TVA Chairman Reaffirms Organizational Reforms

July 28, 2009

TVA Board Chairman Mike Duncan commented on today’s release of the TVA Inspector General’s Report on the Kingston Spill by noting that it confirmed the need for the plan outlining significant organizational changes that the Board adopted on July 21, 2009.

Mr. Duncan noted that the Inspector General’s report mirrored the McKenna Long & Aldridge report that was commissioned by the Board of Directors in the weeks after the incident and was presented at the July 21, 2009, meeting of the Board. According to Mr. Duncan, the Inspector General’s report confirms that mistakes were made, and he reiterated that the Board is committed to treating the Kingston Spill as a wake-up call for fixing the organization.

With respect to the recommendations contained in the Inspector General’s report, Mr. Duncan said that they were largely in-line with the resolutions passed by the Board on July 21, 2009, but that he and the Board would use those recommendations and the issues identified in the Inspector General’s report as additional inputs in preparing for the August 20, 2009, meeting of the Board to ensure that all lessons learned are being utilized.

Mr. Duncan continued that “the internal audit function provided by the Inspector General is critical for the Board to be able to fulfill its duties” and that he is appreciative of the work of the Inspector General. He indicated that “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, and we welcome his thoughts and insights.”

Mr. Duncan expressed his disappointment that the root cause presentation of June 25, 2009, gave the impression of finality. He noted that the “what” was never considered a sufficient answer by the Board and he hoped that the Board’s releasing the McKenna report and directing management through the resolutions the Board passed on July 21 demonstrated that the Board is also deeply concerned with the “why.”

He observed that he hopes further dialogue surrounding disagreements between AECOM and Marshall Miller with respect to what happened can resolve those open issues so that any questions raised over what happened can be put to rest. He continued that, while any dialogue over what happened continues, he and the Board will continue to focus on the why and on remedying any deficiencies that have been brought to light. He said that he looks forward to receiving and reviewing management’s plans at the August 20, 2009, meeting of the Board and actively working with the culture-change/organization-development consultants whom the Board hopes to have identified in advance of the August meeting.

Mr. Duncan concluded by reiterating that he and the Board are committed to working with TVA’s senior management to take the steps necessary to earn and maintain the public trust, and they welcome the input of the Inspector General in determining those steps.

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 9 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.

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