the outstanding record that TVA has provided.

TVA is an economic development tool as well. There are many

activities of TVA that are largely unnoticed. TVA has done a great

job in supporting agriculture, people who live in small towns, and

rural communities, throughout this region of our country.

Don DePriest personally is a great success story. He went to college in Lambuth, TN, and at the University of Memphis. He came

to Columbus and started establishing communication businesses,

and manufacturing companies, in the health care area and textile

area. Some of these businesses have gone on to be listed on the

New York Stock Exchange and other exchanges. He is involved in

investments throughout the world and in cellular telephone activities in Asia and Europe.

Don DePriest is really quite a success story. I don’t know how

he can keep up with all the things in which he is involved and still

have time to serve as the head of our local manufacturing association in Columbus, MS. He is working as a volunteer in the Boy

Scouts and is active in his church. He and his wife, Sandra, are

well respected throughout Columbus. She is an Episcopal priest.

Their children are talented and smart.

I am really proud to have known him as a friend for these many

years and to recommend him to you today for confirmation.

Senator INHOFE. Thank you, Senator Cochran.
3

Senator Frist, before you came in, we said that we had a lot of

requests from members, and we are taking them in order of seniority. We will recognize you now for any comments you want to make

about the nominees.

STATEMENT OF HON. WILLIAM H. FRIST, U.S. SENATOR FROM

THE STATE OF TENNESSEE

Senator FRIST. Thank you, Mr. Chairman. I will be very brief, in

fact, I will not be commenting specifically on the nominees except

to say that I know most all of them very well and have tremendous

respect for them. This is exactly the sort of quality that was envisioned when this initial legislation, which changed the nature of

the board, was proposed.

It is an expanded, modernized board. What we have really done

through legislation which I proposed, I think about 9 years ago

now, initially was to modernize this board and bring it up to date,

consistent with any other $7 billion company that is out there

today. It was clear to me in the past from dealing with the TVA

board that it was time to modernize it in the sense of having a

CEO with a board that has the appropriate range of expertise, of

qualifications, of experience. It is a range, as we will hear in our

presentations today.

It was about a year ago that our legislation to modernize the

board passed the Congress. It was enacted into law as part of the

fiscal year 2005 Omnibus Appropriations bill. I think the quality

of these nominees is a real testament to the fact that there is both

a need but also that there will be a huge positive impact on the

operation of TVA in the years ahead.

I of course am especially pleased to recognize the three nominees

from Tennessee: Denny Bottorff, Bill Sansom and Susan Richardson Williams, all good friends, all of them experienced, all of them

with the qualifications that I expect will be to the benefit of the

TVA region but also the expanded region.

So Mr. Chairman, I simply wanted to come by and say thank

you, thank you for holding the hearing in an expedited way. I know

all my colleagues will be talking on the individual nominees. But

this is exactly what was envisioned when we passed this legislation

a year ago and it will be fulfilled. Thank you.

Senator INHOFE. Thank you, Senator Frist.

Senator McConnell.

STATEMENT OF HON. MITCH MCCONNELL, U.S. SENATOR

FROM THE STATE OF KENTUCKY

Senator MCCONNELL. Thank you, Mr. Chairman. I am here today

on behalf of a nominee from Kentucky, whom I have known since

he was in college at Williamsburg College in southeast Kentucky

in the early 1970s. He subsequently went to the University of Kentucky College of Law, has studied at Harvard Business School. He

has been an outstanding banker and citizen in my State for a long

time.

Mike has a big job, because this is probably not a completely appropriate forum to make this point, but Mike has a big job because

Kentuckians are just not very happy with TVA. TVA rates for Kentucky customers are 30 percent higher than any other Kentucky
4

power providers. Put another way, if you are inside the TVA wall,

you get high rates. If you are outside and you are in the service

area of an investor utility, for example, you have lower rates. That

cost Kentuckians about $100 million last year.

In addition to that, TVA raised rates on its Kentucky customers

by 7.5 percent last year. That is one of the largest rates in the history of TVA over a 73-year period. But they did find an opportunity

to give $60 million in bonuses to their employees last year.

We have had difficulty getting TVA to allow Kentucky customers

the right to purchase power from more affordable providers. They

have refused, in effect, the transmission of the power on their

power lines, flouting a contract to the contrary they signed in 1997.

Sorry to rain on the parade with a litany of complaints, but Mike

is going to go on this board as a representative of our TVA customers in Kentucky with some real challenges in order to try to

bring about the equity we have been seeking for a number of years.

I can’t think of anyone better to do that, Mr. Chairman. He is

a truly outstanding person, one of the finest people I have known

in my entire life. I think he will be a fine addition to this newly

reconstituted TVA board.

I would just like to ask unanimous consent that my full remarks

on behalf of Mike be inserted into the record.

Senator INHOFE. Without objection.

Senator MCCONNELL. Thank you.

Senator INHOFE. Senator Lott.

STATEMENT OF HON. TRENT LOTT, U.S. SENATOR FROM THE

STATE OF MISSISSIPPI

Senator LOTT. Thank you, Mr. Chairman and Senator Jeffords

and the distinguished Senator from Georgia. Thank you very much

for having this hearing and allowing us to appear before you.

I am sorry that Senator Frist did leave, because I wanted to commend him publicly for his leadership in helping produce the legislation that made this change in the Mississippi-Alabama-KentuckyTennessee Valley Authority. You will notice the way I said that. I

do think that it is time that we made that change. This is a $7 billion a year business. It is huge. It needs to be run more as a business, as well as a service entity. I think this new board gives us

that opportunity, to have a CEO and board of directors.

So in that vein, I think it is very important that we have men

and women on that board from all the States in the region that

have unique capabilities and business experience. That is why I am

just really delighted to support the nomination of Donald R.

DePriest, who is clearly one of the most outstanding citizens in our

State.

He has been a successful businessman, he is involved in civic affairs, he has just been supportive of every major positive effort we

have had in our State. I think it is a great credit to TVA that he

is willing to serve in this new position. He is married to his wife,

Sandra, and they have four children, Sally, Robert, John and Warner. I mention that for the record because they also are going to

make a sacrifice by Don serving in this position.

He has served as Chairman of the Columbus, Mississippi Utilities Commission, which is a TVA Authority power distributor. So
5

he is personally directly knowledgeable about what TVA does and

what its needs and possibilities are. He is a member of the Mississippi Governor’s Venture Capital Task Force and the State of

Mississippi Audit Oversight Committee on Ethics, all of which will

be helpful to him in dealing with the future at TVA.

He has been a very aggressive business leader. He has been CEO

and Chairman of Charisma Communications, a former Union

Planters Bank director, founder of MicroTek Medical, Inc. and

Boundary Healthcare Products. He currently serves as CEO and

Chairman of MCT Investors and Chairman of MCT Corporation. So

he is an accomplished businessman, but he has taken time to work

in Mississippi with our historic preservation.

He has been president of his area Scout council. He holds a silver

beaver award from Scouts, and those of you in Scouts know that

is their highest honor. The list goes on, everything up to and including serving as a trustee of the National Symphony Orchestra.

I don’t know how he has time to enjoy good music along with his

other achievements.

So I am really delighted that he has been willing to serve here

and the President has selected him to serve on the TVA board. I

am expecting great things from him and this new board. I believe

that the Tennessee Valley Authority will be better run, more responsibly run, and provide good power and good services to people

in the region. I thank you very much for allowing me to participate

in these hearings.

Senator INHOFE. Thank you, Senator Lott.

Senator Sessions.

STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM

THE STATE OF ALABAMA

Senator SESSIONS. Thank you, Mr. Chairman. I am pleased that

President Bush has nominated Howard Thrailkill to serve on the

board of directors of the Tennessee Valley Authority. How big is

TVA? Well, it has a $25 billion debt. That ought to tell us something. That is not a small, little entity. Howard has the kind of

background, skills and interest to play an important role in making

sure that TVA is relevant to the future.

I think the people of the Tennessee Valley are coming more and

more to understand that the Tennessee Valley Authority is really

contained now. It does not receive outside Federal dollars. So when

moneys are wasted, it is money they have to pay in their rates.

There are no free lunches. It is just a deal in which we have to

keep those costs in a reasonable way, make good business decisions

for the future, and eliminate some of the errors that have been

made in the past that have actually been the cause of the debt that

we now see.

So I think the new board has great potential. I am excited about

it. Alabama has never had a member of the board. Senator Shelby

and I are delighted that we have one now and that we have one

as strong as Howard Thrailkill.

His background as an engineer and successful businessman is extraordinary. He retired in September as president and chief operating officer of Adtran, a telecommunications and equipment maker

in Huntsville, AL. Seventeen hundred employees, when they start-
6

ed they had zero employees. They are one of the world’s great communication technology companies. It is a success story of an extraordinary nature.

He formerly served as president of the Computer Systems Division and corporate vice president of Motorola. He was vice president and general manager of the Composition Systems Division

and Computer Systems Division of Harris Corporation. Additionally, Howard just completed a tour as chairman of the HuntsvilleMadison County Chamber of Commerce, which is one of our most

progressive and growing areas. In that capacity, he is known, and

in other capacities, as a civic leader who is very well informed

about the entire nature of the Tennessee Valley Authority.

So we are excited about his appointment. I think he is just the

kind of person that should be on there. I am pleased that President

Bush has seen fit to nominate him, because it indicates that he too

is committed to having directors who have the capability to engage

the top management of the TVA, to ask the tough questions, to

help them make long-term, important decisions. If we get that kind

of leadership, this new legislation will have been worthwhile.

Thank you, Mr. Chairman.

Senator INHOFE. Thank you, Senator Sessions.

Senator Bunning.

STATEMENT OF HON. JIM BUNNING, U.S. SENATOR FROM THE

STATE OF KENTUCKY

Senator BUNNING. Thank you, Mr. Chairman, Senator Jeffords,

Senator Isakson. I appreciate the opportunity to be here and to introduce my friend and fellow Kentuckian, Mike Duncan, to be a

nominee for the Tennessee Valley Authority’s new board. I have

known Mike for many years and known him to be a man of integrity and fine character. He takes public service seriously and he is

a man of compassion and fairness.

His educational and philanthropic endeavors to better the lives

of Kentuckians is unmatched. Mike has been past president of the

Kentucky Bankers Association and a director of the Cleveland Federal Reserve Bank, Cincinnati Branch. His banking and finance experience will bring a unique perspective when it comes to TVA’s

management and accounting of its finances and debt.

TVA certainly needs a board member who understands economics to help get its $25 billion in debt under control. What I like

about Mike is that he is not a yes man, or someone who simply

gets going to go along. If there is a problem, Mike will identify it.

He will work hard to fix the problem, even if it is not a popular

solution. Mike takes his endeavors seriously and I know he will

take this job as a TVA board member seriously, too.

TVA has its problems. It has issues with debt, it is unregulated

by FERC. Some residents in the TVA region, as my senior Senator

from Kentucky has said, pay higher costs for their electricity than

those living outside the TVA fence. This defeats the purpose of

TVA. I know that Mike will help bring these issues to light and as

a board member, he will advocate common sense solutions.

Mike will help to work to ensure that citizens in the TVA region

will receive reliable, efficient and cheap power for bettering their

lives. I appreciate the Chairman’s and Ranking Member’s invita-
7

tion to introduce Mike Duncan, and I look forward to a swift confirmation in the committee and on the floor.

Thank you very much.

Senator INHOFE. Thank you, Senator Bunning.

Before we hear from our last Senator, let me just tell you nominees, this is unprecedented. I have never seen this many Senators

show up to say so many good things about so many good people.

Senator Alexander.

STATEMENT OF HON. LAMAR ALEXANDER, U.S. SENATOR

FROM THE STATE OF TENNESSEE

Senator ALEXANDER. Thank you, Mr. Chairman, Senator Jeffords, members of the committee.

First I would like to compliment Senator Frist and former Senator Thompson. It was their legislation a few years ago that caused

this to happen. It is exactly the right thing to do, in my judgment.

An $8 billion a year company, the largest public utility in America,

needs a modern governance system and a chief executive officer.

Since its inception in the early 1930s, mid-1930s, TVA has been

run by a committee of three. Most of those members of the committee have been very good people.

But it is an awkward management process. It would be like having three committee chairmen or three Governors or three mayors.

This makes much more sense. TVA does have some problems. But

it has also done some things very well. In the Tennessee Valley region, as a former Governor, I have especially seen the importance

of having large amounts of low-cost, reliable, clean energy available

as we sought to raise our standard of living. That is important in

Kentucky, Alabama and Mississippi, as well as it is in Tennessee.

I am chairman of the TVA congressional Caucus, and I am hopeful that with this new board, that our caucus can be more active

and work together better to make sure that people in our region

are better served. We have rapidly rising natural gas prices. We

have rapidly rising gasoline prices. We don’t need rapidly rising

electricity prices. And that should be the focus of TVA.

The three nominees from Tennessee are people that I realize I

have known for at least 30 years in each case. Dennis Bottorff,

Denny Bottorff from Nashville, is widely regarded in our State as

one of our most accomplished executives. He is from Vanderbilt, he

is vice chairman of Vanderbilt University today. He is an engineer

by background and a banker by profession. He is involved in activities throughout Nashville and is enormously well respected.

Bill Sansom is from Knoxville. He has been a leader in the University of Tennessee. He was the top graduate at Citadel, as a Marine. He was president of the Knoxville Area Chamber of Commerce when I invited him to come be the transportation commissioner and then the chief operating officer of the State Government.

Susan Williams has a distinguished career as well. It is a little

different career. She comes from a TVA family. She may say this

in her testimony. Her father worked for TVA from the time it was

created. She was personnel commissioner in my cabinet as Governor. She has always been a pioneer among women in our State.

She has a broad background and brings a lot to the board.
8

I also ought to say how much I respect the other nominees. Don

DePriest I have known and known about for a long time. He has

been interested in TVA for many years. Mike Duncan, I have

known for a long time. He has a distinguished background. Mr.

Thrailkill, I have not known as long, but I can’t think of a stronger

nominee from Alabama.

So I am delighted that we are moving from a committee of good

people to a part-time board, a modern governance structure and a

full time chief executive officer to run the Nation’s largest public

utility. I expect the citizens of the Tennessee Valley and especially

my State of Tennessee to benefit from that by having better incomes and cleaner air and a more secure future.

Thank you, Mr. Chairman, for your courtesy.

Senator INHOFE. Thank you, Senator Alexander.

That completes our list that will be making comments about the

TVA board. Any of you Senators who would like to stay here, you

are certainly welcome. But we know you have other obligations.

Anyone who wants to join the dais with us is certainly welcome to

do so.

Also, Senator Jeffords, we have Congressman Udall here. We

don’t want to sell Terrence Bracy short, because this is primarily

TVA. But if Congressman Udall would like to come forward to

make any comments about the nominee to the Foundation, you are

welcome to do so.

STATEMENT OF HON. MARK UDALL, U.S. REPRESENTATIVE

FROM THE STATE OF COLORADO

Mr. UDALL. Thank you, Senator Inhofe. I have a bevy of Congressmen out there to match the Senators that you had up here

earlier.

[Laughter.]

Mr. UDALL. I want to thank Senator Jeffords, my friends, Senator Thune and Senator Isakson, for holding the hearing today. I

have a statement for the record, and I will just submit that if I

might, and make a couple of comments about the Udall Foundation.

Senator INHOFE. Of course. Without objection, your entire statement will be made a part of the record.

Mr. UDALL. Thank you, Senator.

I am here to just express my strong support for Terry Bracy to

continue on the Board of Trustees of the Udall Foundation. I think

I speak for most of the Udall family, there are a lot of Udalls, so

I can’t claim I speak for every one of them. But we are all very

pleased with what the Foundation has accomplished, and I know

my father would be.

The Foundation focuses on training Native American leaders to

run their governments effectively and efficiently. It also works with

environmental leaders across the spectrum.

I think probably of real interest to this committee is the environmental mediation work that the Udall Foundation has been doing

across the southwest. I think the model that it has been able to

build is one that we could replicate around the country.

So I wanted to take the time to come over here today to see how

things are unfolding over here on this side of the Capitol, and in
9

particular to express my gratitude to Terry Bracy. He has worked

untold hours, unpaid, in a labor of love to keep the spirit of my father and his good work alive. With that, I would ask for his confirmation, and I appreciate the opportunity you are going to give

him today to testify.

Senator INHOFE. Thank you, Congressman Udall. We are all very

grateful for what you and your family have done for America.

Thank you so much for being here this morning.

Mr. UDALL. Thank you very much, Senator.

OPENING STATEMENT OF HON. JAMES M. INHOFE,

U.S. SENATOR FROM THE STATE OF OKLAHOMA

Senator INHOFE. We would ask now for the nominees to please

take your place at the table. Let’s see, I guess we have name tags

here, so we will start with Mr. Bracy, you will be on the far right.

First, I want to welcome all of our nominees here this morning.

We have seven very well qualified nominees before this committee.

Six have been nominated to serve on the TVA, as we heard during

the introductions, on the TVA’s board of directors. That is Dennis

Bottorff, Robert Duncan—Mr. Duncan, let me ask you a question.

Are you related to any of the Duncans, Jimmy Duncan and so

forth?

Mr. DUNCAN. Yes, we are distant cousins.

Senator INHOFE. Oh, you are? Good. I served with both Jimmy

Duncans and enjoyed it very much over on the other side.

