published Saturday, November 20th, 2010

TVA triples Kilgore pay

The Tennessee Valley Authority more than tripled the pay of its chief executive this year and will give its 12,000 employees bonuses averaging more than $6,900 each next week.

TVA President Tom Kilgore was paid a record high $3.6 million in the fiscal year ended Sept. 30, according to the annual report released Friday.

Overall, TVA more than met most of its annual performance standards, triggering the payment of $94 million of "Winning Performance" bonuses. Kilgore said fiscal 2010 was the utility's best in meeting performance goals since 2002.

The utility's 90 top executives will average more than $120,000 each as a reward. Nonexecutive employees will get checks averaging $6,917 each.

The utility also is giving salaried employees an average raise this fall of 2.9 percent, Kilgore said. Under the TVA act, the utility conducts pay surveys with comparable businesses to set its compensation levels.

Kilgore, 62, gave up any pay raise or bonuses a year ago following the December 2008 coal ash spill in Kingston. But he was the highest-paid federal employee in America in fiscal 2010, and he will be eligible to make $200,000 more in the next year if he again meets all of his performance standards.

Kilgore and other top TVA executives still are paid less than most of their peers at comparable investor-owned utilities and at least a dozen other Tennessee companies. A study by Towers Watson found the typical major utility CEO was paid more than $6 million last year.

"While our compensation plan is designed to pay market rates, we tend to be conservative and pay below the market," TVA Chief Financial Officer John Thomas told reporters during a briefing Friday. "We had a good year and all of our executive pay is based upon performance. We believe these compensation programs do matter in driving performance and in TVA's ability to attract and retain talent."

But taxpayer and consumer advocates denounced the utility for giving big pay raises to executives while most communities in its region are coping with jobless rates near or above 10 percent.

"At a time when taxpayers and TVA ratepayers are struggling to make ends meet, it's offensive that this government agency would heap such a massive pay increase on its top executive," said Justin Owen, president of the Tennessee Center for Policy Research, a taxpayer advocacy group in Nashville. "This represents government largesse more than reasonable compensation."

U.S. Rep. John Duncan, R-Tenn., also objected to million-dollar-plus salaries for TVA's top executives.

RIGHT2KNOW

The Times Free Press has tripled the size of a salary database by adding 43,630 full-time state employees. See what they make at www.timesfreepress.com/content/right2know.

The Times Free Press Right2Know site uses public records to provide information about a variety of topics, including the salaries of public employees, arrests and crime.

TVA in 2010

* Average electricity rates were down 9.3 percent and TVA improved its cost ranking among the top 100 utilities from 41st in 2009 to 31st in 2010.

* Net earnings rose 33.9 percent to a record high $979 million and power sales rose 6 percent.

* TVA worked on economic development projects that yielded $4.3 billion of investment and 40,999 jobs in the Tennessee Valley.

* Debt rose 3.5 percent to $23.4 billion, $200 million below projections, while cash grew by $100 million.

* Employee accident rate dropped to less than half the rate of three years ago.

* Nuclear performance capacity rose from 89.1 percent to 90.6 percent and the Unit 1 reactor at Browns Ferry completed a record 586-day run.

* Coal plant availability rose to 85.8 percent.

Source: Tennessee Valley Authority

"You don't have to pay people ridiculous salaries to get them to come to East Tennessee and work," said Patrick Newton, a spokesman for Rep. Duncan.

TVA's employee turnover rate averaged 6 percent last year, meaning that about one of every 17 workers quit or retired.

TVA earns B plus

Kilgore on Friday gave the utility a "B-plus" for fiscal 2010 with improvements in rates, reliability and environmental performance. Electricity sales rebounded by 6 percent but revenues were still down because of lower fuel costs.

"Not many utilities would say they had a good year when revenues were down," Kilgore said. "But TVA did have a good year when we produced more electricity than the year before with lower revenues. Because TVA doesn't make a profit, one way we measure success is keeping prices low for our customers."

The average monthly wholesale rate for TVA electricity was down 9.3 percent from 2009. Net income rose to a record $972 million on sales of nearly $10.9 billion.

The utility reinvests net income in its power business, Kilgore said.

"We bring in our own revenue and don't get a single dollar of taxpayer funds," he said.

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

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deltenney said...

No taxpayer funds? That part is good, if true, but this salary,bonus increase is unseemly in a time of national economic crisis. Wish we could have the "rest of the story."

November 20, 2010 at 10:21 a.m.
ratepayer said...

To deltenney: You want the rest of the story? If TVA was a private investor owned utility your rates WOULD go up as a result. Think about it! An investor owned utility is focused on profit for it's shareholders, TVA is focused on keeping rates as low as possible for the valley. This has been the goal of TVA since day one. The executive compensation is far below the average of other utilities and as an employee, our salaries are market based and performance driven and we have the same opportunities as you to better ourselves. Could you do the job of a CEO? If you could then why don't you? It is articles like this that keep people like you UNINFORMED about the true vision of TVA versus the vision of other investor owned utilities. Do some research into other companies and then compare salaries. I think you will find a different headline than what this article is trying to imply.

November 20, 2010 at 12:53 p.m.
ratepayer said...

More information that was left out of the article: The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities that can produce about 34,000 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA’s service territory are below the national average.

November 20, 2010 at 1:01 p.m.
dave said...

I say keep TVA just the way it is. As someone said it has worked so well that the Government never saw fit to repeat the experiment! It set out to do exactly what it was commissioned to do and did it well-bring low cost electrical power to the Tennessee Valley. I also feel that a "for profit" company will not make the needed choices to operate nuclear power stations correctly but will be driven by economics rather than safety. Returning a profit for the stockholders will come ahead of public safety.

