The Tennessee Valley Authority needs to undertake a full consideration of energy efficiency and better capital expenditures planning, GAO has said.
It said the nation’s largest public power provider has financed large capital investments mostly by issuing debt and is subject to a $30 billion debt ceiling imposed by the TVA Act.
According to its 2010 power supply plan, by 2029 TVA plans to meet electricity demand primarily by expanding natural gas-fired generating capacity, adding three nuclear reactors, and expanding energy efficiency programs.
TVA plans to increase its generating capacity and total electricity generation by about 1 percent per year on average, to keep up with demand growth, but it has not fully considered the potential gains of energy efficiency efforts, according to GAO-12-107.
It said TVA’s financial condition could hamper its ability to fund capital improvements. As of September 30, 2010, TVA’s statutory debt was $23.6 billion, and TVA plans to spend almost $10 billion by fiscal 2013 for various capital investment projects, the report said.
It added that TVA does not have a formal capital expenditure management plan that identifies assets to be acquired, their costs, and funding sources.
TVA generally agreed to use information from an energy efficiency study it commissioned in March 2011 to inform its future resource planning process, as well as develop a written capital expenditure plan that includes the full costs of the assets TVA plans to acquire and the sources of funding for acquiring those assets.