We have Susan Richardson Williams, Bill Sansom, Howard

Thrailkill and Donald DePriest. We also have Terrence Bracy, who

has been renominated to the position of the board of trustees of the

Udall Scholarship Foundation. We have so many TVA nominees

here today because we have restructured the TVA board. It was restructured not only to modernize it, the old structure was in place

since 1933, but also because there have been ethical concerns in

the past boards.

Before we get into those issues, let me say that I have been very

pleased with the current board, Bill Baxter, Skila Harris and the

recently retired Glenn McCullough. They have all served the people

very well and worked to serve the best interests of those in the

Valley. I want to publicly voice my gratitude to them.

But in the past, specifically during the tenure of Chairman Craven Crowell, from 1993 to 2001, there were serious ethical concerns. It is no secret that there was overwhelming evidence of cronyism, no-bid contracts and other shady dealings that we would all

consider unethical, excessive and abuse of the office. The abuse was

chronicled by many major publications, including the Los Angeles

Times and Time Magazine.

The TVA inspector general investigated the situation and called

it, ‘‘public perception of favoritism, lack of TVA oversight and controls which allowed certain consultants to make excessive profits,

over-bill and sometimes be unaccountable for their services and

charges.’’ While the laws may not have been broken, this is characteristic of corrupt people that get into power and they have all

this money that they have control over that belongs to the public,

they all are very careful not to break any laws. But we know it is

wrong.
10

While the laws were not broken perhaps at that time, it is clear

that these actions were unacceptable. Fortunately, new leadership

at the TVA cleaned up the mess and the TVA was reformed. That

reform continues today with the new board structure that is represented by these extremely qualified nominees.

I bring up this ethical issue, not only as a warning to nominees,

but also because my constituents in Oklahoma are facing something very similar today by the CEO of the Grand River Dam Authority, headed by a former State Senator, Kevin Easley. The

GRDA was created by the Oklahoma legislature in 1935, and is

today very much Oklahoma’s version of the TVA. It manages water

systems and produces power for Oklahoma.

Much like the TVA of a decade ago, Chairman Easley appears to

have taken the route of using the GRDA and its customers, my

constituents, I might add, for his own benefit and for the benefit

of his political cronies.

I have a special dog in this fight, in that my father-in-law, Glade

R. Kirkpatrick, was in the State legislature, Senator Warner, many

years ago, in the middle 1930s. He actually drafted the legislation

that created the GRDA. He did so with the intent of the GRDA to

serve the people in the interests of Oklahoma. Unfortunately,

Chairman Easley appears to be using the people of Oklahoma to

fill his appetite for luxury and excesses.

Let me highlight a few examples of what has been alleged by

those who know the GRDA very well. I ask you nominees to recall

the TVA a decade ago and see what parallels you see. I think what

I am about to describe to you would make an excellent book. However, it would have to be a novel, because no one would believe that

it could be true.

Let’s start off with his creation of his new position. Chairman

Easley, in his final term as State Senator, due to term limits, coauthored State legislation to overhaul the GRDA, removing the

current board to provide for completely new appointments. This

new board then hired Easley to serve as CEO, giving him a 3-year

contract and a raise of $15,000. His salary is now above the annual

salary set by State law and more than the Governor of Oklahoma

makes.

Let’s be sure we understand that Chairman Easley’s legislation,

he legislatively created the job that he now holds. To pay for his

excesses, he immediately started raising more money. Electrical

rates went up, user fees went up in the lakes that were involved.

Well, the legislative maneuvers through legislation sponsored by

Chairman Easley, serving as the State Senator prior to his appointment as CEO, the GRDA was exempt from traditional State oversight, including the Open Records Act. That is comparable, I guess,

I would say, on the Federal scale, to the Freedom of Information

Act, FOIA.

A total of nine pieces of legislation have been passed by Easley

and colleagues since 2001, eroding the transparency and limitations of this State agency. But not to worry, don’t worry, because

there is oversight. Easley’s own mother, State Senator Mary

Easley, currently serves as the Vice Chairman of the State Senate

Energy and Environment Committee, which has oversight over the

GRDA. So Mama’s going to watch his every move.
11

Now, the unprecedented spending, never happened before, Chair- man Easley purchased a $550,000 jet helicopter used by Easley and

his friends for their own travel. Easley has purchased three boats

since 2004, all valued over $50,000 apiece. His third boat purchase

was a $66,213 Cobalt, with a 10-disc CD player and sharkskin

cover that Easley assures will become part of the lake patrol fleet. Easley also purchased an $11,884 Sea-Doo. That is a little water

toy that Senator Easley rides around the lake, I guess. All of these

new purchases have never before been required for GRDA operations. Allegations of extravagance in entertainment and meals

and travel have also been made. I say to my friends who are nominees here today, your past TVA Chairman Crowell and Mr. Easley

have a lot in common: abuse of corporate aircraft, excessive compensation, no-bid contracts, and the list goes on and on.

New office space, this is a good one here. You see, the GRDA, we

have 77 counties in Oklahoma. They have jurisdiction in 24 counties. Oklahoma County, which is the county for Oklahoma City, is

not one of those. GRDA has acquired a 2,200 square foot new office

in downtown Oklahoma City. This office is being leased at over

twice the cost of what other State agencies are paying in rent. Although Easley originally reported to the press the total cost of renovation was $24,000, we now find out it has now exceeded $135,000

to date for the renovations. It is a real play palace located in a

trendy club and entertainment Bricktown area of Oklahoma City.

I would invite all of you to come and visit Oklahoma City and see

this beautiful area of fun and games.

The Bricktown area of Oklahoma City, this property is located

above Hooters Restaurant and Bar, and next door to the Wild Coconut Tiki Lounge, a very appropriate location for a quasi-State agency to select to conduct its businesses. By the way, the new space

is only going to accommodate one GRDA employee.

Since becoming CEO, Easley has allegedly awarded no-bid sole

source contracts to friends and colleagues for lobbying, marketing

and personal services exceeding State limits for such expenditures.

Whether or not any of these actions are in violation of the law is

something that Oklahomans are looking into. What is not in question is the fact that a culture of ethical corruption has found a

home at the GRDA in my State of Oklahoma.

Just as with the TVA, I believe that only a change in leadership

at the GRDA will bring about the cultural change to put it back

in business of serving the people and out of business of the people

serving the GRDA. You cleaned up your house, and now we need

to clean up ours. Any time you have a gigantic budget, virtually no

oversight, the temptation will be there. It is the insatiable appetite

of unelected bureaucrats to spend money that is not theirs. You

have corrected your problem at TVA, and we will do the same.

So it is my hope that the new TVA board that is sitting here

today will continue to make ethical behavior a top priority, and I

am sure you have. I said earlier, at the beginning of this meeting,

I say to my Senators who were not here at the time, I don’t recall

in the 20 years that I have been here ever seeing a more qualified

group of nominees as the seven of you sitting before us today. We

are honored to have you here, willing to share your time, your expertise, and your abilities to make this a greater country.
12

With that, I will recognize the Ranking Minority Member, Senator Jeffords.

[The prepared statement of Senator Inhofe follows:]

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE

STATE OF OKLAHOMA

I want to welcome all of our nominees here this morning. Today, we have seven

very qualified nominees before this committee: six have been nominated to serve on

TVA’s Board of Directors: Dennis C. Bottorff, Robert M. Duncan Sr., Susan Richardson Williams, Bill Samson, Howard Thrailkill, and Donald DePriest. We also have

Terrence Bracy, who has been renominated to a position on the Board of Trustees

at the Morris K. Udall Scholarship Foundation.

We have so many TVA nominees here today because we have restructured the

TVA Board. It was restructured, not only to modernize it—the old structure was in

place since 1933 but also because there have been ethical concerns with past boards.

Before we get into those issues, let me say that I have been very pleased with the

current board; Bill Baxter, Skila Harris, and the recently retired Glenn

McCullough—they have all served the people well and worked to serve the best interest of those in the Valley. I want to publicly voice my gratitude to them. But in

the past, specifically during the tenure of Chairman Craven Crowell from 1993 to

2001, there were serious ethical concerns. It’s no secret that there was overwhelming evidence of cronyism, no bid contracts, and other shady dealings that we

would all consider unethical, excessive, and abuse of the office. The abuse was

chronicled by many major publications, including the Los Angeles Times and Time

Magazine. The TVA Inspector General investigated the situation and called it ‘‘public perception of favoritism’’ and there was ‘‘lack of TVA oversight and controls

which allowed certain consultants to make excessive profits, overbill and sometimes

be unaccountable for their services and charges.’’ While laws may not have been broken, and it is certainly characteristic of the unethical to be very careful and try not

to break the law, but it is clear that these actions were unacceptable. Fortunately,

new leadership at TVA cleaned up the mess and the TVA was reformed. And that

reform continues today with the new board structure that is represented by these

extremely qualified nominees.

I bring up this ethical issue, not only as a warning to the nominees, but also because my constituents in Oklahoma are facing something very similar today by the

CEO of the Grand River Dam Authority, former State Senator Kevin Easley. The

GRDA was created by the Oklahoma Legislature in 1935 and is today very much

Oklahoma’s version of the TVA. It manages water systems and produces power for

Oklahoma. And much like the TVA of a decade ago, Chairman Easley appears to

have taken the route of using the GRDA and its customers, my constituents, for his

own benefit and for the benefit of his political cronies. I have a special dog in this,

my father-in-law, Glade R. Kirkpatrick, wrote the legislation to create the GRDA

and he did so with the intent of the GRDA to serve the people and interest of Oklahoma. Unfortunately, Chairman Easley appears to be using the people of Oklahoma

to fill his appetite of luxury and excess. Let me highlight a few examples of what

has been alleged by those who know the GRDA very well. And I ask you nominees

to recall the TVA a decade ago. This would be a great book, but it would have to

be a novel because no one would believe it.

Chairman Easley, in his final term as State Senator due to term limits, co-authored State legislation that overhauled the GRDA removing the current board to

provide for completely new appointments. This new board then hired Easley to serve

as CEO giving him a 3-year contract and a raise of $15,000. His salary is now above

the annual salary set by State law, and more than the Oklahoma Governor makes.

Let’s be sure we understand Chairman Easley legislatively created a job for himself

to pay for his excesses the first thing he did was to raise rates and fees.

Through legislation sponsored by Chairman Easley serving as a State Senator

prior to his appointment as CEO, the GRDA was exempted from traditional State

oversight including the Open Records Act. A total of nine pieces of legislation have

been passed by Easley or colleagues since 2001, eroding the transparency and limitations of this State agency. But not to worry, there is oversight. Easley’s own mother, State Senator Mary Easley, currently serves as the Vice-chairman of the State

Senate Energy and Environment Committee which has oversight of the GRDA. And

Mama’s watching his every move.

Chairman Easley purchased a $550,000 jet helicopter used by Easley and his

friends for their own travel. Easley has purchased three boats since 2004 all valued

at over $50,000. His third boat purchase was a $66,213 Cobalt with a 10-disc CD
13

player and a sharkskin cover that Easley assures will ‘‘eventually’’ become part of

the lake patrol fleet. Easley also purchased an $11,884 Sea Doo now that’s a little

water toy that he rides. All of these new purchases have never before been required

for GRDA operations. Allegations of extravagant entertainment, meals, and travel

have also been made. So, I say to my friends who are nominees here today, your

past TVA Chairman Crowell and Mr. Easley have a lot in common. Abuse of corporate aircraft, excessive compensation, no-bid contracts, and the list goes on.

Now, how about this one: GRDA has acquired a 2,200 square foot new office in

downtown Oklahoma City. GRDA serves 24 counties in Oklahoma—Oklahoma

County is not one of them. This is the first time GRDA has ‘‘needed’’ an office in

Oklahoma City. This office is being leased at over twice the cost of what other State

agencies are paying in rent. Although Easley originally reported to the press the

total cost of the renovation to be $24,000, GRDA has spent over $135,000 to date

for the renovations. It’s a play palace located in the trendy club and entertainment,

Bricktown area of Oklahoma City located above Hooters restaurant and bar and

next to the Wild Coconut Tiki Lounge. A strange location for a quasi-State agency

to select for conducting the business of its rate payers, don’t you think? By the way

the new space will office only one GRDA employee.

Since becoming CEO, Easley has allegedly awarded no-bid, sole source, and inflated contracts to friends and colleagues for lobbying, marketing, and personal services—exceeding State limits for such expenditures.

Whether or not any of these actions are in violation of the law is something that

Oklahomans are looking into, but what is not in question is the fact that a culture

of ethical corruption has found a home at the GRDA.

Just as it was with the TVA, I believe that only a change in leadership at the

GRDA will bring about the cultural change to put it back in business of serving the

people and out of the business of the people serving the GRDA. You cleaned up your

house, now we need to clean up ours. Any time you have a gigantic budget with

virtually no oversight, the temptation will be there. It’s the insatiable appetite of

unelected bureaucrats to spend the public’s money on themselves. You have corrected your problem at TVA, we need to do the same. It is my hope that the new

TVA board, who is sitting here today, will continue to make ethical behavior a top

priority.

Again, I want to thank the nominees for being here today and I look forward to

getting you all confirmed and serving the interests of this country.

OPENING STATEMENT OF HON. JAMES M. JEFFORDS,

U.S. SENATOR FROM THE STATE OF VERMONT

Senator JEFFORDS. Thank you, Mr. Chairman, for that very interesting introduction.

Welcome to all of you and your families. I would like to thank

each of the nominees here today for their commitment to public

service. One of our finest public servants, especially in serving to

protect our environment, was Mo Udall, a good friend of mine. He

gave us so much inspiration and wisdom, and encouraged us to be

better environmental stewards. He is greatly missed, but still very

much remembered. The Foundation that bears his name is a tribute to Mo and a living legacy that will promote environmental education and preservation for generations.

Mr. Bracy, I am sure you are very proud to serve on the board.

And Mo would be proud of you for your service and your work in

keeping his name synonymous with environmental responsibility.

With these new nominees at the helm, the TVA needs to continue

to provide its core product, wholesale electric power, competitively,

with efficiency and reliability. The TVA needs to set a standard for

public responsibility against which private companies can be measured. That standard needs to include better environmental and fiscal responsibility.

In 1998, the TVA unveiled a new clean air strategy to reduce the

pollutants that cause ozone and smog. Modern equipment investments will help States and cities in the Tennessee Valley meet
14

new, more stringent air-quality standards while providing greater

flexibility for industrial and economic growth in the region. But the

TVA should do more than be focused on a technological solution.

The TVA should also be increasing the use of renewables and enhancing its commitment to energy efficiency.

I look forward to hearing from all of the nominees and learning

how they see the future for the organization under the new board

structure. Thank you, Mr. Chairman.

[The prepared statement of Senator Jeffords follows:]

STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM THE

STATE OF VERMONT

Welcome to all of you and your families. I would like to thank each of the nominees here today for their commitment to public service.

One of our finest public servants, especially in serving to protect our environment,

was Mo Udall. He gave us so much inspiration and wisdom, and encouraged us to

be better environmental stewards. He is greatly missed, but still very much remembered. The Foundation that bears his name is a tribute to Mo and a living legacy

that will promote environmental education and preservation for generations.

Mr. Bracy, I am sure you are very proud to serve on the Board of the Udall Foundation, and Mo would be proud of you for your service and your work in keeping

his name synonymous with environmental responsibility.

With these new nominees at the helm, the TVA needs to continue to provide its

core product—wholesale electric power—competitively, efficiently and reliably. The

TVA needs to set a standard for public responsibility against which private companies can be measured.

That standard needs to include better environmental and fiscal performance. In

1998, the TVA unveiled a new clean-air strategy to reduce the pollutants that cause

ozone and smog. Modern equipment investments will help States and cities in the

Tennessee Valley meet new, more stringent air-quality standards while providing

greater flexibility for industrial and economic growth in the region. But the TVA can

and should do more than be focused on a technological solution. The TVA should

also be increasing its use of renewables and enhancing its commitment to energy

efficiency.

I look forward to hearing from all of the nominees and learning how they see the

future for the organization under the new board structure.

Senator INHOFE. Thank you, Senator Jeffords, for that excellent

statement.

I would call upon my members to see if there are any other opening statements.

Senator Isakson.

OPENING STATEMENT OF HON. JOHNNY ISAKSON,

U.S. SENATOR FROM THE STATE OF GEORGIA

Senator ISAKSON. Thank you, Mr. Chairman.

I have a complete statement for which I would like to ask unanimous consent be submitted for the record.

Senator INHOFE. Without objection.

Senator ISAKSON. I want to welcome the board members. I have

had the time to read the resumes of each. They are extremely

qualified and I am going to be delighted to vote for them in committee.

I will, however, Mr. Chairman, I want to tell you and Senator

Frist, ask for, before we go to the floor, we need to hold for a second to take a look at some issues that have been raised to me and

that I have raised with some of the other members, including the

discussion I had a long time ago, some time back, with my distinguished friend from Tennessee, Senator Alexander. This legislation

is great legislation. It creates a nine-member board, seven of which
15

have to be from States served by the TVA, two may be from the

outside. It is a five-member staggered board, which is exactly what

you need to ensure you don’t get stale and you have some continuity of knowledge, but you also have new blood.

