Just as the Tennessee Valley Authority is looking to borrow lots of money this year, the cost of doing that is going up. It’s a reaction to the suggestion that TVA should be privatized.
TVA carries $25 billion in debt, which is why the Obama Administration is considering putting it in private hands. That announcement last month sent the bond market into an uproar. The value of TVA’s bonds dropped sharply. Traders worry it has too much debt to be viable as a private company.
CEO Bill Johnson was asked about bond prices today, in the very last question of a half-hour earnings call. “The impact of all this will become apparent later in the year because we do have a significant amount of refinancing to do by the end of the fiscal year,” Johnson said.
TVA is looking to spend billions more over the next decade, as it shuts down more than a dozen coal-fired generators, brings a long-delayed nuclear plant online, and upgrades its existing nuclear reactors. In the meantime, Congress has imposed a $30 billion limit.