by Craven Crowell, Chairman
Good morning, and Happy New Year to everyone. It's good to be with all of you again. I hope everyone had an enjoyable holiday season, and that you were able to spend time with your families, and a special thanks to all of you working in the plants who kept the lights on for the rest of us.
As Gil mentioned, we're here in Knoxville, and through technology we're able to talk with those of you in Chattanooga, Muscle Shoals and other TVA sites. This is the start of a new year, and on behalf of Directors Hayes and Kennoy and myself, there are a few things we wanted to share with you as we begin the year.
We especially want to share with you some of our thoughts on the future of TVA in the 21st Century and your role in it. First off, we want to thank you for TVA's wonderful performance last year. Thanks to you, our power system is performing better than it has in many years, and we've made improvements throughout the organization.
Our system is among the most efficient in the nation, and our production costs are second-lowest among the nation's 50 largest utilities. We've capped our debt, and we've embarked on a 10-Year Business Plan that will enable us to cut the debt in half by the year 2007. By the end of this year, we hope to reduce the debt by $1 billion. Those are tremendous accomplishments that we can all take pride in.
Another thing I want to mention is my perspective on the media coverage of TVA. Since we are owned by the United States Government, we are discussed in the halls of Congress and in the media on a continuing basis. We all must remember that we are a very large business operating in a political environment. We can expect political agendas to put us in the news from time to time.
I want to assure you that we are following the most recent comments on the I-G's audit very carefully, and we are taking the appropriate actions. Still, I know it can be distracting. But what we need to do is continue to do our jobs effectively and stay the course, because we all are doing the right things and our performance reflects it. We are confident that the members of TVA's Congressional delegation have the best interests of the Tennessee Valley at heart, and we must remember that there's always room for differing viewpoints.
The next thing I'd like to share with you is that TVA is taking a proactive role in our industry's restructuring. We are doing this, so that restructuring legislation, whenever or however it comes, will be fair to TVA and fair to the people of the Tennessee Valley. The industry continues to move in the direction of competition.
Several states with high electricity rates are forging ahead, but it may be some time before legislation makes its way through Congress. It's my view that lawmakers are discovering that the electric-utility industry is too complicated and too important to every facet of American life to risk making mistakes.
As restructuring legislation is drafted, we are working to ensure that the voices of the Valley are heard, and that Valley citizens enjoy the same benefits as citizens of other regions. Last year, the Clinton Administration asked the Department of Energy to draft the Administration's own version of restructuring legislation, to be proposed later this year. To help with the TVA part of that legislation, D-O-E has formed a task force to gather opinions about TVA.
Bill Museler, our Executive Vice President for Transmission and Power Supply, is representing TVA on that task force. The DOE task force will conduct public meetings to make sure all viewpoints are heard, and it's especially important for TVA, our customers, and the Valley, that restructuring supports the key responsibilities of all utilities to the public, for --
These are commitments that TVA and the people of the Tennessee Valley have always valued. TVA's mission within the Valley and outside is just as important today as it has been for the past 65 years. We provide direct benefits to the people of the Valley through our traditional role of--
We take our strength from our unique position of being a public agency owned by the people of the United States. We believe TVA will continue to provide value and benefits to the nation and the Valley in the next century in ways we have not even thought of today.
Two years from now, we will enter a new Millennium. What do we want TVA to be in the 21st Century? TVA has a storehouse of strengths, including one of the most reliable and efficient power systems in the country. The mainstay of our strength, however, is the talent and dedication of TVA people. It's obvious, but important to state, that it is the people of TVA who will ensure our success.
We have come a long way and faced many tough decisions to be where we are today. Looking ahead to the era of restructuring, here are the 10 key elements that I want and the Board wants for TVA in the 21st Century:
First, that TVA remain a public enterprise---owned by the government and possessing the flexibility and initiative of a private corporation. I am totally against privatization of TVA and you can count on me to lead the effort against it.
Second, I want us to continue to operate as an integrated whole, with the River and the power system working together to optimize benefits.
Third, we continue our quest to operate the power system in the most efficient manner possible, while remaining true to our commitment to conservation and the public interest.
