Tennessee’s co-ops express concern over sale of TVA Bellefonte site

In a letter to Sherry Quirk, TVA executive vice president and general counsel, on Friday, March 18, TECA CEO David Callis expressed concern with the proposed sale of the TVA Bellefonte nuclear site.

“Our membership is concerned with the disposition of the Bellefonte Nuclear Plant Site,” said Callis. “We understand that Bellefonte isn’t needed in TVA’s current IRP. However, we are troubled that this valuable power asset could be sold as surplus property in a public auction.”

“Tennessee’s cooperatives believe this decision requires a thorough evaluation process that takes into consideration the full value of the site – both current and future needs,” said Callis. “While it may be two decades before TVA needs additional generation (potentially from the Bellefonte site), the value of TVA’s rights-of-way for high voltage transmission lines is too great to risk their loss. In today’s environment, securing paths and siting for new electric lines and substations is costly and time consuming.”

The letter also urged the TVA Board to consider additional input from TVA’s existing Public Advisory Councils and the Local Power Companies that depend on TVA.  Callis also expressed co-op support for the comments of the Tennessee Valley Public Power Association.

The Tennessee Electric Cooperative Association is the service association representing the interests of Tennessee’s 23 electric distribution cooperatives and the 2.5 million rural and suburban consumers they serve.

TVA sets second highest winter peak

Tuesday, Jan. 7, was an all-time record energy day for TVA using 703 gigawatt-hours over the 24 hour period. That equates to an average hourly demand across the entire day of 29,300 megawatts. Monday, Jan. 6, was TVA’s fourth-highest energy day at 678 gigawatt-hours.

“We appreciate all the efforts by our local power companies to reduce voltage, along with any appeals for power conservation locally during the heaviest demand period Tuesday morning,” the statement read. Many Tennessee co-ops took action to conserve energy in their own facilities and requested that members do the same via media releases and social media.

TVA’s peak demand reached 32,490 megawatts at 7 AM CST on Tuesday with a system temperature at 4 degrees. This is the second highest winter peak in TVA history and the lowest average temperature since a 3 degree average on February 5, 1996.

TVA’s record winter demand is 32,572 megawatts set on Jan. 16, 2009 when temperatures averaged 9 degrees, and TVA’s all-time record is 33,482 megawatts set on Aug. 16, 2007 when temperatures average 102 degrees.

TVA expects the cold weather to continue through Wednesday, Jan. 8, and electricity use to remain high. TVA is continuing an in-house conservation effort to reduce electricity use in TVA facilities.

Photo courtesy of Sequachee Valley Electric: Snow and ice accumulated in Sequatchie County on Sunday night, causing an out-of right-of-way tree to fall onto a three phase span and break two poles going up the side of Lewis Chapel Mt. SVEC Linemen worked in single digit temperatures for several hours to make repairs and restore power.

FPU earns high marks on TVA compliance audit

Fayetteville Public Utilities (FPU) has received high marks after an exhaustive audit performed by Tennessee Valley Authority’s Distributor Compliance Group.

During a presentation to FPU’s board of directors, Walter Haynes, representing TVA, told board members that FPU’s compliance audit was “one of the cleanest” he has seen since TVA began performing compliance assessments of each of TVA’s local power companies.

“The compliance audit that TVA does is an audit that looks at the operations of Fayetteville Public Utilities to determine if you are in compliance with the wholesale power contract that you have with the Tennessee Valley Authority,” he explained.  “The compliance audit looks at 14 different areas that are required by the wholesale power contract we have with FPU.”

According to Haynes, each of TVA’s 155 power companies will be assessed on a recurring four-year cycle, with testing focused on contract areas of billing, discriminatory practices and uses of revenue. And, while FPU was scheduled to have its compliance audit performed next year, CEO and General Manager Britt Dye requested TVA perform the audit this summer.

“Because of some not-so-favorable publicity that another utility had from a comptroller’s audit from the state of Tennessee, Britt (Dye) asked us to come on in and do the compliance audit,” Haynes explained, referring to the scathing audit handed down on Lincoln County Board of Public Utilities last year.

Of the 14 areas of focus on TVA’s compliance report, FPU was in full compliance in eight of those areas, Haynes said.

“FPU had a terrific compliance audit,” Haynes told the board. “Fayetteville Public Utilities exhibits a culture which promotes compliance with the TVA contract.

