Tennessee Valley Authority
2009 Highlights
A letter from President and CEO Tom Kilgore
Fiscal year 2009 was one of the most challenging in TVA’s history, marked by the Kingston ash spill and an economic decline that affected families and businesses across the TVA region and prompted an unprecedented decline in electricity sales.
Throughout the year, the people of TVA have worked to deal with the consequences of these two events. We have reduced costs throughout TVA’s business, increased borrowing, deferred major expenses to lessen short-term impact on rates and taken advantage of lower fuel costs.
We were pleased that a decline in fuel costs led to the Fuel Cost Adjustment reducing rates in four straight quarters in 2009. Starting from all-time peaks in summer 2008, prices of fuel and purchased power moved downward in 2009. In addition, after three years of drought, the TVA region saw a return to normal rainfall in spring 2009. The result was a 64-percent increase in hydro power, our least expensive source of electricity, from 2008 to 2009.
At the same time, as a result of the national economic downturn and mild weather in summer 2009, power use in the Valley decreased by 7 percent, the largest drop in sales in TVA history.
Overall, TVA operating revenues were approximately $11.3 billion on sales of some 163.8 billion kilowatt-hours of electricity in fiscal year 2009.
TVA’s nuclear fleet contributed nearly 32 percent of TVA’s power mix, an increase of 3 percent from 2008 and a step toward the goal of supplying at least 50 percent of TVA’s power from zero or near-zero carbon-emitting sources. Toward that goal, we are on schedule to complete our seventh nuclear unit, Watts Bar Nuclear Plant Unit 2 in Spring City, Tenn., by fall 2012. The unit is expected to cost about $2.5 billion and add 1,150 megawatts of safe, emissions-free, base-load generating capacity to the TVA system. Looking ahead, we are exploring the options for nuclear units at our Bellefonte site near Hollywood, Ala.
Among many energy-conservation initiatives, TVA’s Energy Efficiency and Demand Response (EEDR) organization is working with customers to reduce the growth in peak power demand by up to 1,400 megawatts by 2012. In 2009, EEDR reduced summer peak demand by 208 megawatts, surpassing its goal of 189 megawatts. More than half of the reduction resulted from a limited test program that pays participating commercial and industrial facilities to reduce the power they use at specific times.
Throughout 2009, we have worked diligently to recover the area around the ash spill at Kingston Fossil Plant. As of November 2009, half the ash had been removed from the Emory River, with the remainder of the ash expected to be removed from the river by late spring.
Within TVA, we took to heart the lessons of the ash spill. We have reassessed our management priorities — placing accountability and safety at the top of the list — and committed to a process of changing our corporate culture from executive offices to plant floors. Our goals are to ensure that nothing like the Kingston spill ever happens again and to enable our employees to reach higher levels of safety, reliability and efficiency in our operations.
Just a half-year before the Kingston spill, on May 18, 2008, TVA had celebrated the 75th Anniversary of its mission of service to the Tennessee Valley region.
This milestone gave TVA employees and retirees an opportunity to reflect on TVA’s contributions to the quality of life in this region, starting with the mission of controlling floods, replenishing fields and forests, opening the Valley to commercial navigation, electrifying farms and rural areas and sparking the regional economy by attracting industries and jobs. We paid tribute to the several generations of men and women of TVA and their can-do spirit of innovation and public service that made it all happen.
In TVA’s 76th year, as we continue to take our tough medicine from the Kingston spill, we have redoubled our commitment to TVA’s role as power provider, steward of the region’s natural resources and catalyst for sustainable economic development.