Fourth, we continue to maintain and operate the Tennessee River to prevent floods and support commercial activity. Last year, of course, we had a discussion of TVA's role in maintaining the Tennessee River, and what did we learn? We learned that our Congressional delegation wants us to continue our historic stewardship of the River, and the people of the Valley made it abundantly clear that they thought the same thing. Then the people of the Valley went a step further by reassuring us that they believe TVA can manage the River and other resource responsibilities better and more efficiently than anyone else. So, you can count on my strong and unbending support for our traditional stewardship role in managing the Tennessee River. This year we will be spending time determining how these functions will be funded, but we're confident we can arrive at a workable solution on funding.
The fifth key element of what I want for TVA in the future is that we work with our customers to address contract issues to achieve a win-win for the competitive era.
Sixth, looking toward restructuring, that we promote choice for electric customers in a way that benefits all classes of customers.
Seventh, we are permitted to recover stranded costs from customers who choose to leave our system.
Eighth, we are permitted to sell power outside the traditional fence so that we can maintain our flexibility to our customers.
Ninth, we operate under tax policies that give full and fair consideration to TVA's nonprofit operations and existing tax-equivalent payments.
Tenth, and most important of all, that we rededicate ourselves to working together to lift the spirits of our employees and to give them the tools to achieve even greater things in our efforts to be the best.
So how should we, the TVA family, prepare for industry restructuring? There will certainly be many changes. We are in the midst of restructuring of the electric utility industry, and we will be challenged as never before.
The answer is to strive to improve our already excellent performance. Keep doing a great job, and never become complacent or content with our achievements. Keep looking for ways to cut costs and improve efficiencies, because we know our competitors will be doing all the same things. Our No. 1 job, is to make sure our customers remain satisfied. That means that we continue to be the low-cost, reliable and safe power producer.
That means we continue our excellent stewardship programs. That means we create a future in which TVA power and services are always in demand. We on the Board know that job security is one of the key issues for all employees.
In our recent contract negotiations, we have worked with our unions to address job security head on. We have been very pleased at the progress we've made in our negotiations. Several unions have already signed contracts, and we look forward to completing the task to find the best solutions for everyone.
By continuing to work together, we can ensure that TVA succeeds in a restructured marketplace. The cornerstone of our current efforts to work better together as an organization is our STAR 7 initiative. If you haven't yet taken part in a STAR 7 workshop, I hope you will be able to do so soon.
STAR 7 has been an important experience for many of those who've taken part. It has been meaningful for me personally. After my workshop, I have made an effort to be more approachable and to be a better listener, and I believe it's made a difference in the way I communicate with everyone.
It's the Board's hope that STAR 7 will yield results in the workplace, as well as in our lives at home and in our communities. Obviously, communication is a key part of teamwork. As an organization, we must commit ourselves to improving communications from top to bottom, and from bottom to top.
We have consistently heard one very reasonable request from employees: When there are changes, it would help everyone if managers could redouble their efforts to keep employees informed about the reasons for change. To every manager, we would ask you to join with us in making the extra effort to communicate the "whys" of changes that we ask people to make. I believe that, united with a clearer understanding of where we are, and where we are going, we can achieve great things in the future.
Because of you, the employees of TVA, we on the Board are more confident than ever about TVA's future. Also because of you, we are prouder than ever of TVA's contributions to the Valley and to the nation.
In the era of competition, we must continue to enhance our role as the international model for regional development and integrated-resource management. We must enhance our value as a national asset, and we must hold firm to the values and responsibilities that make TVA what it is.
Our corporate values are ---
As we enter the New Year, I'd like to ask all of us to reflect on these values. There will be challenges ahead. But we are on track for success in the 21st Century, and I'd like to suggest a couple of things that will help get us there.
We'd like for you to continue doing your jobs with the energy and commitment that has placed us among the elite companies of the nation. We'd also like for you to take pride in the great organization you've helped create, and for all of us to feel confident about our future. I look forward to seeing more of you this year, and I'll make it a point to drop by and talk with you as I visit TVA facilities.
Thank you for joining us. .
Craven Crowell is Chairman of the Tennessee Valley Authority
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