The Tennessee Valley Authority more than tripled the pay of its chief executive this year and will give its 12,000 employees bonuses averaging more than $6,900 each next week.
TVA President Tom Kilgore was paid a record high $3.6 million in the fiscal year ended Sept. 30, according to the annual report released Friday.
Overall, TVA more than met most of its annual performance standards, triggering the payment of $94 million of "Winning Performance" bonuses. Kilgore said fiscal 2010 was the utility's best in meeting performance goals since 2002.
The utility's 90 top executives will average more than $120,000 each as a reward. Nonexecutive employees will get checks averaging $6,917 each.
The utility also is giving salaried employees an average raise this fall of 2.9 percent, Kilgore said. Under the TVA act, the utility conducts pay surveys with comparable businesses to set its compensation levels.
Kilgore, 62, gave up any pay raise or bonuses a year ago following the December 2008 coal ash spill in Kingston. But he was the highest-paid federal employee in America in fiscal 2010, and he will be eligible to make $200,000 more in the next year if he again meets all of his performance standards.
Kilgore and other top TVA executives still are paid less than most of their peers at comparable investor-owned utilities and at least a dozen other Tennessee companies. A study by Towers Watson found the typical major utility CEO was paid more than $6 million last year.
"While our compensation plan is designed to pay market rates, we tend to be conservative and pay below the market," TVA Chief Financial Officer John Thomas told reporters during a briefing Friday. "We had a good year and all of our executive pay is based upon performance. We believe these compensation programs do matter in driving performance and in TVA's ability to attract and retain talent."
But taxpayer and consumer advocates denounced the utility for giving big pay raises to executives while most communities in its region are coping with jobless rates near or above 10 percent.
"At a time when taxpayers and TVA ratepayers are struggling to make ends meet, it's offensive that this government agency would heap such a massive pay increase on its top executive," said Justin Owen, president of the Tennessee Center for Policy Research, a taxpayer advocacy group in Nashville. "This represents government largesse more than reasonable compensation."
U.S. Rep. John Duncan, R-Tenn., also objected to million-dollar-plus salaries for TVA's top executives.
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TVA in 2010
* Average electricity rates were down 9.3 percent and TVA improved its cost ranking among the top 100 utilities from 41st in 2009 to 31st in 2010.
* Net earnings rose 33.9 percent to a record high $979 million and power sales rose 6 percent.
* TVA worked on economic development projects that yielded $4.3 billion of investment and 40,999 jobs in the Tennessee Valley.
* Debt rose 3.5 percent to $23.4 billion, $200 million below projections, while cash grew by $100 million.
* Employee accident rate dropped to less than half the rate of three years ago.
* Nuclear performance capacity rose from 89.1 percent to 90.6 percent and the Unit 1 reactor at Browns Ferry completed a record 586-day run.
* Coal plant availability rose to 85.8 percent.
Source: Tennessee Valley Authority
"You don't have to pay people ridiculous salaries to get them to come to East Tennessee and work," said Patrick Newton, a spokesman for Rep. Duncan.
TVA's employee turnover rate averaged 6 percent last year, meaning that about one of every 17 workers quit or retired.
TVA earns B plus
Kilgore on Friday gave the utility a "B-plus" for fiscal 2010 with improvements in rates, reliability and environmental performance. Electricity sales rebounded by 6 percent but revenues were still down because of lower fuel costs.
"Not many utilities would say they had a good year when revenues were down," Kilgore said. "But TVA did have a good year when we produced more electricity than the year before with lower revenues. Because TVA doesn't make a profit, one way we measure success is keeping prices low for our customers."
The average monthly wholesale rate for TVA electricity was down 9.3 percent from 2009. Net income rose to a record $972 million on sales of nearly $10.9 billion.
The utility reinvests net income in its power business, Kilgore said.
"We bring in our own revenue and don't get a single dollar of taxpayer funds," he said.
Contact staff writer Dave Flessner at email@example.com or at 757-6340.