“Fayetteville Public Utilities is very, very fortunate to have the experience and knowledgeable staff that’s here. It’s something you should be very proud of,” he said. “I can tell you in working with a total of eight distributors, that’s not always the case with all utilities.

“…this is the sixth compliance audit I’ve seen, and this is the cleanest compliance report of those six.”

The compliance audit revealed six reportable results, all of which are minor issues, Haynes said. The issues identified – none of which had a financial impact – have been corrected or have a plan in place to be corrected and include such actions as adopting written documents to specify TVA-approved rate codes, installing a demand meter for one customer required to have such a meter and refunding 51-cents to a customer for an incorrect adjustment.

“When we get down to the meat of what has to be corrected,” he said, “it’s almost nothing in all areas. None of these are bad.”

Following Haynes’ presentation, Dye expressed his appreciation to the FPU staff for their work and said he is pleased with the results.

“We were scheduled to have a compliance audit from TVA in 2014 but requested that audit in 2013,” Dye said after the meeting. “This was a detailed audit that checked compliance with our TVA contract, and the results were very good. We are working to provide the proper documentation in the few issues noted in the audit, and there was no financial impact associated with those issues.”

Janine Wilson, chairman of FPU’s board of directors, praised Dye and the FPU employees after the board was informed of the audit results.

“It was no surprise to me or the other board members that FPU had extremely high marks on the recent compliance report,” Wilson said after the meeting. “Mr. Dye and the employees at FPU go above and beyond the call of duty to make sure that things are done correctly and report to the board each month on compliance issues.

“We are all proud of the job that they do, and this community should be proud of such a well-run organization,” she added. “Congratulations to the entire staff at FPU.”

TVA board approves budget, rate increase

KNOXVILLE, Tenn. ― The Tennessee Valley Authority board of directors approved a $10.5 billion fiscal year 2014 budget at its meeting Thursday and a 1.5 percent retail rate increase – TVA’s first increase in two years.  Less than the economy’s modest growth in inflation since TVA’s last rate increase in 2011, the rate adjustment will add about $1.50 to the monthly power bill of a residential consumer using 1,000 kilowatt-hours of electricity.

“While we never like to raise rates, this small adjustment is necessary to meet our 2014 revenue requirements and operate our system safely and reliably,” said TVA President and CEO Bill Johnson. “We will also make critical capital investments to keep reliability high and meet environmental standards and contribute to paying down debt.” TVA’s fiscal year 2014 budget anticipates 4.6 percent lower sales year over year and is about 6 percent less than 2013, including capital expenditures of $3.3 billion for Watts Bar 2 nuclear plant and clean air controls at Gallatin Fossil Plant. Johnson said TVA’s priorities include “living within our means” by bringing operations and maintenance expenses in line with recent trends in declining electricity sales and revenues.  “Demand for our product is down and that won’t change anytime soon. The weather, the economy, energy efficiency/demand response, and rate design are all factors,” Johnson said. “We’re working harder than ever to reduce our costs, but they are not declining at the rate of our sales and revenues.”

TVA is executing a plan to reduce O&M costs by $500 million by 2015 with employees and leadership identifying efficiencies, cost reductions and cost avoidance opportunities. Nearly $150 million in reductions have been achieved this fiscal year with plans for an additional $150 million by the end of 2014 and another $200 million in 2015.

“We are taking action to improve TVA’s operations and financial health so it continues to serve the region for years to come,” Johnson said.  Additional priorities include evaluating future operations of the remainder of the coal fleet, preserving the unfinished Bellefonte nuclear plant as an option for future power generation, continuing to explore Small Modular Reactor nuclear technology, promoting economic development in the region and updating the Integrated Resource Plan, the long-term strategy for TVA’s energy supply as they enter FY14.

Johnson said that TVA employees remain focused on delivering outstanding service while carrying out TVA’s unique mission of delivering safe, clean, reliable energy at low rates as well as promoting economic development and providing resource stewardship.

The new budget and rate adjustment go into effect with TVA’s new fiscal year, which begins Oct. 1, 2013.