But it does not necessarily ensure that all the people served by

TVA will in fact be represented on a board of directors. Going from

a three-member executive committee to a nine-member board of directors portends that the oversight that the board will provide will

be much like that of the oversight of a corporation to a full-time

CT, CEO and its employees.

I want to submit also for the record TVA’s Web site, its references to my State of Georgia that are on that Web site, which

include the fact that 130,000 households in my State, 10 of the

fastest growing counties in my State, 15,000 surfeit acres of water

and 300 miles of shoreline are TVA properties in the State of Georgia. My predecessor, Zell Miller, in fact, introduced legislation a

couple of years ago in anticipation of this event, trying to find a

way to ensure that all the States would have, over time, representation on the TVA board since its going to a board of directors type

of system.

So Mr. Chairman, I am going to ask you, in your kindness, and

the leader, if they will, to discuss with me before we go to the floor

on this final confirmation, ways that we can ensure that States like

Virginia, North Carolina and Georgia, who are three of the seven

members served by TVA who are not represented on the board

might know that over time there would be a way to ensure equity

of representation of those States that are served.

My desire to do this is no reflection at all on the quantity and

the content of this distinguished panel. They are outstanding. I

also recognize there is one other appointee left to come, but I understand that is probably going to be someone from within the four

States that are represented here as well.

So on behalf of the State of Georgia that I represent and the almost half million people served in my State by the TVA, I think

it is important as we go to this great mechanism of representation

for TVA that we look to the future to ensure that all the citizens

served are over time or in method represented equitably on the

TVA board. I thank the Chairman for the time.

[The referenced document may be found on pages 152–153.]

[The prepared statement of Senator Isakson follows:]

STATEMENT OF HON. JOHNNY ISAKSON, U.S. SENATOR FROM THE STATE OF GEORGIA

Thank you, Chairman Inhofe, for holding this hearing. Today we undertake one

of the most important roles we have as Senators, the role of ‘‘advise and consent’’.

I appreciate the opportunity to hear from all the nominees.

I will, however, today focus my remarks on the nominees for the Tennessee Valley

Authority Board, and specifically on the lack of diversity in representation amongst

that board. Mr. Chairman, some months back I met in my office with Tom Kilgore,

the president and chief operating officer of the TVA. During that meeting, I expressed to him my wish that the TVA diversify its board, to include a Georgian. Mr.

Chairman today we have 6 nominees before us and as we speak the White House

is currently in the process of selecting a 7th nominee, which I have been told from

sources familiar with the process will also be from Tennessee. Each of the nominees

before us is well qualified, but yet again my State of Georgia is not represented on

the board. In fact, the State of Georgia has never been represented on the TVA

board. This current board also does not represent the States of North Carolina, Vir-
16

ginia, and Mississippi which are all part of the TVA territory. This is extremely disappointing.

Mr. Chairman, I would like to submit for the record a document that my staff

printed off the TVA Web site. This document is entitled ‘‘TVA in Georgia’’, and is

a fact sheet for the year 2004 which I presume is the latest data available to the

TVA. On this sheet it says the following:

‘‘Distributors of TVA power sold nearly 1.9 billion kilowatt-hours to more than

123,000 households located in 10 north Georgia counties.’’

If we assume that each household houses on average three individuals, which I

believe is a fair assumption, then that equals 369,000 constituents of mine who rely

on TVA and yet have never been given a voice on their board.

Today I am giving them that voice.

Mr. Chairman, it is my intention to introduce legislation to expand the TVA board

to 13 part-time members and to add a requirement that of these 13 members at

least 1 member from each State in the TVA service area must be on that board.

I am sure that each of these members is well qualified, Mr. Chairman, and I will

vote to move them out of committee when given the chance. However, I will place

a hold on their nominations until I am given the opportunity by Senate Leadership

to explore my options through legislation or amendments to expand the board to expand the board to include individuals from each State in the TVA.

Thank you Mr. Chairman, I yield back my time.

Senator INHOFE. Certainly I say to my friend, Senator Isakson,

I give you that commitment, and I would hope that in your opening

statements, some of you may address some of the concerns that

were expressed by Senator Isakson.

We are honored to have the Senator with the most seniority on

this committee, who would be Chairman except that he is Chairman of the Senate Armed Services Committee, and I am very

grateful for that, here with us today, Senator Warner.

OPENING STATEMENT OF HON. JOHN W. WARNER,

U.S. SENATOR FROM THE COMMONWEALTH OF VIRGINIA

Senator WARNER. Thank you, Mr. Chairman.

All of us spend lots of time listening around here, but I really

enjoyed your opening statement and indeed, that of the Ranking

Member. I think you said it all, and there is little left for me to

add. But in following Senator Isakson’s observation that our two

States are left out of the representation, I noticed, having studied

the distinguished resumes of all of you—and thank you for stepping forward as public servants.

Mr. Bottorff, you were in our State for some time. So we feel that

we are going to be represented. Would you kindly acknowledge, the

recorder does not put into the record that you are nodding yes.

[Laughter.]

Mr. BOTTORFF. Yes sir. I will acknowledge I had the good fortune

to serve as the president of one of Virginia’s major banks for 4

years. I also want to say that both of my sons were educated in

Virginia’s schools. One at the University of Virginia and the other

attended Norfolk Academy. Both received excellent education and

I feel privileged to have lived in Virginia.

Senator WARNER. I think, Senator Isakson, Virginia is represented on this board.

[Laughter.]

Senator WARNER. Perhaps at your convenience some day, you

will take a look at the rate structure as it has been applied to my

State, and I think possibly yours, where the rates are really not

commensurate with the rural cooperative rate structure. We have

a very fine, well-integrated rural cooperative network in our State.
17

Then the publicly owned power companies, again, it is just not

what I would call a reasonable explanation of why the TVA rates

should be so far afield of those two indices. So take a look at that,

if you would, early on in your work.

It is refreshing to see how legislation in the Congress can engender and produce such an extraordinary panel as this to go in and

correct the alleged wrongs of an institution which really goes back

to the early days of our Republic, in many ways. This was the first

of its type. Thank you very much.

I see our good colleague here, have you further to say, my dear

friend?

Senator ALEXANDER. No, thank you. I have had my say and I am

here to listen.

Senator WARNER. Thank you. Thank you, Mr. Chairman.

Senator INHOFE. Thank you, Senator Warner.

We have a required question for all of you to answer, and if you

would respond audibly. Are you willing to appear at the request of

any duly constituted committee of Congress as a witness?

[Witnesses respond in the affirmative.]

Senator INHOFE. Let the record reflect they all responded in the

affirmative.

Do you know of any matters which you may or may not have

thus far disclosed that might place you in any conflict of interest

if you are confirmed in this position?

[Witnesses response in the negative.]

Senator INHOFE. Let the record reflect they all answered in the

negative.

We will start off with you, Mr. Bracy and then we will work our

way down. I would like to invite you to recognize any members of

your families who may be here today prior to your opening statement. I would ask that you confine your statement to 5 minutes,

since we have so many of you here. The rest of your statement will

be included as part of the record.

STATEMENT OF TERRENCE L. BRACY, NOMINATED TO BE A

MEMBER OF THE BOARD OF TRUSTEES OF THE MORRIS K.

UDALL SCHOLARSHIP AND EXCELLENCE IN NATIONAL ENVIRONMENTAL POLICY FOUNDATION

Mr. BRACY. Mr. Chairman, thank you very much. Let me point

to my wife, Nancy, my son, Michael and my oldest granddaughter,

Eliza.

Senator INHOFE. Welcome, Eliza.

Mr. BRACY. She wants to be a Senator some day.

Mr. Chairman, you have a lot of witnesses here, and with the

TVA board in attendance and our mediation operation at the Foundation, I view this as a marketing opportunity. But in any event,

let me say that we really appreciate, on behalf of the Udall Foundation, the relationship that we have had with this committee, the

help and the direction we have received from the members and the

staff, and the participation in our Native American internship program. In your case, Senator Inhofe, you were one of the first to

take our interns when you were in the House. It has become a

highly regarded and much sought after program in Indian country.
18

The long and short of it is that we started off as a scholarship

foundation, much like the Truman and the Goldwater. It has been

a very successful scholarship program. Over the last 10 years we

have given 1,107 academic awards. We are very proud of that program. It continues to grow.

The second job Congress gave us was to set up a graduate school

for tribal leaders. In the era of self-governance, Tribes lacked many

of the governance skills needed to suceed. We were asked to organize a graduate school for tribal leaders, which we have done with

in partnership with the University of Arizona, which has the largest Indian studies department in the country and the Harvard

Project on American Indian Economic Development. In the last 5

years, more than 1,700 tribal executives and leaders have enrolled

in our executive education programs. We are very proud of that.

NNI is thought of as the best in the country.

Finally, and most relevant to this committee, you have twice

passed legislation creating at first what we all viewed as an environmental mediation center in the Federal Government. We were

happy to take this job on. We didn’t really know what we had.

In retrospect, we just had no idea what the market for this service was. It has just been enormous. We have been involved in hundreds of cases throughout the country, from the Everglades to the

Hawaiian coral reefs. It is a very quiet Agency. We have 24 fulltime staff working for us in Tucson, kind of hidden away from the

cross-currents of politics. We have some 260 qualified private mediators from all over the country on our Roster, which serves as a

resource to us and to other agencies looking for mediators with

whom to contract.

You reauthorized the program and increased our resources reasonably. It is running extremely well. All I can tell you about the

mediation program is that there is more business than we can handle. We are very grateful to this committee. Senator Chafee was

one of the guiding hands originally, as was Senator McCain and

others who serve on this committee, particularly, Senator Jeffords.

We are very proud of that program. It is an amazing program. I

would encourage you, far beyond my tenure or our board’s tenure,

to continue and work with it.

My final appeal is to remind the committee that I don’t do this

alone. We have a group of core trustees who have served at no cost,

Anne Udall, Mike Rappoport, and Eric Eberhard, who head our

committees and work tirelessly. I hope that their nominations will

soon come before this committee. Thank you very much.

Senator INHOFE. Thank you very much, Mr. Bracy.

Mr. Bottorff.

STATEMENT OF DENNIS BOTTORFF, NOMINATED TO BE A

MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Mr. BOTTORFF. Mr. Chairman, members of this committee, thank

you very much for the opportunity to appear before you today. This

is indeed an honor for me to be considered for the TVA board. I

also want to thank the President, President Bush, for nominating

me. I want to acknowledge my fellow Tennesseans, Senator Lamar
19

Alexander, and Senator Bill Frist, for their confidence, encouragement and support.

Most of my life, my adult working life, I have spent in the private sector, 32 years of which were in commercial banking. As Senator Warner mentioned, 4 of those years were in the State of Virginia, where I had the good fortune of being president of one of Virginia’s banks. I retired from commercial banking about 5 years ago.

After doing so, I became a venture capitalist.

During that time period, I really had no time for public service.

The banking career did afford me some time for community service

on a number of not-for-profit boards. The situation has been changing recently. In the State of Tennessee, I was given the opportunity

to serve as the inaugural chairman of an instrumentality of the

State of Tennessee, the Tennessee Educational Lottery. That occurred 2 to 3 years ago. I will say, that experience in public service

has been rewarding, but also very challenging, to be part of a

quasi-public organization, not unlike what I view the Tennessee

Valley Authority to be.

We had a very successful launch of the lottery in Tennessee. All

of the net proceeds goes for education. We have been able to fund

all of the scholarships for all the qualified students and students’

applications for college in Tennessee have gone up by 6 to 7 percent, stimulated by the scholarships available. So it has been, as

I said, very rewarding to see the affordability of and the accessibility to higher education increase for the children of Tennessee.

If confirmed, I do welcome this opportunity for a chance to be

more involved in public service as a member of the Tennessee Valley Authority Board of Directors. In studying the basic mission of

TVA, I am enthused about its mission. I am enthused about the opportunity to accomplish that mission and the impact that will have

on economic development and the quality of life of people in the region. Those two themes are the two focuses of community and more

recently, public service to which I have been attracted.

As I begin to look at the strategic challenges facing TVA, I recognize full well the importance from transitioning from the operating

board system to a policy board system: the more modern governance system that we would see today in much of corporate America. I am hopeful that my service on numerous boards, private sector boards, not-for-profit boards, and more recently quasi-public

boards, can be helpful to my fellow team members here, today and

those already serving on the board to navigate that journey. It is

a difficult journey to go from an operating board to a policy board.

So Mr. Chairman, members of this committee, and members of

the Senate, I am willing to serve on the TVA board if confirmed.

What I assure you is I will do so with energy, with commitment,

and with sound stewardship.

Senator INHOFE. Thank you very much, sir.

Mr. Duncan.

STATEMENT OF ROBERT DUNCAN, NOMINATED TO BE A MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE

VALLEY AUTHORITY

Mr. DUNCAN. Thank you, Mr. Chairman. I appreciate the kind

remarks from Senator McConnell and Senator Bunning and also
20

Senator Alexander on my nomination. I also appreciate the support

of other members of the Kentucky delegation.

I thank President Bush for nominating me to the Tennessee Valley Authority board. I am honored that the President chose me for

this very challenging position. I would like to recognize the help

that we have received from your staff, Mr. Chairman, and Senator

Jeffords, from your staff, in the hearing today and also the TVA

staff in preparing us for this.

Mr. Chairman and Senators, as a young boy growing up in east

Tennessee near the Tennessee-Kentucky border, I never imagined

that I would one day appear before a Senate committee as a Presidential nominee. Being here today is a highlight in my life. I was

born in a clinic served by the Tennessee Valley Authority, attended

a two-room school provided power by the TVA, and observed firsthand during the 1950s and 1960s the difference that the Tennessee

Valley Authority made in people’s lives.

My father still lives in Scott County, TN, where Congressman

Duncan and his father originated. Although I do not live in the

part of Kentucky that is served by the Tennessee Valley Authority,

I have a historic appreciation for the role that TVA has played in

the region.

I have chosen to spend my life in rural Appalachia, and I am fortunate to have been involved in community and economic development at many different levels. My background enables me to appreciate TVA’s primary mission of generating and transmitting safe,

reliable and affordable power while respecting the environment and

promoting economic development in the region. My decades of experience as a community banker provide a perspective in analyzing

TVA’s operation and financial efficiencies. I am pleased to see that

TVA has an emphasis on financial flexibility through debt reduction. All financial issues must be viewed of course through the lens

of changing competition.

The electric utility industry is constantly restructuring, and

TVA’s 158 power distributors, customers, 61 directly served industries and Federal agencies are constantly, as they should be, looking for lower cost power. Addressing the need to create clean and

safe power is very important. Meeting clean air standards is essential. I applaud TVA for its continued investment in modification to

the coal-fired plants. I am confident that TVA can be a leader in

environmental stewardship.

As an attorney, I read most of the recent amendments to the

TVA Act mandating sweeping change as a mandate for management change. I embrace the enumerated duties that the board is

to undertake and, if confirmed, my obligation is to establish broad

goals, objectives and policies while developing long range plans.

Arguably, the most important thing that we will do is to hire a

chief executive officer with senior level experience and hold him or

her accountable. To paraphrase President Bush, being considered

for this position is not the ambition of a lifetime, but it is the opportunity of a lifetime. I promise that if confirmed, I will make the

most of the opportunity by balancing the needs of the country, the

Tennessee Valley residents and communities in which they live.
21

I look forward to answering the committee’s questions today and,

if confirmed, to working with each of you to ensure the success of

the Tennessee Valley Authority. Thank you, Mr. Chairman.

Senator INHOFE. Thank you, Mr. Duncan.

Ms. Williams.

STATEMENT OF SUSAN RICHARDSON WILLIAMS, NOMINATED

TO BE A MEMBER OF THE BOARD OF DIRECTORS OF THE

TENNESSEE VALLEY AUTHORITY

Ms. WILLIAMS. Good morning. I am honored to be here today, as

well as the rest of my colleagues, as one of President Bush’s nominees to the board of the Tennessee Valley Authority. I am very

grateful to the Tennessee Senator, Senator Alexander, whom I

have known for many years, longer than each of us would like to

remember, I am sure, and to Senator Frist, for their support. To

Congressman Duncan, my Congressman, Congressman Gordon,

who came over this morning, as well.

Mr. Chairman, members of the committee, I really do appreciate

the opportunity to be here today and to appear before you. The

woman you see here today has been shaped and molded by the

Tennessee Valley Authority. I grew up in Savannah, TN. It is a

small town in rural west Tennessee on the banks of the Tennessee

River.

My father, that Lamar mentioned, worked his entire life for TVA,

45 years, to be exact. Most of it at Pickwick Dam, which is near

Savannah. He was a senior operator, he worked in the plant. He

worked shift work. He belonged to the International Brotherhood

of Electrical Workers. He bought Series E savings bonds every single month through TVA for my sister and me so we could go to college.

I can only imagine what he would think if he were here today

to see his daughter nominated for this position. I am a daughter

of the Tennessee Valley, and I consider it an incredible honor to

serve on the board.

Having this background and knowledge of the Tennessee Valley

I think gives me a unique perspective on the history and on the

mission of the Tennessee Valley Authority. I appreciate what TVA

has done for the people of the Valley. I also recognize that there

are challenges facing the new board. I can tell you that I will work

hard to understand the challenges and make determinations based

on sound research and careful thought.

I have served on the University of Tennessee’s board of trustees

for almost 11 years. We obviously have had a lot of challenges

there including large budgets. We have had many other very, very

good challenges over the past several years. It has been an interesting experience.

