TVA Strategic Plan To Focus on Customers, Performance, Finances

March 30, 2007

TVA’s strategic objectives for the next decade should focus on customers, sound financial principles, a balanced use of assets and achieving top-quartile operational performance, TVA President and CEO Tom Kilgore told the TVA Board today.

In a report to the Board on the development of the 2007 Strategic Plan, Kilgore said that the landscape for the electric utility industry has changed significantly during the past several years. He outlined highlights of the proposed policy-level plan that would provide strategic direction for the next 10 years at a Board meeting in Knoxville, Tenn.

The Board will consider adopting the Strategic Plan following a period for commentary.

“One of the new Board’s first actions was to address the need for a new Strategic Plan to provide strategic direction in a rapidly changing business environment,” Kilgore said. “TVA’s business model has served the Tennessee Valley well, but it must be refined in order for TVA to be better positioned in the marketplace. The Strategic Plan will focus on leveraging TVA’s strengths and addressing customer, financial, operational and organizational actions necessary for TVA to support the region’s future growth and success.”

He said that retail competition in the country has stalled and wholesale competition is evolving slowly. However, several new issues have emerged including escalating fuel prices, a growing need to learn how to use energy more efficiently and increasing desire for a cleaner environment.

The strategic objectives in the proposed plan and what TVA must do to achieve them are:

• Customers – Maintain power reliability, improve rates and build trust with TVA customers. This would include simplifying the wholesale pricing of power and partnering with customers on providing new power supply, encouraging conservation, reducing peak demand and eventually offering fixed and variable fuel costs.
• Financial – Adhere to a set of sound guiding financial principles to improve TVA’s fiscal performance. This would include applying sound economic evaluation practices to new investments, paying down existing debt before the asset value is depleted and improving the ratio of financing obligations to assets.
• Assets – Use TVA’s assets to meet market demand and deliver public value. This would include balancing production with demand, preserving existing assets as appropriate, planning for orderly retirement of uneconomic assets and managing public lands to provide multiple benefits.
• Operations – Improve performance to consistently rank in the top quartile or better. This would include holding non-fuel operating and maintenance costs to equal or less than sales growth, continuing the reduction in emission rates, serving as a responsible steward of the river system and benchmarking others to demonstrate top quartile performance.
• People – Build pride in TVA’s performance and reputation. This would include developing workforce competencies and management processes to motivate performance and successfully implement the strategic objectives, safeguarding the health and safety of the public and employees, treating everyone with integrity and respect, and communicating clearly and consistently.

Kilgore’s presentation to the Board regarding the Strategic Plan, the draft version of the plan, and a commentary form are available on the Strategic Plan page of this Web site. The Board will consider the plan after reviewing the commentary.

TVA is the nation’s largest public power provider and is completely self financing. TVA provides power to large industries and 158 power distributors that serve approximately 8.7 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

Media Contact

John Moulton Knoxville, 865-632-8048
TVA News Bureau, Knoxville, (865) 632-6000

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