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TVA CEO defends private plane, helicopter use

SNL Image

Tennessee Valley Authority President and CEO Bill Johnson speaks at the agency's Feb. 16 board meeting.
Source: TVA

The Tennessee Valley Authority's CEO defended his agency's use of private planes and a luxury helicopter, arguing they facilitated economic development and enhanced business efficiency.

Bill Johnson, the TVA's president and CEO, and board members of the federally owned company faced a hostile crowd at a Feb. 16 quarterly meeting, with dozens of citizens slamming the TVA's recent aircraft purchases, revealed earlier by an environmental group.

Members of the public also asserted the agency is shifting the rate burden from industrial users to residential customers and the TVA is not doing enough to transition from fossil fuels to renewable resources.

After three hours of hearing from the community, TVA officials were ready to respond.

"I think we're so good at what we do that most people take flipping the switch and having the lights turn on as a simple given," said board member Eric Satz, a Nashville venture capitalist.

The agency's aircraft took up the brunt of public discussion during the meeting, despite a proposed rate change and the Trump administration's recent proposal to sell the TVA's transmission assets.

Citing federal records, the Southern Alliance for Clean Energy said in a Feb. 13 blog post that the TVA has spent $40 million since 2015 on two Cessna jets, a Beechcraft plane and a helicopter with a Mercedes-Benz interior. The helicopter had been used previously by Dallas Cowboys owner Jerry Jones, according to the environmental group.

Johnson defended the TVA's aircraft, describing them as safer than its older ones and integral to the agency's operations. He said they enable the CEO to attend more meetings around the state in a day than driving would.

Johnson said that more importantly, they recently helped the TVA secure a $1.6 billion deal in which Toyota Motor Corp. and Mazda Motor Corp. will set up a joint auto manufacturing plant in Huntsville, Ala. The TVA certified the land on which the site will be built.

The CEO called the helicopter's Mercedes-Benz interior "ridiculous," saying that it would cost money to take out the hardwood floors and plush seats. However, he added, "When you're looking at prospects who want to look at big sites, you've got to get 'em up in a helicopter ... Our mission is economic development; we commit resources to it."

Operations update, renewables plan

Richard Howorth, the TVA's board chairman, addressed a number of public comments, calling the agency's performance "quite good." The TVA's carbon emissions are down 50% from 2005 levels, he said, with that statistic on track to be 60% by 2020. Its residential retail rate is the 23rd-lowest among the nation's 100 largest utilities, he said.

The agency's rate differential, which is the gap between how much residents and industry pay for electricity, is 5.61 cents/kWh, compared to the national average of 6.22 cents/kWh, the chairman said. One hundred of the TVA's 154 local power companies have had decreases in their effective wholesale rates in recent years, he added.

A strategic pricing plan, which the agency's board will vote on in May, will be revenue neutral, Howorth said, though local power companies could decide on their own to raise residential rates.

Mike Skaggs, the TVA's executive vice president of operations, announced that the agency on Jan. 17 set its all-time record for energy delivered to the Tennessee Valley in one day: 706 million MWh, which he said is enough to power New York City for over 64 days. The TVA experienced several peak load records in January, he added, with this year being the coldest start to a January in the last 20 years.

Two-fifths of the agency's Jan. 17 generation came from carbon-free sources, Skaggs said, with nearly half coming from fossil fuels. Just over 10% came from purchased power or power under contract.

SNL Image

Tennessee Valley Authority board chairman Richard Howorth.
Source: TVA

Howorth attributed this performance in large part to Johnson, who was criticized by several speakers for his multimillion-dollar compensation package.

"This board is very pleased with Bill Johnson's performance over the past five years," Howorth said. "And I will also say that Bill Johnson, who could work for a number of other utility companies at an even greater salary, cares deeply about the mission of TVA."

Johnson expanded on the TVA's $8 billion allocation for renewable energy over the next two decades, telling reporters after the board meeting that the agency is "testing the market" for 200 MW of solar. "Over the next couple years, you're going to see us do that a couple times on that size scale."

The CEO said the TVA is doing all it can on renewables. Investor-owned utilities are often required by regulators or legislatures to invest in carbon-free generation, whereas the TVA is federally mandated to pursue the lowest-cost option, regardless of source.

"We don't get to make the value judgment," Johnson said. That "makes the task at hand easier to describe, but not any easier to carry out."