Business

TVA Axing 2,000-Plus Jobs in Cost-Cutting Drive

The federally owned Tennessee Valley Authority (TVA) announced this week that it was eliminating more than 2,000 jobs as part of its ongoing effort to stem a tide of red ink.

The cuts are not as draconian as they might appear, since more than half of the jobs represent vacancies that will now not be filled. Another 900 are retiring workers or those taking voluntary severance packages. Less than 100 TVA employees are actually being laid off.

The cuts will leave the TVA with around 10,000 employees, a far cry from the massive 50,000-plus staff it maintained in the 1980s.

The TVA is trying to cut its annual budget by $500 million by fiscal 2015 in an effort to reduce its electricity rates and make it more competitive. The staff cuts will allow it to reduce its payroll by about $150 million. Though the cost-cutting drive has shown some results, according to the TVA’s second quarter report, it is still losing substantial amounts of money from lower power sales.

Higher sales this spring have helped close the gap, but the utility still lost $23 million on sales of $2.7 billion for the second quarter of 2014. However, the latest results are more promising, with the TVA reporting net income of $147 million on sales of $8 billion for the first nine months of the current fiscal year.

Various methods to put the utility on a more sound long-term financial footing—including an outright sale—have been advanced recently, but for the moment it is pursuing conventional approaches to reducing its expenses. Though federally owned, the utility does not receive federal subsidies and its debt is not federally guaranteed.

Last year, the TVA announced that it was closing 3 GW of coal-fired generation in Alabama and Kentucky by 2016, and it has agreed with the EPA to shutter about a third of its coal plants by 2017. Meanwhile, it has been trying to boost its nuclear capacity over the past decade, with the long-delayed second unit at its Watts Bar plant set for commercial operation by the end of 2015.

—Thomas W. Overton is a POWER associate editor.

[This story has been updated to reflect the most recent financial data for TVA.]

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