News from the Tennessee Valley Business
SUNDAY, MAY 15, 2005

Departing TVA chairman optimistic
McCullough predicts largest public utility will continue to thrive

By Duncan Mansfield
Associated Press Writer

KNOXVILLE — Departing Chairman Glenn McCullough said the Tennessee Valley Authority is stronger than when he arrived in 1999, but the nation’s largest public utility still faces financial, environmental and competitive challenges.

Tougher soot and smog requirements on coal-fired power plants could cost TVA $4 billion to $5 billion beyond the $6 billion it has already spent or committed for pollution controls.

Rising fuel prices for its fleet of fossil plants, gas turbines and nuclear stations could force further cost-cutting and a likely electric rate increase that would affect some 8.5 million people receiving TVA power in Tennessee and six surrounding states.

Yet as McCullough nears the end of his term Wednesday as the 12th and final full-time chairman in the 72-year history of TVA, he remains optimistic about TVA’s future.

“I think TVA will continue to be a high performer,” McCullough told The Associated Press in a recent interview in his 12th floor office at TVA headquarters.

McCullough, 50, was mayor of his hometown of Tupelo, Miss. — TVA’s first member city — when he was appointed to an unexpired term on the three-member TVA board in 1999 by President Clinton. In 2001, President Bush elevated McCullough, backed by then-Senate Majority Leader Trent Lott, R-Miss., to chairman.

During his tenure, TVA changed its Tennessee River watershed plan to improve recreational use, set rising peak power demand records, adopted a rate increase in 2003 to pay for coal plant pollution controls and developed the first commercial wind farm in the Southeast.

Reduced debt

TVA also reduced a nearly $28 billion long-term debt by $1.8 billion. In so doing, the agency eliminated hundreds of jobs and put one of its twin headquarter towers in Knoxville up for sale as surplus. The tower sale is pending and the payroll now stands at 12,700 — compared to more than 30,000 in the 1980s.

The self-financing government agency with a $7 billion budget also took heat over extravagant travel and entertainment spending by executives, but moved quickly to crack down with new internal policies.

However, McCullough said the boldest actions were the 2001 write-off of $3.4 billion in nonproducing assets, including three unfinished nuclear reactors; and the $1.8 billion decision to restart a mothballed reactor at the Browns Ferry station in Alabama by 2007.

Browns Ferry gamble

“It was a good business decision, not an easy one,” he said of the write-offs, while the gamble on the Browns Ferry reactor — now 60 percent complete — could pay off in meeting baseload demand through 2014.

“All of those things kind of roll off the tongue, but I tell you there are thousands of people that did their job better so that TVA could have record generation and record clean air and record economic growth and record debt reduction,” McCullough said.

Looking ahead, McCullough said a rate increase, which has become rare in recent years at TVA, seems inevitable because of rising fuel costs that can’t be controlled.

“I think the future board will have to determine what rates need to be and when adjustments are necessary,” he said. “I don’t know how much and I don’t know when.”

McCullough doesn’t even know if he will be on an expanded part-time board that is being created after he leaves. Senate Majority Leader Bill Frist, R-Tenn., pushed the board restructuring to make the group more open and responsive. The White House has yet to name nominees.

McCullough sees plenty of opportunities and challenges ahead for them.

TVA is working with two national consortiums studying designs and licensing for the next generation of nuclear plants, while TVA assesses the feasibility of using its unfinished Bellefonte nuclear plant in Alabama as a possible project site.

Meanwhile, TVA continues to review efficiencies and costs of new “clean coal” technologies for its fossil fleet. McCullough believes coal and nuclear should remain the foundation of TVA’s power system.

“We are also looking at the business model,” McCullough said. “There could be some opportunities for TVA to do joint ventures with perhaps other utilities or other entities that make good business sense.”

Red Hills plant deal

He cited TVA’s deal set up a few years ago to buy power from the Red Hills Power Plant and Mississippi Lignite Mining Co. near Ackerman, Miss., as an example of a successful joint venture.

Meanwhile, growing private and commercial development along the Tennessee River continues to stir resentment among the families of former residents displaced by TVA’s hydroelectric dam projects in the 1930s and 1940s.

McCullough is sympathetic to a point. “Land in the valley is almost sacred. That is a characteristic of the South that I am frankly proud of — ‘Don’t mess with the land.’ I understand that,” he said.

“But if you look on the TVA seal you see the words ‘Progress Through Resource Development,’ ” he said. “And you can’t make progress without some development.”

McCullough said he is looking forward to going home to Tupelo and spending time with his wife, Laura, and two teenage sons, and weighing his career options.

More low-key than his predecessors, McCullough said being chairman of TVA, like being mayor of Tupelo, was “a wonderful opportunity to make a positive difference.”

“I didn’t ask to come to TVA and I didn’t ask to be chairman. But I was asked to do this job and it was a unique opportunity,” he said. “If you get it right, if you make good decisions and fulfill the mission of TVA, then the people of the valley can be better off for generations to come. And that can be satisfying.

Biography: Glenn McCullough

Biography of Tennessee Valley Authority Chairman Glenn McCullough:

  • Appointed to three-member TVA board by President Clinton in November 1999, filling remaining term of former member Johnny Hayes. Term expires May 18, 2005.
  • Appointed TVA’s 12th chairman by President Bush on July 19, 2001. First chairman from Mississippi.
  • Sixth-generation Mississippian, born in Tupelo on Dec. 18, 1954.
  • Bachelor’s degree in agricultural economics from Mississippi State University.
  • Spent 12 years with family’s steel company, McCullough Steel Products, rising to president.
  • Appointed director of Mississippi Office of Appalachian Regional Commission in 1992.
  • Elected Tupelo’s 23rd mayor in 1997.
  • Married to the former Laura White of Tupelo. Two teenage sons.

    Source: Tennessee Valley Authority

    The Associated Press

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