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 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.
Officials said "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 percent 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 percent 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 percent 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, officials said.
“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 percent 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; and
• Appointed David Fountain as the assistant secretary of TVA.
David Wade, president and CEO of EPB said, "We appreciate TVA for sharing the results of their successful financial stewardship by providing a Pandemic Relief Credit and additional Community Care Fund matching grants to support local power companies in serving our communities during these very difficult times. Actions like these set TVA and the Public Power Model apart by demonstrating a clear and responsive commitment to joining local power distributors in putting people and communities first.”
Wes Kelley, president and CEO of Huntsville Utilities said, “TVA is a regional asset with a national vision. Roosevelt said that TVA would be a birch rod by which others are measured. That mission continues—especially during a period of dramatic change.TVA and Local Power Companies can help determine cost-effective ways to take advantage of technology advances to innovate the power industry. Our partnership is uniquely suited to seek answers to tough challenges, like cost-effectively integrating distributed energy resources into the grid, building new approaches without burdening those who can least afford it, and pursuing environmental justice without skyrocketing costs. Public power is well situated to navigate uncertain waters without unduly increasing costs to end-use customers.”
Gabe Bolas, president and CEO of Knoxville Utilities Board said, “The assistance TVA has provided to KUB customers through $80,000 in community agency grants, the Back to Business program, and the proposed Pandemic Relief Credit will have a real and positive impact on those we serve. These efforts build on a strong partnership that has resulted in the Home Uplift program,
providing weatherization improvements to create more efficient housing for our low-income
customers. Since 2015, our partnership has combined TVA funding with local funds and other
grants to weatherize nearly 1,800 homes in our service area. Our partnership has also provided pilot programs like Green Switch Match and programmable thermostats, which give customers more options to help manage their own environmental impacts; and energy efficiency workshops which provide useful information and do-it-yourself resources for customers to reduce their bills. Together, we are giving customers the help they need when they need it the most.”
Gregory J. Fay, CEO and general manager of Clinton Utilities Board said, “During these extraordinary times, the benefits of public power have never been more evident. As other areas of the country experience rolling blackouts, millions of residents across the Valley continue to enjoy some of the lowest electric rates and highest levels of reliability anywhere in the country, because of TVA and its leadership. As the impacts of the pandemic became apparent, not only did TVA immediately step forward in its regulatory role to provide each Local Power Company with the ability to offer flexibility in terms of payments and suspension of service, but it also provided much needed financial assistance to our customers through the Community Care Fund. At the same time, the Back to Business Program gave industrial customers much-needed assistance to get those same customers back to work. As the impacts of the pandemic continue to be felt, we are excited by TVA’s continued commitment to these timely solutions and the introduction of the Pandemic Relief Credit. Whatever the challenge, I am proud that we have a partner like TVA to stand beside us so that together we can continue to provide the essential service that our customers depend upon and deserve.”
Jody Wigington, general manager and CEO of Morristown Utilities said, “As partners in public power with TVA, we are collectively blessed by the Long-Term Partnership, Community Care Fund, Flexibility Options, Back to Business incentive and Pandemic Relief Credit. Thanks to TVA’s board and leadership for moving forward a partnership vision that benefits the public power model in the Valley.”
Lee H. Brown, president and CEO of Erwin Utilities said, “Since 1933, TVA has been committed to providing public power in the Tennessee Valley by partnering with those best suited to understand local needs, which are the local communities themselves. Erwin Utilities is proud to have partnered with TVA to provide safe, reliable, and efficient service to the people of Erwin and Unicoi County since 1945. We look forward to TVA's continued partnership to preserve and support local power companies, large and small, to ensure that each community, regardless of size, is able to provide public power that meets unique local needs.”
Jason Griggs, superintendent of Milan Public Utilities said, “When TVA was considering its strong financial position despite the impacts of the pandemic, I truly appreciate TVA for including its customers in consideration of surplus revenues. I recognize that TVA could use that money to pay down debt or invest back into its assets, but I agree that the Pandemic Relief Credit is the right thing to do in the face of the challenges we must address today. As a municipal utility in Tennessee, I represent and fully support public power in the Valley. Actions like this and many more demonstrate the value this model delivers now and for the future.”
Officials from the Tennessee Valley Industrial Committee said, “TVIC supports the public power model as it currently exists at TVA and the collaborative approach TVA takes with its stakeholders to establish strategic direction and achieve longterm objectives. Through the leadership of experienced and capable management, successful public power entities are able to focus on the provision of low-cost, reliable power to benefit all customers. TVIC supports TVA’s ongoing focus on controlling its costs and providing competitive rates to all of its customers and views TVA as a reliable, long-term partner under its current structure as a not-for-profit public power provider.”
Decosta Jenkins, president and CEO of Nashville Electric Service said, “Nashville Electric Service has been meeting the needs of our customers and community for more than 80 years and TVA has been our partner since day one. We take our mission of providing safe, reliable, and affordable power very seriously, and it would not be possible without our strong collaboration with TVA. Jeff Lyash has brought a significant amount of positive change to the Valley in the short time that he has been in the position of President and CEO of TVA.”
Doug Peters, president and CEO of Tennessee Valley Public Power Association said, “The partnership between TVPPA members and TVA has driven economic development and enhanced the lives of the millions of people who call the Tennessee Valley home. We commend TVA and its leadership, especially TVA CEO Jeff Lyash, for recognizing the challenges local power companies continue to face as the result of lost revenue from the discontinuation of shut-offs this spring. The economic impact of COVID-19 on local power companies has been felt throughout the Valley. TVA’s Pandemic Relief Credit, along with the continued commitment to the Community Care Fund and the Back-to-Business credit program for industrial customers, will provide much needed relief.
We further commend them for putting decision making regarding the use of Pandemic Relief Credit funds in the hands of local power companies so they can make decisions based on their unique knowledge of their business and community needs.”