Additional Board Actions

The board also approved new programs to foster economic growth in the Tennessee Valley. The TVA Valley Commitment Program will give credit to manufacturing customers for their ongoing commitment to the Valley. The Small Manufacturing Rate Program will give small industrial customers a rate alternative for operating during off-peak demand periods. These new programs and enhancements are intended to serve as interim measures while TVA works with customers and other stakeholders on a longer-term rate strategy, Johnson said.

In other action, the board:

  • Approved a five-year extension of the Environmental Adjustment; up to $3.5 billion in contracts for fuel and purchased power, and up to $4 billion of long-term bonds.
  • Approved TVA entering contracts for hydroelectric modernization and transmission system construction and modification services.
  • Approved changes to the annual and long-term employee performance goals incentive programs.

Freedom to choose

Choices. Not quite as American as apple pie, but pretty close. Given the foundations and the relative wealth of our nation, we’re accustomed to having lots of choices in just about everything we do. We like to have choices, whether it’s selecting a movie to watch, buying a car, or deciding on chocolate, vanilla, strawberry or one of the 28 other flavors.

Other choices are more complex and have long-lasting consequences. One of our most complicated choices involves producing enough energy and getting that energy into your home. This continuous process involves thousands of co-op member- owners and employees across the nation every single day.

The Tennessee Valley Authority generates the electricity we deliver, and its task is as challenging as ours. Some decisions in the past may have knocked TVA from its perch as the lowest-cost provider, but TVA has a long history of providing dependable, low-cost power to Tennesseans.

Generating and delivering electricity to your home involves a lot of difficult choices — a difficult-to-achieve balance of providing enough energy and doing so with a limited impact on the environment. It takes a balance of engineering, design and operational efficiency against environmental and safety concerns. Add cost-effectiveness to that list, and you’ve set some tough goals.

Sometimes, we don’t get to choose. There have been countless attempts to craft energy policy at the federal level. Past efforts would have punished the Southeast for our geography. The wind and sun don’t create as much energy in our region as they do in the West and Midwest. And they never will. Tax credits and financial incentives can’t make the wind blow or the sun shine.

To put it succinctly, we don’t need — or want — Washington policymakers making decisions on how we generate our electricity. Political machinations are a poor substitute for meticulous planning and analysis. Even worse, the choices made by outsiders are ours to live with for decades.

Effective energy policy should be about providing choices. Different solutions work better for different parts of the country.

One example: TVA and the Department of Energy recently entered into a partnership developing small modular nuclear reactors (SMRs). Together with Babcock & Wilcox, this cooperative effort could lead to a new generation of lower-cost, clean generation capacity. TVA has been evaluating small nuclear reactors for several years. The Clinch River site, which TVA had once slated for a much larger, costlier facility, is where the SMR project will be located.

This type of project is among those needed for a balanced energy future. Energy policy shouldn’t be about picking winners and losers; it should be focused on providing you with an affordable, reliable supply of electricity.

The nation’s electric utilities will need a variety of energy sources, from solar arrays to SMRs, to meet those needs. We can achieve our energy goals; we just need the freedom to make the right choices.

Watching wind grow

Wind energy development in the United States is rushing past recent growth records. For example, 6,819 megawatts of generating capacity were installed in 2011; in 2012, that figure jumped to more than 13,000 MW, according to the American Wind Energy Association. In total, the U.S. has more than 60,000 MW of installed wind power capacity.

Since 1 MW powers 750 to 1,000 average homes, more than 45 million American residences could be powered by wind. I say “could be” because wind doesn’t blow constantly. In fact, in our part of the country, there are very few places where the wind blows consistently enough for it to be a reliable power source. While we can’t rely on wind 24/7, it is one tool to have as part of a balanced generation fuel mix.

The industry boomed thanks to federal subsidies for construction of wind farms, sharp drops in production costs and rural economic development projects. Construction of the turbines themselves, however, is not the full cost associated with installing wind production on the electric grid.

Across the country, 50 electric co-ops either own wind turbines or buy output from wind farms, amounting to 4.3 gigawatts, or about 9 percent of the U.S. wind generating capacity. Of course, states in the Upper Midwest and Great Plains enjoy more opportunities for wind power than most others.

The Tennessee Valley Authority’s wind power site is on Buffalo Mountain near Oak Ridge. In 2004, TVA greatly expanded its wind-generating capacity by adding 15 very large turbines to the three original smaller ones at the site.

