published Saturday, June 29th, 2013

TVA offers buyouts to staff in attempt to cut expenses

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BY THE NUMBERS

• 12,646 -- Number of TVA employees

• 13,000 -- Number of TVA contract workers

• 45.35 -- Average age of TVA employees

• $191 million -- TVA loss in the first half of fiscal 2013

• 530 -- Number of jobs being cut at Bellefonte Nuclear Plant, including 35 TVA employees and 495 contractors.

Source: Tennessee Valley Authority

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    Bill Johnson
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TVA's new CEO discarded the "diet and exercise" mantra adopted last year by the federal utility to get the agency into better fiscal shape.

In its place, TVA President Bill Johnson talks frequently about making America's biggest government utility "safer, better, faster and leaner."

But regardless of the terminology, TVA is trying again this year to cut expenses in response to stagnant power sales. After a net loss of $191 million in the first half of fiscal 2013 and the shutdown of its biggest industrial customer last month, TVA managers say they are planning next year's budget with fewer employees and less operating costs.

TVA announced in May it is slowing engineering work at its Bellefonte Nuclear Plant and will eliminate 530 jobs, including 495 contractor positions.

TVA is now offering thousands of its employees the option of voluntarily retiring or resigning over the next several months with severance payments normally paid only when a worker is laid off.

"There is a lot of anxiety about what is going to happen, if not this year then the next year," said Gay Henson, the Valley-wide president of the local Engineering Association, which represents 2,700 employees at TVA. "How we deal with the fossil plants being shut down is a pretty big hit to us."

TVA's power demand is yet to return to pre-recession levels and stricter air quality rules are forcing the utility to shutter its oldest and dirtiest coal plants. Last month, USEC Inc. shut down its Paducah, Ky., gaseous diffusion plant that was formerly TVA's biggest industrial customer.

Henson said she is hopeful of being able to find other jobs for most of the displaced workers at Bellefonte because of ongoing projects at other TVA nuclear plants.

But TVA already has or may soon idle nearly two dozen of the 59 coal-fired units the utility once operated. Such units are more than 4 decades old and no longer meet today's stricter air pollution standards.

TVA spokesman Duncan Mansfield said managers still are developing plans and no targeted reduction numbers have been set so far. But in a recent interview, Johnson conceded that TVA rates are not as competitive as they once were and the agency needs to do more to control operating and maintenance expenses.

"It's time for us to really hone in on cost management and efficiency," Johnson said.

Next year, TVA will have to absorb the expense of additional contributions to its underfunded employee pension fund as well as cost-overruns at its Watts Bar Nuclear Plant, which TVA originally had expected to be generating power by now.

Severance Offers

With nearly 10,000 staff and contractor workers in the Chattanooga area, TVA is one of the region's biggest employers. Those leaving the agency won't depart empty handed, however.

Employees who work at TVA coal plants and in the utility's fossil engineering, environmental and support services are being offered one week's pay in severance for every year of employment if they leave TVA in coming months. A TVA employee in the affected work areas who decides to retire after 30 years would receive a lump sum payment of about seven months of pay.

The incentives are not being offered throughout TVA, however.

"This is designed to better position TVA for the work ahead," Mansfield said. "In all cases, efforts are being made to minimize impacts to employees as much as possible.

Mansfield said TVA received "about what was expected" when TVA offered standard reduction-in-force incentives in the fossil fuel division for those who signed up by June 5 to quit their jobs this year.

"We are still processing applications and working with employees on their voluntary RIF effective dates, some of which will fall in the new fiscal year," he said.

Similar offers have now been extended to other divisions of TVA.

Contact staff writer Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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