by Craven Crowell
Thank you, Sissy, and good afternoon, ladies and gentlemen. As always, were delighted to be back in New York, and were especially pleased to be here today to give you a report about TVA, beginning with our new Board.
I would like to introduce my new colleagues, who joined the Board in November, Directors Skila Harris and Glenn McCullough, both of whom bring a depth of experience in areas that are important to TVAs success.
Director Harris served in the Department of Energy during two presidential administrations. She was executive director of DOEs highest advisory body and managed the work of a panel preparing recommendations about the future of TVA in a competitive marketplace. Director Harris served as a special assistant to Vice President Al Gore and chief of staff for Tipper Gore, and she has held management and executive positions with companies in the private sector.
Director Harris is a native of Bowling Green, Kentucky, where she earned a bachelors degree from Western Kentucky University. She continued her education at George Washington University, where she earned a masters in legislative affairs. Director Harris joins the TVA Board committed to assuring that the benefits of competition accrue to the people of the Tennessee Valley.
She is committed to ensuring a safe, reliable, and environmentally sound supply of electricity to sustain the economic vitality of our region. Please welcome TVA Director Skila Harris.
L. McCullough Jr.
Director McCullough brings to TVA extensive experience as an administrator and executive in both the public and private sectors. During his tenure as Mayor of Tupelo, his city earned recognition from the National Civic League as one of the nations 10 All-America Cities. As mayor, he served on the executive committee of the Mississippi Municipal League and was a member of the Governors Special Task Force for Economic Development Planning.
He also served on the board of the North Mississippi Industrial Development Association and the Big Brothers/Big Sisters organization. Prior to his election as mayor of Tupelo in 1997, he was the Director of the Mississippi state office of the Appalachian Regional Commission. As state director of the Appalachian Regional Commission, he promoted economic growth through programs focused on improving workforce training, infrastructure improvements and industrial recruiting.
Previous to these public service positions, he was as an executive in his familys business, McCullough Steel Products in Tupelo. Director McCullough is a graduate of Mississippi State University. As you can see, he has worked extensively for economic development for his city and the state before joining the TVA Board Please join me in giving him a warm welcome.
Now Id like to talk for just a moment about the opportunities for growth and success presented by the new digital economy: first, the increasing importance of electricity to the digital economy, and second, the vital role of TVA and public power in a restructured electric utility industry.
We have already begun to see the impact of the Internet on our everyday lives with the explosion of e-commerce. But this is only the first glimpse of the impact its going to have on the way we do business. The convergence of knowledge and technology is enabling the creation of totally new industries. Its producing fundamental changes in todays business.
You are well aware of this, since banking and investing are at the forefront of the industries being transformed by computers and the Internet. But what fuels the digital economy? Only electricity has the flexibility and precision to fuel this technological engine, and the need for electricity is increasing at a substantial rate.
Americas reliance on electricity has increased 60 percent since 1970, and some predict that the nations electricity consumption will grow nearly 30 percent over the next 15 years. The leap to a digital economy is making the U.S. increasingly dependent on electricity. The demand is there, and is growing.
Price is important, but reliability is fast becoming an equal concern. Just last summer, business and industry suffered huge losses and public safety was jeopardized during multiple blackouts in Chicago and New York City.
record on reliability
We were able to accomplish this outstanding record because of the hard work and dedication of our employees, who take great pride in the excellent operation of our system. Heres what theyve been able to deliver:
Thats nearly double the national average, with the demand for power increasing an average of three percent a year. Nearly 80,000 additional megawatts of electricity will be needed by the year 2012 to meet the projected load growth in the SERC region. We have already announced plans to add 2,400 megawatts of generating capacity over the next four years through improvements to existing units and the addition of peaking capacity, and we are in the process of examining a variety of options to determine the most reliable and cost-effective way of meeting future demands created by the vigorous growth in our region.
In a few minutes, Ike will tell you about some of the improvements weve made to our system to be able to handle this growth.
and process improvement
Employees must be able to apply that knowledge to meet the competitive challenges that confront the utility industry. TVAs leadership is committed to making culture change a reality as an essential component of preparing for competition. STAR 7 is our company-wide culture change program.
TVAs top executives and thousands of employees have already completed Phase I of the program. They will soon participate in Phase II, as we continue our efforts to build a high-performance, competitive culture.
One of TVAs key values is innovation and continuous improvement. Last year, TVA started a Business Transformation initiative to improve cross-organizational business processes to make us more customer-focused, efficient, and cost effective. Ike will also discuss this program in his comments later on.
Competition is already changing the demands placed on many of our customers, and we are working with them to provide new products and services to meet their changing needs. TVAs efforts in economic development also provide a competitive advantage for our customers and our region.
Since 1995, TVA has offered Valley businesses and industries $90 million in economic development loans. These loans and other TVA services leveraged an additional $3.1 billion in capital investment. This resulted in the creation and retention of almost a quarter of a million jobs in the Valley.
The Institute will develop technologies for and address national issues related to air quality, renewable energy supply, and efficient energy production and use. Because TVA is the largest wholesale producer of electricity in the nation and the primary steward of the Tennessee Valleys resources, we also take our responsibility to protect the environment seriously.
TVA is committed to improving air quality in the Valley and, in fact, has significantly reduced emissions from its plants over the past several years. TVA was the first utility in the nation to agree to participate in the DOE-sponsored Climate Challenge, a voluntary greenhouse-gas reduction program for electric utilities. We also are working with 11 distributors of TVA power to be the first in the Southeast to offer consumers a green-power option with electricity generated by renewable resources like wind and solar energy.
We are committed to protecting the environment, and we are working with the Environmental Protection Agency to find ways to sustain TVAs clean air initiatives without putting TVA customers and the Valley at an economic disadvantage.
At TVA, my Board colleagues and I are actively engaged in the national restructuring debate to make sure that any legislation is fair to all consumers and fosters reliability, universal access, environmental stewardship, and economic development. In terms of timing, we dont expect to see any legislation passed this year. For some reason, Congress always seems to get a little distracted in election years!
As Representative James Garfield said, When the shadow of the Presidential and Congressional election is lifted, we shall, I hope, be in a better temper to legislate.
In conclusion, I want to assure you that TVA will maintain a leadership role in defining competition as the industry transitions to the marketplace of the future. We have a record of efficient and reliable service that is the envy of the industry. Were financially sound and our prices are among the most competitive in the country.
We have a professional workforce that is second to none. We have sound relationships with our customers, the Valley Congressional delegation, and the Administration. Utilities are the fuel of the electronic age, and now more than ever, electricity is the energy of choice. TVA is uniquely positioned to serve as the benchmark of success for the utility industry as it is restructured and as it rises to the challenges of the new digital economy.
Thank you all very much for your kind attention. .
Craven Crowell is Chairman of the Tennessee Valley Authority
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