TVA Releases Top Officers’ Compensation for 2005
December 23, 2005
TVA released the compensation of its top officers for the past year to the Office of Management and Budget, as required by Executive Order 12976 on Compensation Practices of Government Corporations. TVA bases its compensation for all employees on market surveys of utilities similar in size, and its compensation program is similar in approach to those found at other utilities.
“During the 2005 fiscal year, TVA’s integrated power system recorded its most successful year on record, and TVA employees met their performance targets and earned incentive pay. We put the incentive pay at risk each year, and we keep raising the bar on performance because it is a proven method of getting results,” said TVA Chairman Bill Baxter. “TVA’s compensation plans seek to balance TVA’s role as a federal corporation with the skills and experience needed to manage the nation’s fifth largest river system and meet the electric power needs of 8.6 million residents in the Tennessee Valley.” Baxter added, “we are very much in competition with other utilities for highly skilled jobs in running generation plants and our transmission system. I think all of us want our nuclear plants and our other facilities to be operated by people who are very competent at what they do.”
“It was a challenging year for TVA,” said TVA Director Skila Harris. “But our employees helped offset rapidly rising expenses for fuel and purchased power by cutting costs more than $225 million from budgeted amounts at the beginning of the year.
“As one of the largest producers of electric power in the United States with almost $7.8 billion in revenue,” continued Harris, “TVA has the same executive-management requirements as private, investor-owned utilities and must be able to offer competitive compensation.”
The pay for performance TVA pays to all its employees is only a fraction of what was saved from cost reductions. While TVA did have a rate increase this year, it could have been much more if the staff at TVA had not met performance goals while controlling costs. The rate increase that took effect October 1 was driven by fuel cost increases, not added labor cost or compensation.
During the summer period of eight successive days of peak power demand above 29,000 megawatts, the loss of a single nuclear, coal, or hydro plant would have cost TVA millions of dollars in purchased power to avoid interruption of service to its many customers. All of TVA’s plants and its vast transmission system continued to generate and deliver power during those peak periods due to the individual and collective performance of TVA employees.
Chairman Baxter noted that the new Board will, by law, review TVA’s compensation plan. “The new Board will have a variety of business backgrounds, so I am sure they will be very active in reviewing TVA’s compensation practices. I believe it is in TVA’s best interest to offer competitive, performance-based compensation to its employees,” added Baxter.
TVA Board members’ salaries are set by Congress, and Board members do not receive bonuses or other supplemental pay. The chairman’s salary is currently $149,200, and a director’s salary is $140,300, but those salaries will drop to $50,000 and $45,000, respectively, when the new, part-time board members take office.
TVA receives no tax dollars and is completely self-financed. TVA is the nation’s largest public power provider, supplying power to large industries and 158 power distributors that serve approximately 8.6 million consumers in seven southeastern states.
Media Contact
John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000