November 20, 2010 at 1:33 p.m.
SavartiTN said...

I will NEVER complain about TVA and its rates. I have lived places that had for-profit utilities.

November 20, 2010 at 3:58 p.m.
fairmon said...

The TVA is an excellent resource and provides electricity at excellent rates consistent with it's initial charter as an economic stimulus to the impoverished Appalachian region of the country. As with most government entities it has gone beyond the initial charter and is into more than power generation and distribution. I don't think the CEO or any one individual is familiar with all TVA activities and the lax management and lavish behavior of some. Perhaps it is time for another Runyon as CEO. I would not want anyone other then the TVA operating the nuclear facilities.

The liberal personnel practices and policies other than compensation irritates the heck out of those that are aware of them and know what the behavior of a productive employee should be. I attended a few seminars with some of their HR and personnel managers plus had other direct dealings with TVA employees. Some were excellent but those HR folks would put Obama, who is supposedly liberal, and other liberals to shame. I had never heard before or since such ridiculous philosophy as they were espousing regarding people. One had the audacity to say "I am good with people, I know what makes them tick" as she irritated everyone around her with her arrogant attitude.

November 20, 2010 at 4:32 p.m.
sideviews said...

If TVA acts just like a business and feels compelled to pay execs like other businesses, then maybe it's time TVA becomes a business and pays it's taxes like other utilities

November 20, 2010 at 5:10 p.m.
tennresident said...

In response to sideviews, the following is quoted from TVA's 2010 news releases. "In accordance with the TVA Act, TVA pays in lieu of taxes payments to eight states and 144 local governments where it conducts business or holds power-related assets. The payments are based on power sales revenue from the previous year and the book value of TVA-owned power property in each state."

Here are the payments by state: Alabama $125,442,935 Georgia 8,777,429 Illinois 495,278 Kentucky 49,472,778 Mississippi 34,586,920 North Carolina 2,889,121 Tennessee 327,323,789 Virginia 1,320,742 Total $550,308,992

To review the entire statement: http://www.tva.gov/news/releases/octdec10/2010_tax_equivalent.html

November 20, 2010 at 7:26 p.m.
deltenney said...

These comments are enlightening and informative and obviously well researched. I do feel the agency or entity or utility has room for review on salary increases -- that was my what my comment related to. It is not that other utilities pay more or less. The residents of this area are certainly blessed to have TVA benefits, no question.

November 21, 2010 at 11:19 a.m.
hcirehttae said...

This old boy CEO makes less than that ridiculous football coach, Nick Saban, and a bunch of his ilk. Think about that before you complain about the salary of a highly educated, highly skilled person whose work contributes greatly to our society.

What is the social utility of big-money football, either college or professional? In theory, it does keep a lot of young men off the streets, away from a life of crime, for four or five or six years. I guess I should be thankful for that...

November 21, 2010 at 12:02 p.m.
sideviews said...

TVA pays no federal taxes on income. TVA pays 5 percent of frevenues on what it calls tax-equivalent taxes, but that is 40 percent less than the 8.5 percent average share of revenues paid by the average investor-owned utility, according to Ediison Electric Institute.

November 21, 2010 at 5:06 p.m.
TeaParty330 said...

Tom Kilgore appears to be a great CEO and he and his top assistants have kept the lights on reliably and tackled key challenges. But 20 years ago, those in the same position were paid less than 10 percent of what Kilgore will receive in total compensation this year and next. and there were more employees and construction projects underway at the time and the overall job market was much better. Top TVA pay has risen ten-fold in the past two decades -- and has doubled even since the economic downturn hit three or four years ago. Legally, TVA directors must pay competitive wages. But one would hope that TVA executives in a depressed part of the country (that's why TVA was created) would not continue to take million-dollar-plus pay levels, at least until others of us are also getting pay raises again.

November 21, 2010 at 9:24 p.m.
ratepayer said...

All I can say to you TeaParty330 is if you and your new party can solve the out of control CEO pay of major corporations then that will be truly be a step in the right direction. Meanwhile, TVA execs are paid well below the average of other utilities in the same industry. It is ironic that your party is against healthcare for all and yet when you look at, for example, the CEO of HealthCare of America he pulled down three times as much as the CEO of a company that actually produces something for consumer use (TVA). Oh and TVA does have projects under construction, actually a nuclear reactor is under constructon and set to go online at Watts Bar in the near future. Bellefonte is on the board to finish what was started years ago, and there are numerous transmission projects scheduled to maintain the reliability the valley has become accustomed to. A combustion turbine gas plant is under construction in West Tennessee and one is to be built in East Tennessee as well. Twenty years ago there was tremendous waste and neglect of obligation within the company and as a result TVA basically has had to reorganize to remain competitive. Reagan actually started in the early eighties when most represented crafts were essentially done away with. Projects were shut down and people and towns in the valley was hit hard.

It is hard to say we live in a depressed part of the country when Blue Cross can afford to build a luxury office complex within walking distance of downtown Chattanooga. TVA is one entity of the federal government that strives to do the right things and is a vital part of the success of this region.

November 22, 2010 at 12:53 a.m.
skeeballcore said...

The fact that the Times Free Press is seeking to give out the salaries of all TVA employees...none of which are paid with taxpayer funds, most that earn less than if they worked at other utilities...who would really rather not have the whole world know their salary...it's a pretty desperate attempt at "news".

November 22, 2010 at 8:45 a.m.
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