TVA attempting to "live within its means"

August 26, 2013 | By Barbara Vergetis Lundin

The Tennessee Valley Authority (TVA) board of directors has approved a $10.5 billion fiscal year 2014 budget and a 1.5 percent retail rate increase -- the first in two years. The rate adjustment will add about $1.50 to the monthly power bill of a residential consumer using 1,000 kilowatt-hours of electricity.

The TVA Towers. Credit: Brian Stansberry/Wikimedia Commons

"While we never like to raise rates, this small adjustment is necessary to meet our 2014 revenue requirements and operate our system safely and reliably," said TVA President and CEO Bill Johnson. "We will also make critical capital investments to keep reliability high and meet environmental standards and contribute to paying down debt."

TVA's fiscal year 2014 budget anticipates 4.6 percent lower sales year over year and is about 6 percent less than 2013, including capital expenditures of $3.3 billion for Watts Bar 2 nuclear plant and clean air controls at Gallatin Fossil Plant.

Johnson said that TVA's priorities include "living within our means" by bringing operations and maintenance expenses in line with recent trends in declining electricity sales and revenues.

"Demand for our product is down and that won't change anytime soon. The weather, the economy, energy efficiency/demand response, and rate design are all factors," Johnson said. "We're working harder than ever to reduce our costs, but they are not declining at the rate of our sales and revenues."

TVA is executing a plan to reduce O&M costs by $500 million by 2015 with employees and leadership identifying efficiencies, cost reductions and cost avoidance opportunities. Nearly $150 million in reductions have been achieved this fiscal year with plans for an additional $150 million by the end of 2014 and another $200 million in 2015.

Additional priorities include evaluating future operations of the remainder of the coal fleet, preserving the unfinished Bellefonte nuclear plant as an option for future power generation, continuing to explore Small Modular Reactor nuclear technology, promoting economic development in the region and updating the Integrated Resource Plan, the long-term strategy for TVA's energy supply as they enter FY14.

The board also approved new programs to foster economic growth in the Tennessee Valley. For example, the TVA Valley Commitment Program will give credit to manufacturing customers for their ongoing commitment to the Valley and the Small Manufacturing Rate Program will give small industrial customers a rate alternative for operating during off-peak demand periods, which will serve as interim measures while TVA works with customers and other stakeholders on a longer-term rate strategy.

For more:
- see last year's budget

http://www.fierceenergy.com/story/tva-attempting-live-within-its-means/2013-08-26