More than 11,000 TVA workers should get an early Christmas present in their paychecks within the next couple of weeks.

But with TVA’s costs higher and power plant output lower than what was budgeted, TVA President Tom Kilgore said Thursday that the yearend bonuses will be less than the $48.9 million that the utility handed employees a year ago.

“Our estimate is that it is going to be about 30 percent less than last year,” Mr. Kilgore said. “We missed one of our main goals (for power plant performance) and that will reduce what we pay.”

In fiscal 2008, TVA’s major power plants were available for power generation 84 percent of the time, which was below the 88 percent target set in the agency’s “Winning Performance” goals a year ago.

“Our plants are performing pretty well, but they are old,” Mr. Kilgore said. “We’re in a process of refurbishing many of our plants to get back to top quartile performance (among comparable U.S. utilities.)”

Directors of the Tennessee Valley Authority set comparable plant output targets for next year’s “Winning Performance” bonuses during a special board meeting Thursday in Chattanooga. The board challenged TVA management to cut costs as revenues drop because of the declining economy.

In the first eight weeks of the current fiscal year, TVA electricity sales, adjusted for the weather, are down 4 percent because of the economic slowdown, Mr. Kilgore said. If such a decline continues, TVA will have to trim at least $170 million from its current budget to meet the targets for Winning Performance.

“As the slower economy reduces our revenues, we must offset that loss by proportionately reducing our internal expenses, primarily our non-fuel operating and maintenance costs and any capital expenditures that can be postponed,” Mr. Kilgore said.

To qualify for bonuses next year, TVA employees will have to maintain above-average reliability while cutting even more expenses than TVA did in the past year.

“These are tougher challenges than what we had last year,” TVA Chairman Bill Sansom said.

Despite the extra costs, Mr. Sansom said employee incentives are a cost-effective means of rewarding and encouraging better TVA performance.

The average TVA employee last year got a year-end bonus of $3,915. But that average will fall below $3,000 per worker for the fiscal 2008 incentive plan.

TVA rewards employees based upon the agency maintaining above-average performance among utilities for transmission system reliability, power plant performance, net cash flow and reduction in peak demand.