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The Tennessee Valley Authority and Financial Disclosure


Location: Washington, DC


The hearing will come to order.
This morning, the Committee meets to hold a hearing with respect to the Tennessee Valley Authority and the financial disclosures the Authority makes for the benefit of bondholders and
potential investors. During the Committee's markup of the accounting and investor
protection legislation, Senator Bunning offered a proposal to make the TVA subject to the Securities Act and the Exchange Act. At the time, and since we were really focusing in a different direction, I indicated to Senator Bunning that I would be happy to hold a hearing on this issue. Therefore, we did not address it in the course of that markup. Other Members of the Committee have also expressed an interest in this issue, including Senator Miller, and others.
The TVA, of course, is a Federal corporation created by Congress in 1933, pursuant to the Tennessee Valley Authority Act. Today, TVA is the Nation's largest public power company and has operating revenues of over $7 billion. Its power service area covers 80,000 square miles in the southeastern United States, including almost all of Tennessee and parts of Kentucky, Georgia, Alabama, Mississippi, North Carolina, and Virginia. I hope I have them all.

Ms. HARRIS. Yes, you do.

Chairman SARBANES. Unlike public corporations, the TVA is owned entirely by the U.S. Government. In other words, it has no public shareholders. It is governed by a three-member Board of Directors, each of whom is appointed by the President and confirmed by the Senate. TVA funds itself by selling electricity to customers, as well as by selling bonds and raising capital through other non-equity financing. It has approximately $25 billion of debt outstanding and securities are held by over 200,000 individuals and institutions. The TVA published annual and quarterly reports, information statements, offering circulars, of course, press releases, and other
data for the benefit of investors. Its financial statements are certified by a major accounting firm and it is, of course, subject to the oversight of the Congress, the Comptroller General, and an internal Inspector General.

TVA is not required, however, by Federal law to make specific
disclosures for investors or file prospectuses or periodic reports
with the Securities and Exchange Commission pursuant to the Se-
curities Act of 1933 or the Securities Exchange Act of 1934.

The Committee looks forward this morning to hearing testimony
about the extent of the disclosures that TVA provides for the ben-
efit of investors, to look at the question of whether TVA should pro-
vide additional disclosures, and the further question of the pros
and cons of requiring by Federal law that the TVA should provide
specific disclosures, such as those that would be required if they
were subject to the Securities Act of 1933 and the Securities Act
of 1934.

We have a number of, we think, distinguished witnesses with us
this morning. It is our intention to proceed with two panels.

The first panel will be Ms. Skila Harris, a Member of the TVA
Board of Directors. She was confirmed by the Senate in November
of 1999, for a term that extends to May of 2008. Previously, Ms.
Harris worked at private engineering and management consulting
firms, held positions with the U.S. Synthetic Fuels Corporation and
the U.S. Department of Energy. She serves on the boards of the
Knoxville Area Chamber Partnership and the East Tennessee

I will defer introducing the second panel until they come to the
table, but our other witness on this panel is Alan Beller, Director
of the Division of Corporate Finance of the SEC. Mr. Beller has in-
creased the frequency of the Division's review of disclosure filings,
implemented regulatory initiatives that improve the filings of pub-
lic companies. Of course, the SEC is very much in the spotlight
nowadays, including, amongst the other Divisions, the one that Mr.
Beller directs. Mr. Beller is an expert on corporate and securities
law and previously was a partner of the law firm of Clary, Gottlieb,
Steen, and Hamilton.

We had invited the Office of Management and Budget to testify.
But they apparently found themselves unable to send a witness, so
we will not hear directly from the OMB this morning.
Before I turn to the witnesses, I will yield to my colleagues.
Senator Bunning.


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