ELIZABETHTON — An announcement made last week by the Tennessee Valley Authority has made Elizabethton Mayor Curt Alexander mad enough to suggest looking elsewhere for the electricity to run the city’s electric department.
“It just seems to always happen when we have to raise our electric rates that TVA announces some big bonus for its top executives or its employees,” Alexander said Friday.
The mayor was responding to a TVA announcement that its 2011 incentive program will result in $107.5 million in “at risk” pay to 12,893 employees because the federally owned utility met its performance goals.
The announcement came as the Elizabethton City Council was in the process of raising electric bills for its electric department by 2.1 percent, or $1.2 million, for next year. Part of the reason for the increase is to ensure adequate cash flow to cover the fluctuating costs the city must pay for wholesale electricity. The council will hold a public hearing and a second and final vote on the rate increase on Dec. 9.
“TVA says it met its performance objectives, but in my business, the bottom line is where we measure performance objectives,” Alexander said. “TVA’s costs keep going up. Their rates are higher than either Duke Power or Appalachian Power. That tells me they may not be as efficient.”
Alexander works as a financial adviser with Edward Jones. He said that during the depth of the recent recession, Edward Jones had an across-the-board budget cut and did not award bonuses or pay raises. Once the company turned around its fortunes, the bonuses started coming again.
He believes TVA should follow the example.
In a statement announcing the incentives, TVA Chairman Denny Bottorff said “(b)ecause TVA operates one of the nation’s largest utility systems and competes with other utilities for talented and knowledgeable people to strategically manage its operations, compensation must be competitive with other utilities.”
The statement said TVA uses the pay-for-performance plan to set performance goals that motivate performance, make operations more efficient and keep costs down. All TVA employees have some amount of pay “at risk” that is paid only if performance targets for the year are met.
“By whatever name they call it, I still call it a bonus,” Alexander said.
Alexander also said he believes the top decision makers at TVA are “out of touch” with the people who have to struggle to pay their electric bills every month. He said TVA’s chief executive officer, Tom Kilgore will earn $2.7 million this year.
“When you make that kind of money, you don’t understand what it is like for people who must decide what they are going to cut to pay their electric bills in hard times. I have had grown men call me start crying because they don’t know what they are going to do.”
Alexander does concede that Kilgore’s salary is much less than the top executives in other energy companies in the South, which average more than $7 million a year. However, he said those companies are charging lower wholesale rates.
In a recent energy workshop, the city’s electric rates consultant Chris Mitchell said TVA’s rates are higher because it has been proactive in meeting clean energy objectives while other utilities have lagged behind. When the other utilities meet those objectives their rates will also be going up.
Alexander said he is not calling for Elizabethton to make the switch from TVA, he said he does not yet know what steps would be required. “I am just asking our city staff to look at every way we can keep our rates as low as we can for our customers and still provide a reliable service.”
He said everything should be considered, including purchasing wholesale electricity from a different supplier or selling the city’s electrical infrastructure to a major energy company.