For nearly half a century, the Tennessee Valley Authority sought a better life for Appalachia by throwing electricity at the problem.

Providing lots of power at cheap rates called for dams on and around the Tennessee River, and 35 were built. Farms were flooded and lives were altered, and streams were rearranged as if they were hoses in a garden.

Power plants went up everywhere; the coal they burned was stripped from the mountains left bleeding behind. The black smoke meant progress, and pollution was ignored in an impowerished region the size of Britain. Nuclear power plant cooling towers symbolized the future.

But now the TVA is under new management. And, as board chairman S. David Freeman said the other day, the utility is not going to build any more dams: "No. None. Flatly."

Neither is it going to build all of the nuclear power plants that made it the nuclear industry's best customer, although it still will be the nation's largest nuclear operation with 10 units. Instead, there is a leavening water-coal-nuclear mix, more experimental power programs such as electric cars and fuel cells and a lot more counting on social costs.

The idea, Freeman said, is to get back to TVA's original mission: development. Cheap power was never meant to be more than a means to that end, but somehow it came to squeeze out all other goals. What is needed now, he said, is "quality growth."

This could all be rhetoric, as so often happened in TVA's past, but Freeman's friends and foes alike say it is not. He is moving his 52,000 employes onto a path of cleaner, safer energy and atonement for past sins. To do it, he is spending money and raising the power rates, however, and that alarms a lot of people here. Whether they like it or not, things have changed at the TVA.

There are a variety of experimental solar and coal-use programs, free home energy audits, low- or no-cost insulation loan programs. A controversial and expensive air pollution control program is being implemented, and there is a budding program to buy coal from small producers rather than conglomerates. A new safety program clamped onto the nuclear power plants will make TVA reactors the world's best, Freeman says. He has overhauled his staff to make sure the chiefs share his attitude.

Freeman, 54, admits he is an abrasive workaholic who frequently rubs the locals the wrong way. Named to the TVA board in 1977 with a mandate from President Carter to turn the place from "just another utility" into a showcase for conservation, Freeman became chairman in 1978. He now thinks that all electric utilities should see the world the way he does.

"If public utilities can't do things that are in the public interest, maybe we need a new animal to do them," he said in an interview.

"I'm not there yet, but I would have no hesitation in opening a national debate on the structure of the utility industry in a few years, if that's what seems necessary."

His environmentalist approach, however, has yet to convert everybody in the Tennessee River valley, let alone the nation.

The people here are still at 80 percent of the national income and many argue that the effect of Freeman's new ideas is simply to raise rates. His gung-ho style has irritated even some who agree with his goals, and they are waiting to see if the changes reach deeper into the valley than the rhetoric of the old TVA.

Freeman could even lose his job as chairman next year should Ronald Reagan become president. The term of board member Bob Clement expires and Reagan would be certain to name his new appointee chairman of the board.

Freeman's new approach can be startling. The 1979 annual report, for example, far from extolling corporate virtue, features an impoverished Martha Collins in a brave green coat.

She paid her electric bill with her Social Security check, the report relates, "and walked out to face the month of February with less than $30."

The report tells how TVA fought to put in a coal barge terminal at Melton Hill, Tenn., and lost. And it outlines the worries of anti-nuclear groups, somberly agreeing that "the utilities operating nuclear power plants [must] place safety and technical competence ahead of other considerations."

If this doesn't sound much like the average utility, it's because Freeman wants it that way. "We're not in bed with the utilities anymore. We're in good with the regulators," he said.

At the same time, he wants the utilities to follow his new example in the way they followed the old TVA by running contests to think up ways to consume electricity. TVA was the first to buy strip-mined coal in the 1940s, to build oversized nuclear and coal plants and transmission lines later on, and to offer bargain-basement industrial electricity rates to bring jobs into the region.

But TVA is unique in some crucial ways that set it apart from ordinary utilities.

Franklin D. Roosevelt set up TVA as the crown jewel of his New Deal in 1933 to be a model "for the nation to learn how to make the most out of its vast resources for the lasting benefit of the average man and woman." Go out and tackle poverty, he ordered, in Tennessee and parts of northern Georgia, Alabama and Mississippi, southern Kentucky and western Virginia and Carolina.

And TVA transformed the valley, bringing flood control and jobs as industry responded to the call of cheap power.

Where TVA behaved like a utility, others followed. Where it did not, they waited and watched, arguing the words of local journalist James Branscome that TVA was "America's first great flirt with socialism."

