A letter from Chairman Bill Baxter
It is my privilege to serve as TVA’s chairman, along with Director Skila Harris, in an important and exciting period of transition.
As TVA prepares for the future, we are focused on sustaining our momentum in the key areas of 1) operational excellence in generating and transmitting electricity, 2) environmental stewardship, 3) our mission of fostering economic development in the Tennessee Valley and 4) our disciplined work to increase TVA’s financial flexibility.
A Successful Year in Operational Excellence
TVA’s generation and transmission system enjoyed its most successful year on record in fiscal year (FY) 2005, selling more than 171 billion kilowatt-hours of electricity to our customers and earning revenue totaling almost $7.8 billion.
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| Chairman Baxter and Director Skila Harris at a July board meeting in Knoxville. |
The TVA power system’s performance throughout the year is a tribute to operational excellence in fossil, nuclear, hydro, bulk power trading, transmission and all parts of the TVA system.
For the sixth year in a row, TVA’s transmission system delivered power to customers with 99.999-percent reliability.
On July 25 and 26, the power system met TVA record peaks of 31,703 and 31,924 megawatts, respectively.
The second peak was 1,958 megawatts, or 6.5 percent, higher than the TVA record before July 25.
In the years to come, the system is expected to grow even stronger. Work to restart the Browns Ferry Nuclear Plant Unit 1 reactor is on budget and on schedule for completion in 2007. Scheduled to be the nation’s first nuclear unit to come online in the 21st century, Browns Ferry 1 is expected to add 1,280 megawatts of zero-air-emission, low-cost base-load power to the TVA system.
Environmental Stewardship
TVA is doing its part to make the Valley’s air cleaner for our children and grandchildren. During 2005, TVA invested $202 million in clean-air equipment. When our current commitments are completed, TVA expects to have invested $5.7 billion to reduce emissions.
As stewards of the Tennessee River system, TVA works with partners across the TVA region to improve water quality through watershed teams and initiatives like the Clean Marina program.
Economic Development
Meanwhile, TVA continues to deliver on its mission of economic development, partnering with public officials and community leaders who work to bring quality jobs to the region and keep them here, enabling communities to realize their dreams and making life better in the TVA region.
In FY 2005, TVA and our state and local partners helped attract or retain 57,000 jobs and leveraged investments of $3.6 billion in our region.
Financial Flexibility
TVA is taking aggressive steps to reduce debt and give the corporation the financial flexibility it needs to meet the region's ever-increasing demand for electricity. This year we reduced our total financing obligations by $301 million. This brought the total reduction of our financing obligations to $2.1 billion, from $27.7 billion at the end of 1996 to $25.6 billion at the end of FY 2005. In those nine years, the amount of each revenue dollar used to pay interest and other financing expenses has declined from 34 cents to 18 cents.
An Exciting Future
This year we were pleased to welcome to TVA Tom Kilgore, who in March became president and chief operating officer. Tom is an outstanding choice for leading TVA’s operations.
Tom has 30 years of experience in the electric-utility industry, most recently as president and chief executive officer of Progress Ventures in North Carolina. He is hard-nosed but gracious, and a natural leader, with a keen understanding of the complex challenges facing TVA in an era of competition.
At the corporate level, TVA is moving toward completion of its transition to a nine-member board of directors and a single CEO.
Director Harris and I look forward to welcoming the seven new directors when they are nominated by the president, confirmed by the Senate, and sworn in as members of the TVA Board. Once in place, the new board will name a chief executive officer to run TVA’s day-to-day operations. This new management structure will enable TVA to move more quickly to adjust to a fast-changing business environment.
This is a time of transition, ongoing improvements and positive changes. What is not changing is TVA’s commitment to our mission of service to the region. As we adapt to changing conditions, TVA will continue to provide the benefits of our unique combination of energy, environment and economic development. As it has been for 72 years, the winners are the people, businesses and communities of the TVA region.
Bill Baxter
Chairman