Marvin Runyon and Bill Johnson are seen in this composite photo.TVA President Bill Johnson was strolling down Gay Street in Knoxville this fall when he looked down and saw the name of one of his predecessors at TVA -- Marvin Runyon -- on the brick sidewalk beneath his feet.
Johnson, whose style and approach of running America's biggest public power company has often been compared to Runyon, says he was proud to stand on the foundation laid by Runyon.
Johnson, like Runyon, came out of the private sector and wants to bring a leaner, more businesslike approach to the Tennessee Valley Authority. He doesn't shy away from the comparison to Runyon, the former Nissan and Ford manager who headed TVA from 1988 to 1991. In fact, Johnson was even eager to be photographed standing by Runyon's name on the sidewalk.
Runyon earned the moniker "Carvin' Marvin" for cutting the size of TVA's staff nearly in half through layoffs, outsourcing and plant cutbacks. During his term as TVA chairman, Runyon froze TVA electric rates after previous years of double-digit annual increases in power prices.
Like Runyon, Johnson in his first two years in office has cut TVA's staff and programs. Although rates have risen in each of the past two years, the increase has been less than the rate of inflation.
Johnson expects in fiscal 2015 to operate with $500 million less than the operations and maintenance budget for TVA just three years ago.
"We're on track to meet that goal in 2015, and as you manage your business there are always opportunities every day after that to manage your business better," Johnson said.
The cuts have forced some layoffs and eliminated some programs, such as a pilot energy conservation study in Loudon and the Live Well fitness centers for TVA employees, and delayed work on other projects, including work on finishing the Bellefonte Nuclear Plant in Hollywood, Ala.
TVA also is selling some of its surplus property, including much of the Muscle Shoals reservation in Alabama, and making plans to consolidate its smaller staff in fewer buildings.
But after cutting 2,000 full-time jobs from TVA -- reducing the agency's staff to the lowest level in more than a half-century -- Johnson insists the federal utility is actually doing better on its core mission.
"Every key performance indicator has improved during this period [of staff and expense cuts]," Johnson said. "We actually did do our job safer, better and faster."
The TVA board will meet Thursday in Nashville to review how well TVA met its "winning performance" objectives in fiscal 2014, which ended Sept. 30, and decide on the performance bonuses Johnson and other TVA employees will be paid.
In fiscal 2013, Johnson was paid nearly 50 percent more than his predecessor, Tom Kilgore, even though he was on the job only nine months of that year. Johnson's $5.9 million compensation package in fiscal 2013 -- valued at nearly $7.4 million on an annualized basis -- makes him the highest-paid federal employee in America. But compensation consultants Towers Watson said the average head of a comparable size investor-owned utility was still paid more.
Johnson, a 60-year-old attorney, was paid a severance of $44.4 million after Duke Energy bought out Johnson's old firm, Progress Energy, in 2012.
TVA directors said the federal utility must pay competitive salaries to attract top talent.
Dr. Barbara Haskew, retired dean of the Middle Tennessee State University business college and chairwoman of the TVA board committee on people and performance, said Johnson, like Runyon, has brought strong management skills to the top job at TVA. Haskew worked under Runyon as a rates manager at TVA in the late 1980s and later recruited Runyon to MTSU after he retired as head of the U.S. Postal Service.
Haskew said Runyon and Johnson each have been willing to make difficult decisions to improve TVA operations.
"Bill Johnson is doing great and we need to keep him, particularly through this uncertain period," Haskew said.
TVA's industrial customers, who have complained that TVA has lost much of its rate advantage and has higher prices now than some of its neighbors, also have voiced support for Johnson's cost-cutting efforts and have not objected to Johnson's record-high salary at TVA.
"The TVA board made an excellent choice in hiring him," said John Van Mol, executive director for the Tennessee Valley Industrial Committee, a trade group that represents TVA's biggest industrial customers. "He absolutely 'gets it' when it comes to the value of competitive electric power for making lives better."
Johnson said implementing the cost reductions in the third year of the three-year savings effort "will be the hardest part" during 2015, especially as TVA works to finish a new reactor at Watts Bar, build new gas plants in Memphis and Kentucky and install scrubbers at the Gallatin Fossil Plant in Middle Tennessee.
TVA now has about 11,000 full-time positions on its payroll -- "and not all of those are filled right now," Johnson said.
The TVA CEO said he always expected the utility to do better in key areas with fewer employees.
"If you have engaged in programs like this, it's not really a surprising result because it forces managers to focus on what's important," he said.
Much of the improvement, Johnson said, stems from improving work flows and organizational processes. Fewer people are having to sign off on TVA memos, news releases or work proposals.
"We reduced costs everywhere -- no one was immune," Johnson said.
"Are we going to spend less and have fewer people working in parts of TVA? Yes," he said. " Are the people who count on TVA every day going to notice this? I don't think so."
TVA still has more than 10,000 contract workers across its seven-state region, but most of those are employed in short-term design, construction, repair or maintenance programs at TVA nuclear and coal plants or proposed new natural gas and small modular reactor plants.
The utility still has more than 2,000 contract workers on site at the Watts Bar Unit 2 reactor being built near Spring City, Tenn.
TVA changed the management of the $4 billion Watts Bar construction project in 2012, prior to the hiring of Johnson as TVA's CEO, after the original team failed to bring the project in on budget or on time. Watts Bar is projected to cost about $1.6 billion more and take another couple of years to complete than what was forecast when the TVA board authorized the project in 2007.
TVA Chairman Joe Ritch said the change in management at Watts Bar helped get the project back on track, and Johnson is ensuring the program stays on budget.
"Management of this project is much better now," Ritch said last month after reviewing construction work at Watts Bar.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.