Dive Brief:
- Tennessee Valley Authority (TVA) will cut 2,600 workers, or more than 10% of its workforce, in order to cope with decreasing sales and power generation plant closures, while streamlining operations and maintenance programs to stay competitive.
- So far, 750 employees have accepted a voluntary severance package and 1,000 open positions will not be filled. TVA's nuclear program, under reorganization, is expected to face cuts. The company will also lay off 390 Bechtel contract workers from the Wyatt Bar Nuclear Plant, in Texas.
- The utility is still trying to identify which areas of its workforce can be reduced to meet its budget targets. The utility expects severance settlements to cost about $25 million. The lay-offs are expected to bring down the utility's annual spending by $500 million by 2015.
Dive Insight:
The Tennessee Valley Authority is the largest federal utility, operating across seven states. TVA President Bill Johnson said that compared to similarly sized utilities, the company had accumulated far more staff over the last decade, which has led to higher operating costs. Combined with a drop in demand, the company has run out of options if it wants to keep rates low for customers.
Like many utilities and power plant operators, TVA is retiring coal-fired generation, to the tune of 3,000 MW. The John Sevier Plant and most of the units at the Widow's Creek Plant are already closed, and more units are scheduled to retire at plants in Alabama, Tennessee, and Kentucky.
Most of TVA's other plants have been recently upgraded, which should lower operational and maintenance costs even more, ultimately resulting in savings for rate payers. Johnson said the company's assets "are much improved from where they were five years ago."