I have run a State government agency that oversaw 40,000 employees. I have been in the private sector. I have spent 35 years

in the public and private arenas in my career. I feel like my work,

my life’s experiences and my knowledge of the TVA, I think I can

make a valuable contribution to the board, if you choose to confirm

me.
22

I really appreciate the opportunity to be here before you. I do

consider it an honor, and I ask for your confirmation. I look forward to the questions. Thank you.

Senator INHOFE. Thank you, Ms. Williams.

Mr. Sansom.

STATEMENT OF WILLIAM SANSOM, NOMINATED TO BE A MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE

VALLEY AUTHORITY

Mr. SANSOM. Thank you, Mr. Chairman. I am also honored to be

here today and thank you for your time to listen to us and consider

our nomination for this board. I also want to thank Senator Alexander and Senator Frist for their confidence and encouragement. I

worked for Lamar for almost 5 years, and I know him well. I hope

I can perform this job so you can still be proud, Senator.

By the way, Senator Isakson, I want to respond, because the

Chairman asked that we respond to your comments, I have about

100 employees in Georgia, I own property in Georgia. I hope my

100 employees in Georgia think I represent them. So I hope I can

help represent you on the TVA board and also make you proud.

Anyway, I grew up in Tennessee. I also dredged sand and gravel

in the TVA lakes and river. I have been in the towing business on

the river. I recognize the importance of the river system and its

value to the Tennessee Valley and the whole region. I will continue

to work, if confirmed on this board, to make your decision to

change this board a wise decision. I think you have done a great

thing doing this, and I think I have gotten to know these colleagues

here in the last couple of days. I look forward to working with them

and I will give you some time back.

Thank you for your consideration.

Senator INHOFE. Thank you, Mr. Sansom.

Mr. Thrailkill.

STATEMENT OF HOWARD THRAILKILL, NOMINATED TO BE A

MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Mr. THRAILKILL. Thank you, Mr. Chairman. It is a great privilege for me to appear before you and the distinguished members of

this committee as you consider my nomination for the Tennessee

Valley Authority board of directors.

In that regard, I also want to express my gratitude to Senator

Richard Shelby, Senator Jeff Sessions and Congressman Bud

Cramer, who have encouraged me to come before you today. I

would also like to acknowledge a new friend whose thought about

the future of TVA I have quickly gained so much respect for, and

that is Senator Lamar Alexander.

Finally, I must also acknowledge my wife, Donna Thrailkill, who

offers her support by her presence at these proceedings.

Mr. Chairman, I deeply respect the heightened importance of

this particular confirmation hearing, the first to consider seating a

restructured board of directors under broad amendments to the

TVA Act that you have enacted. It is also the first following the

signing of the Energy Policy Act of 2005 after so many years of debate. Therefore, I am mindful of the formidable obligation and re-
23

sponsibility I must shoulder if you choose to confirm my nomination.

If you do, you can rely upon my applying the full measure of my

ability, background and experience for this endeavor. In my view,

Congress has given TVA an historic opportunity to renew and to

transform itself. You have pointed the way to a new horizon. The

newly established board will now bear the responsibility for implementation of your vision, and you should hold us accountable for

doing so.

Having met individually with each of the other current nominees

and the two incumbent board members, I commend them to you

and look forward to serving with them. Upon your confirmation, I

am convinced this board has the breadth of knowledge and experience to move aggressively and to begin meeting your expectations.

With their business acumen and maturity, I am confident they will

move in a financially and socially responsible fashion as well.

Working together, I believe this board can guide TVA to achievement of new standards of excellence in the delivery of clean, lowcost, reliable electric power to its customers. TVA should accept

nothing less than becoming best of class in this Nation.

As TVA crafts its future along the path you have charted, it is

clear to me that the innovative application of technology will be

critical to TVA’s success. As a practical matter, no other approach

will power continued economic development in the Tennessee Valley, while simultaneously meeting ever tighter, more stringent environmental standards for air and water quality.

Technology is also fundamental to TVA’s delivering electric service to its customers at lowest cost and highest reliability. There are

simply no practical alternatives in my mind that don’t introduce

downside consequences that are unacceptable, in my view. In this

environment, I believe my background as an engineer, technologist

and business executive could provide important balance and perspective that will augment the backgrounds of the other board

members.

Throughout my career in private enterprise, organizations I have

headed were built around large, complex engineering teams and

programs not unlike those that TVA must undertake to succeed.

There is little doubt that the new board will be called upon to endorse many complex, costly programs whose success hinges upon

correct assessment of technical and financial alternatives. For more

than three decades, that has been the nature of my work. I offer

that experience and expertise to this effort without reservation.

In closing, I would like to affirm my love for the Tennessee Valley and the natural beauty of its rivers, lakes, hills and valleys.

Even though my wife and I moved to Alabama from a home near

the Columbia River Basin in Oregon, we have found a river basin

managed by TVA to be no less stunning and fragile. On many occasions, traveling around the area, I have simply pulled over and

marveled at the incredible vistas we have in our Valley.

If confirmed, I pledge my strong support of TVA’s continued program of environmental stewardship and responsible management

of the Tennessee River system and resources.

Mr. Chairman, I am energized by the prospect of service as a

member of TVA’s board of directors during this critical period,
24

when energy service providers are moving in new directions, thank

goodness. I firmly resolve that the new TVA can be and will be

worthy of its heritage.

Thank you for your consideration.

Senator INHOFE. Thank you, Mr. Thrailkill.

Mr. DePriest.

STATEMENT OF DONALD DEPRIEST, NOMINATED TO BE A

MEMBER OF THE BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Mr. DEPRIEST. Thank you, sir.

Mr. Chairman, members of the committee, there is probably no

greater honor than to be asked by the President to serve the Nation. As President Bush’s nominee as a director of the Tennessee

Valley Authority, I am thankful for the opportunity to serve. Mississippi’s two marvelous Senators, Thad Cochran and Trent Lott,

have been unwavering in their support and encouragement, and I

will be forever grateful to them.

I must also acknowledge my friend, Senator Alexander, of many

years, and the support that I have received from Senator Frist.

Congressmen Wicker and Pickering and Governor Barbour have

also offered their assistance and advice. It is generous of you and

the committee to act on these nominations as promptly as you

have, and I deeply appreciate your kindness.

TVA has been important to me for my entire life. I can remember

the day at age 6 when electricity was first turned on at our house

in the country near Dyer, TN. The establishment of this great institution transformed an impoverished region into a flourishing and

wonderful part of the world. I will do my part, if confirmed, to see

that the Tennessee Valley Authority continues its mission in an

ever-improving way.

I have lived in Columbus, MS since 1963. I moved there from

Memphis to open an industry that continues to operate today and

which depends on the reliable, low-cost electric power that is provided by TVA’s distributor, Columbus Light and Water. I came to

Mississippi from Tennessee, where I am the seventh generation of

my family in the great Volunteer State. Gibson County Electric

Membership Cooperative, now Gibson Electric, was formed and

chaired by my uncle, Charles Garner, for 40 years. So I have a legacy to fulfill and continue and improve TVA’s service.

TVA, as you know, is the largest power generator in the Nation

and must continue to produce large quantities of low-cost, reliable

and clean power. It is a mammoth enterprise that requires prudent

management and financial integrity. It has a unique capacity to

control its own rates and funding sources and operates primarily

like a private enterprise with a public purpose.

In expanding the board of directors and creating the chief executive officer, Congress has restructured TVA to meet the challenges

of a growing organization in the power generation industry. We

should keep in mind that TVA is not just an enterprise, but a leader in electric power and it carries with its power generation mission the important task of aiding economic development in the TVA

area. This arm of TVA is critical to America’s future. This role

means that TVA must accommodate shifting trends for this indus-
25

try, promote employment of citizens within its area, advance technological development and secure energy sources and protect national security.

My own experience in building and developing industries and

new technologies should contribute to the decision to advance the

objectives of TVA. I was a board member and chairman of one of

TVA’s distributors in Columbus, MS during the turbulent oil and

energy crisis of the 1970s. This experience should be helpful in my

role on the board of TVA.

I must note that the other nominees of the newly expanded board

of TVA are quality, thoughtful people of diversified skills that will

bring depth of experience and a variety of viewpoints to the organization which is vital to making decisions that will affect thousands

of employees, 158 distributors and millions of users and customers.

The board must deal with issues and opportunities associated with

types of power generation and energy sources, financial planning,

budgeting and execution regarding these issues on a giant scale.

Management of appropriate debt levels, commensurate with

making appropriate power rates and capital expenditures, human

resources, environmental matters, land uses, legal challenges, service areas and distributor relations, finding a world class CEO, corporate governance, mega-sites for industrial and economic development and countless other challenges must be effectively solved.

This requires the skill sets and experience gained in dealing with

large and diverse organizations and the new board must possess

these skills and be prepared to act with precision.

If confirmed, I will bring my own experience to bear in having

formed, managed and operated several companies of national and

international scope in telecommunications, manufacturing and

broadcasting. This also includes having established one of the two

original cell phone carriers in all the major cities in the TVA region.

I respectfully commend you for these hearings and for your consideration. I hope you find your way to confirm this board of candidates, Mr. Chairman.

Senator INHOFE. Thank you, Mr. DePriest. I thank all seven of

you for your excellent statements, your opening statements. I must

say to the six nominees to the TVA that I am a little bit prejudiced.

I spent 30 years of my life in the real world in paying for all this

fun they are having up here, so I appreciate others willing to come

in and participate.

I was going to ask you how you are going to respond to the needs

of those States that are not represented on this board, but I will

let Senator Isakson do that. First of all, Mr. Bracy, let me tell you

that both Senator Jeffords and I had the honor of serving in the

House with Mo Udall, and what a high regard we had for him. I

remember him very, very well.

You have been there since the inception, I guess, of the Foundation. Is there anything you want to share with us that was not in

your opening statement as to maybe where you want to go in the

next few years?

Mr. BRACY. Mr. Chairman, I think that we try to stick to our

knitting. What we try to do as an organization is fill the cracks in

the system. We are a small organization in a governmental context,
26

with many, many big organizations. But what our advantage is as

a small organization is we can find the cracks in the system and

we can fill them.

One of the real cracks in the system is Indian health care. More

and more money is being spent on this, but you don’t see the needle moving. When you go out to the reservations, the diabetes is

worse than it has ever been. Some of the health care facilities have

been improved on many of the reservations, thanks to members of

this committee and others. But we don’t really see progress in

terms of the overall health of the Native American community. We

are very concerned about that as a board. That is certainly one of

the things we want to focus on in the next few years.

Senator INHOFE. Good. To the six of you that are nominated for

the TVA, I would ask, you heard me describing some of the problems that you had in your past and we currently have in Oklahoma. It will be your responsibility to choose a director, someone

who is going to be running this and answering to you. What do you

have in mind in terms of what type of person you are looking for

and what safeguards do you think you could put in place to keep

from resurrecting some of the unethical activities of the past? Anyone who wants to respond, starting with you, Mr. Bottorff.

Mr. BOTTORFF. I had the good fortune of chairing three search

committees, one of which was for the chancellor of Vanderbilt University. The process that seems to work is to start with defining

the knowledge, skills and attributes that are necessary. Those

knowledge, skills and attributes need to link with the strategic

mission of the organization. So what I would do is encourage us as

a board to try to understand the strategic challenges and then define the basic characteristics, knowledge, skills and attributes required of the CEO.

In terms of the ethics, a friend of mine once said, ‘‘In God we

trust, everybody else we audit.’’

[Laughter.]

Mr. BOTTORFF. Seriously, to have good ethics an organization

must start with a good value statement. Then you must monitor

behavior to ensure it complies with those values. There are a lot

of good systems that are in place and are many. I would hope that

we would employ some of those systems.

Senator INHOFE. Any other want to comment on that?

Mr. DUNCAN. I would agree with my colleague. I think we have

some guidance from the statute that you provided us, and we have

to look to that for senior level experience and some other things

that you put in there. I think we have to understand the skill set.

On the ethics issue, I totally agree. This is a matter of personal

accountability. We all have to take individual responsibility for the

ethical issues that we face and know that the ground changes over

a period of time, just as Congress is considering ethics today. I do

think that our primary responsibility as a board is going to be to

hire the chief executive officer and hold that person accountable for

the organization.

Senator INHOFE. Yes, ethics is at the forefront. I think we joke

around a little bit, but it is something that is there and something

that can creep back in. It is just, as I said, the insatiable appetite
27

of unelected bureaucrats to spend somebody else’s money is always

there, for their own benefit.

Ms. Williams or anybody else care to respond as far as the directors are concerned?

Ms. WILLIAMS. I would just say, Mr. Sansom and I have both

served on the University of Tennessee board and search committees there, and certainly know what goes on looking for management. I think ethics is very important to me. Personally, I have

lived in the Tennessee Valley all my life—I have lived in Knoxville

the last 18 years, so I know what you are speaking of. I am absolutely committed to getting the right person.

Senator INHOFE. Good. Anybody else? Thank you very much.

Senator Jeffords.

Senator JEFFORDS. Mr. Bracy, the U.S. Institute for Environmental Conflict Resolution is an integral part of the Udall Foundation, as you know. Its premise is simple: it is better to resolve Federal environmental disputes through mediation rather than

through litigation.

Since Congress created the Institute in 1988, it has built an impressive record of accomplishments. Just a few months ago, the

White House, the Office of Management and Budget and the Council on Environmental Quality issued a memorandum encouraging

Federal agencies to draw on the services of the U.S. Institute to increase the effective use of the environmental conflict resolution.

However, the President’s budget proposes less than $700,000 to

fund the Institute this fiscal year 2007 as compared to $1.9 million

appropriated by Congress this year. Mr. Bracy, if the Congress

were to enact the President’s proposed funding levels, please describe the impact that would have on the ability of the U.S. Institute to fulfill its mission.

Mr. BRACY. Well, Senator, let me first put it in perspective. You

all have created this Institution, we have tried to manage it well

for you. You have revisited this twice in terms of what the authorized level and needed level is. We agree with what you have done.

The cost of one major environmental lawsuit in the United States

today exceeds the total appropriation for all our mediation services.

One lawsuit. We have settled hundreds of things.

So the impact would be, I think, something that the committee

would not be very happy about. We would certainly have to abandon many, many of the cases that we are involved in. We might

even have to lay off staff. This kind of recommendation has come

up here before. Once I was quietly complaining about this to a

member of the Senate, and he said to me, well, you know, sometimes they send budget items up here that they know we are going

to approve.

Given the OMB directive to the Federal agencies to go ahead and

use our services as much as possible, I think that some recognition

has to be given that we need the resources to do the job.

Senator JEFFORDS. Thank you. I would like to work with you to

make sure that that gets done.

Mr. BRACY. Thank you, Senator.

Senator JEFFORDS. Mr. Bottorff, the new Energy Policy Act of

2005 encourages the development of distributed generation by allowing individuals to connect windmills or solar panels at their
28

home to the grid and expanding combined heat and power projects

by standardizing the interconnection process. Do you think this legislation should apply only to the TVA?

Mr. BOTTORFF. Senator, I really haven’t had a chance to look at

that, but I will.

Senator JEFFORDS. I would appreciate it if you would, because we

are very interested.

Mr. Duncan, would you support the TVA in electing to voluntarily adopt further measures to increase energy efficiency at its

projects and among its ratepayers and increase the supply of electricity in the region?

Mr. DUNCAN. Senator, obviously that is something that we

should consider. I do not have enough information to give you a

specific answer at this time. I generally understand the issue of efficiency. On the one hand, we are generating electricity and trying

to sell electricity. On the other hand, we are asking people to conserve. I think you can do both.

Senator JEFFORDS. I would like to continue to discuss that with

you. I will as we go on.

Mr. DUNCAN. I would be happy to do that.

Senator JEFFORDS. Ms. Williams, in addition to hydropower,

what portion of TVA’s generation base should come from renewable

energy sources?

Ms. WILLIAMS. That is a very good question, and something that

I am very interested in. I know Senator Alexander spent a good

deal of time looking at that issue as well. I can’t give you a specific

percentage. It is a small percentage right now, in TVA. Obviously,

renewables are important. We need to, I think, increase those. Obviously, we have had issues with clean air, and that is something

that could be very helpful in the Valley.

Again, I don’t know the percentage, but I think it should be increased.

Senator JEFFORDS. I would appreciate your looking into some of

these issues. I am deeply interested in this. We will be back to you.

Ms. WILLIAMS. Yes, sir. I understand that. I can commit to you

that we will do that.

Senator JEFFORDS. Mr. Sansom, the effective of restructuring of

the electric production and transmission industry in our country on

reliable delivery of electric power will continue with lessons learned

from the blackout in New York, the California crisis and the reliability struggles elsewhere. TVA must continue its earnest efforts

to ensure reliable power delivery.

What else do you feel that TVA can do with neighboring utilities

to ensure that we do not suffer additional regional blackouts?

Mr. SANSOM. Obviously that is important. In fact, I was just visiting Oak Ridge National Lab last week. They have people working

on that same issue, of transmission, power loss in transmission. I

think it is obviously something TVA has to be involved in. I don’t

know all the answers yet, not that I ever will, on how to work with

other utilities in that regard. But we will sure pay attention to

that, and we know it’s important.

Senator JEFFORDS. We will be following up.