The newer turbines expanded the capacity of the Buffalo Mountain site to 29 MW of generation, or enough to power about 3,780 homes, according to TVA. The turbines are about 260 feet tall, and the blades are 135 feet long. They have a capacity of 1.8 MW each. The three original turbines, with a capacity of 660 kilowatts each, are 213 feet tall, and their blades are 75 feet long. Generally, the higher the tower, the better the access to the wind.

The primary federal subsidy for wind power project development — federal production tax credits — is available only to for-profit electric utilities. That means not-for-profit electric cooperatives can’t take advantage of the subsidies. Extension of the production tax credit is a hot topic in Washington, D.C., and the credit is likely to end soon.

To get competitive prices, electric co-ops and their wholesale power providers must sign agreements to buy electricity from private-sector wind projects or arrange long-term leasing agreements with a developer who qualifies for the federal incentives, rather than developing wind projects on their own. This would include the expense of transmitting the power from the Midwest to Tennessee.

While the idea of generating electricity from the wind seems to be a no-brainer — the fuel is free, after all — its costs rob wind power of some of its luster. If your cooperative were to rely upon wind generation to power your home, the utility would also require some form of backup power source to combat the intermittency of the wind. In essence, the utility must have redundant sources of generation. And that is very expensive.

Electric cooperatives are no strangers to innovation. As technology continues to advance, we will work hard to provide you with affordable, reliable electric power in a way that makes the most sense for your community.
To learn about other ways we’re looking out for you, visit

Federally Owned – Ratepayer Built

by David Callis, Executive Vice President and General Manager for the Tennessee Electric Cooperative Association

When you’re immortalized in song, you can reasonably assume that you’ve made it. When a government agency is immortalized in song, well, that’s profound.

The group Alabama did just that for the Tennessee Valley Authority with their 1988 hit, “Song of the South.” One verse reads, “Well Momma got sick and Daddy got down. The county got the farm and they moved to town. Papa got a job with the TVA. He bought a washing machine, then a Chevrolet.”

Simplistic as it is, the song sums up the agency’s transformative power on the Valley. TVA, one of several Depression-era stimulus projects, revitalized our entire region, controlling flooding and bringing low-cost power and wealth through jobs and investment.

Over the decades, TVA also transformed itself. No longer a beneficiary of federal funding, TVA is fully financed through power sales. Valley residents know the value of TVA to the region. It has turned the corner from being a Democratic Depression-era program to become an integral part of our political, economic and utility infrastructure.

Over the decades, TVA programs have touched every aspect of life in the Tennessee Valley — from farm production to uranium enrichment. TVA powered the engine that enabled the U.S. to end World War II. The same agency has provided countless summers of fishing and boating for multiple generations of families.

In the 2014 budget of the U.S. government, President Barack Obama advocates the administration’s intent “to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divestiture of TVA, in part or as a whole.”

We’ve been down this road before with advocates of privatization calling for the dismantling of TVA and selling it to the highest bidder. To be fair, past efforts have come from both sides of the aisle, from both the Executive Branch and the Legislative Branch. Even though we “liked Ike,” President Dwight Eisenhower once referred to TVA as an example of “creeping socialism” and told friends in private, “I’d like to sell the whole thing.” TVA privatization even figured into the 1976 Tennessee Republican presidential primary between Ronald Reagan and Gerald Ford.

Selling TVA to the highest bidder seems like a quick fix for those outside the Valley or to those who are unable or unwilling to look at the facts. Transforming a publicly owned utility that sells electricity at cost into a for-profit entity isn’t a good solution for Tennessee ratepayers.

TVA has dealt with challenges before: recovering from an overexpansion of a nuclear program in the 1980s and weathering the deregulation and restructuring of the electric utility industry of the 1990s and the Kingston ash spill a few years ago. The agency has streamlined operations over the years: The number of employees has declined, and TVA is managed by a part-time board that is more diverse than ever. TVA may have issues to deal with, but we’ll deal with them together — they affect all of us.

Though the federal government owns TVA, the ratepayers in the Tennessee Valley provided the funds that constructed the generation assets and world-class transmission system. The ratepayers have paid back the original loans from the U.S. Treasury — with interest. If there is a divestiture of TVA, it should be a transfer to those ratepayers. It’s ours; we built it.

Simply put, TVA may be federally owned, but it is ratepayer-built.