Lazard Strategic Review on TVA
June 4, 2014
The FY 2014 President’s Budget announced the Administration’s intentions to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divestiture of TVA. TVA engaged financial expert Lazard, Frères & Co. LLC to assist in analyzing financial data for the strategic review. Lazard’s report was provided directly to the Administration as part of a broader strategic review being conducted by the Administration as announced in the President’s 2014 Budget.
TVA is pleased the Lazard Report supports TVA’s financial and operational plan. The review also validated that TVA provides substantial economic and other benefits for the region. Based on the information received, current financial market conditions and their analysis of various business models, Lazard concluded that the business model with TVA’s financial and operational plan is the best current option for the citizens of the Valley and others.
In the FY 2015 President’s Budget proposal, the Administration recognized TVA’s efforts in improving our financial outlook and supports our ongoing operating and financial direction. While the 2015 Budget does not include a proposal to divest TVA, it does state the Administration stands ready to work with Congress and other TVA stakeholders to explore options to reduce or end Federal ties, including alternatives such as a transfer of ownership to state or local stakeholders. The Lazard Report highlights the challenges and complexity of changing Federal ownership of TVA and puts TVA’s non-power mission in question.
TVA does not receive any taxpayer funding. Power system appropriations ended in 1959 and land, water and environmental stewardship funding ceased in 1999. Stewardship is funded out of electricity revenues.
TVA’s healthy financial profile and ongoing efficiency initiatives are expected to generate benefits for TVA’s stakeholders, and Lazard’s summary observation is that there currently is no apparent detriment to ongoing Federal ownership at this time.
TVA will continue to collaborate with the Administration on its ongoing strategic review, while remaining focused on its mission of providing lower-cost, reliable power, environmental stewardship and economic development.
TVA Public Relations, Knoxville, 865-632-6000