TVA chief works to slim down agency

TVA chief works to slim down agency

October 11th, 2013 by Dave Flessner in Business Around the Region

TVA logo

TVA logo

TVA by the numbers

$10.2 billion - Budget for fiscal 2014, down $1.5 billion form the peak $11.7 billion in sales reached in 2007

12,500 - Number of TVA employees

12,000 - Approximate number of TVA contract workers.

18 - Number of fossil units TVA is committed to closing, only four of which have been closed so far

140 - Number of employees still working at Bellefonte Nuclear Plant, down from 540 this spring

300 - Number of fossil division employees at TVA who are leaving under summer voluntary program

$150 million - Annual cuts in operations and maintenance for TVA in fiscal 2013 and fiscal 2014

$200 million - Additional cut in operations and maintenance budget for TVA in fiscal 2015

Source: Tennessee Valley Authority

TVA executives who report to the CEO

Chip Pardee, executive vice president and chief operating officer

Rob Manning, executive vice president and chief external relations officer and senior vice president for shared services

Kathy Black, senior vice president for human resources and communications

John Thomas, executive vice president and chief financial officer

Ralph Rodgers, executive vice president, Office of General Counsel

With electricity sales lagging, the staff of America's biggest government utility and Chattanooga's biggest federal employer is getting smaller.

The Tennessee Valley Authority, which is cutting 700 jobs this year at nuclear and coal plants being phased out or delayed, is developing plans for other ways to cut more contractors or employees as it tries to trim another $350 million in operating expenses this year and next.

Bill Johnson, the former Progress Energy CEO hired a year ago to head TVA, is convinced such cuts can and should be made. Following an address Thursday to the Chattanooga Rotary Club, Johnson said since he started his job in January he has found "TVA staffing levels are higher than what I was used to" in his previous utility jobs "and I was never happy with the amount of staffing and money we were spending in my previous job."

"My job is to always to find ways to do operations more efficiently," he said.

Johnson said he has little choice but to cut costs to make up for "a staggering loss" in power sales at TVA., down $1.5 billion in the past five years. Hurt by slower economic growth and the loss of its biggest industrial customer this spring -- U.S. Enrichment Corp. in Paducah, Ky., -- TVA power sales are projected to drop another 4.6 percent in the new fiscal year to the lowest level in a decade.

"We're focusing on process and efficiency," Johnson said. "If you have a process that takes you eight steps and involves four weeks, you try to do it in two steps in a week."

EPB Chairman Joe Ferguson said Johnson seems the most business-oriented and cost-conscience head of TVA since former Nissan Executive Marvin Runyon headed TVA two decades ago and earned the nick-name "Carvin' Marvin" for cutting TVA's staff nearly in half.

""I think he made more sense today (in his speech to the Chattanooga Rotary Club) than anybody I have heard since Marvin Runyon," Ferguson said following Johnson's speech Thursday at the Chattanooga Choo Choo. "What he brings, having been in the private sector, is a different mindset on how you resolve those major issues he is faced with and I think that is probably a very good thing right now."

But TVA labor leaders aren't so sure about efforts to trim staff.

Gay Henson, president of Local 1937 of the Engineering Association IFTPE which represents more than 2,000 engineers at TVA, insisted that the utility isn't overstaffed and, in some areas, may have too few employees.

"We've got some places where (additional staff cuts) would just be a devastating blow to the organization because staffing levels are already tight," Henson said. "We have a lot of folks with a lot of experience and there is a real threat of a brain drain as these people retire or leave. There are still a lot of jobs that are very difficult to staff."

Further cuts could risk the safety of TVA workers and facilities, Henson said.

"In some places of TVA, I think they've already gone down to a level where I don't think they have all of the people they need to get things done that need to be done," she said. "If you go any further, I think you can get into safety issues. We want to be able to do the work safely."

Johnson said "it's too soon to tell" how many of TVA's 12,500 employees or 12,000 contractor jobs may be cut due to the reorganization, but he stressed that TVA's mission and commitment to safety remains unchanged.

The TVA CEO said he is working to pare operating costs before making additional rate increases for the 9 million people who rely upon TVA power in its 7-state region. TVA raised its base electric rates this month by 1.5 percent, the first increase in those rates in two years.

"We're really in the phase now of defining what the work is we have to do," Johnson said. "Obviously, things we don't have to do we're going to be evaluating if we need to keep them."

Since joining TVA as chief executive in January, Johnson has replaced his top nuclear officer, hired a new chief operating officer and seen the departure of a half dozen top TVA executives to other utilities or to retirement. TVA top managers who have left in the past year include nuclear chief Preston Swafford, chief generation officer Kim Greene, human resources director Janet Herrin, chief sustainability officer Anda Ray and pricing vice president John Trawick, following the departure a year ago of chief operating officer Bill McCollum.

The top staff recently was trimmed from seven to five direct reports to Johnson.

"We've established a new organization that is a lot more compact with functional alignment," Johnson said. "Now those folks (picked to head the new divisions) are reviewing their organizations, defining the work that we have to do and figuring out how we can do it with the budget that we have. We're really in the phase of detailed design of the organization based on the design of the work."