Meeting Aug. 23 in Knoxville, TN, the TVA Board of Directors approved a fiscal 2018 budget of $10.37 billion budget, including a 1.5-percent effective retail rate increase.
Calling the rate increase “modest,” TVA President/CEO Bill Johnson said the hike “recognizes the need for TVA to continue to build on the financial and operational performance improvements we have made over the past three years.”
TVA’s directors also approved a one-time, $500 million contribution to the TVA Retirement System – in addition to the yearly contribution of $300 million.
“A major focus on TVA’s financial health has been to attend to long-term liabilities, especially related to debt and pension,” Johnson said. “The board has taken steps today to reduce both of those through the … base rate increase and the pension contribution.”
Johnson and new TVA Chair Richard Howorth also took time during the meeting to note the changing of the guard at TVPPA. Each man recognized new TVPPA President/CEO Doug Peters and his predecessor, Jack Simmons, whose retirement takes effect Oct. 1.
TVPPA Chairman Greg Williams addressed the TVA board as well, saying Johnson and his team “have worked very hard to build credibility and trust within the Valley” and highlighting several “challenging, but timely issues” that serve as “key objectives” for TVPPA:
Strategic Pricing Plan: “Discussions continue to be robust and productive,” Williams said. “The staff [and] our Rates and Contracts Committee are working fundamentally change our wholesale rate structure to include a fixed-cost component.”
Distributed Energy Resource Council: “As more and more energy sources are connected to the distribution system, we must work together to construct appropriate rate structures and consider the impact of the power system,” Williams said. “The DER Council will be the platform through which we conduct strategic planning around subjects like renewables, energy efficiency, demand response and even fiber deployment.”
Contract Flexibility: “Given the changing landscape of distributed energy resources and the infiltration of third parties to meet renewable power supply needs, it is truly time to consider flexibility in our power requirement contracts,” Williams said.
TVA’s Long-Range Financial Plan: “It’s tough to deal with rate increases … at the local level [and] communicate that to the folks we serve,” Williams said. “TVA has done well in balancing those increases with lower O&M and [a] mix in generation, [but] what we consider to be the most important thing is being able to be at the table with you for those discussions going forward. We very much want to be part of the planning and fully engaged in providing relevant input in the future of our power suppliers for cost and ultimate rates.”