November 15, 2012
RAINSVILLE, Ala. ― The Tennessee Valley Authority board of directors at its meeting Thursday credited employees for TVA’s success in holding the line on power rates, generating record amounts of clean energy and helping create or retain more than 48,000 jobs in the region during the 2012 fiscal year.
In reviewing TVA’s performance in 2012, TVA Chairman Bill Sansom said, “TVA faced a number of financial challenges early in the year that impacted performance. By focusing on business priorities, TVA posted solid operational and financial results. As a result, rates remained unchanged.”
Tom Kilgore, TVA president and CEO, was recognized by the board members and TVA customers for his leadership. He has announced his retirement effective the end of this calendar year. Sansom said that since Kilgore became president and CEO in 2006, TVA has focused on a vision that emphasizes low rates, reliable power generation and environmental stewardship. TVA’s diverse energy mix has been important to TVA’s cooperative efforts to attract and retain more than 298,000 jobs over a six-year period.
The 48,000 jobs created or retained in the region in 2012 are backed by companies making a total capital investment of $5.9 billion in the region. Other 2012 highlights:
- Reduced costs and improved productivity to help avoid a rate increase
- Improved safety for the fifth straight year and rank in the top 10 percent in the utility industry
- 13 consecutive years of 99.999 percent reliable power delivery
- Best annual nuclear performance in a decade and best seasonal coal and gas availability ever
- Improved clean energy generation
- Best industry portfolio balance
- Top-quartile industry performance in energy efficiency
TVA was challenged in 2012 by reduced sales and revenues as the region experienced an unusually mild winter and slower economy. Chief Financial Officer John Thomas reported that in response, TVA took action to reduce costs and improve efficiencies, ending the year with total revenue of $11.2 billion, compared with $11.8 billion in fiscal year 2011. In spite of $600 million in reduced revenues, the actions by the TVA workforce helped create over $1.1 billion more free cash flow and $668 million of cash than planned.
Electricity sales were down 1 percent in 2012, compared with last year. In addition, power rates for customers were 5 percent lower than in 2011.
“Tom Kilgore has provided the leadership to transform TVA from a three-member board that guided the agency to a more traditional corporate structure,” Sansom said. “The people of the Tennessee Valley have benefitted from the direction Tom has provided in setting a clear vision and developing an integrated resource plan, while delivering reliable power and maintaining TVA’s natural resources stewardship roles.”
The board affirmed the selection of Bill Johnson as TVA’s new president and CEO beginning Jan. 1, 2013. In doing so, the board notationals used in the CEO selection process became part of the public record.
“Bill is a seasoned, experienced utility executive and we look forward to his leadership as TVA continues to provide power to the people and growing businesses of the Tennessee Valley,” Sansom said.
In other actions, the board:
- Approved projected tax equivalent payments of $536 million to be paid to state and local governments during fiscal year 2013, based on TVA’s fiscal year 2012 revenues.
- Approved a redevelopment plan for 1,000 acres of TVA land at Muscle Shoals, Ala.
- Discussed 2012 performance and CEO compensation. Kilgore’s salary and incentive compensation for 2012 is $2.556 million, compared with $2.708 million in 2011.
- Expressed appreciation to directors William Graves of Memphis and Marilyn Brown of Atlanta for their board service.
- Recognized Predrag “Mick” Mastilovic, manager of Nuclear Fuel Supply in Chattanooga, as TVA’s Engineer of the Year.
- Approved the appointment of 20 members to the Regional Resource Stewardship Council, based on nominations from governors of the states served by TVA and recommendations from TVA customer organizations, community officials and other stakeholder groups.