TVA expected to offer incentives to cut staff, expenses in 2014

TVA expected to offer incentives to cut staff, expenses in 2014

December 27th, 2013 by Dave Flessner in Business Around the Region

By the numbers

* 45 - Average age of a TVA employee

* 12.5 years - Average tenure of a TVA employee

* 300 - Typical number of TVA employees who retire every year

* 12,612 - Number of TVA employees, including more than 4,000 in the Chattanooga area

* $72,903 - Median base pay for TVA employees*

* $10.8 billion - Annual revenues for TVA

* Data for fiscal 2011-2012, the latest year for which data is available

Source: Tennessee Valley Authority

TVA logo

TVA logo

Despite the improving job market, one of Chattanooga's biggest and best-paying employers plans to cut its staff in the new year.

The Tennessee Valley Authority, which employs nearly a third of its 12,612 employees in the Chattanooga area, is expected to announce in January the next steps the agency will take to help trim $500 million in operating and maintenance expenses from its annual budget. In a meeting with TVA employees earlier this month, TVA President Bill Johnson hinted that the agency will ask for voluntary resignations and retirements, probably in January, in selected organizations at TVA.

Last year, TVA cut 700 employee and contractor jobs through cutbacks at its Bellefonte Nuclear Plant in Alabama and reductions at coal plants being shut down or scaled back due to a drop in power demand and stricter pollution control requirements.

Even more cuts are likely in 2014.

"Given that approximately 80 percent of TVA's operating and maintenance costs are related to labor, staffing level reductions will necessarily result from this process," TVA said in its fiscal 2013 annual report filed last month with the U.S. Securities and Exchange Commission. "The evaluation of staffing levels will take into account attrition, elimination of open positions, and retirements in order to minimize the impact on current personnel."

TVA said in its regulatory filing that some employees whose jobs are being phased out will be eligible for severance payments, although the agency said it is too early to estimate what that may cost TVA.

TVA's goal is to reduce its annual operating and maintenance costs by $500 million by 2015 compared to its 2013 spending level. TVA President Bill Johnson told TVA staff during an employee forum on Dec. 12 that the agency is likely to ask in January for voluntary retirements or resignations from employees in affected organizations within TVA.

"What this will look like, we don't know yet," TVA spokesman Duncan Mansfield said last week.

TVA directors voted last month to shut down its entire five-unit Colbert Coal Plant and another unit at its Widows Creek Coal Plant. Both of those plants are is Alabama.

TVA also plans to shutter two of the three units at its Paradise Fossil Plant in Kentucky and replace that power by building a new gas-fired plant.

The coal cutbacks are needed for TVA to comply with new regulations on smog, mercury and carbon and to adjust to a 4-year decline in power sales. TVA lost its biggest customer, the U.S. Enrichment Corp., in Paducah, Ky., in May when the uranium processing facility shut down.

TVA also expects next year to begin to pare the number of contract workers and employees involved in construction of the Unit 2 reactor at the Watts Bar Nuclear Plant, which is scheduled to be largely completed in the next year and to begin power generation by 2015.

Johnson, who joined TVA in January after heading Progress Energy and Duke Energy, has trimmed the top management cabinet who report directly to him from seven to five executives already this year.

"My job is to always find ways to do operations more efficiently," Johnson said earlier this year.

Gay Henson, president of Local 1937 of the Engineering Association IFTPE, which represents 2,700 engineers who work at TVA, said Thursday she is encouraged that TVA is likely to first ask for volunteer retirements and resignations before resorting to layoffs.

"We have an older workforce and I think some of our older workers may be ready or willing to leave to make room for newer employees to stay," Henson said. "We don't know exactly what is going to happen, but I think it's good to give an opportunity for those who want to leave the opportunity to do so first."

Mansfield said TVA pays most employees who are laid off or involuntarily dismissed five days of pay for every full year of annual service, up to 30 years of service. For those with 30 year or more years of employment with the agency, departing employees qualify for 30 weeks pay, plus any accrued leave time. For most workers that would provide a severance package equal to more than seven months of pay.

TVA employs more than 4,000 workers at its power headquarters in the Chattanooga Office Complex, the Sequoyah Nuclear Power Plant near Soddy-Daisy and other hydro stations in and around Chattanooga. The median annual pay for TVA employees was nearly $73,000 two years ago when TVA last provided complete employee salary data to the Times Free Press.

Contact Dave Flessner at or at 757-6340