Three years after revamping its board of directors, the Tennessee Valley Authority is looking at more changes in its management and policies in the wake of one of America's worst industrial spills.
TVA Controller John Thomas said Wednesday that he is heading a team that hopes to draft a plan before the end of the year to improve accountability and communication within the nation's biggest government utility.
TVA's inspector general on Tuesday said TVA managers ignored warning signs and then tried to stifle a report about the problems that led to the Dec. 22 coal ash spill in Kingston, Tenn. The accident dumped more than 1 billion gallons of ash into the Emory River and nearby properties and is projected to cost TVA more than $1 billion to clean up.
The internal TVA audit and a separate study released last week by an Atlanta law firm both concluded that TVA's corporate culture must change to avoid similar disasters.
"We're looking at significant changes for TVA," said Mr. Thomas, the TVA vice president who helped prepare the agency last year for regulation under Securities and Exchange Commission rules for the first time. "We have some real challenges ahead."
In a memo to more than 12,000 TVA employees this week, CEO Tom Kilgore warned that the coming changes could involve "painful side effects." Mr. Kilgore said TVA is soliciting proposals from outside consulting firms to help Mr. Thomas work with the agency's board to establish a new organization "to help transform TVA into a more effective operation."
"This organizational transformation is something we have to do," Mr. Kilgore told employees. "The long-term health of TVA depends on it."
Mr. Kilgore described the coming changes as "tough medicine" that "will come in several doses, and we'll be taking it for a while."
TVA officials said Thursday that no decisions have been made yet about personnel or policy changes. Mr. Thomas said TVA plans to pick an outside consulting firm next month to give another independent assessment of the agency and help him develop recommendations for management changes.
A report on the Kingston spill prepared by the McKenna Long & Aldridge law firm found that TVA's management system lacked accountability and communication and is too reactive instead of proactive.
"The necessary systems, controls, standards and culture were not in place," said Bill Hyde, an Atlanta lawyer who specializes in management ethics and corporate governance.
Mr. Kilgore was picked as TVA's first chief executive more than two years ago after TVA's former three-member governing board was replaced in March 2006 by a part-time, policy-making board.
TVA Chairman Mike Duncan, a former Republican National Committee chairman appointed to the agency's board by President George W. Bush, said the Kingston spill is a wake-up call for fixing the organization. He pledged to try to implement many of the recommendations from consultants and internal auditors working with the current senior management at TVA.
"As TVA begins the arduous process of moving forward to eliminate deficiencies in systems, standards, controls and corporate culture that were identified in McKenna's and the inspector general's reports, the inspector general will have a key role to play in being an independent voice to ensure that TVA is getting it right," he said.