1.011 Project Evaluation Spring Term 2003Tom Kilpatrick Page 1THE NICKAJACK DAM$74 million for a lifetime of cheap power, flood control, and recreationWhat is it?• Tennessee River dam built in mid-1960’s • Jointly funded by Federal appropriations and corporate bonds• Upgraded old Hales Bar Dam, providing cheap electrical power, flood control, and recreational space• Overseen by TVAWhat is the TVA?• Federal agency created in 1933• Jurisdiction in Tennessee River Basin• Goals included reducing flood damage, providing cheap electricity• Not without controversyDivision of costs• In 1963 TVA Board of Directors requested proposal to build new dam on Nickajacksite• Bureau of the Budget stipulated that costs of power facilities be financed through bonds and power revenuesDivision of costs, cont.• Initially, 12% expected $70 million costs to be attributed to power facilities• Final costs topped $74 million, with 38% attributed to power facilitiesTVA power generation• Most controversial aspect of TVA because private power companies suffered• TVA basically sole provider in region, with more than 50 dams• Among lowest rates in U.S., 1¼¢ per kwhin 1970 (national average > 2¢ per kwh)• In 1959, ordered to pay back $1 billion plus dividends1.011 Project Evaluation Spring Term 2003Tom Kilpatrick Page 2Power related cash flows-2000000-100000001000000200000030000004000000500000060000007000000800000090000001 10192837465564738291100109118monthcash flowNon-power cash flows-3000000-2500000-2000000-1500000-1000000-50000005000001 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46monthcash flowReferences• Office of Engineering Design and Construction, Tennessee Valley Authority. The NickajackProject. Knoxville: Tennessee Valley Authority, 1970.• "Tennessee Valley Authority.” EncyclopædiaBritannica. 2003. Encyclopædia Britannica Online.04 May, 2003 http://www.search.eb.com/. • “Tennessee Valley Authority.” 4 May 2003.
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