TVA eliminating more than 2,600 positions to save, compete

TVA's Bill Johnson

The Tennessee Valley Authority will cut more than 10 percent of its staff positions this year as it shutters more coal plants and trims operations to bring the federal utility more in line with competitors' staffing levels.

TVA accepted 750 early retirements and resignations under a voluntary incentive program this year and won't fill about 1,000 other vacant staff positions, TVA President Bill Johnson said. Other staff cuts are planned in TVA's nuclear power program, which is still being reorganized. But even before TVA cuts its own nuclear staff, 390 Bechtel contractors are scheduled to be laid off this summer from the Watts Bar Nuclear Plant in Spring City, Tenn.

TVA also expects to have to make some involuntary layoffs this year, although managers still are working to identify staffing personnel and numbers to meet budget targets.

The staff reductions are the biggest at TVA in more than two decades and are designed to help America's biggest government utility bring its staffing levels and rates more in line with other electric utilities adjusting to a slowdown in the growth of U.S. power consumption. Johnson has set a goal of reducing annual operating and maintenance expenses by $500 million by 2015.

"We have had higher operating costs than some of our neighbors, so we're looking at ways to bring our costs down and operate more efficiently," TVA spokesman Duncan Mansfield said. "It's all driven toward trying to keep our rates low."

Johnson said TVA's staff grew bigger than those of other utilities in the past decade, and the utility is having to adjust to an unprecedented drop in the growth of electricity demand.

Following the economic downturn in the 2008-09 recession and increased energy efficiency and conservation in recent years, TVA doesn't expect to get back to the power peaks it reached in 2007 for another decade.

"On a comparative basis if you look at the staffing of TVA compared with similar entities, we have had more people," Johnson said. "Over the years, we've accumulated more [staff positions] than others in our industry."

TVA will pay a severance package equal to one week's pay for every year of employment, up to a 30-week maximum, to employees who voluntarily leave TVA in jobs that the utility is phasing out. In a financial filing today, TVA said it has paid out $3 million in severance pay already and anticipates spending another $25 million in severance payments to workers who resign, retire or are laid off this year.

"You can tell by the 750 [wanting to retire or leave] that there was a lot of pent-up demand, stemming from the economic conditions of the past few years," Johnson said. "We joke that the 401(k) [retirement plans] went to a 201(k), but that is coming back now."

Johnson said managers have worked on reorganizing and realigning staff over the past year to make sure the reductions can be made without compromising TVA's operational performance, safety or reliability. Staff cuts are being made across the TVA organization and at facilities across the seven states served by TVA.

Johnson said staffing and budget were higher than normal over the past decade because TVA was catching up on deferred maintenance and investments in the past when TVA tried to avoid raising prices through the 1990s and early part of the 21st century.

"Generally, capital spending should be equal to amortization, but there were periods in the past when our capital spending was half of our amortization," Johnson said. "Not raising rates for so long was a laudable goal, but it's like that Fram commercial, 'Pay me now or pay me later.'"

But such maintenance catch-up is nearing an end, Johnson said.

"In terms of the material condition of our assets, they are much improved from where they were five years ago," he said.

Although TVA has upgraded most plants, TVA has not invested in some of its oldest coal plants built in the 1940s and 1950s. TVA has determined it no longer made financial sense to invest in preserving the aging units and trying to bring them up to meet today's stricter air quality standards.

TVA shut down its John Sevier plant and most of the eight units at its Widows Creek plant and is in the process of shuttering other units at Colbert in Alabama, Johnsonville in Tennessee and Paradise in Kentucky. TVA is considering other possible coal cutbacks at Allen in Memphis and Widows Creek near Stevenson, Ala.

"One of the reasons for retiring these coal plants is that the capital requirements are so high compared to the uncertainty of what you get in terms of how long they can run," Johnson said.

The staff cuts come a decade after TVA eliminated 739 jobs in a cost-cutting program in 2004 and two decades after TVA cut more than 2,400 jobs in 1994.

At its peak in 1981, TVA had more than 52,000 employees, including its construction work force that the utility has since contracted out to other companies.

Pedestrians walk past the main entrance to TVA in downtown Chattanooga in this file photograph from 2012.

To aid displaced workers from the latest reorganization, TVA opened outreach centers at its offices in Chattanooga, Knoxville and Muscle Shoals, Ala., early this year.

"We have folks in each center to help workers wanting help with writing resumes, searching for other jobs or making other career adjustments," TVA spokeswoman Gail Rymer said.

Contact Dave Flessner at dflessner@timesfree press.com or at 757-6340.