The peculiar structure of TVA, plus some historical accidents, has as much to do with Freeman's success in "getting hold of this battleship," as he puts it, as did his own considerable effort. Far from being bureaucratically immobile, TVA responds to its board like the precision-tooled instrument it is.

TVA may set its wholesale power rates without public hearings or explanations to any regulator, and there is no judical review. Its annual congressional appropriation -- $194.6 million this year -- was authorized at TVA's creation, and the board has full authority over its $5.2 billion power-production budget. There are few applicable federal rules over the letting of bids or contracts and minimal red tape in hiring and firing; TVA gets preferred rates for borrowing money and pays no state or federal taxes, only payments in lieu of taxes that never keep up with inflation.

"It's practically a full-time job making sure we get exemptions" from new federal laws in these areas, said TVA general counsel Herb Sanger.

Freeman was able to bring in new people, move others around or out and rejigger lines of authority and projects with a speed that would leave Washington reeling. "People complained when I first got here that things were so slow it took a month to hire someone, and I just laughed in their faces," said one former Washingtonian.

In the wake of last year's Three Mile Island nuclear accident in Pennsylvania, TVA set up a special Nuclear Safety Review staff that came up with 133 recommended changes for the Brown's Ferry plant and the seven others under construction. Three-quarters of the changes are either completed or on schedule, said staff chief Newt Culver. He added that most of them anticipated orders that were issued later by the Nuclear Regulatory Commission and will cost TVA $50 million for each two-unit plant.

Antinuclear forces are disappointed that Freeman did not dismantle TVA's nuclear program instead of cutting it from 17 planned reactors to "at least 10," to be finished by 1987. Freeman said his conservationist image was overblown in advance of his arrival.

"I didn't change; the facts do," he said. "Three Mile Island changed public opinion to the point where I became mainstream and acceptable." He has drawn fire from the 160 power distribution companies that retail TVA's electricity for saying bluntly that safe nuclear power will require increases everyone should be glad to pay. "I want utilities to feel they'll go broke if they don't keep the things safe," he said. "It may be that it takes a certain -- ah, critical mass, if you handle nuclear power." Small utilities like Metropolitan Edison Co., which own Three Mile Island, "may not have the necessary competence" to run reactors either, he added.

Some of Freeman's iconoclasm undoubtedly has been made easier by historical accidents in his appointment. With electricity demand dropping nationwide as costs soar, TVA, like most utilities, is ahead of the game through 1990, if trends continue. Freeman can preach conservation and cut his nuclear option without worrying that the valley's 7.2 million residents will suffer brownouts as a result.

In addition, President Carter appointed all three board members, where normally their overlapping nine-year terms would tend to brake the enthusiams of new arrivals. Freeman in fact served alone on the board for six months and laid considerable planning groundwork before he was joined in October 1978 by Chicago busnessman Richard M. Freeman (no relation), whom he had reportedly suggested himself.

Bob Clement, son of the late Gov. Frank Clement and recommended by Sen. Jim Sasser (D-Tenn.) to Carter, joined the board last August. He is thought to be more interested in running again for governor -- he lost in the last election -- than in TVA, where he occasionally votes in futile dissent, ususally on spending programs.

Clement's lack of interest in utility matters is legendary, but tales of his boredom delight many of his backers who see the two Freemans as snobbish outsiders. Clement swapped stories and joked with Mississippi farmers outside a recent out-of-town TVA board meeting, for example, while his colleagues faced a dressing-down from antinuclear protesters inside.

At least the critics of TVA's new path can get a hearing now, Freeman's supporters respond. Open board meetings held around the region bring the public out every month, while a new citizens' action office has opened toll-free information lines that get 3,000 calls each month.

And Freeman is confident that Tennesseans will back him in the long run. "If they don't, perhaps TVA ought to be sold back to them," he said. "I don't shy away from the experiment ending if there's no support for it." CAPTION: Picture 1, TVA Chairman S. David Freeman with an architect's model of a Chattanooga power plant complex. Tennessee Valley Authority; Picture 2, A Tennessee Valley Authority complex at Watts Bar Dam in Tennessee. The Washington Post; Picture 3, Martha Collins: she paid the electricity bill with her Social Security check, and had $30 left over. Tennessee Valley Authority; Map, TVA Power Service Area, By Richard Furno -- The Washington Post