Revision History - Jerry Post

Tennessee Valley Authority (TVA)
The Tennessee Valley Authority (TVA) is a quasi-public federal organization headquartered
in Knoxville, Tennessee, that was founded in 1933. It provides electric power;
flood control; navigation; and agricultural, economic, and industrial development through
the Southeastern United States. It is the nation’s largest electric utility. It makes most of
its money ($6.9 billion in 2003) by selling electric power to regional power associations. It
provides power to more than 160 municipal and cooperative power distributors who service
more than 7 million consumers. In addition, special projects are funded by Congress
(amounting to $135 million in 1992). The 13,000 employees (down from 19,000 in 1992) are
divided into several business units, including finance, power generation, marketing, and
navigation. The IS department consists of 683 employees (down from 925 in 1992) and has
an annual budget of $100 million [Garvey 2003]. However, the company employs 4,000 union
trade workers (such as electricians) on a seasonal basis to handle maintenance [Hoffman
2004].
Like other businesses, the TVA faces a changing environment with deregulation. For
Revenue (Million $)
Year 2003 2002 2001 2000 1999
Revenue 6,952 6,796 6,999 6,762 6,595
Net Income 456 73 (3,311) 24 119
years, it was
the only supplier
of electricity
in its
region—
cooperatives
and municipalities signed agreements to purchase power solely from TVA. Many of these
contracts had extended time frames of 35 to 50 years. Many of these contracts were due for
renegotiation in the 1990s, and other utilities are eager to expand their markets. Additionally,
the federal government is encouraging competition in the production of electricity. As
a result, TVA has to become more cost conscious. As of 1994, the Energy Policy Act of 1992
effectively frees customers to choose the electric company they wish to use. Wholesale corporate
utility customers can already buy their electricity from a variety of sources. It is unclear
at this time whether individual households will have the option of selecting power
providers. The act is primarily designed to provide multiple choices to large factories, power
distributors/resellers, and municipal utilities.
Management and Employees
The TVA is governed by a three-person board of directors, with one of them appointed
as the head of the board. The three members are appointed by the U.S. President, and
the spots are often given to financial backers as political patronage. The day-to-day activities
are governed by the general manager, the comptroller, the general counsel, the chief
budget officer and the director of information. The separate business units are largely independent
of each other. They have separate divisional leaders, separate budgets, and different
objectives that occasionally conflict. Also, many of the offices are located in different cities.
The TVA has an interesting history in terms of management and labor relations. Although
it is technically an agency within the federal government, its employees are not subject
to Civil Service regulations. Congress decided that because of the technical nature of
the agency, it required highly trained employees, so it should be free to hire employees from
the national job market without the political considerations involved in the Civil Service
8