GAO: Tennessee Valley Authority: Actions Needed to Better Communicate Debt Reduction Plans and Address Billions in Unfunded Pension Liabilities
The Tennessee Valley Authority, the nation's largest public power provider, provides electricity to more than 9 million customers. It raises billions in revenue but also issues bonds to finance its large capital investments (though it is subject to a $30-billion debt limit). The TVA plans to reduce its debt by about $4 billion by 2023 by increasing rates and reducing expenses; it also plans to eliminate its unfunded pension liabilities. To meet its goal to reduce debt by about $4 billion—from about $26 billion in fiscal year 2016 to about $22 billion by fiscal year 2023—the Tennessee Valley Authority (TVA) plans to increase rates, limit the growth of operating expenses, and reduce capital expenditures.
TVA's debt reduction plans and performance information are not reported in a manner consistent with the GPRA Modernization Act of 2010. Specifically, TVA identifies managing its debt and its unfunded pension liabilities as major management challenges but has not reported required performance information in its performance plans or reports on these challenges, thereby reducing transparency and raising questions about how it will meet its goal. As of September 30, 2016, TVA‘s pension plan was about 54 percent funded (plan assets totaled about $7.1 billion and liabilities $13.1 billion). Report.