Critics claim top officials' personal use of TVA aircraft may be illegal

Critics claim top officials' personal use of TVA aircraft may be illegal

One detractor says utility's CEO is using jets 'like a fancy limousine service to his home'

April 23rd, 2018 by Dave Flessner in Breaking News

TVA bought a Cessna Citation Excel jet in 2015 for $11.2 million and a similar jet in 2017 for $10.7 million.

Photo by Contributed Photo /Times Free Press.

This story was updated April 23, 2018, at 11:59 p.m. with documents.

POLL: Should TVA CEO Bill Johnson resign over his use of jets?

The Tennessee Valley Authority frequently used its jets and airplanes to transport TVA's president and its chairman back and forth to their respective homes in North Carolina and Mississippi in what critics say may have violated federal travel regulations.

According to FAA flight logs, TVA's aircraft were dispatched 31 times to Raleigh, N.C., where TVA President Bill Johnson has a home, and 76 times to Oxford, Miss., where TVA Chairman Richard Howorth resides. In another instance, TVA sent its jet to Philadelphia, near where Johnson grew up, on Christmas Eve.

The Southern Alliance for Clean Energy, a Knoxville-based environmental group that compiled the flight information based upon FAA records, is questioning the need for TVA to provide such personalized air travel and urged the TVA inspector general Monday to conduct a full investigation of such trips.

"Based on our preliminary research, we have serious concerns about abuse of power by TVA's CEO, executive staff and board of directors and see clear signs of waste, and potential fraud," Stephen Smith, executive director of the Southern Alliance for Clean Energy, said in a letter to the inspector general.

Tennessee Valley Authority CEO Bill Johnson answers questions during an interview with The Associated Press Tuesday, April 18, 2017, in Nashville, Tenn. The CEO of the biggest public utility in the country says the agency is not going to reopen coal-fired power plants under President Donald Trump. (AP Photo/Mark Humphrey)

Tennessee Valley Authority CEO Bill Johnson answers questions...

Photo by Associated Press /Times Free Press.

Document: Letter to Inspector General

Read the letter requesting the Inspector General investigation of TVA aircraft use.

Debbie Dooley, president of Conservatives for Energy Freedom and co-founder of the National Tea Party, charged that Johnson is using TVA jets "like a fancy limousine service to his home" and TVA directors "literally have their heads in the clouds" with their aircraft use.

Dooley noted that former Health and Human Services Secretary Mike Price, whose department has a budget nearly 100 times bigger than that of TVA, was required to pay the government back for a chartered flight he took last year and still ultimately was fired for his travel spending.

"TVA is not just chartering jets, it's buying jets it doesn't need and shouldn't use," Dooley said. "The people voted last year to elect Donald Trump to 'drain the swamp,' and it's time that we drained the TVA swamp Mr. Johnson needs to go."

An earlier inspector general audit of only one of TVA's two jets and another turboprop airplane said TVA had not adequately demonstrated the need for its jets and, in some instances, had made inaccurate reports or failed to adequately justify its aircraft use or disclose personal use of the jets or airplanes.

"Some aircraft usage appeared to be for the personal preference and convenience of TVA's chief executive officer, including flights to and from his second personal residence that is located outside the TVA service area [in Raleigh, N.C.]," TVA's inspector general concluded in a report released earlier this year. "If any of the travel was for personal reasons [for either the CEO or his spouse], TVA should have imputed the fringe benefit income to the CEO for the value of the transportation."

But the inspector general said no such personal travel benefits were recorded or disclosed as required in the compensation report to the Securities and Exchange Commission or the Internal Revenue Service. That could be a potential violation of tax and SEC rules, although TVA told auditors that the extra trips to Raleigh were to pick up Johnson when he was on leave and needed for an emergency. The auditors found, however, that "TVA had no policies in place for reporting personal use of TVA aircraft."

Dooley said the initial audit by the inspector general "only just scratched the surface of what appears to be an ongoing pattern of CEO Bill Johnson's abuse of power, lack of transparency, and complete disregard for the customers that he is supposed to be serving."

Document: Inspector General audit

Read the Inspector General audit released in March on TVA air travel.

