TVA Chief Executive Officer Outlines TVA's Vision and Strategy for Future Operations

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Aug 20, 2010, 01:20 ET

KNOXVILLE, Tenn., Aug. 20 /PRNewswire-USNewswire/ -- The Tennessee Valley Authority Board of Directors on Friday adopted a renewed vision for TVA's future, focusing on cleaner air and greater energy efficiency and eventually replacing some of its older coal-fired generation units with low-carbon or carbon-free sources such as nuclear power.

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"TVA's basic mission has not changed, but the times have changed and requirements are changing for the energy industry," CEO Tom Kilgore told board members. "TVA's vision to lead our nation toward a cleaner energy future means relying more on nuclear power, continuing to improve air quality, relying less on coal and sharpening our focus on energy efficiency."

For TVA to continue to achieve its mission in today's economic climate, the corporation must lead with continued focus on key critical issues, including keeping bills low, maintaining power system reliability and strengthening the company's reputation, Kilgore said.

"Much of our stakeholder input and other assessments point toward a greater reliance on nuclear power and energy efficiency and less reliance on coal," Kilgore noted. "Replacing some coal with other, cleaner fuel sources allows a reduction in air emissions, including carbon. One of TVA's key goals is to reduce our carbon intensity."

TVA's vision of providing cleaner energy will be guided by its Integrated Resource Plan, a broad assessment of the utility's options for fulfilling its mission over the next 20 years. A draft of the Integrated Resource Plan is expected to be released for public comment in September, and the plan should be finalized in the spring, Kilgore said.

As part of the move toward greater demand response and energy efficiency, the TVA Board also approved a change in the wholesale rate structure. The new structure, to be implemented in April 2011, will include options for time-of-use rates that more closely reflect the cost of electricity production, which can be significantly higher on hot summer afternoons and cold winter mornings than at other times.

"TVA is implementing this wholesale rate change to encourage energy efficiency and peak demand reduction, giving customers who alter their electricity consumption patterns the opportunity to reduce their bills," said John Trawick, senior vice president, Commercial Operations and Pricing.

Board members also approved TVA's budget for fiscal year 2011, which includes $248 million for work at the Bellefonte nuclear site in North Alabama to maintain the option for future power generation. Next year, the TVA Board will consider whether to complete construction of the nuclear power generating unit there. Construction was halted several years ago, but studies show new generation capacity will be needed by 2020, and nuclear energy provides power generation with no carbon emissions.

The fiscal year 2011 budget, which includes no base rate increase for the fiscal year, also includes $635 million for construction of the Watts Bar 2 nuclear facility in East Tennessee, scheduled for completion in 2013; $314 million for construction of natural gas-fired power generation at the John Sevier plant site near Rogersville, Tenn.; and $351 million for environmental improvements at coal-fired plants, including converting wet ash storage facilities to dry. In addition, the budget contains $135 million for energy efficiency and demand-response programs and $70 million for economic development.

The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities and supplies up to 33,700 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA's service territory are below the national average.

SOURCE Tennessee Valley Authority