Coal ash disaster prompts TVA to restructure

Coal ash disaster prompts TVA to restructure

March 15th, 2010 in News

The Tennessee Valley Authority has replaced its board and most of its top managers over the past five years.

But a key to changing the culture of America's biggest government utility is coming simply from listening to its longtime employees and having TVA executives regularly gather to discuss long-range problems, according to those involved in trying to revamp the agency's management.

John Thomas, the executive helping to lead TVA's latest management reorganization, said new approaches are needed to make TVA more accountable and efficient.

Under the changes developed over the past year, TVA's 12,000 employees should get a bigger voice in utility operations. But workers also will be held more accountable for following the right procedures and getting better results, Mr. Thomas said.

He said an early test of the new approach at TVA's Paradise Fossil Plant has yielded employee suggestions that should save TVA more than $60 million a year at the Kentucky coal plant alone.

"I was surprised about how many ideas we could do right now with no cost to TVA," said John Bell, a student instructor who was among more than 300 Paradise workers to share ideas late last year.

Mr. Thomas said not all of the changes will show up so immediately.

"But over the next several years, TVA will be a very different company," he said. "I think there will be much more agreement and clarity inside the organization. I think that people will behave in a manner that shows that we embrace collaboration."

Kingston Ash Aftermath

TVA President Tom Kilgore said the 2008 collapse of a coal ash storage pond in Kingston -- one of the biggest environmentally damaging spills in U.S. history -- exposed TVA's weaknesses in employee communications, risk assessment and corporate management.

"The aftermath of the ash spill at Kingston and other recent events have shown that organizational changes are needed to help us improve accountability for recognizing and addressing problems more quickly," he said.

In his assessment of TVA's handling of the ash spill last year, TVA Inspector General Richard Moore blasted TVA managers for ignoring red flags about the potential of an ash pond collapse and then avoiding disclosure of problems to minimize legal liability.

In response, TVA hired management consultants McKinsey & Co., to conduct a $5 million study on how to improve the way the federal utility operates. So far, TVA has revamped the top three levels of the organization and expects to complete the management restructuring by this spring.

Changes at the top

Kim Greene, formerly chief financial officer, is taking on the biggest new task in the reorganized TVA. As president of strategy and external relations, Ms. Greene not only heads TVA's financial operations but also the agency's long-term planning and dealing with Congress, state legislatures and the public.

Mr. Thomas is heading a new division as people and performance officer. In that role, he is developing better employee polices, evaluations, participation and succession.

Since TVA's governing board was put in place in March 2006, 11 of the agency's top 18 officers have been recruited from other utilities and businesses. Five of the six people reporting directly to TVA President Tom Kilgore are new to TVA in the past four years.

"I think that's an indication that there wasn't good succession planning at TVA," Mr. Thomas said.

In the new organization, the top two layers of management's nearly three dozen executives will meet twice a month to clarify responsibilities and discuss challenges and opportunities.

The new organization will try to streamline the layers of management outside the nuclear program to no more than eight levels. Some groups now have up to a dozen levels of management hierarchy at TVA. Mr. Thomas said some managers now supervise only one or two employees.

He said TVA also needs better programs to reward and discipline employees. In one year, only five out of more than 12,000 workers were dismissed because of performance problems. Few workers were rated unsatisfactory in annual performance reviews.

TVA's new paradise

Managers also are being pushed to do more to reach out to employees for ideas and suggestions.

TVA piloted a program involving most of the 429 employees at the Paradise coal plant. In the initial two weeks, McKinsey consultants worked with plant managers to assess problems and performance "much like has been done in the last 20 consulting reports," Paradise plant manager Aaron Melda said.

But what occurred next was very different from previous plant improvement programs. In November and December, employees gathered to brainstorm and produce 1,346 ideas on improving performance.

A craft worker suggested some abandoned pipes be removed in some duct work. The removal cost $17,000 and is projected to save TVA $1.1 million by improving boiler operations, according to Bill Cronin, a plant manager.

In all, the top employee suggestions being implemented at Paradise will cost TVA about $7 million to implement and should help save up to $64 million, officials said.

Jeff Fugua, a pipefitter at Paradise for the past 24 years, said he was skeptical at first that the program would be just another fad and ideas "would go into a black hole" to be ignored by managers. But as ideas are being implemented, he said, workers are getting more excited.

"People are seeing a drastic change in the efficiency of the plant," he said.

Mr. Melda said he is working on a group to help take the lessons at Paradise to other TVA facilities.

"It's a new way of management, but I think it can work throughout TVA," he said.

CHANGING TVA

* Management reorganization: TVA departments will be realigned along with reshuffling of executives.

* More collaboration: More employees will be involved in decision making with idea sessions among employees at the plant level and bimonthly management council meetings among top executives.

* Policies and procedures: Better job descriptions and defined procedures will enhance accountability and safety.

* Staff evaluations: Better performance reviews of workers will ensure greater variability in ratings.

Source: Tennessee Valley Authority

CHANGING OF THE GUARD

In the past five years, most of TVA's top leadership has changed.

* TVA board: In 2006, a part-time, nine-member board was appointed to replace the former three-member, full-time governing board. Five new members are scheduled to join the board this year.

* Tom Kilgore: He joined TVA in 2005 as president and was appointed the first chief executive in 2006.

* Bill McCollum: He joined TVA in 2007 as chief operating officer.

* Kim Greene: She joined TVA in 2007 as chief financial officer and was elevated to group president of strategy and external relations in January.

* John Thomas: He was named TVA controller in 2007 and became executive vice president of people and performance in January.

* Preston Swafford: He joined TVA in 2006 as senior vice president of nuclear support, worked as head of the fossil group for two years and in 2009 was named chief nuclear officer.

* Robert Fisher: He joined TVA in November 2009 and was promoted this year to senior vice president of fossil generation.

* David Mould: He joined TVA in July 2009 as senior vice president of communications.

* Daniel Traynor: He is joining TVA this month as chief information officer.

THE PARADISE PAYOFF

* 1,346: Number of ideas offered by TVA employees for upgrades at the Paradise Fossil Plant

* $7.4 million: Investments made to implement the top 30 suggestions

* $64 million: Projected annual savings from implemented suggestions

Source: Tennessee Valley Authority