Investment grows in the Valley
2007 - $5.6 billion and 45,300 jobs2008 - 5.5 billion and 42,000 jobs2009 - $4.2 billion and 26,000 jobs2010 $4.3 billion and 41,000 jobs2011 - $4.9 billion and 43,000 jobs2012 - $5.9 billion and 48,500 jobs2013 - $4.1 billion and 39,000 jobs2014 - $8.5 billion and 60,300 jobs2015 - $7.8 billion and 76,200 jobs2016 - $8.3 billion and 72,100 jobs2017 - $8.2 billion and 70,076 jobs2018 - $11 billion and 65,000 jobsSource: Tennessee Valley Authority
TUPELO, MISSISSIPPI - In the birthplace of the Tennessee Valley Authority where President Roosevelt declared the New Deal agency "a remarkable success" 85 years ago, TVA leaders Wednesday heralded the agency's continued economic development during a record-setting year for new projects in 2018.
TVA's economic development department worked on business additions or expansions valued at more than $11 billion in the fiscal year ended Sept. 30, up by more than a third from the previous investment peak reached in 2014.
Although the business additions and expansions added fewer jobs in fiscal 2018 than in the previous three years, outgoing CEO Bill Johnson said it was still one of the most successful years in TVA history. Over the past six years while Johnson has been CEO, TVA has helped recruit or encourage nearly $50 billion of new business investment in TVA's 7-state region.
And fiscal 2019 is starting even stronger with the announcement this week that Amazon is locating a $230 million operations center in Nashville that will add more than 5,0000 direct jobs and 8,000 other indirect jobs - the biggest single job announcement in Tennessee history.
"It's just another indication of the growth of the South," Johnson told TVA directors during their quarterly board meeting. "We try hard to do as much economic development as we can and to take as little credit for it as we can. We always talk about our efforts in cooperation with our state, local and business partners we work with and our role in various transactions varies according to the needs of the prospect."
Site Selection this fall named TVA one of its top 10 utilities for economic recruitment for the 13th consecutive year.
Among the investments announced in fiscal 2018 was the $340 million expansion by Volkswagen of America at its Chattanooga assembly plant, where VW is adding a 5-seat Atlas and another 1,000 jobs.
TVA recruits businesses to its service region with such programs as the Valley Investment Initiative, which provides incentives for qualifying existing and new companies in the TVA region based on factors such as their long-term capital investments, jobs, energy efficiency and power use.
For competitive reasons, TVA officials said the utility doesn't disclose details of what it provides specific businesses. But Johnson said he believes the rates, reliability and sources of power are the biggest draws offered by TVA.
But some TVA critics question whether the federal utility is being too generous to big industry or picking winners and losers in its economic development programs.
"It is unclear to me that it is the best policy to be using rate structures that hurt the vast majority of customers in the Valley and a lot of small businesses in the region that actually employ more people to favor a few big industries you are trying to recruit," said Stephen Smith, executive director for the Southern Alliance for Clean Energy. "We are not opposed to economic development, but we are opposed to doing these programs on the backs of small businesses and residential customers."
In a study prepared earlier this year by Synapse Energy Economics Inc., consultants found industrial customers of TVA enjoyed a nearly 20 percent decline in the price of electricity from 2011 to 2016 while residential power rates continued to climb. The Tennessee Valley Industrial Committee, an advocacy group for TVA's direct-served industrial customers, said TVA industrial rates in the past were less competitive than neighboring utilities and the relative differences in rate changes in recent years simply reflects the true cost of power, especially since many industrial customers are on interruptible contracts that allow TVA to limit their power deliveries when demand is too high.
TVA began implementing a grid access fee to its wholesale customers on Oct. 1 to help cover more of the fixed costs of serving each customer, but Smith said the effect of that change was to shift a bigger share of the cost of power on small users and to discourage alternative and renewable power generation.
Although TVA as a federal corporation does not pay federal income taxes, Johnson said TVA pays 5 percent of its top line revenues to state and local governments as in-lieu-of-tax payments, which he said is comparable or even more than what most investor-owned utilities pay.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340