- increasing rates
- limiting the growth of operating expenses
- reducing capital expenditures
TVA’s pension liabilities add to these financial woes. Its pension plan was only about 54 percent funded as of September 30, 2016. Although TVA hasn’t increased its debt much over the past decade, the plan’s unfunded pension liabilities have steadily increased. Moreover, the agency continues to invest in nuclear projects while deferring full recognition and funding of pension liabilities, which means TVA may need to raise rates in the future to fund those liabilities.
(Excerpted from GAO-17-343)TVA’s debt reduction plans can also be derailed by other unforeseeable events, such as regulatory pressures, future changes in demand for electricity, and technological innovations. Illuminating information According to TVA, managing its debt and unfunded pension liabilities are major management challenges. TVA is required to report performance information on those challenges, but hasn’t done so—which reduces transparency and raises questions about how it will meet its goals. While TVA also aims to eliminate $6 billion in unfunded pension liabilities within 20 years, market conditions and other factors could affect progress toward this goal. No mechanism is in place to ensure the pension plan is fully funded. We recommended that the TVA Board of Directors better document and communicate TVA’s goals in its performance plans and reports, as well as work toward rules that can ensure its pensions are fully funded. To find out more about our recommendations, check out our full report.