GAO Says TVA Slow on Energy Efficiency Planning

AP

KNOXVILLE (AP) – The Tennessee Valley Authority lacks a formal long term capital spending management plan and its proposed spending on power generating along with promised pollution controls mean tough times ahead, the U.S. Government Accountability Office said in a report.

"TVA does not have a formal capital expenditure management plan that identifies assets to be acquired, their costs, and funding sources," the report said. "The lack of such a plan may impede TVA's long range financial planning."

Requested by U.S. Sen. Barbara Boxer, D-Calif., as chairwoman of the Committee on Environment and Public Works, the report also said TVA has been slow to consider the potential of energy efficiency measures in its seven state service region but acknowledges the utility is about to finish such a study.

With TVA's statutory debt at almost $24 billion in September 2010, the report said TVA plans to spend about $10 billion by 2013 for capital projects and by 2029 plans to expand gas-fired generating capacity, add three reactors and expand energy efficiency programs.

With a $30 billion debt ceiling, the report said "TVA's financial condition leaves it with difficult decisions to make in order to meet electricity demand while keeping its debt within the statutory limit."

"Given the significant delays and cost overruns that TVA has historically experienced, these projects could potentially face similar issues," the report said. "In addition, under a settlement with the Environmental Protection Agency, TVA agreed to invest $3 billion to $5 billion in the next 10 years on new and upgraded pollution controls on existing power plants. TVA also anticipates increases in operating costs. All of these factors could reduce the available funds TVA could use for its planned capital investments."

The report released Dec. 1 said TVA plans to increase its generating capacity by about 1 percent annually on average but until it has an energy efficiency study "TVA cannot be sure that its current resource plans reflect the full scope and possible extent of energy efficiency programs or that the plans are realistic."

TVA President and CEO Tom Kilgore in a written response accompanying the GAO report said TVA "sees the opportunity for considerable progress in energy efficiency." Kilgore said TVA needs financial flexibility and he reminded the GAO that the debt ceiling remains unchanged since 1979.

Kilgore's response said TVA in fiscal 2011 expanded its energy efficiency investments and is doing so again in 2012. .

He said TVA's energy education efficiency strategy includes incentive programs.

TVA's still unfinished energy efficiency study is expected to be publicly discussed at a forum that starts Feb. 21 in Nashville.

TVA in a November release said its energy efficiency programs have reduced the region's electricity use, conserving enough energy to power 50,000 area households for an entire year.

TVA serves about 9 million people in Tennessee, Kentucky, Alabama, Mississippi, Georgia, North Carolina and Virginia.

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