Unit 2 senior manager of operations Tom Wallace walks up the stairs to the Unit 2 cooling tower of TVA's Watts Bar nuclear plant Wednesday, April 29, 2015, in Spring City, Tenn. TVA plans for the nuclear plant's second reactor unit to come online by the end of the year.One of Chattanooga's biggest employers is getting more profitable by getting smaller.
The Tennessee Valley Authority, which cut nearly 2,000 jobs over the past two years to trim its staff to the lowest level in 81 years, plans to cut another 200 jobs in the next year. TVA President Bill Johnson said Tuesday the latest staff cuts will come primarily at coal plants that TVA is shutting down, including the Widows Creek Fossil Plant near Bridgeport, Ala.
Widows Creek, which TVA began building in 1952, is one of five coal-fired power plants in Alabama, Tennessee and Kentucky that TVA either has or soon plans to shut down or will curtail operations at to comply with environmental regulations and shifting power demands.
By the numbers
$609 million: TVA net income in the first nine months of fiscal 2015, up from $147 million in the same period a year ago.$7.7 billion: TVA power sales in the first nine months of fiscal 2015, down 1.9 percent from the same period a year ago6.7 cents: Average price per kilowatt of TVA power this year, down 1.5 percent from the previous year$397 million: TVA savings this year in operating and maintenance costs
The staff cuts also are part of TVA's three-year program to cut $500 million in annual operating expenses. By cutting staff and selected programs and taking advantage of cheaper natural gas, purchased power and coal, TVA officials said Tuesday the utility has more than quadrupled its net income in the current fiscal year compared with a year ago.
TVA has cut its operating and fuel expenses this year by nearly 9 percent, or $593 million, to help boost its profits while still reducing the average price of electricity by 1.5 percent from year-ago levels.
"We're well positioned to wrap up this fiscal year as one of TVA's strongest in memory," Johnson told industry analysts in a conference call Tuesday.
Johnson said TVA and other electric utilities are having to adapt to a new environment of cheaper natural gas, little or no growth in power demand, and stricter environmental rules. In anticipation of the carbon controls announced Monday by the Obama administration, TVA plans to shutter more than half of the 59 coal-fired units it once operated and rely more upon nuclear power, natural gas, wind and solar power.
The shift is leading TVA to spend a record $3.5 billion this year to finish the Watts Bar Unit 2 reactor - the first new nuclear unit to come on line in America in two decades - and to build coal scrubbers at the Gallatin Fossil Plant and new gas plants to replace shuttered coal units in Memphis and Paradise, Ky.
In the next decade, Johnson wants to cut coal generation to only about 20 percent of TVA's power, down from more than 60 percent of TVA's generation two decades ago. TVA expects more than 30 percent of its power to come from nuclear power and the rest to be split among natural gas, hydroelectric dams, wind mills, solar panels and energy efficiency moves.
TVA recently completed the purchase of the Ackerman Combined Cycle Plant in Mississippi. The 700-megawatt facility is the sixth combined cycle gas-fired facility TVA has built or purchased since 2007.
"Our diverse portfolio has helped us deliver superior financial performance in recent periods despite the extreme weather," TVA Chief Financial Officer John Thomas said.
The reductions in coal generation have reduced TVA's emissions of greenhouse gases by 30 percent since 2005 and are expected to have cut such carbon emissions by 40 percent by 2020 - two years before the Environmental Protection Agency's new deadline for such reductions.
Johnson said the reductions have pushed up TVA rates over the past five years, but he said TVA "is better positioned than most utilities" to comply with the new rules.
TVA also announced Tuesday it earned $32 million on revenues of $2.5 billion in the three-month period ended June 30. In the same period a year earlier, the utility lost $81 million on sales of more than $2.6 billion.
Senior vice president of operations and construction Mike Skaggs stands inside of the Unit 2 reactor containment during a tour of TVA's Watts Bar nuclear plant Wednesday, April 29, 2015, in Spring City, Tenn. TVA plans for the nuclear plant's second reactor unit to come online by the end of the year.But while the power shift has helped TVA's bottom line, it has also taken a toll on its employment numbers. The federal utility, which employed 51,709 employees at its peak in 1981, has shrunk its staff to about 10,900 today. That's the lowest staffing level for TVA since 1934, only one year after the New Deal agency was created.
TVA disclosed in a financial report Tuesday that 200 resignations or retirements have been accepted from among those who opted for the Voluntary Reduction in Force program in TVA's power operations. TVA has paid $45 million in severance payments in fiscal 2015 to encourage certain employees to retire early or resign to cut its overall staffing levels.
"Do we have more plans for staff reductions?" Johnson asked. "We don't have any set plans today, but we are every day focusing on our resources - both our spending and headcount - to make sure we meet our job of delivering clean and reliable power at the lowest feasible cost."
Contact staff writer Dave Flessner at 423-757-6340 or dflessner@timesfreepress.com.