Dooley questioned why members of President Trump's cabinet, including Price, EPA Administrator Scott Pruitt and Treasury Secretary Stephen Mnuchin, are being challenged for their use of first-class tickets or chartered flights when TVA, a federally owned utility, is spending far more to transport its executives and directors within only a seven-state region.

"This is an egregious double standard and seems to be part of the good ole boy system that the voters rebelled against in the 2016 elections," Dooley said.

In a news conference Monday, Dooley and Smith urged the inspector general to conduct a complete investigation, Congress to hold oversight hearings and the Justice Department to probe any criminal violations if any of the trips were illegal or not property reported.

TVA has acknowledged that it needed better record keeping and disclosure, but agency officials said the jet aircraft are safer and more efficient than the planes they replaced and are in line with industry practices of using executive aircraft to transport executives and board members.

Although not covered in the first inspector general's audit, TVA officials also have defended their $10.6 million purchase last July of a second Cessna Citation jet and the $6.95 million purchase of an executive helicopter previously used by Dallas Cowboys owner Jerry Jones. Mike Skaggs, executive vice president of TVA, said the new aircraft have been used appropriately for official business and have allowed Johnson and other TVA executives to more frequently visit plant sites, customers and other stakeholders to help improve TVA operations.

While TVA has added the extra aircraft, the federal utility has cut its annual operating costs by more than $600 million and helped to reduce TVA electric rates, on average, by about 2 percent in the past five years.

"All reviewed flights were confirmed as 'official travel' under the federal travel regulations," TVA spokesman Jim Hopson said Monday in response to the latest charges against TVA's aircraft spending. "In cases where select passengers were not directly supporting TVA business, imputed income standards consistent with applicable regulations were applied. If necessary, amended income statements were filed with the IRS."

Hopson said TVA is "strengthening and clarifying" some of its air travel policies and procedures and installing new software to meet the recommendations of the inspector general's audit.

Skaggs said TVA actually has fewer aircraft than most of its investor-owned utility peers. But Smith said TVA has a smaller footprint than neighboring utilities such as Duke Energy, Southern Co. or Entergy that own other energy operations across the country.

TVA maintains the new jets offer quicker transportation than the King Air turbo airplanes they replaced, allowing Johnson and other TVA officials to travel to multiple sites in the same day across the Tennessee Valley. But the inspector general said the faster speed is negligible within 600 miles, and more than 95 percent of TVA's private aircraft trips were under 600 miles.

More than half of TVA's flights were under 200 miles, including 129 flights between Chattanooga and Knoxville. Each jet trip between Lovell Field in Chattanooga and Knoxville's McGhee Tyson airport saved only 26 minutes in travel time, the audit showed.

The inspector general's report, which only covered aircraft travel though February 2017 before TVA bought another jet and an executive helicopter, identified 13 days when TVA aircraft "appeared to be used for the personal preference and convenience of TVA's CEO." Johnson was accompanied by his wife, Sally, on three of the trips on TVA aircraft.

Even before the second jet and executive helicopter were bought last year, Johnson flew on the corporate aircraft 132 times and his wife flew 18 days, while TVA board members flew a total of 264 days during the audit period.

"TVA board members need to be like members of Congress or cabinet officers and fly commercial or simply drive to their meetings," Dooley said.

Members of Congress in the Tennessee Valley, at least so far, have voiced little concern for TVA's activities.

U.S. Lamar Alexander, R-Tenn., said he wouldn't question the agency's decision to buy the jets for executive travel.

"That is why we have a TVA board of directors to make decisions like that and to run this $10 billion-plus agency," Alexander told the Times Free Press during a recent visit to Chattanooga. "The argument that I have seen is that the jet is four or five times safer than the turboprop plane."

U.S. Sen. Bob Corker, R-Tenn., said he "has a lot of faith" in Johnson's leadership "and I tend to focus on major issues and let others focus on these kind of issues."

Last week, the entire Tennessee congressional delegation wrote a letter to President Trump voicing support for TVA and opposition to a White House budget proposal to consider selling TVA's transmission assets.

"TVA is on a good path," the letter from TVA's two U.S. senators and nine U.S. representatives said.

Contact staff writer Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.