Mr. Thrailkill, TVA announced plans in 1997 to cut its debt in

half by the year 2007 and increase rates for its distributors specifi-
29

cally in order to reduce its debt. TVA has acknowledged that it will

not meet its debt reduction targets and is only on a track to make

a small dent in the overall debt. As part of the TVA board, do you

plan to meet the original plan of reducing TVA’s debt?

Mr. THRAILKILL. Senator, I do not have a specific target for reducing the debt. But I certainly know that that is something that

needs to be addressed by this board. I am convinced that once we

look at the financial affairs of this company in great depth, this

Congress with its great wisdom has asked that we put together a

strong audit committee and that we write a strategic plan.

I think those two mechanisms will ensure that we start to approach those issues in a very sensible and business-like fashion,

and I pledge to you I will work hard toward that direction.

Senator JEFFORDS. I appreciate your saying that. We will be

working hard to look after you.

Senator INHOFE. Senator Jeffords, I know you have one more

question, but if you could hold that for just a moment until we go

around to the rest of the panel, we will come back to that. Is that

all right?

Senator JEFFORDS. OK. I only have one more, but that’s all right.

Senator INHOFE. All right. Senator Isakson.

Senator ISAKSON. Thank you, Mr. Chairman. I want to repeat

what I said at the outset of my remarks, that this is a tremendous

group of nominees, and I look forward to voting for your confirmation out of committee.

The reason that I raise the representation issue is that if not

raised now, and it rises to a level of your attention after you go on

the board, then it would be a mistake on my part not to see to it

we’ve dealt with it forthrightly. I am glad the Hackney Company

has 100 Georgians working for them. It was wise of you to hire all

them. I want to thank you for that.

I am delighted that Mr. DePriest has the practical experience

with municipal electric and cooperative deliveries. As you know,

TVA sells power through five either municipal or electric cooperatives in Georgia. Being familiar with cooperatives, because I am a

cooperative customer myself, as many of you may or may not know,

cooperatives go to a great extent to ensure inclusion on the part of

those that pay them in policy matters and coming before and meeting with the executives of the cooperative authority on a timely

basis.

When TVA converts, as it should, and I commend Senator Frist

for this creation, from a tightly knit three-member executive committee to a nine-member board, although you are appointed, you

take on much more of a representative form of a governing body,

if you will. In my State of Georgia, aside from the statistics that

I mentioned in terms of the number of people served, the vital infrastructure and aesthetic beauty of lakes, their shorelines and

other things directly controlled by TVA are something people in

Georgia would be very disappointed if they did not feel like they

had a seat at the table when vital decisions are made.

So rather than a question, it is like poor Judge Alito and Judge

Roberts, you ask them what kind of a decision they are going to

make before they are in a position to make a decision, they can’t

prejudice themselves. So I am not going to ask you to prejudice
30

yourself. However, I want to make this point. This is two-thirds of

the future board sitting in the room, if the makeup stays at nine

members. This is six, my Georgia math tells me that is two-thirds.

You could in yourselves make a decision. You are getting ready

to be a part of hiring a CEO. If part of the hiring of that CEO is

equitable representation of those that are served but do not have

a board member, I would sure feel a lot better to know that that

was an issue that was on his or her radar screen, for example.

Second, if you are going to be a board that represents several

States, but only a few of the States are on the board, you might

want to find a mechanism for those States to have advisory capacity within your own creation, so that when issues come forward to

you, there is a mechanism for them to flow to the board that reflects the parochial interests of each of the States.

I can’t address the States of North Carolina and Virginia. But I

can address the State of Georgia, and I would presume their interests to be the same. There are going to be issues dealing with electric energy in the years to come that are going to be crucial to have

customer buy-in and community buy-in. The absence of representation on a board like TVA and the reason for the reach that we went

to to expand that board now is to ensure those are as smooth, timely and as cooperative as possible.

So I know you can’t commit yourself to something before you

have the opportunity to do it. But I am going to commit myself to

make sure we have some dialog before we get to that confirmation

to ensure that you are aware and others are aware that there must

be a mechanism for a smooth flow of information to and from all

those served. I am open as I can be to being as cooperative as I

can be to being a part of that solution.

I don’t apologize for raising the issue, because I have been on the

board of banks that are audited. I was the first load management

customer of a major cooperative. I have worked closely with electric

generation in my 30 years in public life. I have seen issues like this

not raised until it was too late and the problems were a whole lot

bigger than they were if you raise them on the front end.

Last, Ms. Williams, were you part of hiring Pat Summitt?

[Laughter.]

Ms. WILLIAMS. I actually worked with Pat Summitt as associate

women’s athletic director for 8 years. She is my hero.

Senator ISAKSON. If you can get her to TVA, you all will make

a good decision.

[Laughter.]

Ms. WILLIAMS. I have tried to get her to run for Governor a couple of times.

[Laughter.]

Senator ISAKSON. Thank you, Mr. Chairman.

Senator INHOFE. Thank you, Senator Isakson.

Senator Jeffords, you had one more question in your line of questioning, if you would like to ask that now, it would be an appropriate time.

Senator JEFFORDS. Mr. DePriest, what will you do to ensure that

TVA aggressively reduces air pollution and aims to achieve at least

the 1990 levels of carbon dioxide emissions?
31

Mr. DEPRIEST. I am not specifically familiar with the 1990 levels,

but I am fully committed to producing clean power. In the area of

producing power from coal energy, I would be very interested in

coal gasification that would include the carbon recapture. So I believe that I will be a voice on this board, if confirmed, for very

much clean power with every technology that we can find. I assure

you that we will examine each one of those technologies.

Senator JEFFORDS. Thank you for that answer. I will be following

up with you.

Senator INHOFE. Thank you, Senator Jeffords.

Senator Alexander, do you have any questions you would like to

ask the panel?

Senator ALEXANDER. Thank you, Mr. Chairman, for inviting me

to sit in, although I am not a member of the committee. I won’t

ask any questions. I would just say this. If the shareholders of the

TVA are the citizens of the Tennessee Valley Authority region and

the citizens of the United States, I think any shareholders in

America would be fortunate to have as directors a group of men

and women this distinguished and broad-gauged and serious about

their purpose. I look forward to working with them.

Senator INHOFE. I certainly agree with that comment.

Let me just ask one further thing. Senator Sessions brought up

the issue of the debt. Does anyone have any comment to make

about how we are going to address that?

Mr. BOTTORFF. As a banker maybe I should comment. You might

guess that my bias is prudence and conservatism in terms of debt

levels. When I look at TVA, I will say I haven’t really had a chance,

though, to study cash-flows, coverage ratios. It’s balance sheet,

strengths, sensitivities and to define really what ought to be the

debt capacity.

I also think that looking at TVA’s balance sheet, it is very different than an investor-owned utilities balance sheet. What is important to understand, in any capital intensive industry is its cost

of capital. We need to really understand the differences in TVA’s

balance sheet versus investor-owned utilities to determine its true

cost of capital. That coupled with its debt capacity will have major

impact on TVA’s funding strategy.

So I come at the question from a conservative standpoint. I need

to understand the facts before commenting specifically on TVA’s

debt service capabilities.

Senator INHOFE. An other comments on that issue?

Senator Jeffords or Senator Isakson, do you have any further

questions?

Senator JEFFORDS. No, no further questions.

Senator INHOFE. Again, it is an honor to have this very distinguished panel before us. We are looking forward to working with

you in the future. In fact, Senator Jeffords said something that is

interesting to me quietly a minute ago. He said that maybe we

should go down and look at this thing. I have to tell you, I have

never been there. So you may have some visitors.

With that, we are adjourned.

[Whereupon, at 11:06 a.m., the committee was adjourned.]

[Additional statements submitted for the record follow.]
32

STATEMENT OF HON. JIM BUNNING, U.S. SENATOR FROM THE STATE OF KENTUCKY

Thank you, Mr. Chairman. I appreciate having the opportunity to introduce my

friend and fellow Kentuckian, Mike Duncan, to be a nominee for the Tennessee valley authority’s new board.

I have known Mike for many years. He is a man of integrity and fine character.

He takes public service seriously. And he is a man of compassion and fairness. His

educational and philanthropic endeavors to better the lives of Kentuckians is unmatched.

Mike has been past President of the Kentucky Bankers Association and Director

of the Cleveland Federal Reserve Bank’s Cincinnati Branch. His banking and finance experience will bring a unique perspective when it comes to TVA’s management and accounting of its finances and debt. TVA certainly needs a board member

who understands economics to help it get its $25 billion in debt under control.

What I like about Mike is that he is not a ‘yes man’ or someone who simply ‘goes

along to get along’. If there is a problem, Mike will identify it. And he will work

hard to fix the problem, even if it is not a popular solution.

Mike takes his endeavors seriously, and I know he will take the job as a TVA

boardmember seriously, too.

TVA has problems. It has issues with its debt. It is unregulated by FERC.

Some residents in the TVA region even pay higher costs for their electricity than

those living outside the TVA fence. This defeats the purpose of TVA.

I know that Mike will help bring these issues to light as a boardmember and he

will advocate commonsense solutions.

Mike will work to help ensure that citizens in the TVA region will receive reliable,

efficient and cheap power to better their lives.

I appreciate the Chairman’s and Ranking Member’s invitation to introduce Mike

Duncan. I look forward to his swift confirmation in the committeeq and on the floor.

Thank you, Mr. Chairman.

STATEMENT OF HON. WILLIAM H. FRIST, U.S. SENATOR FROM THE

STATE OF TENNESSEE

Mr. Chairman, I am delighted to be here today to welcome the first nominees to

serve on the expanded, modernized Board of Directors of the Tennessee Valley Authority.

Nearly 10 years ago, shortly after I came to the Senate, I started working on legislation to reform the TVA Board. In my dealings with TVA as a Senator, it quickly

became clear to me that the existing Board structure of three, full-time Board members, and no chief executive officer, was not working effectively. TVA needed a

Board that operated like the Board of Directors of any other large, $7 billion a year

corporation. Its Board members needed to have more business and management experience, with less emphasis on political experience. And it needed a CEO to manage its day-to-day operations.

I am proud to say that, a little over a year ago, my legislation to modernize the

TVA Board passed the Congress and was enacted into law as part of the fiscal year

2005 Omnibus Appropriations bill. The nominees who are here today to testify are

the first group nominated by the President to serve on the new, expanded, part-time

Board. They are an extremely well-qualified group. They have exactly the kind of

business skills and management expertise that I had in mind in drafting my reforms. And I believe that the new Board structure will ensure that they, and the

new CEO that they hire, are more accountable to the ratepayers and the citizens

of the Tennessee Valley.

I am especially pleased, of course, that the President has nominated three distinguished Tennesseans to serve on the new Board—Denny Bottorff, Bill Sansom, and

Susan Richardson Williams. They are truly excellent choices, with solid business

backgrounds and lengthy records of leadership in their communities, and I am confident that they will serve with distinction if they are confirmed. I also have the

pleasure of knowing several of the other nominees from other states, and I am excited about the future of TVA because they are such an experienced, highly qualified

group.

Mr. Chairman, I want to thank you again for moving forward on these nominations so expeditiously, and for allowing me to be here this morning. I look forward

to working with you and all of my colleagues to make sure that we get these very

qualified nominees confirmed by the Senate as quickly as possible. Thank you.
33

STATEMENT OF HON. TRENT LOTT, U.S. SENATOR FROM THE STATE OF MISSISSIPPI

Mr. Chairman, it is my honor and privilege to introduce my friend, the Hon. Donald R. DePriest, a fellow Mississippian and nominee of the President of the United

States to become a member of the Tennessee Valley Authority Board of Directors.

Don is lucky to live in the great State of Mississippi. He lives there with his wife

Sandra with whom he has four lovely children: Sally, Robert, John and Warner, who

has the firmest handshake in the State!

Don has dedicated himself to the State of Mississippi through his service as

Chairman of the Columbus, Mississippi Utilities Commission, a Tennessee Valley

Authority power distributor, as a member of the Mississippi Governor’s Venture

Capital Task Force, and of the State of Mississippi Audit Oversight Committee of

Ethics.

Don has complemented his service to Mississippi with his work in the private sector. He was founder, CEO and Chairman of Charisma Communications; a former

Union Planters Bank director; and founder of Microtech Median Inc. and Boundary

Healthcare Products. He currently serves as CEO and Chairman of MCT Investors;

and Chairman of MCT Corporation.

Don is not only an accomplished businessman, but also an outstanding member

of his community as a Rotarian, a founding member of the State of Mississippi Historic Preservation Commission, and as president of the Boy Scout Council.

Don holds the Silver Beaver Award from the Boy Scouts of America and has

served multiple terms on the Atlanta Regional Panel for the Selection of White

House Fellows. In 1974, the U.S. Small Business Administration awarded him the

‘‘Businessman of the Year’’ award for Mississippi. He is also a trustee for the National Symphony Orchestra.

As you can see, Don’s gift for Communication and his deep understanding of the

relationship between Government, community and business make him not only well

qualified, but also deserving and prepared to serve as a Tennessee Valley Authority

Board Member.

STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM THE STATE OF ARIZONA

Mr. Chairman, thank you for this opportunity to offer my strong support for the

reappointment of Terry Bracy to the Udall Foundation Board of Trustees.

As this committee knows, the Morris K. Udall Foundation was established by

Congress in 1992 to honor the legacy of Morris Udall and his commitment to the

preservation of the Nation’s natural environment. The Foundation has been a great

success and I know that Mo would be very proud of its many accomplishments in

advancing important programs in environmental and Native American policy.

The Udall Foundation has competitively awarded hundreds of scholarships to college students throughout the United States. The Foundation also has developed and

carried out a very successful native American Indian Summer Congressional Internship Program, and is well along in the effort to establish the Native Nations Institute that was authorized by Congress in 2000 to provide leadership and governance

training for tribal officials. The Udall Foundation has also established and successfully operated the U.S. Institute for Environmental Conflict Resolution, created to

assist in the resolution of federal environmental, natural resources, and public lands

conflicts and controversies through facilitated negotiation, mediation, and collaborative problem-solving. It is so appropriate that the Conflict Resolution Institute is

housed under the Morris K. Udall umbrella, as Mo was so adept at helping find

common ground to forge resolutions from often diverse view points—resolutions that

were of benefit not only to Arizona, but the Nation.

The Act establishing the Foundation created a Board of Trustees comprised of 13

members, almost all of whom are nominated by the President and confirmed by the

Senate. Terry Bracy has been Chairman of the Board of Trustees for the Udall

Foundation since 1994 and I am pleased to lend my strong support to his renomination. I have known Terry since 1982 when Mo Udall introduced us. Terry was one

of Mo’s closest friends and advisors throughout his life. Earlier he had served as

perhaps Mo’s key aide for 10 years before becoming Assistant Secretary of Transportation. Terry’s leadership at the Foundation has been essential at every stage, from

ensuring its solid inception to helping to advance its accomplishments and building

continually upon its many successes. The Foundation has a promising future, and

that is in large part due Terry’s leadership and tireless dedication.

Mr. Chairman, Terry’s contributions to the Foundation have been remarkable,

and I urge the committee’s support for his reappointment to the Morris K. Udall

Foundation Board of Trustees.
34

STATEMENT OF HON. MARK UDALL, U.S. REPRESENTATIVE FROM THE

STATE OF COLORADO

Mr. Chairman and Members of the committee, I want to express my strong support for Terrence L. Bracy and to urge the committee to recommend that the Senate

advise and consent to his nomination for continued membership on the Board of

Trustees of the Morris K. Udall Foundation.

Since the inception of the Foundation in 1994, Terry has served as a Foundation

trustee, providing outstanding leadership and direction in the development of the

Foundation’s education programs and the U.S. Institute for Environmental Conflict

Resolution.

Having previously been the chief legislative aide to my father, Representative Mo

Udall, and then having served as Assistant Secretary of Transportation, Terry has

brought invaluable government experience to the Foundation’s board, provided essential guidance and support to senior staff on important management issues, and

devoted untold hours of unpaid work to the Foundation.

I believe his continued membership on the board is vital for the continued success

of the Foundation, especially because the board now includes a large number of recently-appointed trustees with more limited experience with the operations of the

Foundation.

The Foundation has developed an array of scholarship, fellowship, and internship

programs. I understand that more than 1,100 academic awards have been made to

students in all 50 States who represent the next generations of environmental and

Native American leaders.

In addition, since 1998 the Foundation has worked to promote alternative dispute

resolution of environmental conflicts as a way to reduce litigation, and more recently has been charged by Congress to take steps to improve the skills of Native

American leaders seeking to help their tribes’ efforts at effective self-governance. Toward that end, the new Native Nations Institute has provided executive training to

more than 1,700 leaders from more than 340 tribes.

Terry has been involved in all these efforts and I think his continued involvement

as a Member of the Board of Trustees will greatly assist in their success.

I urge approval of his nomination.

STATEMENT OF HON. MITCH MCCONNELL, U.S. SENATOR FROM THE

STATE OF KENTUCKY

Mr. Chairman, Ranking Member Jeffords, Fellow Senators, it is my great honor

and privilege today to introduce you to Mike Duncan, the President’s nominee to

be the newest member of the Board of Directors of the Tennessee Valley Authority.

I have known Mike for many years, and during the course of these hearings, I

believe this distinguished committee will come to know what I know: that he is an

intelligent, experienced, capable man of integrity who will bring all his talents and

energy to the much-needed task of reforming the TVA.

