TVA to cut positions due to slumping sales, looming expenses
Published: May 6,2012
NORTH MISSISSIPPI — The Tennessee Valley Authority will seek to cut less than 1,000 positions as it faces a drop in electricity sales driven by an unusually warm winter and looming expenses, including an over-budget effort to finish building a nuclear reactor in Tennessee.
TVA officials reported that the electricity supplier brought in roughly $5.2 billion in revenue during the first half of its financial year ending in March, or nearly 11 percent less than the same period last year. Power sales were down almost 6 percent.
The electric supplier blamed the bulk of those losses on an unusually warm winter, which cut both the demand for electricity and the prices that TVA can charge for it. TVA officials stood by the board’s recent decision to approve adding $1.5 billion to $2 billion to the estimated cost of building a second nuclear reactor at its Watts Bar power plant in Spring City, Tenn. That brings the final cost of the project to as much as $4.5 billion.
“While we still believe that will be a low-cost option and help balance our portfolio for our fleet, the increased spending on that certainly is a hard spot,” said John Thomas, the TVA’s CFO, in a conference call with reporters and analysts.
Seeking to trim its expenses, Thomas said the TVA anticipates it will spend roughly half a billion less on capital projects — such as plans to build another nuclear reactor — and eliminate less than 1,000 positions. TVA officials did not immediately offer more detail on the job cuts.
CEO Tom Kilgore said the TVA will do a better job managing the nuclear construction project at Watts Bar and measuring progress. While the price of natural gas has plummeted, Kilgore said the TVA still needs a mix of power plants — what utilities call a portfolio — because it cannot predict what various fuels will cost deep into the future.
“We think that keeping this balance with having nuclear be a base part of the portfolio is still a good decision,” Kilgore said, adding that the new Watts Bar reactor is expected to produce electricity at less than the cost of TVA’s current wholesale power rates.
TVA provides electricity to about 9 million people in Tennessee, Kentucky, Mississippi, Alabama, Georgia, North Carolina and Virginia.
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