TVA Board Approves Strengthened 2007 Strategic Plan

May 31, 2007

COLUMBUS, Miss. — The TVA Board today approved the 2007 Strategic Plan, which provides the framework and high-level direction that will guide TVA strategic decisions for the next decade.

After holding nine public meetings throughout the Tennessee Valley, along with employee briefings on a draft plan presented to the Board in March, TVA strengthened several areas in the plan based on more than 300 unique comments received. The plan provides strategic direction and establishes performance measures in five key areas – customers, people, financial, assets and operations.

Specific actions to implement the overall direction of the plan will be part of TVA’s annual business and performance plans.

“The review of the draft plan and comments by stakeholders — the public, our customers and our employees — resulted in a stronger, more comprehensive Strategic Plan,” said TVA President and CEO Tom Kilgore, who presented the plan to the Board at a meeting in Columbus. “We made some changes from the draft plan in the areas of energy efficiency and conservation, resource stewardship and economic development, but some things did not change, including our commitment to TVA’s three-fold mission of energy, environment and economic development; providing sufficient assets to meet the Valley’s growing demand for power; and partnering with our customers on power supply.”

Actions to achieve the five key strategic objectives include the following:

• Customers — Will simplify rates and have them more accurately reflect the cost to serve; strive to be a leader in energy-efficiency improvements and reductions in peak power demand in five years; provide the opportunity for distributor-owned generation; consider environmental impact, load factor and volatility in addition to jobs and capital investment in economic development decisions; and develop three way-partnerships among TVA, distributors and end-use customers.
• People — Emphasize a safety focus for employees, the public and customers as part of all decisions; provide open communications often with all customers to strengthen relationships and build trust; embrace the values of integrity, respect, accountability, teamwork, continuous improvement, honest communication and flexibility along with ethical behavior in interactions with employees, customers and stakeholders; and provide tools, techniques and training to enable employees to successfully meet the strategic objectives.
• Financial — Retire financial obligations on a schedule linked to asset useful life; ensure that capital projects are economically justified or needed to meet regulatory requirements; and continue to improve TVA’s financial health and performance.
• Assets — Balance TVA power generation within 5 percent of demand by reducing demand through energy efficiency and conservation efforts; by buying and building new generation assets or through long-term purchased power contracts; increase TVA’s renewable energy generating capacity; maintain a diverse generation portfolio to reduce fuel supply risks; and manage land and water resources to provide multiple benefits.
• Operations — Deliver reliable generation and transmission services; achieve top quartile benchmarks in performance; make nuclear safety an overriding priority; reduce emissions by adding controls and using cleaner coal at fossil plants; reduce TVA’s carbon footprint; and examine opportunities to retire fossil plants with high emissions as demand is reduced through energy-efficiency efforts.

“TVA has served the Valley well for 74 years, and its operations and financial condition are in excellent shape,” said TVA Chairman Bill Sansom. “However, the Board recognized that some refinements and overall direction are needed as TVA faces future challenges. This plan establishes a strategic direction for TVA, and it is now up to TVA management and staff to develop and carry out business plans and specific action steps to move TVA in this direction.”

Kilgore also told the Board that assumptions on which the plan is based include a 1.9-percent annual growth in demand, an annual increase in generation capacity of about 700 megawatts to meet growth, achieving the targeted savings in operating and maintenance costs, and offsetting a year of demand growth through energy efficiency measures.

The increased emphasis on energy efficiency and conservation includes plans to develop rates based on the time of electricity use, to use new technology that would help reduce the amount of power demand and to collaborate with national experts on how to reduce demand.

TVA is the nation’s largest public power provider and is completely self financing. TVA provides power to large industries and 158 power distributors that serve approximately 8.7 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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