Tennessee Valley Authority: Assessment of the 10-Year Business Plan
Abstract
I am pleased to be here today to summarize the results of our work analyzing the Tennessee Valley Authority's (TVA) 10-year business plan. My testimony is based on our April 1999 report, 1 which assesses the plan in depth. Restructuring of the electricity industry has led to wholesale competition, which, combined with other factors, has caused wholesale electricity prices to fall in many parts of the country. This increased competition led TVA management to develop this plan to position TVA to be more competitive by, among other things, reducing its high debt servicing and other fixed costs. Because of concerns about TVAs ability to achieve the 10- year plan's objectives by 2007-when competitive pressures are likely to be greater and when many of TVAs long-term contracts could expire-we were asked to determine whether TVA will be able to reduce debt as envisioned in the plan and whether its goals and assumptions regarding capital expenditures and revenues and expenses are achievable or reasonable. Specifically, my testimony today will discuss the findings from our April 1999 report concerning * whether the plan objectives address the key issues confronting TVA, * major costs that were not included in the plan, * whether the goals and assumptions in the plan are achievable or reasonable, and TVAs plans to formally update the plan for significant changes. In summary, TVAs 10-year plan is moving TVA in the right direction by addressing the most important issues facing TVA: its high fixed financing costs and limited financial flexibility and the large amount of deferred assets that TVA has not recovered through rates. However, because TVAs actual experience and assumptions about certain major costs have varied in significant ways from those envisioned in the 10-year plan, it is unlikely that TVA will generate sufficient cash flow to reduce debt and the corresponding fixed interest costs to the extent stated in the plan through
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 22, 1999
- Accession Number
- ADA368701
Entities
People
- Linda M. Calbom
Organizations
- United States Government Accountability Office