A conversation with President and Chief Operating Officer Tom Kilgore

Tom Kilgore was named president and chief operating officer of TVA in March 2005.

Kilgore previously served as president and chief executive officer at both Progress Ventures, a subsidiary of Progress Energy, and Oglethorpe Power, which supplies power from fossil, nuclear and hydroelectric plants for 39 consumer-owned utilities in Georgia.

A native of Alabama, he earned a bachelor’s degree in mechanical engineering from the University of Alabama and a master’s in industrial engineering from Texas A&M University. He is a member of the Alabama Engineering Hall of Fame and a Distinguished Engineering Fellow at the University of Alabama.

Q: What were your main impressions of TVA before you came on board?

I grew up in North Alabama. I saw firsthand how TVA fostered the economic health of the area.

One of my first jobs during college was on a TVA fossil-plant testing crew, so I have always been familiar with the size and scope of TVA’s operations.

My previous experience gave me an appreciation for the importance of TVA’s relationship with its distributor customers.

The people of TVA have much to be proud of, and one of my goals is to reinforce employees’ pride in their own and in TVA’s proud history of achievements.

Q: What were the top operational accomplishments in 2005?

Tahnika Rodriguez of Bulk Power Trading buys and sells megawatt-hours in the power market.

Overall, this was the best that TVA’s integrated power system has ever performed. For the year, TVA’s system supplied our customers with more than 171 billion kilowatt-hours of electricity. You have to give credit to my predecessor, Ike Zeringue, for leaving the operating facilities in a high state of readiness.

The biggest test came during a stretch of scorching days in July, when the TVA system met peak power demands of over 29,000 megawatts on eight consecutive days.

It was the first time the system had ever had peaks of over 29,000 megawatts on any two days in a row, let alone eight. During that streak, we met our two highest peak demands ever, and the high demand continued through the fall. Starting in June, TVA set new monthly peak-demand records for five consecutive months, extending into the new fiscal year.

For the year, TVA’s coal-fired plants generated 98.4 billion kilowatt-hours of electricity, 4 percent above last year’s total. Our system of 11 coal-fired plants achieved its best reliability ever recorded for a fiscal year. Six fossil units set continuous-run records, including Widows Creek Unit 3, which in April completed 819 days of continuous operation to set what was at the time a national record for nuclear and coal-fired units.

All five nuclear units ran near full capacity during the crucial summer months. Their equipment reliability for the fiscal year was the best ever, with days offline due to equipment failures totaling just 6.2.

Thanks in part to our ongoing hydro power-train modernization program, TVA dams generated 15.7 billion kilowatt-hours, 13 percent above normal. This is especially impressive since rainfall for the year was 9 percent below normal.

It was the best year ever for TVA’s transmission-system reliability. We not only completed the sixth year in a row of 99.999-percent reliability to our customers, but we also achieved our best-ever performance in a key reliability indicator — Load Not Served. Looking to the future, we plan to continue making significant investments in TVA’s transmission system.

Q: What were TVA’s top accomplishments as stewards of the Tennessee Valley region for 2005?

One of the basic aims of TVA is to be a good steward of the region, improving our environment, fostering economic development and supporting communities.

TVA continues to improve its management of the nation’s fifth-largest river system. In its first full year of operation, TVA’s new reservoir operations policy helped us meet flow commitments, keep water levels high through Labor Day and generate much-needed hydropower to help meet record power demands.

Fifty-three marinas have now joined the TVA Clean Marina program. The program recognizes marinas that adhere to practices of responsible waste management and overall environmental compliance in their operations and by their boating customers.

Our watershed teams, working in partnership with 8,100 volunteers, collected more than 300 tons of trash and debris from area reservoirs, streams, parks and roadways.

And TVA’s series of locks and navigation channels enabled the low-cost barge transport of some 50 million tons of cargo, saving shippers almost $550 million over the next-cheapest alternative.

But I am most excited about the positive changes we are making to keep improving the air we breathe. Studies show that air quality in the TVA region, including the Smoky Mountains, is better now than at any time since at least the 1970s. In part this is the result of TVA’s emissions-control program, which is one of the most aggressive in the nation.

TVA expects to add five sulfur-dioxide (SO₂) scrubbers to the six already in operation. Two are under construction, at Paradise Fossil Plant in Kentucky and Bull Run Fossil Plant in Tennessee. When the five are finished, overall SO₂ emissions are expected to be reduced by 80 to 85 percent below 1977 levels.

With this year’s addition of two new selective catalytic reduction systems, TVA now has 20 in operation. These and other measures have reduced summer nitrogen-oxide emissions by 80 percent since 1995.

TVA’s economic development efforts helped retain or attract some 57,000 Valley jobs.

In response to the growing need for large industrial properties, or “megasites,” for automotive-manufacturing or assembly plants, TVA two years ago introduced an industrial-site certification program.

TVA contracted with the site-location firm McCallum Sweeney Consulting to identify, evaluate and certify potential megasites. In the past two years, five megasites have been certified — one in Kentucky, two in Mississippi and two in Tennessee.

An important aspect of corporate citizenship comes from the employees who make up TVA. Their contributions to our quality of life can be seen in numerous, often unheralded activities performed every day.

These activities were exemplified by selfless acts on the part of employees and retirees in the relief efforts following Hurricanes Katrina and Rita.

Winston Churchill said, “We make a living by what we get, but we make a life by what we give.” I am proud that TVA employees and retirees continue to demonstrate that they know what life in this region is about.

Q: What is TVA’s top challenge in 2006?

The rising prices of coal, natural gas and purchased power present one of our toughest ongoing challenges. Moreover, the ever-increasing demand for coal means we face mounting difficulties in getting our coal delivered, in terms of cost and availability.

Q: What are your main areas of focus moving forward?

Four important keys to TVA’s future are:

1) Operational Excellence — We intend to continue meeting rising energy demands day after day through the most efficient use of system resources.

2) Financial Flexibility — Being frugal in a smart way, we must continue to reduce our debt so we are ready to meet future challenges.

This year we were able to pay down our total financing obligations by over $300 million, which was more than what was budgeted for the year. This brings our total reduction since the end of 1996 to $2.1 billion.

This is a good trend. Still, it is not aggressive enough. We plan to more than double that reduction over the next 10 years.

3) Customer Relationships — To be successful, we must work effectively with the 158 power companies that serve 8.6 million people across the region and with our 61 directly served customers.

4) Quality of Life in the TVA Region— We are committed to TVA’s core mission of managing the region’s natural resources, stimulating economic growth and supporting communities as they work to improve the quality of life in our region.