Skip to main content

Posts

Showing posts from November, 2015

Future Customers to Pay $229 Million of TVA's 2015 Pension Cost

TVA paid only $282 million of its $511 million pension cost in 2015.(1)  TVA expects future customers to pay the remaining $229 million of its 2015 pension cost that it chose not to pay.  The total amount of pension cost that TVA has assigned future customers to pay is $5.4 billion.(2)  In order to defer this cost as a regulatory asset on its balance sheet, as TVA has done, accounting standards dictate that TVA must believe that it is probable that it will be recovered through higher rates charged to future customers.(3)  $5.4 billion is almost half of TVA’s total 2015 revenue.  This percentage of annual revenue is by far the highest of any of the large electric utilities surrounding TVA.(4)  Is it reasonable for TVA to believe that $5.4 billion of past pension cost will be paid by future customers?  Accounting standards indicate that such deferred costs will be subject to prudence reviews as part of the ratemaking process, and if denied, the costs will be immediately charg