B i l l Jo h n s o n P r e s i d e n t & C E O S E P T E M B - PowerPoint PPT Presentation

B i l l Jo h n s o n P r e s i d e n t & C E O S E P T E M B E R 3 0 , 2 0 1 4

2 1933 – President Roosevelt Signs The TVA Act

3 “Power is really a secondary matter … TVA is primarily intended to change and to improve the standards of living of the people of that Valley.” — President Franklin D. Roosevelt During a news conference at Warm Springs, Ga., Nov. 23, 1934

4 Statutory Standards • TVA is a creature of Federal statute, and those statutes govern the criteria by which we make resource selections, on both the supply and demand side. • Specifically, those statutes require us to . . . – Use a least-cost planning program to select energy resources. • In doing this, we are directed to consider diversity of resources, resource operability, system reliability, risks and environmental compliance costs. All toward the goal of providing electricity to the public we serve reliably and at the lowest feasible cost.

5 Asset Decisions 18 – Coal units idled/retired Shawnee Paradise due to EPA agreement Bull Run Gallatin 14 – Coal units idled/retired as Cumberland John Sevier an option under/beyond EPA Kingston Johnsonville agreement Allen 2 – Coal units still under Colbert Widows Creek evaluation 25 – Coal units that will remain in the fleet

6 Adding and Upgrading Assets John Sevier Allen Paradise Watts Bar Unit 2 Browns Ferry Transmission

7 Energy Sources Trajectory 2015 2007 2020 EE 7% EE 9% Renewables Hydro Renewables 3% 6% 3% Coal Hydro Coal 25% 11% Hydro 38% Nuclear 10% 26% Coal Gas 58% Gas Nuclear 16% 10% 31% Nuclear Gas 37% 10%

8 Major Initiatives • Nuclear program • Generation fleet construction – Performance – Paradise – Watts Bar 2 – Allen – Gallatin • Transmission system • Workforce – Reliability – Regulatory Compliance • IRP – Expansion – Energy Efficiency/Demand Response and Renewables • Hydro modernization modeled as resources

9 Watts Bar 2 Timeline Milestone Schedule

10 Nuclear Regulatory Progress

11 Hydro Modernization • Average age of hydro fleet is 61 years with 15 units over 75 years • Needed to maintain reliability • Potential for ~200 MW additional capacity

12 Clean Air Regulations • CAA, CSAPR, MATS, etc. • 111(d) Rule • TVA invested $5.6B in cleaner energy and clean air • NO X and SO 2 emissions reduced by more than 90% • 30% reduction of CO2 since 2005; 40% by 2020 • Adding about 1,800MWs of carbon free generation to the fleet

13 Paradise

14 Paradise l & 2 Options – Illustrative Example Gas Turbine Emission Controls $780 million ~ $300 million upgrade 111(d) 316(b) $1.2 billion VS Other water regulations 30-year asset Coal ash Future costs/capital Plant is 44 years old, has to run 20-25 more to justify investment

15 Efficient Load Following Resources

16 Expansion and Environmental Capital Substantial investment in new gas and nuclear generating assets (FY15 Plan) Gas $987 Nuclear $841 Capacity Expansion $ 2,004 Clean Air $296 Environmental 505 $ 2,509 Total Transmission $176 Ash $161 Kingston $48 0 100 200 300 400 500 600 700 800 900 1,000 $ million

17 Expansion and Environmental Capital Growing assets by nearly $18 billion while holding debt to <$2 billion increase (FY15 Plan) $18 B $ billion Gross Property, Plant & Equipment Change Total Debt & Other Financing Obligations Change < $2 B

18 Mission of Service

19 Mission of Service

B i l l Jo h n s o n P r e s i d e n t & C E O S E P T E M B E R 3 0 , 2 0 1 4