TVA Cites 2011 Performance, Enhances EnergyRight Program; CEO Pay Unchanged for 2012

Nov 17, 2011, 13:52 ET from Tennessee Valley Authority

STARKVILLE, Miss., Nov. 17, 2011 /PRNewswire-USNewswire/ -- The Tennessee Valley Authority met fiscal year 2011 performance goals for delivering affordable, cleaner and reliable energy to the region while responding to events tied to the Japanese tsunami and April tornadoes across the Southeast.



"We are focused on making sure our nuclear plants operate safely and withstand natural disasters similar to those that crippled the Fukushima reactors in Japan," President and CEO Tom Kilgore said during Thursday's meeting of the TVA board of directors. "TVA employees worked around the clock to restore power after devastating tornadoes across much of our service area damaged our transmission system.

"The reliability of our system was tested this year and we met the challenge," he said. "TVA employees strive every day to provide safe, cleaner, affordable and reliable energy. These are the cornerstones of our vision."

The board of directors reviewed annual compensation for Kilgore for fiscal year 2012.        

"While TVA compensation is based on market comparisons, we realize that the CEO's current compensation is near the bottom of industry rankings," TVA Chairman Denny Bottorff said. "Nonetheless, in keeping with the federal salary freeze, we are not adjusting the CEO's salary; neither are we adjusting his at-risk performance pay opportunity for fiscal year 2012." His total base salary and annual performance incentive for 2011 were $2.708 million.

At the meeting, the board reviewed the updated program "EnergyRight Solutions." The program will serve all levels of energy users and encompass renewable energy sources, as well as energy efficiency, under the EnergyRight Solutions brand. While TVA and local utilities have long provided efficiency programs for homes and businesses, this update focuses on energy efficiency as a key energy source in TVA's long-term plans for supplying electricity to the region.

"Energy efficiency and renewable sources will support job growth as new energy technologies are demonstrated and the market grows for energy products, such as solar panels," Kilgore said. The redesigned EnergyRight Solutions website is live at

The board approved a new renewable energy program and an incentive program for industry, and was briefed on a pilot solar program:

  • Green Power Providers – A long-term renewable energy program to replace the successful Generation Partners pilot. The board approved the program to encourage small to mid-sized renewable energy projects in the TVA service area; its features include contract terms of 20 years with price premiums for the first 10 years.
  • Off-Peak Pricing Pilot – Offers pricing incentives to businesses and industries that use additional power during off-peak hours. This will allow TVA to operate its power plants more efficiently, saving money for the power system and consumers. Price breaks will encourage industries to consider the Tennessee Valley first when they add production to their existing plants.
  • Solar Solutions Initiative – A pilot renewable program targeted to mid-sized solar energy generators participating in TVA's Renewable Standard Offer. It will pay incentives for solar projects to spur additional capital investments and job growth in the region.

In 2011, energy efficiency initiatives by TVA and local power distributors reduced electric power consumption by 559 gigawatt-hours; and energy efficiency programs over the past two years have reduced electricity use by 765 gigawatt-hours, conserving enough energy to power 50,000 area households for an entire year. In renewable energy, if TVA's service area were compared to state rankings, TVA would be fourth in the nation in small-scale solar growth since June 2010; and its wind power capacity ranks sixth largest among U.S. utilities, according to industry groups.

For more information on EnergyRight Solutions, visit TVA's energy efficiency website at

In reviewing TVA's 2011 performance, Kilgore noted that TVA's vision underlies the agency's commitment to meeting future energy needs while improving its core business. "We measure ourselves against other utilities in the Southeast, identifying and striving for the highest performance standards," he said.

Performance in 2011 included:

  • Helping to bring higher paying jobs and capital investment to the seven-state region with more than 43,000 jobs created or retained and new capital investment of $4.9 billion;
  • Achieving 99.999 percent reliability in delivering electricity to customers for the 12th year in a row, excluding outages directly caused by the April storms;
  • Surpassing targets for cleaner air and for operating power plants reliably;
  • Taking actions to add more nuclear generation, as well as greater energy efficiency, to its energy mix;
  • Providing a safe workplace and improving organizational health through employee involvement, knowledge sharing and career opportunities;
  • Delaying the construction schedule for Watts Bar Nuclear Plant Unit 2 and addressing a Nuclear Regulatory Commission finding at Browns Ferry Nuclear Plant.

"This year presented significant challenges as we began phasing out of some of our coal units, worked to expand our natural gas and nuclear generation and restored our transmission system after massive tornadoes affected the lives of hundreds of thousands of the people we serve and many of our employees," Kilgore said.

"I am proud of what we accomplished during the year, and there is more to do in 2012 to reach our goals of safe, reliable and affordable energy," he said. (See fact sheet on TVA 2011 performance at

The board noted that TVA must hire and retain capable people with experience in the operation and management of a complex power system. "Because TVA operates one of the nation's largest utility systems and competes with other utilities for talented and knowledgeable people to strategically manage its operations, compensation must be competitive with other utilities," Bottorff said.

TVA uses pay-for-performance plans to set the performance goals that motivate performance, make TVA operations more efficient and hold down costs. All TVA employees have some amount of pay "at risk" that is paid only if performance targets for the year are met. The amount at risk that will be paid through the employee incentive program for 2011 performance is $107.5 million to a total of 12,893 employees.

While TVA compensation is becoming more competitive, Bottorff noted that the CEO of TVA remains the lowest paid among major utilities.

In other business, the board:

  • Approved final tax equivalent payments to state and local governments of about $530 million for fiscal year 2011 and projected payments of $567 million for fiscal year 2012. Under the TVA Act, which established the federal utility in 1933, TVA pays 5 percent of its gross proceeds from the sale of power to the eight states where it sells power or owns power properties and directly to 144 local governments where TVA has acquired existing power facilities. The payments compensate state and local governments that cannot levy property or sales taxes on TVA as a federal entity. State and local governments use the TVA payments to help fund schools, roads and other needs.
  • Expressed appreciation to three directors whose board terms are ending: Bottorff, Mike Duncan and Tom Gilliland. The board continues to have a quorum, and vacancies are filled through presidential appointments.
  • Elected board Vice Chairman Bill Sansom as the new chairman, succeeding Bottorff, to a term expiring Dec. 31, 2013. Sansom previously served two consecutive terms as chairman from 2006 to 2009.
  • Approved a long-term service agreement for up to $120 million with General Electric International, Inc., for the three gas turbines at the new John Sevier Combined Cycle Plant in upper East Tennessee.  

During his president's report, Tom Kilgore also announced that Jim Hagerman, a registered professional engineer, has been recognized as TVA's Engineer of the Year for his work at TVA overall and especially his dedication to the ash spill cleanup and recovery at Kingston Fossil Plant.  A member of TVA's Environment and Technology organization, Hagerman is senior project manager on the Kingston recovery project, where he is helping determine the best ways to restore the area to the way it was before the spill.

Hagerman has also been a principal researcher at TVA in the field of water quality and pollution control. He has helped develop new watershed modeling techniques, incorporated them into TVA's planning process and helped make it easier for citizen groups and state and federal agencies to be involved in that work. Hagerman is now eligible for the Federal Engineer of the Year award, which will be announced in Washington, D.C., early next year.

For high resolution photographs and broadcast quality video of various TVA plants discussed at the board meeting, go to

The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for 9 million people in parts of seven southeastern states at prices below the national average. TVA, which receives no taxpayer money and makes no profits, also provides flood control, navigation and land management for the Tennessee River system and assists utilities and state and local governments with economic development.

SOURCE Tennessee Valley Authority