More than 10,000 employees of the Tennessee Valley Authority will have extra reason to be thankful during Thanksgiving week when TVA pays its workers a record amount of performance pay.
TVA in December had its first rolling blackouts amid a cold spell, and a foreman died working on a natural gas pipe in September, but TVA said the utility performed the best it ever has on measures such as reliability and safety and will pay out a record-high $253 million of extra employee pay in next week's paychecks.
The median performance reward for TVA workers will be $10,214. That's up nearly 55% from a year ago.
The utility has added more than 500 more employees in the past year. Those hired after July 1 will not receive the incentive pay this year, and those hired before July 1 will receive the incentives on a prorated basis depending on what portion of the fiscal year they were on staff.
TVA is expanding its staff to help the utility boost power production for a growing population and over $9.2 billion of new business investment in TVA's seven-state region.
"We did extraordinarily well in the past year and even exceeded our stretch goals in three of the five key areas we measure," Sue Collins, executive vice president and chief human resources officer at TVA, said in a telephone interview. "Even in a high inflationary market with lots of market and weather challenges, TVA employees were able to deliver for the people of the valley."
TVA found that it exceeded its target goals for power reliability, price and safety during fiscal 2023, calculating that employees achieved 185% of the goals set for the year.
TVA also adjusts its performance scores based on how well it promotes business and achieves income targets.
— TVA residential rates among the lowest 25% of all electric utilities.
— TVA industrial rates among the lowest 10% of all electric utilities.
— TVA debt reduced to the lowest level in over 30 years.
— All seven nuclear reactors were rated exemplary by the Institute for Nuclear Power Operations for the first time.
— 99.999% reliable power delivery for the 21st consecutive year.
— Fewest number of employee accidents and the best overall safety record in TVA history.
— TVA helped attract $9.2 billion of new business investment to add or retail 58,411 jobs.
Source: Tennessee Valley Authority
TVA directors last week decided to roll back the score by 5%, but the reduced determination that the agency met 176% of its goals was still the highest in the 10 years of the program.
The reduction was set to reflect concerns about TVA's rolling blackouts during Winter Storm Elliott in December and because of the on-the-job death of a TVA foreman in September.
TVA Director Brian Noland, the chair of the TVA's people and governance committee, said in fiscal 2023 TVA met all five of its major performance measurements and in three areas it achieved its "stretch" goals for performance.
"However, the committee recognized that there are extenuating challenges and circumstances related to TVA's performance this past year," Noland said during the TVA quarterly board meeting last week in Tupelo, Mississippi. "Most importantly, we suffered the loss of a team member, Mathew McPherson, in September. TVA strives to have the best-in-class safety performance and a loss of life like this is unacceptable."
Federal regulators are still evaluating the Sept. 1 death of McPherson, who had worked at TVA for the past 19 years and died from injuries he incurred during maintenance work at TVA's Lagoon Creek Combined Cycle Plant near Brownsville, Tennessee.
TVA also created problems for millions of its customers in December when Winter Storm Elliott cut off or limited power for most of the 10 million people served by TVA, Noland said. For the first time in its 90-year history, TVA imposed rolling blackouts on Dec. 23 and Dec. 24 of 2022 when TVA lacked adequate power generation after power lines and equipment froze at the Cumberland Fossil Plant and at other natural gas plants.
TVA sets criteria for reliability, price, safety and other metrics each year in advance. When the agency finds that it met its goals, the outcome is scored as 100%. In each year the program has been in effect, the agency has found it exceeded its goals, with scores above 100%.
* In these years, the TVA board scaled back the scores by 5%. The reduced score is shown.
Source: Tennessee Valley Authority
"Although TVA had high levels of performance over this three-year period, we recognize the reputational impact from Winter Storm Elliott," Noland said.
TVA spent about $10 million in the last fiscal year and has spent about $35 million more in the current fiscal year to insulate and harden all of its lines and equipment to handle the cold weather during the winter months ahead, Lyash said last week.
"If we had the same weather again (with single-digit temperatures over time), we are prepared now to keep these plants running," Lyash said in an interview.
Over the summer, TVA had plenty of power to meet several new power peaks reached during June. For the entire year, TVA's power delivery exceeded its target goal, and the safety measurements used to monitor employee performance also did better than the previous year even with the death of McPherson.
"Despite Winter Storm Elliott and the challenges that we had, we performed very well with exceptional performance from our employees through the year as a whole," Collins said.
TVA has exceeded its target goals every year since the performance program began more than a decade ago.
The board's adjustment of the formula for fiscal 2023 was only the second time in the past decade that TVA directors have trimmed the preset formula for at-risk pay given to all TVA employees.
Although TVA raised its base wholesale rates by 4.5% last month, TVA has kept its rates relatively flat for the past five years, and its electricity prices are now below 75% of all the U.S. electric utilities, according to the Energy Information Administration.
TVA also helped recruit more than $9.2 billion of new business investment into its seven-state region in fiscal 2023, which is projected to add or retain 58,411 jobs.
TVA's performance payments are distributed among all full-time employees who were on the job in the past year based upon their pay levels and their work responsibilities. The totals include executive bonuses paid to TVA's top managers.
TVA's median pay for its staff in 2023 was $146,466, which was down slightly from the previous year's median pay of $149,400.
Although the average worker at TVA was granted about a 3.5% raise in pay last year, Collins said the median was less because TVA added more entry-level employees as it grows its staff in anticipation of rising power demand in the future.
TVA's median pay was still nearly three times higher than the average salary of $50,811 in Tennessee, according to the job listing service Zip Recruiter.
The amount of TVA's performance pay ranges from 5% of a worker's annual compensation for employees with collective bargaining agreements up to 150% for TVA's CEO. About 60% of TVA's staff is represented by unions and will get incentive payments equal to 5% of their annual base pay.