KNOXVILLE — The economic slowdown will give electricity users another break in the price of power this spring but also will cut out any pay raise or bonus for most TVA employees this year.
For the second time this year, the Tennessee Valley Authority will cut power rates in April. But in response to lower sales and earnings, the TVA board voted Thursday to cut the pay of their CEO in half and eliminate merit and bonus pay for most TVA employees this year.
TVA announced Thursday that its electricity charges will drop another 7 percent on April 1, reflecting lower coal and natural gas prices paid by TVA to generate and buy its power. The April drop follows a similar 6 percent cut in rates from the quarterly fuel-cost adjustment made in January.
TVA President Tom Kilgore said the slowing economy has cut consumption and helped lower prices for natural gas, coal, oil and purchased power.
“In these economically challenging times, we are especially glad lower fuel costs will provide some relief in power costs,” he said.
The April rate cut will save the typical Chattanooga residential customer from $5 to $7 a month and will help keep TVA rates below nearby utilities in Alabama, Mississippi and Florida but above the electric rates charged by utilities in Kentucky, Georgia and Ohio, according to TVA and EPB figures.
TVA adjusts its rates every three months based upon the costs of the coal, natural gas and power it purchases from other utilities. Soaring coal, gas and oil prices generated the biggest jump ever in fuel expenses and helped push up TVA rates by more than 30 percent during 2008.
Colder than normal temperatures this winter have pushed up home heating usage and bills and generated a new wintertime consumption peak. But industrial power sales are falling and for all of fiscal 2009 TVA projects it
TVA power sales in fiscal 2009 are projected to drop from 4.5 percent to 6 percent -- the first yearly drop since the recession of the early 1980s, Mr. Kilgore said.
The slowdown means TVA won’t meet its performance targets for fiscal 2009. In response, TVA directors voted Thursday to cut out its annual bonus payments for its top executives and to not grant merit pay increases or corporate bonuses for TVA employees.
“These are not usual times and in order to do what we need to do for our customers we really need to be focused on efficiency and costs,” TVA Director Dennis Bottorff said. “The net impact of this change is that in 2009, Tom (Kilgore’s) total compensation will be reduced by about 50 percent.”
Mr. Kilgore said he and his top managers agreed to forego any of the bonuses this year which pushed most of their compensation in 2008 near or above $1 million each.
“We appreciate the fact that we have jobs when many people don’t,” he said.
In December, TVA paid $37.2 million in year-end incentives to its 11,849 employees. Such bonuses will be cut out this year.