The Tennessee Valley Authority will distribute $161 million in "winning performance" payments to its employees in recognition of meeting or exceeding the utility's major corporate goals in the fiscal year that ended Sept. 30.
The median check will be $6,610 to be paid next week to most of TVA's 10,073 full-time workers as part of TVA's "pay for performance" plan.
The year-end performance pay is down nearly 12% from the record-high payments distributed by TVA a year ago. However, TVA officials still heralded their successes over the past year in keeping base power rates stable for a third consecutive year while helping to attract more than $10 billion of new investment into TVA's seven-state region.
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"TVA is in the best financial condition in decades and, even with rising inflation and interest rates, electric consumers in our service area will continue to benefit from TVA's financial discipline and the significant cleaner energy investments we have made," TVA Chief Financial Officer John Thomas said Tuesday during a conference call discussing the utility's fiscal 2022 results.
During the past year, TVA cut its debt to the lowest level in 35 years while paying out $228 million in pandemic credits to local power companies like EPB in Chattanooga.
Higher natural gas prices, which have tripled in the past two years, pushed up TVA's fuel expenses by $1.8 billion in the past year, boosting customers' monthly fuel cost adjustments enough to raise the typical ratepayer's electric bill by about 15% in the past year. But Thomas said TVA residential rates were still below 74% of other major utilities, and its industrial rates ranked among the cheapest 10% in the country.
(READ MORE: TVA issues $500 million of debt at historically low rate)
"This was our third year holding base rates flat despite growing inflation pressures, and we will continue that stable trend into a fourth year in 2023," TVA President Jeff Lyash said Tuesday during an earnings call with industry analysts. "TVA, in partnership with our local power company customers, accomplished many things in 2022, including maintaining industry-leading reliability during challenging conditions this summer while keeping energy costs among the lowest in the nation."
TVA's $1.1 billion of net income last year was down from the record $1.5 billion earned by TVA in 2021. But after five consecutive years of profits of $1 billion or more by the federal utility, TVA cut its debt and long-term obligations to $20.3 billion, or more than $5 billion below the peak levels reached more than a decade ago.
TVA said the median compensation for all of its employees in 2022 was $149,400, with at least 5% of that pay for all employees subject to whether the utility achieves its winning performance targets.
Sue Collins, TVA's executive vice president of people and communications, said in a phone interview the pay-for-performance plan encourages workers to focus on meeting key objectives, and the extra pay is critical in keeping employees in today's tight labor market. TVA's turnover has increased in the past couple of years, although TVA's 2.5% annual turnover is much lower than in most industries.
"Especially with this war for talent that has been ramping up over the past year or so, we recognize that it's a very competitive market, and when you are looking to add more workers, it's critical that we have competitive pay," Collins said.
The TVA board, which sets TVA's objectives for the next year in advance, set the winning performance payout last week during a board meeting in Mississippi. TVA directors praised TVA's staff for maintaining 99.999% reliability while keeping its base rates constant amid higher inflation by continuing to cut its operating costs.
Over the past three years, TVA has also improved the performance of its nuclear power plants. The capacity factor for TVA's seven reactors was in the bottom quartile four years ago but has moved into the top quartile of all U.S. plants.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340. Follow him on Twitter @DFlessner1.