Looking for the best value from your electricity provider? An independent assessment says TVA’s public power model is it!
At its February 11 quarterly business meeting, the TVA Board of Directors heard an updated report from Lazard, an independent financial advisory firm. Building on an earlier strategic review in 2014, the Board commissioned Lazard to reassess TVA’s business performance through 2020 and determine if its current business model is a reasonable approach to fulfilling TVA’s mission. Lazard’s new report highlights include:
“Just as it did in 2014, Lazard’s assessment concluded that the public power model works and continues to provide the best value to the communities and customers we are privileged to serve,” said Jeff Lyash, TVA’s president and chief executive officer.
As Memphis continues to review its options for a power provider, this report validates our focus on clean, affordable and reliable energy.
The Lazard report also bolstered our position against allowing utilities to “wheel” power across our transmission system. Lazard noted that TVA is “exempt from the Federal Power Act and Federal Energy Regulatory Commission authority to order utilities to provide transmission service; this exemption limits both TVA's exposure to competition and loss of customers in TVA's service area, which in turn facilitates TVA's ability to spread out fixed costs over a wider customer base.”
The effectiveness of TVA’s business model was also supported as part of an independent review of CEO compensation discussed at the meeting. The review by the FW Cook firm concluded that the Board’s compensation process is best practice and, with expanding inclusion of government agencies and non-profit entities, uses the most relevant market data to be consistent with requirements of the TVA Act.
“TVA’s compensation must be market-driven and competitive with for-profit utilities since we are all seeking to attract talent from the same limited pool of individuals who have the unique skills and experience to be successful leading a complex organization like ours,” said John Ryder of Memphis, TVA Board chair.
Our strong performance over the past several years continued into the first three months of fiscal year 2021, according to our quarterly financial report on February 12. TVA’s first quarter base revenue and net income remained favorable to budget even as revenues were lower than a year ago, in part due to the TVA Pandemic Relief Credit that began in October and returns 2.5% of the base wholesale rate each month to local power companies, their large commercial and industrial customers and TVA directly-served customers. Nearly $49 million was returned in the first quarter, and the credit will continue through the end of FY21.