Tennessee Valley Authority: Additional Steps Are Needed to Better Manage Climate-Related Risks
The Tennessee Valley Authority (TVA) provides electricity to 10 million customers in 7 states.
TVA faces some climate-related risks that could affect its ability to generate and transmit electricity while keeping rates low. For example, in 2010, some TVA infrastructure was submerged in over 5 feet of water when 15 inches of rain fell in 2 days. Relocating this infrastructure to higher ground cost about $9 million.
TVA hasn't taken inventory of all of its assets and operations that are vulnerable to climate change, or developed a resilience plan that identifies and prioritizes measures that address specific risks.
We recommended that it do so.
TVA’s Service Area and Power Generation Assets
What GAO Found
The Tennessee Valley Authority (TVA) faces several climate-related risks to its operations. Increasing temperatures and other climate-related risks are expected to affect TVA's ability to generate and transmit electricity, according to reports reviewed and stakeholders interviewed by GAO. For example, in 2007, 2010, and 2011, TVA had to reduce power generation at its Browns Ferry Nuclear Plant because river temperatures were too high to receive discharge water from the plant without raising ecological risks. Climate-related effects, such as heavy precipitation and flooding, could also create added costs to TVA's operations—such as for infrastructure investments—that could affect TVA's ability to keep electricity rates low. For example, in 2010, a TVA substation was submerged in over 5 feet of water when 15 inches of rain fell in 2 days. TVA relocated the substation to higher ground, at a cost of about $9 million.
Tennessee Valley Authority's Browns Ferry Nuclear Plant in Alabama
TVA has taken several steps to manage climate-related risks. For example, TVA identified risks, such as flooding and drought, in its 2021 Climate Action Adaptation and Resiliency Plan and implemented several resilience measures, such as relocating certain infrastructure. However, TVA has not conducted an inventory of assets and operations vulnerable to climate change or developed a resilience plan that identifies and prioritizes resilience measures to address specific risks. According to the Department of Energy's (DOE) Guide for Climate Change Resilience Planning, conducting an inventory of assets and operations vulnerable to climate change can help utilities more accurately identify relevant hazards and the potential severity of disruptions to operations or damage to related infrastructure. This, in turn, would better position TVA to plan and implement appropriate actions to address climate change vulnerabilities as they become more acute, and as new and better information becomes available. In addition, developing a resilience plan that includes a portfolio of resilience measures could help TVA identify available options and determine whether mitigating certain risks is worth the investment. Doing so would help TVA better fulfill its mission of providing reliable and affordable power to its customers.
Why GAO Did This Study
More frequent extreme weather events and other risks associated with climate change could cost utilities and customers billions of dollars from power outages, disruptions to electricity generation capacity, and infrastructure damage. Enhancing climate resilience means taking actions to reduce potential future losses by managing climate-related risks. TVA is a federal corporation and the nation's largest public power provider. TVA provides electricity to about 10 million customers in seven states, including 153 local power companies and about 60 large industrial customers and federal facilities.
GAO was asked to examine U.S. energy infrastructure resilience. This report examines (1) climate-related risks to TVA's operations; and (2) steps TVA has taken to manage climate-related risks, and additional steps needed. GAO analyzed relevant reports and financial disclosure documents; and interviewed TVA officials and knowledgeable stakeholders from consumer groups and DOE national laboratories.
GAO is making three recommendations, including that TVA conduct an inventory of assets and operations vulnerable to climate change and develop a resilience plan that identifies and prioritizes resilience measures. TVA neither agreed nor disagreed with our recommendations.
Recommendations for Executive Action
|Tennessee Valley Authority||The TVA Chief Executive Officer should direct TVA staff to conduct an inventory of assets and operations vulnerable to climate change that includes analyzing the likelihood and degree of damage or disruption from climate change and the likely consequences if specific climate effects were to occur. (Recommendation 1)||
In December 2022, TVA stated that while the agency does not have one report or one "inventory" that documents all assets or operations, TVA continually evaluates climate-related risks to each area of its operations. However, TVA has not assessed the risks that climate change may pose to all major planning processes or assets. TVA stated that it would review the best path forward to implementing an enterprise inventory but did not provide a timeframe for the effort.
|Tennessee Valley Authority||Once TVA staff identifies vulnerable assets and operations, the TVA Chief Executive Officer should direct TVA staff to develop a resilience plan that identifies and prioritizes measures to address climate change vulnerabilities and that includes a portfolio of resilience measures and an action plan that specifies which risks to address and how and when to do so. (Recommendation 2)||
In December 2022, TVA stated that it issues and regularly updates a climate adaptation report. In addition, in its written comments, TVA stated that TVA's Enterprise Risk Management business unit provides TVA with a comprehensive risk perspective to identify and manage risks, capitalize on opportunities, and improve risk management behaviors. While TVA's climate adaptation reports highlight certain risks and resilience measures, the reports do not outline a portfolio of resilience measures or identify an action plan that specifies which risks to address, as well as how and when to do so. We continue to believe that our recommendation would help TVA identify what options exist to determine whether mitigating certain risks is worth the investment.
|Tennessee Valley Authority||TVA's Chief Executive Officer should direct staff to establish a plan to routinely reassess the TVA resilience plan and incorporate updated information about implemented resilience actions, as well as updated information about climate change, resilience technologies and planning tools, and connected infrastructure vulnerabilities. (Recommendation 3)||
In December 2022, TVA stated that it was already doing this through its climate adaptation reports and periodic updates that are submitted to the Office of Management Budget and the Council on Environmental Quality as required by executive order since 2011. In addition, TVA stated that the climate risks that have been identified by individual business units are reviewed as part of TVA's Enterprise Risk Management's annual risk assessment process. However, TVA's climate adaptation reports do not identify and prioritize resilience measures or include a plan that specifies which risks to address and how and when to do so. Therefore, while TVA has a mechanism to routinely update its climate adaptation reports, the reports do not include information that could help TVA determine whether mitigating certain climate risks is worth the investment.