Mike’s professional experience is exactly what the TVA needs to correct its course.

After graduating with honors from the University of the Cumberlands, he earned

a degree from the University of Kentucky Law School and completed an executive

education program at the Harvard Business School.

He is an accomplished business manager, having served as the Chairman and

Chief Executive Officer for several financial institutions—the Community Thrift

Holding Company, the Community Holding Company, Inez Deposit Bank, and Inez

Deposit Bank FSB. All of these positions have left Mike extremely well versed in

corporate governance and business management.

Mike was selected to become the White House Assistant Director of Public Liaison

in 1989 and 1990, a position where he became accustomed to using the skills of outreach and communication that will be vital to his position at the TVA.

He has also served as the President and Chairman of the Kentucky Bankers Association, giving him an understanding of the financial tools necessary to rescue the

TVA from its overwhelming debt.

Mike’s many civic activities include service as the chairman of the Center for

Rural Development from 2002 to 2004, service on the Appalachian Regional Commission in 2004, and service on the White House Conference on Small Business in

1995. Every one of these positions has given him insight into the types of problems

the TVA faces.

In short, Mike’s qualifications for this position are not a mystery to me at all.

Over the decades of his professional career, and of our friendship, he has proven

to me his honesty, intelligence, creativity, energy and organizational skills. What is
35

a mystery to me is why he is interested in this position. Taming the wild beast that

is the TVA will surely be the hardest professional challenge he has ever faced.

Quite frankly, the TVA is broken. Created to solve the problems of a long-ago era,

it has failed to even begin to grapple with the problems of today. The Nation’s largest public power company is currently $26 billion in debt.

The TVA is failing to provide its Kentucky customers with power at a fair, competitive price. TVA’s rates in Kentucky are 30 percent higher than other power providers in the Commonwealth, costing Kentuckians who are forced to use TVA $100

million more per year than they would pay if they could use other providers.

Rather than providing relief for these Kentuckians, TVA raised its rates by 71⁄2

percent last October—one of the largest rate hikes in the bureaucracy’s 73-year history. And now they are considering even greater rate increases. Even more outrageous, while TVA is sticking these rate hikes to their customers, they celebrated

their record of financial mismanagement by awarding over $60 million in bonuses

last year. Clearly, this is an entity in need of new management.

TVA has shown contempt for its customers by refusing, despite contracts they

signed in 1997, to allow them the right to purchase power from more affordable providers. They refuse to allow transmission of this power along their power lines—

thus holding many Kentucky communities hostage, and costing Kentucky families

trapped inside the TVA fence needless extra money on their monthly bills.

Despite his assurances for over a year that this flouting of a contract signed in

good faith would be stopped, the current chairman of the TVA Board has yet to

make an honest effort to fix this problem.

TVA has been completely unresponsive to the concerns of its Kentucky customers.

As a new Board member, Mike Duncan’s Herculean task will be to turn around the

TVA’s legacy of mismanagement, fraud, and feeble responsiveness. TVA must

change.

Mike’s confirmation can be the first step. He has the knowledge, the energy, the

talent, and the patience the challenge requires. In fact, Mike likes challenges. Anyone who would take this assignment has to. I am convinced that Mike is the best

person to take the giant, stale, bureaucratic lemon that is the TVA and begin to

turn it into sweet lemonade.

I appreciate the committee’s expeditious handling of Mike’s nomination, and I look

forward very much to his confirmation. I hope this committee will see Mike as

TVA’s best hope for becoming a responsible, stable power supplier in the Valley.

Thank you for allowing me to testify on his behalf.

STATEMENT OF TERRENCE L. BRACY, NOMINATED TO BE A MEMBER OF THE BOARD

OF TRUSTEES OF THE MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE IN NATIONAL ENVIRONMENTAL POLICY FOUNDATION

Mr. Chairman and members of the committee, thank you for this hearing and for

all you have done to support the activities of the Udall Foundation. Our role is to

educate and mediate, and to do so with the spirit of civility and integrity that

shaped the 30-year Congressional career of Mo Udall. I was proud to have him as

a friend and lucky to have him as a mentor. Everything we have attempted as a

Foundation was begun by asking a simple question: How would Mo Udall have approached this challenge?

Inspired by Mo’s creativity and good humor, the Foundation board has found its

way to unanimity in all of its decisions. As new challenges and assignments have

come our way, under Democratic and Republican Administrations, our trustees have

moved together to adopt policies and budgets which fulfilled our common responsibilities. Many of our trustees have given generously of their time and intellect, all

without compensation, to develop the institution you envisioned. I hope and believe

we have served you well.

Attached to my statement is a fact sheet, which lays out our record for the first

10 years. I will not repeat the details, but a few accomplishments are worthy of

note. The Udall Foundation has developed a family of scholarship, fellowship, and

internship programs which have become among the most popular on the campuses

of American universities. To date, 1107 academic awards have been made to students in all 50 States. In these scholars, we seek to identify and recruit the next

generations of environmental and Native American leaders and to teach them the

overarching values of civility, integrity and consensus.

In 1998, you approved legislation that challenged us to build within the Federal

Government a new agency to promote alternative dispute resolution of environmental conflicts. This was a logical response by Congress to relieve court dockets

crowded with expensive and complicated lawsuits that took years and millions of
36

dollars to resolve. I remember Chairman Chafee telling me at the time that he

didn’t know if this approach would work, but it was sure worth trying. The committee approved a public/private partnership under which the Foundation was directed to build a core staff at our headquarters in Tucson, but then reach out to

the private mediation community. Today we have a core staff of 24 at the U.S. Institute and more than 260 qualified private environmental mediators available for contract services or referrals in 46 States. This partnership has given our small agency

vast outreach and explains why we have been involved in hundreds of cases, ranging from the Everglades to the Hawaiian corral reefs. We are grateful that the reauthorization bill you approved in 2003 significantly increased our resources.

We were also charged by legislation authored in the Indian Affairs Committee to

build what is now known as the Native Nations Institute. Self-governance has

brought the tribes many benefits but also many challenges. Of course, most tribes

do not benefit from gaming revenues and are very poor. Often Native leaders have

lacked the governance training and skills needed to succeed, and we were asked to

take steps to fill that gap. NNI, as we call it, has over the last 5 years provided

executive training to more than 1,700 Native leaders from more than 340 tribes,

even as its youth programs, including the first-ever Native American congressional

internship program, is seeking to identify and educate the leaders of the next generation.

Looking ahead, we ask for your continued support. As a relatively small and new

institution within the Federal family, we have the ability to find the cracks in the

system and fill them with creative thinking. Some of that thinking has been ours,

and indeed some has been yours. We will continue to keep you and the committee

staff fully informed of our activities and, as in the past, we will seek additional resources from you only when they are absolutely needed.

As we celebrate our first 10 years of operation, the trustees and our elite staff

will be meeting for 4 days in April to lay plans for the decade ahead. Among the

items already identified is the growing deficit in Indian health care, the need to recruit a new generation of career civil servants in environmental agencies, and a reemphasis on one of Mo Udall’s favorite topics, ethics. As always, we are most interested in any new ideas that the committee may generate.

Mr. Chairman, I hope and believe that we are developing an institution of growing importance and influence whose actions would make this committee and Mo

Udall proud. I’ll be pleased to answer any questions.
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52

STATEMENT OF DENNIS BOTTORFF, NOMINATED TO BE A MEMBER OF THE BOARD OF

DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Mr. Chairman and members of the committee, I want to thank you for this opportunity to appear before you. It is indeed an honor for me to be considered by you

for an appointment to the Board of Directors of the Tennessee Valley Authority.

I also want to express my appreciation to President Bush for nominating me and

to my fellow Tennesseans, the Majority Leader, Senator Bill Frist and Senator

Lamar Alexander for their support and confidence.

I have spent most of my adult working life in the private sector. Thirty two years

of which have been as a commercial banker and the five years after my retirement

from banking as a venture capitalist.

My banking career also afforded me many opportunities for community service

through membership on numerous not-for-profit boards. But time constraints have

not allowed me to enter public service. That is changing and I was recently appointed to the inaugural chairmanship of an instrumentality of the State of Tennessee; the Tennessee Educational Lottery Corporation. I have found that position

both challenging and very rewarding. With the highly successful launch of the lottery, we have been able to fund scholarships for all of the qualifying high school

graduates; thereby, improving the affordability of and accessibility to higher education for Tennessee children.

I welcome the opportunity to become even more engaged in public service as a

member of the TVA Board of Directors.

In studying TVA’s basic mission, I am enthused about the impact fulfilling that

mission can have on the economic development and quality of life of the region.

These have been two areas of interest in my other positions of community and public service. Areas for which I have a great passion.

As I begin to understand the strategic challenges facing TVA, I recognize the importance that effectively transitioning from an operating board to a policy board will

have on addressing those challenges. I believe my experience as both an operating

executive and as a member of numerous boards; private, not-for-profit and quasipublic, will be helpful to the team as we successfully navigate the journey.

Mr. Chairman, members of the committee, and members of the Senate, I am willing to serve as a member of the TVA Board. If confirmed, I assure you I will do

so with energy, dedication and sound stewardship.

RESPONSES FROM DENNIS BOTTORFF TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. If I am confirmed, a major part of my responsibility will be to assure

that TVA is taking the steps necessary to provide an adequate supply of reliable,

low-cost, clean power for the people and businesses in the Tennessee Valley Region.

This will require careful and conservative assessments of which, among the alternative means of power supply, would be the more fiscally responsible for TVA to

pursue. The cost of capital and allocation of risk are significant issues in deciding

whether to add new capacity, and I commit to carefully review all aspects of these

issues if I were to consider adding power generating capacity in the future.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. I have not yet had the opportunity to learn exactly what processes TVA

currently uses to make these types of acquisition and investment decisions. If confirmed, I can assure you that I would become fully acquainted with those processes

and determine if any changes would be warranted. With regard to competition generally, I believe it can be a very important tool to help assure that low-cost decisions

are made, while still acquiring the type and quality of generation resources required

to maintain the reliability of the TVA power system.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I would be committed to carefully studying the costs and

efficiency of TVA’s operations and TVA’s load growth, cash flows, coverage ratios,

balance sheet strengths and sensitivities and other factors to assure that power
53

rates provide sufficient revenues and operating costs are at appropriate levels and

to define the appropriate debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards improving and maintaining efficiency and financial flexibility to enable TVA to make all necessary investments in

the power system, including those for pollution control, in a timely manner.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. Before offering unqualified support for any particular TVA program, I

would first like to have the opportunity, if confirmed, to learn more specifically

about that program and how it is operating. However, with respect to the Green

Power Switch program, I can say, from what I have publicly heard to date, that it

sounds like a worthwhile approach toward encouraging investment in renewable

generation in the Tennessee Valley Region through voluntary measures.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am not personally aware that such a disparity in TVA rate levels by

region exists. If confirmed, as part of my specific duty to establish TVA’s electric

power rates, I will examine TVA’s existing rate structure and rate-making process

in greater detail to make certain that TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I do not currently have enough information about the plans for, and

status of, TVA’s pollution control compliance efforts to offer an informed opinion or

make specific commitments concerning such efforts. I do recognize that environmental stewardship, along with low-cost power and technological innovation, is

among TVA’s important objectives and missions, and I also recognize that I have

an obligation to ensure that TVA complies with applicable laws, including environmental laws. If confirmed, I will have the opportunity learn more about TVA’s pollution control compliance actions and be in the position to assure that TVA is taking

the appropriate steps in this area.

RESPONSES FROM DENNIS BOTTORFF TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. It is my understanding that access to TVA transmission system service

is a very important issue for distributors of TVA power generally, as well as for

those located in Kentucky. Unfortunately, I have not had the opportunity to study

the details of this situation sufficiently to be able to commit to a particular resolution to the varying points of view on this issue at this time.

I can assure that, if confirmed to the TVA Board, I would be committed to

promptly devote my efforts to assure that TVA is seeking ways to address the interests of TVA’s distributor customers who wish to have transmission access in a manner that would both be fair to all power customers in TVA’s seven-state region and

keep TVA on a sound financial basis.
54

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. I believe in taking a conservative approach to debt levels. If confirmed,

I would be committed to carefully studying TVA’s cash flows, coverage ratios, balance sheet strengths and sensitivities and other factors to define the appropriate

debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards reaching financial flexibility. I recognize that managing

TVA’s debt in a fiscally conservative way is key to assuring TVA’s financial soundness in the future.

I recognize that there has been disappointment with TVA’s progress in meeting

the debt reduction goals that it set forth in 1997.

Unfortunately, it is not possible to change the past. But, I can commit that I

would oversee TVA’s financial progress—to better assure that TVA will be able to

provide reliable power at competitive rates, both now and into the future.

With regard to accounting procedures, if confirmed to the TVA Board, the Board

will be establishing an Audit Committee, which, among other things, will be focused

on overseeing TVA’s accounting policies to assure that they are appropriate and

transparent as to TVA’s true financial condition.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a State public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. I do not yet have sufficient information about the details of TVA’s ratemaking process and experience with it to form an opinion as to whether having an

outside entity regulate TVA would be better in terms of helping TVA fulfill its mission and objectives.

If I am confirmed to the TVA Board, it is clear that the TVA Act would place the

duty upon the Board to establish the electricity rates charged by TVA in keeping

with TVA’s overall mission and objectives, including the objective that power be sold

at rates that are as low as are feasible.

I can say without reservation that this duty would be one of the Board’s more

important ones—because TVA’s provision of reliable, low-cost power is a critical factor in enhancing the economic vitality and development of the Tennessee Valley Region.
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69

STATEMENT OF ROBERT DUNCAN, NOMINATED TO BE A MEMBER OF THE BOARD OF

DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Thank you Mr. Chairman. I appreciate the kind remarks from Senators McConnell and Bunning on my nomination. I also appreciate the support of members of

the Kentucky Congressional Delegation.

I thank President Bush for nominating me to the Tennessee Valley Authority

Board. I am honored he chose me for this challenging position.

I appreciate the help of the Committee on Environment and Public Works and the

TVA staff in preparing me for the confirmation hearings.

I thank my wife Joanne, son Rob, and daughter-in-law Valerie for their support

and assistance. I regret that they could not be present today.

Mr. Chairman and Senators, as a young boy growing up near the Tennessee-Kentucky border, I never imagined I would one day appear before a Senate committee

as a presidential nominee, and being here today is a highlight of my life. I was born

in a clinic served by the Tennessee Valley Authority, attended the first year of

school in a two-room building powered by TVA, and observed first hand during the

1950s and 1960s the difference TVA made in people’s lives. My father still lives in

Scott County, TN. Although I do not live in the part of Kentucky served by TVA,

I have a historic appreciation of its role in the region.

I have chosen to spend my life in rural Appalachia and I am fortunate to be involved with community and economic development at many levels. My background

enables me to appreciate the TVA’s primary mission of generating and transmitting

safe, reliable and affordable electricity while respecting the environment and promoting economic development.

My decades of experience as a community banker provide a unique perspective

in analyzing TVA’s operational and financial efficiencies. I am pleased to see TVA’s

emphasis on financial flexibility through debt reduction. All financial issues must

be viewed through the lens of changing competition. The electric-utility industry is

constantly restructuring and the TVA’s 158 power distributors customers and 61 directly served industries and Federal Agencies are constantly looking for lower cost

power.

Addressing the need to create clean and safe power is very important, and meeting clean air standards is essential. I applaud TVA’s continuing investment in modifications to its coal-fired plants. I am confident that TVA can be a leader in environmental stewardship.

As an attorney, I read the most recent amendment to the TVA Act mandating

sweeping change of the agency’s management. I embrace the enumerated duties of

the board and understand, if confirmed, that my obligation is to establish broad

goals, objectives and policies while developing long range plans. Arguably, our most

important decision is to hire a Chief Executive Officer with senior level experience

and hold him or her accountable.

To paraphrase President Bush, being considered for this position is not the ambition of a lifetime, but it is the opportunity of a lifetime. I promise, if confirmed, I

will make the most of the opportunity by balancing the needs of the country, the

Tennessee Valley’s residents and the communities in which they live.

I look forward to answering the committee’s questions today, and if confirmed, to

working with each of you to ensure the success of the Tennessee Valley Authority.

RESPONSES FROM ROBERT DUNCAN TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. I am pleased to see TVA’s emphasis on financial flexibility through debt

reduction. TVA is responsible for providing an adequate supply of reliable, low-cost,

clean power for the residents and businesses of the Tennessee Valley Region. If confirmed, I will consider growth in the region, cost of capital, alternative power

sources and competition when considering additional generating capacity.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. I have insufficient information on TVA’s competitive bidding process to

fully answer the question, but I generally believe competitive bidding leads to better
70

financial results. The process must provide for differences in quality and reliability

as well as price. It is imperative that the process be fair and transparent.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I am committed to implementing the new TVA statute.

The Board will establish broad goals, objectives, and policies while developing long

range plans. Arguably, our most important decision is to hire a Chief Executive Officer and hold him or her accountable. The Board will create committees, conduct

public hearings, establish electricity rates, and approve the annual budget. I applaud TVA’s continuing investment in modifications to its coal-fired plants. I am

confident that TVA can be a leader in environmental stewardship.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. Generally, I support TVA’s Green Power Switch program, but I lack

sufficient information to evaluate its operation. I encourage volunteer measures to

create investment in renewable generation.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am unaware of TVA charging higher electricity rates in some portions

of the service territory. I am aware that other power companies offer lower rates

to customers who border the TVA. If confirmed, I will examine the existing rate

structure and ratemaking process to ensure TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I recognize that environmental stewardship, along with low-cost power

production and technological innovation, is part of TVA’s objectives and missions.

