TVA’s Johnson believes TVA has a ‘good model’

Tennessee Valley Authority (TVA) President and CEO Bill Johnson promised May 3 that the federal utility will fully cooperate with the Office of Management and Budget as OMB investigates the pros and cons of divesting TVA.

During a quarterly financial report Johnson noted that TVA learned last month of the Obama administration’s desire to examine the option of selling the federally-owned utility.

“We are a creation of the government and will engage collaboratively and completely in that review,” Johnson said.

“We believe the TVA model is a good one,” Johnson said during the conference call. Johnson said he has met recently with both credit rating agencies and representatives of the New York financial community about TVA.

When asked, Johnson said he has no idea how long the OMB review will last, although he assumes there will be some type of report issued – as has been the case when the issue has come up in the past.

“We do know they are actively planning and seeking our input,” Johnson said of the OMB review.

The former CEO of Progress Energy said federal ownership versus corporate ownership has little impact on the customer end. It does affect how a utility is financed and the leadership is chosen, Johnson said. The members of TVA’s board of directors are appointed by the president.

Sen. Lamar Alexander, R-Tenn., has said the idea of selling TVA “is one more bad idea in a budget full of bad ideas.” If anything, ending government ownership of TVA would probably drive up power costs in the region, Alexander said recently.

TVA will celebrate its 80th anniversary this month.  It was created in 1933 by legislation enacted by Congress in response to a request by President Franklin D. Roosevelt.

TVA tackles coal and nuclear issues

During his conference call, Johnson noted that during the past quarter, TVA reaffirmed its commitment to doing a $1bn installation of new emission controls at its Gallatin fossil station in Tennessee.

TVA is burning more coal compared to 2012 but not as much as compared to historic levels, officials said May 3.

In a quarterly report filed with the Securities and Exchange Commission, TVA also noted that mediation is ongoing on a batch of lawsuits filed in the Kingston coal ash spill that occurred a few years ago.

On March 21, 2013, a federal court in Tennessee extended the mediation period by an additional 120 days. If the case is not resolved through mediation, the case will proceed to the damages phase.

John said TVA was working to address “controllable factors.” He noted that he has recently completed his first 100 days at the federal utility.

During the past six months of 2013, TVA completed three nuclear refueling outages and a steam generator replacement project at Sequoyah and began a fourth refueling outage, compared to one nuclear refueling outage in the same period last year.

There was another “positive” report on Watts Bar 2 construction and that project remains on track for completion in 2015, Johnson said. TVA has also signed an agreement with Babcock & Wilcox to pursue a small modular reactor project at Clinch River.

The recent hiring of Charles (Chip) Pardee as executive vice president and chief generation officer will help TVA run the best nuclear fleet in the world, Johnson said. Pardee held various management posts at Exelon (NYSE:EXC) prior to joining TVA.

TVA reported Friday net income of $54m on operating revenues of $2.74bn in the second quarter of 2013. This compares with a net loss of $94m on operating revenues of $2.60bn in the same period last year.

TVA runs on the same fiscal year as the federal government.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.