TVA eliminates 2,000 jobs as part of $500 million cost-cutting campaign

photo TVA is cutting its workforce by about 2,000 jobs this year as part of its ongoing effort to trim $500 million a year in operating expenses.

BY THE NUMBERS• 2,000-plus: Number of jobs being cut at TVA• 12,612: Number of TVA employees at the start of fiscal 2014• $182 million: Reduction in operating costs this year by TVA• $500 million: Planned reduction in operating expenses in fiscal 2015 compared with 2013• $3 billion: Planned capital spending next year to build combined-cycle coal plants in Kentucky and Tennessee, to install scrubbers at the Gallatin coal plant near Nashville and to finish Unit 2 at the Watts Bar Nuclear Plant• $1.2 billion: Reduction in TVA's long-term debt this year• $81 million: Net loss in spring quarter• $147 million: Profits through the first nine months of fiscal 2014Source: Tennessee Valley Authority

photo Bill Johnson

In its biggest staff cuts in more than two decades, TVA is eliminating more than 2,000 jobs this year to pare expenses and make electric rates in the Tennessee Valley more competitive with neighboring utilities.

Most of the staff reductions are being made by not filling vacant jobs and through retirements and resignations by the end of next month. TVA President Bill Johnson said Tuesday the voluntary reduction offers "were well received" and avoided the need for massive firings, although some employees are being laid off.

"We are well on our way toward achieving our multiyear goal of reducing operating and maintenance costs by a sustainable $500 million (below 2013 spending levels)," Johnson said. "Once we make that target, we will continue to look for ways to eliminate unnecessary costs and to live within our means."

TVA began fiscal 2014 with 12,612 employees. The planned cuts are likely to leave the federal utility with its leanest staff in more than a half-century and less than a fourth of the peak employment TVA reached in 1981 when TVA had 51,709 employees.

TVA is paying millions of dollars in severance and early retirements to departing workers, most of whom either recently retired or will leave in the next eight weeks. The utility expects to save nearly $150 million next year from the employment cuts.

The job cuts are likely to reduce TVA's payroll in the Chattanooga region by nearly $50 million, offsetting nearly half of the $100 million payroll coming with the expansion of Volkswagen's assembly plant, which is adding 2,000 workers.

More than 900 employees, including 194 in the nuclear power program, agreed to resign or retire and were given a week's pay for each year of employment. Another 1,000 staff vacancies were not filled. TVA declined to detail the number of layoffs.

Labor unions that represent TVA employees said the utility has generally been fair in severance and time for departing employees. But union leaders are concerned that the utility employs nearly as many contractors as it has employees.

"We haven't been hit near as hard as we were in the early 1990s," said Faye Headrick, senior international representative for the Office and Professional Employees International union, which represented more than 3,000 TVA employees four decades ago but only about 600 today.

"As TVA is laying off some of our workers, they are filling some of that work with contractors or selecting managers or others to do the work from outside of our bargaining unit. Those are our major concerns."

Gay Henson, president of the TVA Engineering Association, echoed those worries.

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"We continue to try to find jobs for those being displaced, but we remain concerned about the use of contractors to do work we feel like our employees should be doing," she said.

Nearly a third of TVA's staff works in and around the Chattanooga region, including those employed at the Office of Power in downtown Chattanooga, the Sequoyah Nuclear Plant near Soddy-Daisy and the Watts Bar Nuclear Plant near Spring City, Tenn.

Johnson said the staff reduction is needed to help power users in TVA's seven-state region. TVA power rates, once among the lowest in the country, rose for industrial customers during most of the past decade faster than in rest of the nation, according to industry surveys. But Johnson said TVA rates are improving.

"Our industrial rates are again among the lowest in the country -- top quartile," Johnson said. "The underlying trend of low but positive growth in power demand, better cost management and operational improvement is very encouraging."

Despite a 1.5 percent increase in overall electric rates in the past year, Chief Financial Officer John Thomas said industrial rates are down 6.8 percent from a year ago, primarily due to new rate offerings and incentive programs.

Thomas said making industrial rates more competitive helped the Tennessee Valley attract more than $6.9 billion in new capital investment with more than 47,000 new jobs in the current fiscal year.

TVA said it has cut total operating expenses in fiscal 2014 by $182 million toward the utility's goal of trimming $500 million in operating expenses by fiscal 2015.

Contact Dave Flessner at or at 757-6340.

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