KNOXVILLE ― Based on the operational and financial performance of TVA employees this past year and the continued strength of the Tennessee Valley public power model, the Tennessee Valley Authority Board of Directors took three significant actions at its meeting on Thursday to further extend support to citizens, communities and businesses that continue to be challenged by the COVID-19 pandemic.

Through extraordinary conditions, TVA employees have continued to deliver reduced operating and maintenance costs through the improved productivity, efficiency and reliability of generating and transmission assets over the past ten months. Today, 62% of the area’s energy comes from carbon-free sources and fuel costs are at their lowest point in the past 10 years. Most importantly, safety performance is at industry top decile levels even while team members were faced with the added demands of pandemic precautions.

Local power companies have overwhelmingly supported the Long-Term Partnership Agreement they jointly developed late last year with TVA. Currently, 92% of the local power companies in TVA’s service area have chosen to participate in the voluntary program, which has already returned more than $108 million in customer credits through the end of June.

Based on TVA employee performance and consultation with TVA’s public power partners about ongoing needs in the region, the Board approved an additional $2 million contribution to the Community Care Fund. Similar to the initial contribution in April, these funds will be matched by local power companies and other community groups to benefit local organizations that assist families and businesses most in need. To date, similar matched funds ultimately provided more than $4.5 million to nearly 300 groups across the area.

Secondly, the Board extended TVA’s Back-to-Business credit program, which encourages large customers to resume operations as quickly as possible. To date, about one-third of eligible large customers have benefited from the program.

Lastly, the Board approved a special $200 million Pandemic Relief Credit for the coming fiscal year to help communities and businesses recover more quickly from the pandemic. TVA is providing this relief as a credit to allow each recipient the flexibility to apply the savings in the best way possible to invest in their communities and support those they serve.

The 2.5% base rate credit will be applied beginning in October and will remain in effect through the end of FY2021 for all of the customers TVA serves – local power companies and directly served customers – and to the large commercial and industrial customers served by local power companies.

With the Pandemic Relief Credit, Tennessee Valley public power’s industrial and commercial rates will be lower than they were a decade ago, an important factor in short-term economic recovery and long-term economic growth.

“The continued impact of this pandemic on our communities is unprecedented and creates continued economic uncertainty,” said Jeff Lyash, TVA president and CEO. “Because of the TVA team’s strong operational and financial performance under challenging circumstances this past year, we have an opportunity and responsibility to use TVA’s resources and expertise to provide continued support for customers, businesses and communities.”

“Our financial results remain strong and we are in a good position to do the right thing for our customers, providing people with the help they need when they need it most, while we continue to deliver our mission of service.”

In TVA’s recently reported third quarter results, power sales were about 5% lower than the same period last year due to milder weather and the impacts of the pandemic. Operating revenues, fuel costs and operating and maintenance expenses were all lower, as was interest expense based on a total debt that remains at its lowest point in 30 years.

“Despite the pandemic, the TVA team’s success at reducing debt and holding the line on operating and maintenance budgets have us at or ahead of plan, which results in no base rate increase in FY21 and none anticipated through the end of FY30,” said John Thomas, TVA chief financial officer.

In other business, the Board:

• Elected John Ryder as the new Board Chair
• Directed the People Committee, assisted by a new independent compensation consultant, to conduct a thorough review of CEO compensation, with results to be shared with the Board prior to its November meeting
• Approved FY21 spending authority to better manage a smooth transition into the new fiscal year ahead of the presentation of an official FY21 budget at the Board’s November meeting
• Approved TVA’s financing authority for FY21, including up to $3 billion in new power bonds and other financing arrangements
• Finalized TVA’s FY20 tax equivalent payments, totaling nearly $552 million distributed to state and local governments
• Recognized TVA’s ongoing economic development efforts, which have assisted with $7.1 billion in capital investment and more than 58,400 jobs created or retained in the area through the first three quarters of FY20
• Retained Ernst & Young LLP as TVA’s independent external financial audit for FY21
• Appointed David Fountain as the Assistant Secretary of TVA

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving nearly 10 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.

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