TVA tax payments up; distribution may change

TVA tax payments up; distribution may change

January 10th, 2012 by Dave Flessner in Business Around the Region

The TVA power headquarters and office complex in downtown Chattanooga, center, is surrounded by, clockwise from top left, the Chattanooga Convention Center, the Chattanooga-Hamilton County Bicentennial Library, Warehouse Row, and the Chattanoogan in this aerial photo taken February 19, 2007.

The TVA power headquarters and office complex in...

Photo by John Rawlston /Times Free Press.

The economic recovery may be slower than usual, but power sales grew enough last year to give state and local governments in the Tennessee Valley a 9.1 percent boost this year from one of their biggest taxpayers.

The Tennessee Valley Authority will make tax-equivalent payments in fiscal 2012 of $567.4 million to eight states and hundreds of localities where it operates, according to a tax report released Monday.

Tennessee Advisory Commission on Intergovernmental Relations said Tennessee will get more than 61 percent of those payments, or $347.3 million.

The increase reverses the 3.4 percent decline in TVA payments the previous year because of an unusual drop in power sales and revenues from the recession and weather conditions. TVA's in-lieau-of-tax payments are based upon 5 percent of the utility's revenues, which fell in 2009 because of the economic downturn and mild weather.

But the TACIR study released Monday said how TVA distributes those payments could change as the utility shifts how and where it generates more power. Dr. Reuben Kyle, a TACIR researcher and author of the study on TVA tax payments, said the proposed sale and leaseback of TVA power plants, or the shutdown of some of TVA's older coal plants, could shift where TVA payments are made.

TVA allocates its tax equivalent payments based on population of users plus the value of TVA investments or holdings in each area.

The pending shut down of TVA's John Sevier, New Johnsonville and some of its Widows Creek fossil plants could reduce payments to local governments where those plants are located. If the Watts Bar Nuclear Plant is sold and leased back by TVA, tax equivalent payments from TVA could be cut in Rhea County from TVA but the identity that buys the plant would have to pay property taxes on the plant assets it owns.

TVA, which is the second-biggest taxpayer in Hamilton County behind only EPB, doesn't plan to idle any of its Chattanooga area facilities. TVA paid Hamilton County more than $3.1 million in tax equivalent payments last year.

Contact Dave Flessner at or at 757-6340