TVA's CEO, the highest paid federal employee, will not get a raise after rolling blackouts

After a fiscal year that included rolling blackouts days before Christmas and the workplace death of a site foreman, Tennessee Valley Authority President and CEO Jeff Lyash, the highest paid federal employee, will not get a raise.

In a 6-3 vote, the TVA Board of Directors approved the measure at its quarterly board meeting Nov. 9 in Tupelo, Mississippi. At the same time, the board unanimously voted to give TVA's 10,000 non-executive employees almost all of their at-risk compensation, an end-of-year payout based on performance.

In another 6-3 vote, the board agreed to give the company's 70 or so executives much of their end-of-year payout, though it will be decreased slightly.

Lyash said the compensation structure made sense for "both a remarkable and a very challenging year" and executives like himself should bear greater accountability when things go wrong.

His total compensation package reached $9.8 million in 2022, though the board said it was still 29% below the median for CEO salaries at peer companies. TVA executive salaries and the secrecy around them have long been a point of controversy, challenged from the president of the United States down to board members.

Bobby Klein, a longtime electrician and former vice president of the International Brotherhood of Electrical Workers, was joined by board members Wade White and Bill Renick in opposing giving end-of-year payouts to executives. The three also opposed maintaining Lyash's high salary, arguing that TVA's compensation structure should be studied and potentially overhauled.

"My vote is a reflection of my belief that some of the top executives' compensation is out of line with the public power model," Klein said. "My loyalty lies with TVA and its mission."

TVA is a quasi-public agency that does not receive taxpayer dollars and makes its revenue, $12.5 billion in the 2021-22 fiscal year, from sales of electricity.

Its fiscal year ended Sept. 30, allowing the board to look back at the successes and failures of the last year. Its revenue for this last fiscal year will be released soon.

TVA looks to grow from 2023 blackouts, reputation damage

Last December, the bitter cold of Winter Storm Elliott knocked out key TVA fossil plants right when they were needed most, prompting the nation's largest public utility to call for rolling blackouts for the first time in its 90-year history to preserve its grid. Days later, TVA released a statement taking full responsibility for the blackouts, followed by a report to state lawmakers in February.

A report from the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation released Nov. 7 found that TVA was one of 12 power companies across the eastern U.S. that experienced unplanned outages during the storm, totaling 90,500 megawatts of power loss, or enough to power around 50 million homes. TVA's budget for fiscal year 2024 includes $35 million in investments for winter readiness.

In September, a foreman at TVA's Lagoon Creek Site in Brownsville, Tennessee, died days after a natural gas pipe he was repairing burst. TVA launched an internal investigation and the board's committee overseeing safety said it would look into a report and make further safety recommendations.

Still, TVA had its best year for safety ever, finishing in the top 10% of the industry for safety metrics, Lyash said at the board meeting.

"We mourn his loss along with his family and friends," Lyash said. "We are committed to learning from this and taking the actions needed to prevent something like this from ever happening again."

Both the blackouts and the foreman's death highlighted the risk of fossil fuels like coal and natural gas, which together made up 35% of TVA's power supply over the last year. Renewable energy like hydroelectric and solar power, including that purchased from other utilities, made up 13%. Purchased non-renewable energy was the only power supply to decrease, from 13% to 10%.

Nuclear rises as 'bedrock' of TVA power supply

TVA's biggest challenges also made a convincing case for its biggest opportunity in clean energy: nuclear.

During the December storm, TVA's three nuclear plants — Browns Ferry, Sequoyah and Watts Bar — were the only ones to operate as normal. Together, they produce an average of 8,275 megawatts of electricity per day, or enough to power close to 5 million homes.

This year, for the first time in the 50-year history of its nuclear fleet, all of TVA's nuclear sites were recognized for their excellence by the Institute of Nuclear Power Operations.

While TVA pioneered nuclear power with the Browns Ferry plant in the 1960s, the company has not always been known for the excellence of its fleet. Now, nuclear is the company's largest single source of power, accounting for 42% of its supply, up 3% over last year. The company has set its sights on having the nation's top-performing nuclear fleet by 2025, Lyash said.

"Being recognized one year in a row is not enough. This has got to be an annual expectation," Lyash said. "These units are the bedrock of TVA's system."

As TVA prepares for $15 billion in capital expenditures over the next three years, it is also developing a next-generation small modular reactor at its Clinch River Site. In 2019, TVA became the first utility to get an early site permit from the Nuclear Regulatory Commission to build the small reactor, which could revolutionize nuclear energy and provide a model for other power providers.

In October, TVA raised its base electricity rates for the first time in four years, signaling both the effect of inflation and the company's ambitious capital investments in the near future, spurred by its lowest debt in 30 years.

November's meeting was the last for chairman Bill Kilbride, who handed the position over to Joe Ritch.

"Strap in," Kilbride told the board in parting. "I think the next few years will be exciting, interesting, transformative and ultimately rewarding."

Daniel Dassow is a growth and development reporter focused on technology and energy. Phone 423-637-0878. Email daniel.dassow@knoxnews.com.

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This article originally appeared on Knoxville News Sentinel: TVA CEO Jeff Lyash will not get raise after Tennessee blackouts