Tennessee Valley Authority Needs a Written Policy on the Use of Power System Revenues for Research, Development, and Demonstration

EMD-81-16: Published: Nov 25, 1980. Publicly Released: Nov 25, 1980.

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GAO evaluated the Tennessee Valley Authority (TVA) Office of Power's research, development, and demonstration programs. One objective was to compare the overall TVA level of research and development expenditures with that of investor-owned utilities.

TVA has an informal policy that limits expenditures of power funds for research and development to no more than 2 percent of annual gross power system revenues. That level of expenditures would place TVA among the utility industry leaders in research and development spending. At the time of the GAO review, TVA officials were uncertain about the criteria for identifying all expenditures that are subject to the 2-percent ceiling. It does not appear that the 2-percent ceiling has been exceeded, but TVA needs to establish a formal policy on what level of expenditures TVA will make for research and development and what constitutes those expenditures.

Recommendations for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The TVA Board of Directors should present in a written policy the rationale for selecting that level of spending.

    Agency Affected: Tennessee Valley Authority

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The TVA Board of Directors should present, in a written policy, the level of power funds TVA is willing to spend annually on RD&D.

    Agency Affected: Tennessee Valley Authority

  3. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The TVA Board of Directors should present in a written policy the criteria to be used in identifying the types of expenditures covered by the spending ceiling.

    Agency Affected: Tennessee Valley Authority

 

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