Meeting Aug. 25 in Knoxville, TN, the TVA Board of Directors approved a budget for fiscal 2017 that includes a 1.5-percent effective retail rate increase.
The increase will take effect Oct. 1, at the start of TVA’s new fiscal year. TVA’s directors approved an FY17 budget of $10.37 billion, $330 million less than the previous year’s.
“This budget is in keeping with TVA’s long-term financial plan, which has helped us manage our business to a lower cost structure as businesses and consumers use less energy,” said TVA President/CEO Bill Johnson. “It reflects a modest, incremental rate increase that ensures we make necessary investments in the power system and manage down debt.”
Per the budget, TVA plans to invest $2 billion in cleaner energy resources. Johnson highlighted TVA’s continued work in diversifying the energy generation fleet including the completion of Watts Bar Nuclear Plant Unit 2 as it nears commercial operations; the Paradise, Ky., plant’s new natural gas units expected to begin operation next summer; and the Allen gas plant in Memphis, which is nearly 25-percent complete and scheduled to begin operations in 2018. TVA is also investing more than a billion dollars in clean air equipment at Gallatin, TN, and Shawnee, KY, plants.
“Our diverse portfolio has helped us deliver superior financial performance in recent periods,” Johnson said. “We are making significant investments to balance our asset portfolio further in order to keep rates affordable and stable for our customers under a variety of conditions.”
Johnson told his directors that energy demand is not growing. Even with healthy economic growth overall, he said, power demand has been essentially flat for the past five years – and will likely so continue.
“Our market is changing, and we and our customers are working to adapt to new business conditions that include reduced energy needs and increased demand for energy efficiencies and renewables,” Johnson said.
The TVA board also approved amendments to the TVA Retirement System that will improve the long-term health of the system. These amendments included increasing the yearly TVA contribution to $300 million, changing current employees meeting specific tenure requirements to a 401(k) plan and continuing to provide a cost-of-living adjustment benefit for retirees.