* 12,612 -- TVA employees at the end of last year, nearly a third of whom work in the Chattanooga area
* 51,709 -- Employees at the agency's peak in 1980
* 45 -- Average employee age
* $500 million -- Amount to be cut from annual operating and maintenance budget by fiscal 2015 from 2012 level
* 31 -- Percent of operating expenses on TVA staff
* $73,000 -- Median annual pay for workers
* 30 weeks -- Maximum severance pay for senior employees who quit or retire before October
* $10.8 billion -- Annual agency revenues
Source: Tennessee Valley Authority
America's biggest public utility will get smaller this year.
The Tennessee Valley Authority, seeking to cut $500 million a year in operating expenses, outlined plans Wednesday to encourage many of its 12,600 employees to resign or retire early from jobs not deemed essential by utility managers.
TVA officials said staff cuts are needed to bring the utility's costs and rates more in line with neighboring utilities and to offset an expected four-year decline in electricity sales.
"In order to perform our mission, we must curtail our spending and focus on internal cost management," utility spokesman Duncan Mansfield said. "We will continue with our core business, but some things we will stop doing."
The expected job and spending cuts will be felt especially hard in the Chattanooga area, where nearly a third of TVA employees work and where it is one of the biggest and highest-paying employers.
But the federal utility is cushioning the blow by offering employees the option to leave before October and receive up to 30 weeks of severance pay. The voluntary reduction-in-force plan outlined in a letter to employees Wednesday is designed to limit -- or potentially avoid -- major layoffs this year as TVA prepares to close more coal plants, limit other operations and become more efficient.
TVA President Bill Johnson, who joined the federal utility a year ago, has set a goal of cutting operating and maintenance expenses another $150 million this year and $200 million in fiscal 2015. Last year, TVA cut $150 million in ongoing expenses and reduced its staff and contractor workforce by more than 700 employees.
"My job is to always find ways to do operations more efficiently," Johnson told the Times Free Press last year.
Power sales have slumped nearly 10 percent from the peak in 2007. TVA lost its biggest industrial customer in May when the U.S. Enrichment Corp. shut down its uranium enrichment plant in Paducah, Ky.
But operating expenses continued to rise before last year and TVA, which once boasted some of the lowest electric rates in the country, now offers industrial rates only about average for the South.
Since nearly a third of TVA's operating costs stem from labor expenses, the agency is preparing what could be one of the biggest staffing cuts in a decade.
Mansfield said reorganization plans are still taking shape and will be announced soon. The utility announced Wednesday it will offer one week's pay for every year of employment for most employees.
The offer was not initially provided to the 3,800 employees in the nuclear division. Spokesman Jim Hopson said that was primarily because nuclear chief Joe Grimes has been at TVA for only five months and he is still revamping plans for the utility's nuclear plants and their support.
TVA employs more than 4,000 workers at the downtown power headquarters and the nearby Sequoyah, Watts Bar, Widows Creek and Raccoon Mountain power plants. Median pay is about $73,000 a year, and many senior workers could be paid an extra $50,000 of severance and vacation pay if they retire early and their resignation is accepted.
Such severance payments on top of TVA retirement benefits could encourage many of the agency's engineers, IT specialists and managers to start their own businesses.
"I've worked with many engineers and managers who got laid off or quit jobs at TVA, BlueCross and other major companies and have gone on to be quite successful in building local franchised businesses," said Bruce Krepps, owner of the local franchise of Entrepreneurs Source, which helps match entrepreneurs with franchise opportunities.
"If someone has six months' severance pay to help them make the transition, it's that much easier to be successful during the startup phase. There are a lot of opportunities for folks who want to keep working."
TVA cut 700 staff and contractor jobs last summer after deferring work on its Bellefonte Nuclear Plant and closing its John Sevier Fossil Plant. Last fall, the utility decided to shutter five units at its Colbert Fossil Plant and another unit at its Widows Creek coal plant, both in Alabama, and to shut down two of the three units at its Paradise coal plant in Kentucky. TVA also is considering whether to shut down the Allen plant in Memphis and the Shawnee plant in Kentucky.
Construction of the Watts Bar Unit 2 reactor, which once employed more than 3,000 contract workers, also is nearing completion, and the plant should begin generating power in fiscal 2015.
Mansfield said employees will have until Feb. 18 to sign up for the severance offer, which is being made to all non-nuclear workers with at least one year on the job. Employees who exit under this voluntary reduction-in-force program will not be eligible to return to TVA as contractors for at least one year, Mansfield said.
Contact Dave Flessner at email@example.com or at 757-6340.