Bill Johnson - Transcending Boundaries · 4 Statutory Standards • TVA is a creature of Federal statute, and those statutes govern the criteria by which we make resource selections,

B i l l Jo h n s o n

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1933 – President Roosevelt Signs The TVA Act

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“Power is really a secondary matter … TVA is

primarily intended to change and to improve the

standards of living of the people of that Valley.”

— President Franklin D. Roosevelt

During a news conference at

Warm Springs, Ga., Nov. 23, 1934

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Statutory Standards

• TVA is a creature of Federal statute, and those statutes govern the

criteria by which we make resource selections, on both the supply and

demand side.

• Specifically, those statutes require us to . . .

– Use a least-cost planning program to select energy resources.

• In doing this, we are directed to consider diversity of resources,

resource operability, system reliability, risks and environmental

compliance costs. All toward the goal of providing electricity to the

public we serve reliably and at the lowest feasible cost.

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Asset Decisions

18 – Coal units idled/retired

due to EPA agreement

14 – Coal units idled/retired as

an option under/beyond EPA

agreement

2 – Coal units still under

evaluation

25 – Coal units that will remain

in the fleet

John Sevier

Widows Creek

Johnsonville

Colbert

Allen

Shawnee Paradise

Cumberland

Gallatin

Kingston

Bull Run

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Adding and Upgrading Assets

John Sevier Allen Paradise Watts Bar Unit 2 Browns Ferry Transmission

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EE 7% Renewables

3%

Hydro 11%

Nuclear 31% Gas

10%

Coal 38%

EE 9% Renewables

3%

Hydro 10%

Nuclear 37%

Gas 16%

Coal 25%

2015 2020

Hydro 6%

Nuclear 26%

Gas 10%

Coal 58%

2007

Energy Sources Trajectory

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Major Initiatives

• Nuclear program

– Performance

– Watts Bar 2

• Transmission system

– Reliability

– Regulatory Compliance

– Expansion

• Hydro modernization

• Generation fleet construction

– Paradise

– Allen

– Gallatin

• Workforce

• IRP

– Energy Efficiency/Demand Response and Renewables modeled as resources

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Watts Bar 2 Timeline

Milestone Schedule

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Nuclear Regulatory Progress

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Hydro Modernization

• Average age of hydro fleet is

61 years with 15 units over 75 years

• Needed to maintain reliability

• Potential for ~200 MW

additional capacity

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Clean Air Regulations

• CAA, CSAPR, MATS, etc.

• 111(d) Rule

• TVA invested $5.6B in cleaner energy and

clean air

• NOX and SO2 emissions reduced by more

than 90%

• 30% reduction of CO2 since 2005;

40% by 2020

• Adding about 1,800MWs of carbon free

generation to the fleet

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Paradise

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Paradise l & 2 Options – Illustrative Example

$1.2 billion

30-year asset

$780 million

~ $300 million upgrade

111(d)

316(b)

Other water regulations

Coal ash

Future costs/capital

Plant is 44 years old, has to run

20-25 more to justify investment

VS

Emission Controls Gas Turbine

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Efficient Load Following Resources

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Expansion and Environmental Capital

Substantial investment in new gas and nuclear generating assets

$987

$841

$296

$176

$161

$48

0 100 200 300 400 500 600 700 800 900 1,000

Gas

Nuclear

Clean Air

Transmission

Ash

Kingston

$ million

Capacity Expansion $ 2,004

Environmental 505

Total $ 2,509

(FY15 Plan)

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Expansion and Environmental Capital

Growing assets by nearly $18 billion while holding debt to <$2 billion increase

(FY15 Plan) $ billion

Total Debt & Other

Financing Obligations Change < $2 B

Gross Property, Plant

& Equipment Change

$18 B

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Mission of Service

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Mission of Service

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