I also recognize an obligation to ensure compliance with all laws including environmental statutes and regulations. I have insufficient information to specifically answer your question about TVA’s plans for plant controls and timetables. If confirmed, I pledge to learn more about TVA’s pollution control compliance and to direct and monitor future actions.

RESPONSES FROM ROBERT DUNCAN TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. If confirmed to the TVA Board I will work promptly and diligently to

offer a solution for the Kentucky distributors’ needs for transmission service. All financial issues must be viewed through the lens of changing competition. Access to

TVA’s transmission system is an important issue for all TVA customers. I will work

with other members of the Board to address the issue in a manner that is fair and

fiscally responsible.

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would
71

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. If confirmed I will work to ensure that TVA follows proper accounting

measurers and I will advocate responsible debt reduction. The newly constituted

TVA Board is required to create an audit committee that will focus on overseeing

TVA’s accounting policies to assure they are appropriate and transparent. I am

pleased to see TVA’s emphasis on financial flexibility through debt reduction. Although TVA did not meet its initial targets for debt reduction, I believe the new

Board will take a conservative approach to debt levels.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a state public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. I have insufficient information to advocate or oppose an outside entity

regulating TVA. The legislation establishing the TVA and recent amendments allow

the Board to establish electric rates and conduct public hearings. I am not familiar

with TVA’s current ratemaking process, but I will carefully examine the process in

light of your question. I believe the expanded board and delegation of authority to

a Chief Executive Officer will strengthen the ratemaking process.
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92

STATEMENT OF SUSAN RICHARDSON WILLIAMS, NOMINATED TO BE A MEMBER OF THE

BOARD OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Good morning. I am honored to be here today as one of President Bush’s nominees

to the Board of the Tennessee Valley Authority. I am very grateful to Tennessee’s

Senators, Majority Leader Bill Frist and Lamar Alexander and to my Congressman

John Duncan, Jr., for their support.

Mr. Chairman and members of the committee, I appreciate the opportunity to appear before you today. The woman you see here has been shaped and molded by

the Tennessee Valley Authority. I grew up in Savannah, TN, a small town in west

Tennessee on the banks of the Tennessee River. My father worked his entire life

for TVA, 45 years at retirement, most of it as a Senior Operator at Pickwick Dam

near Savannah. He was a shift worker who belonged to the International Brotherhood of Electrical Workers. He bought Series E savings bonds every month through

TVA so that my sister and I could attend college. I can only imagine what he would

think if he were here today to see his child nominated to serve on the TVA Board.

I am a daughter of the Tennessee Valley and would consider it an incredible honor

to serve on this Board.

Having this background and knowledge of TVA gives me a unique perspective on

the history and mission of the agency. I appreciate what TVA has done for the people of the Valley but I also recognize that there are challenges facing this new

Board. I can tell you that I will work hard to understand the challenges and make

determinations based on sound research and careful thought. I have served on the

University of Tennessee’s Board of Trustees for almost 11 years and have run a

State government agency overseeing over 40,000 employees. My 35-year career has

been in both the public and private arenas. Based on my work, my life’s experiences

and my knowledge of TVA, I believe I can make a valuable contribution to the

Board of the Tennessee Valley Authority if you choose to confirm me.

Thank you again for this opportunity and I look forward to answering any questions you may have for me.

RESPONSES FROM SUSAN RICHARDSON WILLIAMS TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. As a general rule, I support public/private partnerships if they make

sense for both entities. If I am confirmed, a major part of my responsibility will be

to assure that TVA is taking the steps necessary to provide an adequate supply of

reliable, low-cost, clean power for the people and businesses in the Tennessee Valley

Region. This will require careful and conservative assessments of which, among the

alternative means of power supply, would be the more fiscally responsible for TVA

to pursue. The cost of capital and allocation of risk are significant issues in deciding

whether to add new capacity, and I commit to carefully review all aspects of these

issues if I were to consider adding power generating capacity in the future.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. If confirmed, I will have the opportunity to learn exactly what processes

TVA currently uses to make these types of acquisition and investment decisions. I

can assure you that, after becoming fully acquainted with those processes, I would

assess whether any changes would be warranted. With regard to competition generally, I believe it can be a very important tool to help assure that low-cost decisions

are made, while still acquiring the type and quality of generation resources required

to maintain the reliability of the TVA power system.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I would be committed to carefully studying the costs and

efficiency of TVA’s operations and TVA’s load growth, cash flows, coverage ratios,

balance sheet strengths and sensitivities and other factors to assure that power

rates provide sufficient revenues and operating costs are at appropriate levels and

to define the appropriate debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards improving and maintaining effi-
93

ciency and financial flexibility to enable TVA to make all necessary investments in

the power system, including those for pollution control, in a timely manner.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. If confirmed, I look forward to the opportunity to learn more specifically

about the Green Power Switch program and how it is operating. I can say, from

what I have publicly heard to date, that it sounds like a worthwhile approach toward encouraging investment in renewable generation in the Tennessee Valley Region through voluntary measures.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am not personally aware that such a disparity in TVA rate levels by

region exists. If confirmed, as part of my specific duty to establish TVA’s electric

power rates, I will examine TVA’s existing rate structure and rate-making process

in greater detail to make certain that TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I do not currently have enough information about the plans for, and

status of, TVA’s pollution control compliance efforts to offer an informed opinion or

make specific commitments concerning such efforts. I do recognize that environmental stewardship, along with low-cost power and technological innovation, is

among TVA’s important objectives and missions, and I also recognize that I have

an obligation to ensure that TVA complies with applicable laws, including environmental laws. If confirmed, I will have the opportunity learn more about TVA’s pollution control compliance actions and be in the position to assure that TVA is taking

the appropriate steps in this area.

RESPONSES FROM SUSAN RICHARDSON WILLIAMS TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. It is my understanding that access to TVA transmission system service

is a very important issue for distributors of TVA power generally, as well as for

those located in Kentucky. Unfortunately, I have not yet had the opportunity to

study the details of this situation sufficiently to be able to commit to a particular

resolution to the varying points of view on this issue at this time.

I can assure that, if confirmed to the TVA Board, I will be committed to putting

this issue on my personal TVA study agenda promptly to assure that TVA is seeking ways to address the interests of TVA’s distributor customers who wish to have

transmission access in a manner that would both be fair to all power customers in

TVA’s seven-state region and keep TVA on a sound financial basis.

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that
94

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. I take a conservative approach to managing my own debt and I believe

TVA should take a conservative approach to its debt levels. If confirmed, I would

be committed to carefully studying TVA’s cash flows, coverage ratios, balance sheet

strengths and sensitivities and other factors to define the appropriate debt capacity

of TVA. I would then work diligently to assure that TVA makes continuous progress

towards reaching financial flexibility. I recognize that managing TVA’s debt in a fiscally conservative way is key to assuring TVA’s financial soundness in the future.

I recognize that there has been disappointment with TVA’s progress in meeting

the debt reduction goals that it set forth in 1997.

Unfortunately, it is not possible to change the past. But, I can commit that I

would oversee TVA’s financial progress—to better assure that TVA will be able to

provide reliable power at competitive rates, both now and into the future.

With regard to accounting procedures, if confirmed to the TVA Board, the Board

will be establishing an Audit Committee, which, among other things, will be focused

on overseeing TVA’s accounting policies to assure that they are appropriate and

transparent as to TVA’s true financial condition.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a state public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. If confirmed, I will have the opportunity to gain sufficient information

about the details of TVA’s ratemaking process and experience with it. With that information and experience, I would be in a better position to form an opinion about

whether having an outside entity regulate TVA would be better in terms of helping

TVA fulfill its mission and objectives.

It is clear that the TVA Act would place the duty upon the Board to establish

the electricity rates charged by TVA in keeping with TVA’s overall mission and objectives, including the objective that power be sold at rates that are as low as are

feasible.

I can say without reservation that this duty would be one of the Board’s more

important ones—because TVA’s provision of reliable, low-cost power is a critical factor in enhancing the economic vitality and development of the Tennessee Valley Region.
95
96
97
98
99
100
101
102
103
104
105
106

STATEMENT OF WILLIAM SANSOM, NOMINATED TO BE A MEMBER OF THE BOARD OF

DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

I’m honored to appear before you today and be considered as a member of this

new nine member TVA Board. I want to thank Senator Bill Frist and Senator

Lamar Alexander for their support and encouragement.

I appreciate President Bush recommending me as one of the new board members

to your committee and the Senate.

I think you have made a wise decision to change the board structure, and I’ll do

all I can to make that a right decision for you and the TVA customers. I’ll support

TVA’s missions including providing reliable, competitive and environmentally clean

electricity to the people in this region.

I’ve dredged sand and gravel and operated towboats on the Tennessee River, plus

done a lot of water skiing on the TVA lakes. I recognize the navigation requirements, the need to protect the environment, provide flood prevention, and effectively

use our water resources.

I look forward to helping set up this new board and providing leadership and strategic direction for TVA.

I think this board can be thoughtful, objective, inquiring and deliberate about

issues facing TVA today, and I look forward to working with you and your goals

for TVA and making intelligent business decisions.

Thank you for this opportunity to appear before you today and your consideration.

RESPONSES FROM WILLIAM SANSOM TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. If I am confirmed, a major part of my responsibility will be to assure

that TVA is taking the steps necessary to provide an adequate supply of reliable,

low-cost, clean power for the people and businesses in the Tennessee Valley Region.

This will require careful and conservative assessments of which, among the alternative means of power supply, would be the more fiscally responsible for TVA to

pursue. The cost of capital and allocation of risk are significant issues in deciding

whether to add new capacity, and I commit to carefully review all aspects of these

issues if I were to consider adding power generating capacity in the future.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. I have not yet had the opportunity to learn exactly what processes TVA

currently uses to make these types of acquisition and investment decisions. If confirmed, I can assure you that I would become fully acquainted with those processes

and determine if any changes would be warranted. With regard to competition generally, I believe it can be a very important tool to help assure that low-cost decisions

are made, while still acquiring the type and quality of generation resources required

to maintain the reliability of the TVA power system.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I would be committed to carefully studying the costs and

efficiency of TVA’s operations and TVA’s load growth, cash flows, coverage ratios,

balance sheet strengths and sensitivities and other factors to assure that power

rates provide sufficient revenues and operating costs are at appropriate levels and

to define the appropriate debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards improving and maintaining efficiency and financial flexibility to enable TVA to make all necessary investments in

the power system, including those for pollution control, in a timely manner.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. Before offering unqualified support for any particular TVA program, I

would first like to have the opportunity, if confirmed, to learn more specifically

about that program and how it is operating. However, with respect to the Green

Power Switch program, I can say, from what I have publicly heard to date, that it
107

sounds like a worthwhile approach toward encouraging investment in renewable

generation in the Tennessee Valley Region through voluntary measures.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am not personally aware that such a disparity in TVA rate levels by

region exists. If confirmed, as part of my specific duty to establish TVA’s electric

power rates, I will examine TVA’s existing rate structure and rate-making process

in greater detail to make certain that TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I do not currently have enough information about the plans for, and

status of, TVA’s pollution control compliance efforts to offer an informed opinion or

make specific commitments concerning such efforts. I do recognize that environmental stewardship, along with low-cost power and technological innovation, is

among TVA’s important objectives and missions, and I also recognize that I have

an obligation to ensure that TVA complies with applicable laws, including environmental laws. If confirmed, I will have the opportunity learn more about TVA’s pollution control compliance actions and be in the position to assure that TVA is taking

the appropriate steps in this area.

RESPONSES FROM WILLIAM SANSOM TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. It is my understanding that access to TVA transmission system service

is a very important issue for distributors of TVA power generally, as well as for

those located in Kentucky. Unfortunately, I have not had the opportunity to study

the details of this situation sufficiently to be able to commit to a particular resolution to the varying points of view on this issue at this time.

I can assure that, if confirmed to the TVA Board, I would be committed to

promptly devote my efforts to assure that TVA is seeking ways to address the interests of TVA’s distributor customers who wish to have transmission access in a manner that would both be fair to all power customers in TVA’s seven-state region and

keep TVA on a sound financial basis.

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. I believe in taking a conservative approach to debt levels. If confirmed,

I would be committed to carefully studying TVA’s cash flows, coverage ratios, balance sheet strengths and sensitivities and other factors to define the appropriate

debt capacity of TVA. I would then work diligently to assure that TVA makes con-
108

tinuous progress towards reaching financial flexibility. I recognize that managing

TVA’s debt in a fiscally conservative way is key to assuring TVA’s financial soundness in the future.

I recognize that there has been disappointment with TVA’s progress in meeting

the debt reduction goals that it set forth in 1997.

Unfortunately, it is not possible to change the past. But, I can commit that I

would oversee TVA’s financial progress—to better assure that TVA will be able to

provide reliable power at competitive rates, both now and into the future.

With regard to accounting procedures, if confirmed to the TVA Board, the Board

will be establishing an Audit Committee, which, among other things, will be focused

on overseeing TVA’s accounting policies to assure that they are appropriate and

transparent as to TVA’s true financial condition.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a state public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. I do not yet have sufficient information about the details of TVA’s ratemaking process and experience with it to form an opinion as to whether having an

outside entity regulate TVA would be better in terms of helping TVA fulfill its mission and objectives.

If I am confirmed to the TVA Board, it is clear that the TVA Act would place the

duty upon the Board to establish the electricity rates charged by TVA in keeping

with TVA’s overall mission and objectives, including the objective that power be sold

at rates that are as low as are feasible.

I can say without reservation that this duty would be one of the Board’s more

important ones—because TVA’s provision of reliable, low-cost power is a critical factor in enhancing the economic vitality and development of the Tennessee Valley Region.
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126

STATEMENT OF HOWARD THRAILKILL, NOMINATED TO BE A MEMBER OF THE BOARD

OF DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Thank you, Mr. Chairman. It is a great privilege for me to appear before you and

the distinguished members of this committee, as you consider my nomination for the

Tennessee Valley Authority Board of Directors. In that regard, I also want to express my gratitude to Senator Richard Shelby, Senator Jeff Sessions and Congressman Bud Cramer who have encouraged me to come before you today. Finally, I

must also acknowledge my wife, Donna Thrailkill, who offers her support by her

presence at these proceedings.

Mr. Chairman, I deeply respect the heightened importance of this confirmation

hearing, the first to consider seating a restructured Board of Directors under broad

amendments to the TVA Act, as recently enacted by Congress. It is also the first

following passage of the Energy Policy Act of 2005, after so many years of debate.

These are fundamental changes in direction for TVA and the Nation. Therefore, I

am mindful of the formidable obligation and responsibility I must shoulder, if you

choose to confirm my nomination. If you do, you can rely upon my applying the full

measure of my ability, background and experience to this endeavor.

In my view, Congress has given TVA an historic opportunity to renew and to

transform itself. You have pointed the way to a new horizon. The newly established

Board will now bear the responsibility for implementation of your vision, and you

should hold it accountable for doing so.

Having met individually with each of the other current nominees and the two incumbent Board members, I commend them to you and look forward to serving with

them. Upon your confirmation, I am convinced this Board has the breadth of knowledge and experience to move aggressively and begin meeting your expectations.

With their business acumen and maturity, I am confident they will move in a financially and socially responsible fashion as well.

Working together, I believe this Board can guide TVA to achievement of new

standards of excellence in the delivery of clean, low-cost, reliable electric power to

its customers. TVA should accept nothing less than becoming ‘‘best of class’’ in this

Nation.

As TVA crafts its future along the path you have charted, it is clear to me that

the innovative application of technology will be critical to TVA’s success. As a practical matter, no other approach will power continued economic development in the

Tennessee Valley, while meeting ever tighter environmental standards for air and

water quality. Technology is also fundamental to TVA’s delivering electric service

to its customers at lowest cost and highest reliability. There are simply no practical

alternatives that don’t introduce downside consequences that are unacceptable in

my view.

In this environment, I believe my background as an engineer, technologist and

business executive could provide important balance and perspective that will augment the backgrounds of other Board members. Throughout my career in private

enterprise, organizations I have headed were built around large, complex engineering teams and programs not unlike those TVA must undertake to succeed. There

is little doubt that the new Board will be called upon to endorse many complex, costly programs whose success hinges upon correct assessment of technical and financial

alternatives. For more than three decades, that has been the nature of my work,

and I offer that experience and expertise to this effort without reservation.

In closing I would like to affirm my love for the Tennessee Valley and the natural

beauty of its rivers, lakes, hills and valleys. Even though we moved to Alabama

from a home near the Columbia River basin in Oregon, my wife and I have found

the river basin managed by TVA to be no less stunning and fragile. On many occasions while traveling around the area, I have pulled over and marveled at the incredible vistas we have in our valley. If confirmed, I pledge my strong support for

TVA’s continued program of environmental stewardship and responsible management of the Tennessee River system and resources.

Mr. Chairman, I am energized by the prospect of service as a member TVA’s

Board of Directors during this critical period when energy service providers are

moving in new directions. I firmly believe that the new TVA can be and will be worthy of its heritage.

