October
9, 2007
Mr.
Michael Moran
Branch
Chief
Division
of Corporation Finance
Mail
Stop
3561
Securities
and Exchange Commission
100
F
Street, N.E.
Washington,
DC 20549
Re: Tennessee
Valley Authority
Item
4.01 Form
8-K
Filed
October 2,
2007
File
No. 0-52313
Dear
Mr.
Moran:
This
letter sets forth the responses of the Tennessee Valley Authority (TVA) to
the
comments set forth in your letter dated October 2, 2007, in connection with
the
Item 4.01 Form 8-K filed by TVA with the Securities and Exchange Commission
on
October 2, 2007. For ease of reference, we have set forth each
comment in the Staff’s letter followed by TVA’s response.
Comment
1.
It
appears the circumstances you describe represent a future dismissal of your
independent accountants. Please note that you are required to file an
amended Form 8-K when PricewaterhouseCoopers LLP has completed all audit
related
work with respect to their engagement. We would expect you to
disclose the date they completed all audit work, and to be able to state,
if
true, that there were still no disagreements or reportable events through
this
date. The amendment should include another letter from
PricewaterhouseCoopers LLP confirming that they agree with the updated
disclosures, if true. Please acknowledge this obligation to file the
Form 8-K amendment.
Mr.
Michael Moran
Page
2
Response
to Comment 1.
TVA
understands the need to file an amended Form 8-K when PricewaterhouseCoopers
LLP
has completed all audit-related work with respect to its engagement with
TVA. The amended Form 8-K will disclose the date
PricewaterhouseCoopers LLP completed its audit work and will state, if true,
that there were still no disagreements or reportable events through this
date. The amendment will also include another letter from
PricewaterhouseCoopers LLP confirming that, if true, it agrees with the updated
disclosures.
Comment
2.
We
believe the dismissal of auditors and the engagement of new auditors are
two
separate events. You state that the Audit and Ethics Committee
approved the engagement of Ernst & Young; however, you do not specifically
state that they also approve the dismissal of PricewaterhouseCoopers
LLP. Please revise to do so. We would not object to this
revision being made in the amendment filed in response to comment 1 of this
letter, if management determines that to be appropriate.
Response
to Comment 2.
In
the
amended Form 8-K that TVA files in response to Comment 1, TVA will specifically
state that the Audit and Ethics Committee recommended that the Board of
Directors approve the dismissal of PricewaterhouseCoopers LLP as TVA’s
independent accountant and that the Board of Directors approved the dismissal
of
PricewaterhouseCoopers LLP as TVA’s independent accountant.
As
a
point of reference, TVA is a wholly-owned corporate agency and instrumentality
of the United States created by Congress. It exists and operates
pursuant to the Tennessee Valley Authority Act of 1933, as amended, 16
U.S.C. §§ 831-831ee (2000 & Supp. V 2005) (the TVA
Act). Section 2(g)(1)(M) of the TVA Act provides that the TVA
Board shall “engage the services of an external auditor for the
Corporation.” This provision conflicts with the auditor appointment
provision of section 10A(m)(2) of the Securities Exchange Act of 1934, which
states that “[t]he audit committee of each issuer . . . shall be directly
responsible for the appointment, compensation, and oversight of the work
of any
registered public accounting firm employed by that issuer. . .
.”
Mr.
Michael Moran
Page
3
Paula
Dubberly’s December 14, 2006 letter addressed this conflict in the two statutes
as follows:
Based
on
the facts presented and on your opinion that the there is a conflict between
specific requirements of the TVA Act and the Exchange Act, the Division of
Corporation Finance will not recommend enforcement action if, rather than
complying with Section 10A(m)(2) of the Exchange Act with regard to the
appointment of a registered public accounting firm, TVA complies with Section
2(g)(1)(M) of the TVA Act.
Based
on
this, TVA believes it is appropriate to respond to Comment 2 by stating in
the
amended Form 8-K that the Audit and Ethics Committee recommended that the
Board
of Directors approve the dismissal of PricewaterhouseCoopers LLP as TVA’s
independent accountant and that the Board of Directors approved the dismissal
of
PricewaterhouseCoopers LLP as TVA’s independent accountant.
In
connection with responding to your comments, TVA acknowledges that:
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•
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TVA
is responsible for the adequacy and accuracy of the disclosures
in the
Item 4.01 Form 8-K filed by TVA on October 2,
2007;
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•
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Staff
comments or changes to disclosure in response to Staff comments
do not
foreclose the Commission from taking any action with respect to
the Item
4.01 Form 8-K filed by TVA on October 2, 2007;
and
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•
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TVA
may not assert Staff comments as a defense in any proceeding initiated
by
the Commission or any person under the federal securities laws
of the
United States.
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We
appreciate your attention to this matter. If you have any questions
regarding this response, please contact me at (865) 632-2157, or Mike Wills,
Assistant General Counsel, Finance, at (865) 632-7778.
Sincerely,
/s/
Randy
Trusley
Randy
Trusley
Mr.
Michael Moran
Page
4
cc: Mr.
Michael A. Herman
PricewaterhouseCoopers
LLP
One
North Wacker
Chicago,
Illinois 60606
Ms.
Diane T. Wear
PricewaterhouseCoopers
LLP
Suite
280
2030
Falling Water Road
Knoxville,
Tennessee 37922