TVA enters building phase with strong balance sheet

As senior vice president of TVA Finance, Tom Rice leads 380 experts who handle everything from expense reimbursements to 20-year forecasts of copper pricing.

His team serves as a guiding light for all things financial, translating TVA’s strategic priorities into budget-backed operational plans and, ultimately, driving TVA’s wherewithal to carry out those plans.

As a Chattanooga native and the son of a retired TVA nuclear fleet engineer, he’s deeply familiar with the enterprise’s mission of service.

“Fundamentally, the mission of serving the people of the Valley region and making life better – how could you not get behind that?” he said. “The decisions we’re making today are setting the stage for the next 20, 30, 40 years of energy supply for the seven-state region. It’s a big deal. I hope the team here gets a sense they’re part of something very big and very important.”

Rice offered insights into TVA’s financial strategies.

Building new generation capacity isn’t cheap. Is TVA financially strong and prepared?

TVA is as financially healthy and strong today as it’s ever been. We’ve spent the last 10 to 14 years working deliberately on financial health. In the past decade, we tremendously modernized the fleet, deployed a significant amount of capital and paid down debt. So we end the day with a very strong balance sheet – which is important because we need that strong balance sheet to support the capital expansion plans we have for the next several years.

How much is TVA looking to invest in new generation and transmission?

Through FY 2027, we’re looking at $11.4 billion on new generation and upgrades to the existing power system, as well as about $2.6 billion on transmission. We plan to access the capital markets to support our investments in these long-lived assets, particularly new generation assets. Our two primary sources of funding are rates and debt. We’re very deliberate about borrowing money.

Can you tell us a bit more about how TVA is working to be a good steward of financial resources?

TVA is targeting a $950 million reduction in planned costs over FY 2024, FY 2025 and FY 2026. Then, after FY 2026, we are targeting a sustainable $500 million of cost savings going forward. As good stewards of the money we are entrusted with, we should be looking for opportunities to do things better, faster and with less expense. As we are adjusting rates for our customers, we need to be doing everything we can to offset costs internally.

How does TVA get the most out of its resources?

We’ve got to generate sufficient cash flow every year through running the business well. Every employee has a part in improving efficiency and managing cost, all of which goes straight to keeping rates low. And as we embark on a period of significant capital investment, we need to maintain discipline in project selection and project execution. This is the only way to ensure we’re making the most cost-effective investments for our customers.

“We've set the table, including laying out our long-range financial plan for what we have to go do over the next three years. And as we look at the most significant capital program in TVA history, we're starting from a position of strength. Can we do it? Yes, we can. Now we need to get to work.” 

–Tom Rice, senior vice president of TVA Finance

TVA offers power bonds

TVA occasionally offers power bonds to help fund projects and short-term debt. In August 2024, TVA priced $1 billion of new 10-year maturity global power bonds. This is TVA’s first bond offering with a 10-year maturity since 2021, and its first benchmark-size 10-year offering since 2017.

The bonds attracted interest from a wide variety of domestic and global institutions. This offering reflects the need to continue to invest in additional, clean generation to meet the sustained growth across the region.

TVA plans to use the proceeds to pay down short-term debt, and this transaction will not materially change TVA’s debt balance.