KNOXVILLE ― Based on the continued operational and financial performance of Tennessee Valley Authority employees this past year and the strength of the Tennessee Valley public power model, the TVA Board of Directors took significant actions at its meeting on Wednesday to further extend support to communities, businesses, and people across the region challenged by the COVID-19 pandemic.
Recognizing ongoing pandemic recovery efforts, the Board approved an extension of the Pandemic Recovery Credit through fiscal 2022 and requested a proposal to explore the potential of a further extension through the following year.
First approved a year ago, the initiative provides a monthly 2.5% wholesale power cost credit to each of the 153 local power companies TVA serves, as well as TVA directly served customers and large customers served by local power companies. For fiscal 2021, the credit will be about $200 million and extending the program through fiscal 2022 is expected to provide an additional $220 million.
The Board also approved the continuation of the Community Care Fund into the new fiscal year, providing up to $5 million in additional TVA funds. This brings the total TVA contribution to $9 million to support groups that continue to help those most in need in local communities.
“TVA was created to benefit the public good and has continued to build on that clear mission,” said Jeff Lyash, TVA president and CEO. “Thanks to the dedication and hard work of our employees, we continue to deliver value to those we serve.
“Because of TVA’s strong operational and financial performance, we have an opportunity and responsibility to use these resources to provide continued support for customers, businesses, and communities.”
The Board also commended the success of TVA and its local power company partners in reliably delivering vital energy to the region during challenging weather conditions in February and over the past three weeks, when TVA met some of its highest summer peak energy demands in the past decade.
“The public power system served by TVA and local power companies is uniquely capable of handling such events through a combination of systematic planning, continually monitoring weather forecasts to anticipate need and investing for the future,” said Lyash. “Such efforts allow us to demonstrate the four dimensions of value that make public power a unique strategic advantage for the region: resiliency, reliability, environmental performance and cost.
“Even under difficult circumstances, we can consistently deliver some of the nation’s lowest-cost, most reliable, and cleanest energy. The diversity of our generation portfolio and resilient transmission system helps ensure the residents and businesses we serve are insulated from the kinds of price spikes and power shortages seen in other parts of the country.”
TVA remains a national leader in carbon reduction. Through the end of June, nearly 60% of TVA’s energy was delivered from carbon-free sources. TVA’s overall carbon emissions at the end of the last fiscal year were 63% below 2005 levels.
To further support carbon reductions, TVA announced its intent to convert up to half of its fleet vehicles to electric, while continuing to lead a broad vehicle charging network across the entire region through the Electric Highway Coalition.
The TVA team’s performance also enabled the Board to approve the fiscal 2022 budget that maintains a stable wholesale power rate while continuing to invest for future regional needs and maintaining a focus on reduced debt levels.
“TVA’s operational and financial performance through the end of the third quarter has been outstanding and has allowed us to maintain a lower effective wholesale rate today than we had 10 years ago,” said John Thomas, TVA chief financial and strategy officer.
“Just in the past two years, effective wholesale power rates have fallen by more than 6% and retail rates in TVA’s service area were down 4% since 2019. Today, nearly 80% of those served by large utilities in the U.S. pay more for power than those served by TVA and our local power company partners.
“Combined with a debt level that is the lowest in more than 30 years, our strong financial position gives us confidence in maintaining stable rates through at least 2030 while preserving our ability to invest in our existing facilities and future capabilities, and continuing to support the people in communities in our region,” added Thomas.
Focusing on that future, 144 local power companies – nearly 95% of those TVA serves – have chosen to be a part of TVA’s long-term partner initiative. “The 3.1% credit all long-term partners receive combined with the extended Pandemic Relief Credit and our other community outreach efforts means that, by the end of fiscal 2022, TVA estimates we will have reinvested more than $600 million directly in the region’s recovery and future economic growth,” added Lyash.
“This is in addition to our ongoing economic development mission, which helped create or retain more than 65,000 jobs and $7.8 billion in capital investments to the region during the first three quarters of FY21.”
With the end of current Board Chair John Ryder’s term, the Board selected Director Bill Kilbride as its Chair-Elect to officially assume his new role on August 19, 2021. The Board also realigned its committee structure to make the most effective use of the nine Board members.
In other business, the Board:
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.
For a high-resolution photo of Chair Elect Bill Kilbride, click