Thank you for your consideration.
127

RESPONSES FROM HOWARD THRAILKILL TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. If I am confirmed, a major part of my responsibility will be to assure

that TVA is taking the steps necessary to provide an adequate supply of reliable,

low-cost, clean power for the people and businesses in the Tennessee Valley Region.

This will require careful and conservative assessments of which, among the alternative means of power supply, would be the more fiscally responsible for TVA to

pursue. The cost of capital and allocation of risk are significant issues in deciding

whether to add new capacity, and I commit to carefully review all aspects of these

issues if I were to consider adding power generating capacity in the future.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. I have not yet had the opportunity to learn exactly what processes TVA

currently uses to make these types of acquisition and investment decisions. If confirmed, I can assure you that I would become fully acquainted with those processes

and determine if any changes would be warranted. With regard to competition generally, I believe it can be a very important tool to help assure that low-cost decisions

are made, while still acquiring the type and quality of generation resources required

to maintain the reliability of the TVA power system.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I would be committed to carefully studying the costs and

efficiency of TVA’s operations and TVA’s load growth, cash flows, coverage ratios,

balance sheet strengths and sensitivities and other factors to assure that power

rates provide sufficient revenues and operating costs are at appropriate levels and

to define the appropriate debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards improving and maintaining efficiency and financial flexibility to enable TVA to make all necessary investments in

the power system, including those for pollution control, in a timely manner.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. Before offering unqualified support for any particular TVA program, I

would first like to have the opportunity, if confirmed, to learn more specifically

about that program and how it is operating. However, with respect to the Green

Power Switch program, I can say, from what I have publicly heard to date, that it

sounds like a worthwhile approach toward encouraging investment in renewable

generation in the Tennessee Valley Region through voluntary measures.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am not personally aware that such a disparity in TVA rate levels by

region exists. If confirmed, as part of my specific duty to establish TVA’s electric

power rates, I will examine TVA’s existing rate structure and rate-making process

in greater detail to make certain that TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I do not currently have enough information about the plans for, and

status of, TVA’s pollution control compliance efforts to offer an informed opinion or

make specific commitments concerning such efforts. I do recognize that environmental stewardship, along with low-cost power and technological innovation, is

among TVA’s important objectives and missions, and I also recognize that I have
128

an obligation to ensure that TVA complies with applicable laws, including environmental laws. If confirmed, I will have the opportunity learn more about TVA’s pollution control compliance actions and be in the position to assure that TVA is taking

the appropriate steps in this area.

RESPONSES FROM HOWARD THRAILKILL TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. It is my understanding that access to TVA transmission system service

is a very important issue for distributors of TVA power generally, as well as for

those located in Kentucky. Unfortunately, I have not had the opportunity to study

the details of this situation sufficiently to be able to commit to a particular resolution to the varying points of view on this issue at this time.

I can assure that, if confirmed to the TVA Board, I would be committed to

promptly devote my efforts to assure that TVA is seeking ways to address the interests of TVA’s distributor customers who wish to have transmission access in a manner that would both be fair to all power customers in TVA’s seven-state region and

keep TVA on a sound financial basis.

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. I believe in taking a conservative approach to debt levels. If confirmed,

I would be committed to carefully studying TVA’s cash flows, coverage ratios, balance sheet strengths and sensitivities and other factors to define the appropriate

debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards reaching financial flexibility. I recognize that managing

TVA’s debt in a fiscally conservative way is key to assuring TVA’s financial soundness in the future.

I recognize that there has been disappointment with TVA’s progress in meeting

the debt reduction goals that it set forth in 1997.

Unfortunately, it is not possible to change the past. But, I can commit that I

would oversee TVA’s financial progress—to better assure that TVA will be able to

provide reliable power at competitive rates, both now and into the future.

With regard to accounting procedures, if confirmed to the TVA Board, the Board

will be establishing an Audit Committee, which, among other things, will be focused

on overseeing TVA’s accounting policies to assure that they are appropriate and

transparent as to TVA’s true financial condition.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a State public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. I do not yet have sufficient information about the details of TVA’s ratemaking process and experience with it to form an opinion as to whether having an

outside entity regulate TVA would be better in terms of helping TVA fulfill its mission and objectives.

If I am confirmed to the TVA Board, it is clear that the TVA Act would place the

duty upon the Board to establish the electricity rates charged by TVA in keeping
129

with TVA’s overall mission and objectives, including the objective that power be sold

at rates that are as low as are feasible.

I can say without reservation that this duty would be one of the Board’s more

important ones—because TVA’s provision of reliable, low-cost power is a critical factor in enhancing the economic vitality and development of the Tennessee Valley Region.
130
131
132
133
134
135
136
137
138

STATEMENT OF DONALD DEPRIEST, NOMINATED TO BE A MEMBER OF THE BOARD OF

DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY

Mr. Chairman, members of the committee. There is probably no greater honor

than to be asked by the President to serve the Nation, and as President Bush’s

nominee as a Director of the Tennessee Valley Authority, I am thankful for the opportunity to serve. Mississippi’s two marvelous Senators, Thad Cochran and Trent

Lott, have been unwavering in their support and encouragement, and I will be forever grateful to them. Congressmen Wicker and Pickering, as well as Governor

Barbour, have offered their assistance and advice. It is generous of you, Mr. Chairman, and members of the committee, to take the time to so promptly address our

nominations. I appreciate your kindness.

TVA has been important to me for my entire life. I can remember the day at age

6, electricity was first turned on at our house in the country near Dyer, TN. The

establishment of this great institution transformed an impoverished region into a

flourishing and wonderful part of the world. I will do my part, if confirmed, to see

that the Tennessee Valley Authority continues its mission in an ever improving

way.

I have lived in Columbus, MS, since 1963. I moved there to open an industry that

continues to operate today, and which depends on reliable, low-cost electric power

provided by Columbus Light & Water, a TVA distributor. I came to Mississippi from

Tennessee, where I am the seventh generation of my family in the State. Gibson

County Electric Membership Co-Operative, now Gibson Electric, was formed and

chaired by my uncle, Charles Garner, for 40 years. So I have a legacy to fulfill in

continuing and improving TVA’s service.

The Tennessee Valley Authority is the largest power generator in the Nation, and

must continue to produce large quantities of low-cost, reliable and clean power. It

is a mammoth enterprise that requires prudent management and financial integrity.

It has a unique capacity to control its own rates and funding sources, and operates

primarily like a private enterprise with a public purpose. In expanding the Board

of Directors and creating the Chief Executive Officer, Congress has restructured

TVA to meet the challenges of a growing organization in the power generation industry. We should keep in mind that TVA is not just an enterprise, but a leader

in electric power, and it carries with its power generation mission the important

task of aiding economic development in the TVA area. This arm of TVA is critical

to America’s future. This role means that TVA must accommodate shifting trends

for this industry, promote employment of citizens within its area, advance technological development, secure energy sources, and protect national security.

My experience in building and developing industries and new technologies should

contribute to the decision to advance the objectives of TVA. I was a board member

and Chairman of one of TVA’s distributors in Columbus, MS, during the turbulent

oil and energy crisis of the 1970s. This experience should be helpful in my role on

the Board of TVA.

I must note that the other nominees to the newly expanded board of TVA are

quality, thoughtful people of diversified skills that will bring depth of experience

and a variety of viewpoints to the organization, which is vital to making decisions

that affect thousands of employees, 158 distributors, and millions of users/customers. The board must deal with issues and opportunities associated with types

of power generation and energy sources, financial planning, budgeting and execution

regarding these issues on a giant scale. Management of appropriate debt levels commensurate with making appropriate power rates and capital expenditures, human

resources, environmental matters, land use, legal challenges, service areas and distributor relations, finding a world-class CEO, corporate governance, megasites for

industrial/economic development, and probably countless other challenges must be

effectively solved. This requires the skillsets and experience gained in dealing with

large and diverse organizations, and the new board must possess these skills and

be prepared to act with precision. If confirmed, I will bring my own experience to

bear in having formed, managed, and operated several companies of national and

international scope in telecommunications, manufacturing, and broadcasting. These

include having established one of the two original cellular carriers in all the TVA

region’s major markets.

To summarize my thoughts about TVA’s future and its challenges:

1. TVA must continue to produce large amounts of low cost, reliable, and clean

power while positioning itself as a technology leader in these areas. TVA should

maintain excess emergency generating capacity, and must have back-up plans at all

times to insure there is never a service interruption.

2. The Tennessee Valley Authority is in a unique position with its form of organization/governance, rate making, and power generating to have the highest credit
139

rating. TVA must keep this rating by being consistent with proper debt levels and

capital expense.

3. TVA should maintain the best of relations with all of its people (publics). This

includes distributors, industrial customers, trade groups, all levels of government,

economic development organizations, employees/labor unions, and others.

4. The organization must take the lead in encouraging energy conservation at all

levels.

5. TVA must maintain/take the lead in nuclear power generation, coal gasification

(including work on carbon recapture) and other technologies that produce clean

power.

6. The management of the Tennessee River system must be constantly revisited

and strategic plans kept in place and implemented for this valuable economic and

recreational resource.

7. The highest standards of corporate governance should consistently be maintained, and the professional standards of the organization, from top to bottom, must

set the mark for confidence for public or private companies.

8. The board must always keep in mind that the people own this organization,

and that the public good prevails. The conduct of the business of TVA must be performed with this as the guiding principle.

Mr. Chairman, I thank you and all members of this committee for your work and

kind consideration in this confirmation process, and, if I am confirmed, I pledge to

fulfill the duties of this board position in a vigorous and energetic way, always keeping first in my mind the needs of TVA’s owners.

RESPONSES FROM DONALD DEPRIEST TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. Do you think that TVA, which has more than $24 billion in debt,

should take on additional debt to finance new powerplants when private industry

is willing to accept the financial risk of constructing new plants?

Response. If I am confirmed, a major part of my responsibility will be to assure

that TVA is taking the steps necessary to provide an adequate supply of reliable,

low-cost, clean power for the people and businesses in the Tennessee Valley Region.

This will require careful and conservative assessments of which, among the alternative means of power supply, would be the more fiscally responsible for TVA to

pursue. The cost of capital and allocation of risk are significant issues in deciding

whether to add new capacity, and I commit to carefully review all aspects of these

issues if I were to consider adding power generating capacity in the future.

Question 2. Do you feel that TVA should institute some kind of competitive bidding for new projects to ensure that the taxpayers of the Tennessee Valley region

are paying the lowest possible price for their power, and that new generation is constructed in a cost-effective manner?

Response. I have not yet had the opportunity to learn exactly what processes TVA

currently uses to make these types of acquisition and investment decisions. If confirmed, I can assure you that I would become fully acquainted with those processes

and determine if any changes would be warranted. With regard to competition generally, I believe it can be a very important tool to help assure that low-cost decisions

are made, while still acquiring the type and quality of generation resources required

to maintain the reliability of the TVA power system.

Question 3. What will you do to ensure that TVA is being operated as a very efficient business so that financial resources are available to continue its investments

in state-of-the-art air pollution control technology?

Response. If confirmed, I would be committed to carefully studying the costs and

efficiency of TVA’s operations and TVA’s load growth, cash flows, coverage ratios,

balance sheet strengths and sensitivities and other factors to assure that power

rates provide sufficient revenues and operating costs are at appropriate levels and

to define the appropriate debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards improving and maintaining efficiency and financial flexibility to enable TVA to make all necessary investments in

the power system, including those for pollution control, in a timely manner.

Question 4. Do you support TVA’s Green Power Switch program, which allows

families and companies to voluntarily accept a small surcharge on their monthly bill

in order to purchase blocks of electricity generated from renewable sources?

Response. Before offering unqualified support for any particular TVA program, I

would first like to have the opportunity, if confirmed, to learn more specifically

about that program and how it is operating. However, with respect to the Green
140

Power Switch program, I can say, from what I have publicly heard to date, that it

sounds like a worthwhile approach toward encouraging investment in renewable

generation in the Tennessee Valley Region through voluntary measures.

Question 5. TVA is an $8 billion entity. TVA charges higher electricity rates in

some portions of the service territory. An uneven playing field makes increased energy costs even more painful. Would you, as a member of the TVA Board, seek to

make uniform TVA customers’ rates?

Response. I am not personally aware that such a disparity in TVA rate levels by

region exists. If confirmed, as part of my specific duty to establish TVA’s electric

power rates, I will examine TVA’s existing rate structure and rate-making process

in greater detail to make certain that TVA’s rates are fair.

Question 6. The TVA currently has 11 coal-fired powerplants in its system. Of

these 11, 5 plants are currently without any modern pollution controls at all. Many

emitting units within the TVA system remain uncontrolled today and EPA predicts

that even with its latest rules, nearly 50 units in the TVA system will not have

scrubbers by 2015. These powerplants are large sources of emissions emitting millions of pounds of pollution into the air. What are TVA’s specific plans for installing

controls on these powerplants? Will you commit to controlling all of these plants

within a specific timeframe?

Response. I do not currently have enough information about the plans for, and

status of, TVA’s pollution control compliance efforts to offer an informed opinion or

make specific commitments concerning such efforts. I do recognize that environmental stewardship, along with low-cost power and technological innovation, is

among TVA’s important objectives and missions, and I also recognize that I have

an obligation to ensure that TVA complies with applicable laws, including environmental laws. If confirmed, I will have the opportunity learn more about TVA’s pollution control compliance actions and be in the position to assure that TVA is taking

the appropriate steps in this area.

RESPONSES FROM DONALD DEPRIEST TO ADDITIONAL QUESTIONS FROM

SENATOR BUNNING

Question 1. Kentucky TVA customers pay more for power than Kentucky customers who use other utilities. Because of this, many Kentucky TVA utilities have

elected to exercise the rights they have under their contracts with TVA and leave

the system in order to secure cheaper power from other suppliers for their customers. Senator Bunning, along with Senator McConnell, introduced legislation last

year to provide FERC authority to require TVA to provide transmission line access

to these Kentucky utilities. They have been working with TVA on this issue for over

a year now. TVA has repeatedly said it would work with Senators Bunning and

McConnell and so far they have not provided a proposal to the satisfaction of the

Senators to resolve this critical issue for the Kentucky distributors. If you are confirmed to the TVA Board, will you pledge to work promptly and diligently to craft

a resolution on the Kentucky distributor’s need for transmission service from TVA?

Response. It is my understanding that access to TVA transmission system service

is a very important issue for distributors of TVA power generally, as well as for

those located in Kentucky. Unfortunately, I have not had the opportunity to study

the details of this situation sufficiently to be able to commit to a particular resolution to the varying points of view on this issue at this time.

I can assure that, if confirmed to the TVA Board, I would be committed to

promptly devote my efforts to assure that TVA is seeking ways to address the interests of TVA’s distributor customers who wish to have transmission access in a manner that would both be fair to all power customers in TVA’s seven-state region and

keep TVA on a sound financial basis.

Question 2. TVA’s debt now stands at over $25 billion. One of the main reasons

Senator Bunning supported expanding the TVA Board was my hope that it would

help TVA get its accounting books and finances in order. TVA said 10 years ago it

would cut its debt in half by 2007, but it hasn’t made a lot of progress towards that

goal. The President’s Fiscal Year 2007 Budget states that TVA will reduce its debt

by 30 percent by 2016. So basically, a decade after its first target date TVA will

achieve only 60 percent of its initial debt reduction target. If you are confirmed to

the TVA Board, will you work to ensure that TVA follows proper accounting measures and significantly reduces its debt?

Response. I believe in taking a conservative approach to debt levels. If confirmed,

I would be committed to carefully studying TVA’s cash flows, coverage ratios, balance sheet strengths and sensitivities and other factors to define the appropriate
141

debt capacity of TVA. I would then work diligently to assure that TVA makes continuous progress towards reaching financial flexibility. I recognize that managing

TVA’s debt in a fiscally conservative way is key to assuring TVA’s financial soundness in the future.

I recognize that there has been disappointment with TVA’s progress in meeting

the debt reduction goals that it set forth in 1997.

Unfortunately, it is not possible to change the past. But, I can commit that I

would oversee TVA’s financial progress—to better assure that TVA will be able to

provide reliable power at competitive rates, both now and into the future.

With regard to accounting procedures, if confirmed to the TVA Board, the Board

will be establishing an Audit Committee, which, among other things, will be focused

on overseeing TVA’s accounting policies to assure that they are appropriate and

transparent as to TVA’s true financial condition.

Question 3. TVA has announced it plans to increase rates in the near future. This

rate increase comes after a 7.4 percent increase just 4 months ago. While most utilities have some form of outside oversight, such as a state public service commission

and FERC, TVA does not. Are you opposed to an outside entity regulating TVA?

Response. I do not yet have sufficient information about the details of TVA’s ratemaking process and experience with it to form an opinion as to whether having an

outside entity regulate TVA would be better in terms of helping TVA fulfill its mission and objectives.

If I am confirmed to the TVA Board, it is clear that the TVA Act would place the

duty upon the Board to establish the electricity rates charged by TVA in keeping

with TVA’s overall mission and objectives, including the objective that power be sold

at rates that are as low as are feasible.

I can say without reservation that this duty would be one of the Board’s more

important ones—because TVA’s provision of reliable, low-cost power is a critical factor in enhancing the economic vitality and development of the Tennessee Valley Region.
142
143
144
145
146
147
148
149
150
151
152
153

Æ