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Tennessee Valley Authority: Assessment of the 10-Year Business Plan

AIMD-99-142 Published: Apr 30, 1999. Publicly Released: Apr 30, 1999.
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Highlights

Pursuant to a congressional request, GAO provided information on the Tennessee Valley Authority's (TVA) 10-year business plan, focusing on whether the 10-year plan: (1) addresses key issues facing TVA; (2) takes into consideration all applicable costs and revenue sources; (3) contains goals and assumptions that are achievable or reasonable and in line with industry estimates and expectations; and (4) has been updated to reflect significant changes in key goals and assumptions or actual experience.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Tennessee Valley Authority The Chairman of the Board of Directors of TVA should move quickly to improve the reporting of information to the plan's users. Specifically, the Chairman should revise and reissue the plan to reflect evolving conditions and operating plans and their impact on TVA's ability to meet the strategic objectives outlined in the plan by 2007. TVA should also include a discussion of its plans to recover the costs of its deferred assets. As further significant changes occur, the plan should be updated to communicate these changes to plan users.
Closed – Implemented
TVA provides information of its progress towards achieving the objectives of its 10-year plan in its annual reports and elsewhere. Most importantly, TVA has provided a more realistic assessment of its ability to reduce debt than was contained in the 10-year plan. This important information has been provided to stakeholders in a variety of ways, including budget documents submitted to Congress, briefings of investors, and TVA's annual reports. TVA also reduced the carrying value of its deferred assets by about $3.4 billion in fiscal year 2002, better reflecting the value of those assets. For these reasons GAO believes TVA has been responsive to its recommendation, even though TVA has not published a new 10-year plan.
Tennessee Valley Authority The Chairman of the Board of Directors of TVA should move quickly to improve the reporting of information to the plan's users. Specifically, the Chairman should periodically communicate its progress toward achieving the 10-year plan's strategic objectives to those who rely on the information contained in the plan. One option would be for TVA to expand its discussion of the 10-year plan in its annual reports, including reporting: (1) how actual results compare to all of the plan's key goals and assumptions, including those for revenues, debt reduction, capital expenditures, cost savings, and the market price of power; (2) progress toward achieving performance measures related to the plan, when developed; and (3) an overall assessment of whether TVA is on course to provide competitive power in 2007.
Closed – Implemented
As GAO suggested, TVA does provide information in its annual reports regarding its progress towards achieving the major objectives of its 10-year plan. GAO confirmed that it did so in its most recent annual report. TVA provides relevant information that gets to the intent of GAO's recommendation through other avenues as well, including budget submissions, investor briefings, and website articles and reports. Specifically, TVA periodically provides updated information pertaining to revenues, debt reduction efforts, capital expenditures, cost savings initiatives, and expectations regarding the future market price of power. Because TVA has been providing this information, GAO believes TVA has been responsive to its recommendation.

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CompetitionCost analysisCost controlElectric power generationEnergy costsFederal corporationsFinancial analysisFinancial managementStrategic planningUtility rates