TVA Maintains Focus on Delivering Value to the People of the Tennessee Valley
COUNCE, Tenn.—The Tennessee Valley Authority’s employees continued their 84-year mission of service to the region in fiscal year 2017, providing reliable, cleaner energy and strong environmental stewardship while partnering with customers and communities to increase economic opportunities. The value of the team’s effort is reflected in improved operational and financial performance that translates into low rates for consumers.
“Hardin County native and civil rights activist Myles Horton once noted that organizations don’t automatically receive respect, but they must earn it by serving people,” TVA President and CEO Bill Johnson told the TVA board of directors at its meeting today.
“That is a high standard, and one that every TVA employee strives to meet every day. Based on the measured results they delivered in fiscal 2017, our employees have earned respect and demonstrated, once again, their commitment to our mission of serving the people of the Tennessee Valley.”
During the 2017 fiscal year that ended Sept. 30, TVA employees remained aligned with TVA’s long-term financial plan and focused on operational excellence across the entire organization. Johnson highlighted a number of achievements during the board meeting including:
- Strong financial performance
- Sustained $800 million in operating and maintenance cost reductions, and achieved $800 million in fuel cost savings since the implementation of the long-term financial plan in the 2013 fiscal year budget.
- Funded more than $2 billion in capital spending without increasing debt.
- Reduced debt and financing obligations by nearly $200 million—the first year TVA has lowered debt levels since the implementation of the current long-term financial plan.
- Provided an additional one-time $500 million contribution to the TVA Retirement System, bringing the total 2017 contribution to $800 million.
- Maintained low energy prices – total effective energy rates in 2018 are expected to be 2 percent lower than 2013 and TVA’s industrial rates are the lowest among its utility peers.
- Strong operational performance
- Attained the lowest annual recordable injury rate since 1985 when this measurement started.
- Improved generating fleet performance.
- Achieved 99.999% reliability for the 18th consecutive year.
- Met 100% of planned project milestones, including completion of Watts Bar Unit 2, the Paradise combined cycle gas plant and the start of pre-operational testing at the Allen combined cycle gas plant.
- Received Nuclear Regulatory Commission approval to increase the carbon-free power output of the Browns Ferry Nuclear Plant by 14 percent by the end of 2019.
- Strong stewardship performance
- Completed new emissions controls installation on two units at the Gallatin fossil plant.
- Installed a 3,000-panel, one-megawatt solar installation—the largest TVA-owned solar facility in the Valley—at the Allen combined cycle gas plant.
- Reduced CO2 emissions by 34 percent from 2005 levels and on a path to decrease by more than 60 percent by 2020—half of TVA’s energy generation is currently from carbon-free sources, including nuclear, hydroelectric and renewables.
- Worked with multiple partners to attract and retain more than 70,000 jobs and more than $8.3 billion in capital investment, earning recognition as a Top 10 utility for economic development by Site Selection magazine for the 12th straight year.
- Improved customer loyalty and stakeholder relationships.
- Worked with local, state and federal agencies and other groups to provide volunteers to more than 650 community events and 170 stewardship projects, including river clean-ups, educational programs and rural food pantries that provided families 2.3 million meals.
- Welcomed more than 130 thousand visitors to TVA retiree-staffed visitor centers, an all-time record.
TVA Chief Financial Officer John Thomas provided the board with preliminary fiscal year-end results. Operating revenues ($10.7 billion), interest expenses ($1.3 billion) and net income ($685 million) were favorable to budget. Operating and maintenance expenses were favorable at the business unit level, partially offset by the board’s August decision to approve a one-time $500 million extra pension contribution.
“The prolonged warmer weather over the summer and fall, combined with our efforts to improve operational efficiency, created a level of performance that allowed us to accelerate our long-term financial plans,” said Thomas. “As a result, we were able to provide low-cost power, carry out our responsibilities for stewardship and economic development, invest more than $2 billion in capital improvements to our system and still reduce our debt and financing obligations by nearly $200 million during the fiscal year.”
TVA will conduct a call on Wednesday, Nov. 15, with investors and news media to review its complete 2017 fiscal year financial performance. The 10-K annual report will be available the same day.
“TVA employees’ efforts in 2017 have set the stage for meeting the challenges of an evolving energy market. Working together with thousands of local power company employees who share our devotion to the unique Tennessee Valley public power model, we will continue to adapt to meet the changing needs of those we serve,” said Johnson.
During the board meeting, the board acted to:
- Approve the payouts for the FY 2017 pay-for-performance employee programs and CEO compensation for FY 2018.
- Approve the long-term service agreement at TVA’s Lagoon Creek combined cycle gas plant.
- Approve contracts for the purchase of medium and large power transformers.
- Approve a direct serve power arrangement.
- Recognize the service of Directors Marilyn Brown and Lynn Evans, whose terms end this year. (The President has nominated four board members and their nominations are before the U.S. Senate.)
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving more than 9 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.