Tennessee Valley Authority: Assessment of the 10-Year Business Plan
(Testimony, 09/22/1999, GAO/T-AIMD-99-295).

Pursuant to a congressional request, GAO discussed its work analyzing
the Tennessee Valley Authority's (TVA) 10-year business plan, focusing
on: (1) whether the plan objectives address the key issues confronting
TVA; (2) major costs that were not included in the plan; (3) whether the
goals and assumptions in the plan are achievable or reasonable; and (4)
TVA's plans to formally update the plan for significant changes.

GAO noted that: (1) TVA's 10-year plan is moving TVA in the right
direction by addressing the most important issues facing TVA--its high
fixed financing costs and limited financial flexibility and the large
amount of deferred assets that TVA has not recovered through rates; (2)
however, because TVA's actual experience and assumptions about certain
major costs have varied in significant ways from those envisioned in the
10-year plan, it is unlikely that TVA will generate sufficient cash flow
to reduce debt and the corresponding fixed interest costs to the extent
stated in the plan through 2007; (3) TVA has acknowledged that its debt
reduction goal will not be achieved until at least 2009; (4) to the
extent it does not sufficiently reduce debt and related fixed costs and
increase financial flexibility during the 10-year period, TVA's ultimate
strategic objective--to be able to offer competitively priced power by
the end of 2007--could be jeopardized; (5) however, since it is not
possible to accurately predict what the market price of power will be in
2007, TVA could still achieve its objective of offering competitively
priced power, even if it does not fully achieve the plan's other goals
and objectives; (6) conversely, depending on the market price of power,
TVA could fully achieve all of the goals and objectives outlined in the
plan and still not be positioned to offer competitively priced power in
2007 and beyond; and (7) nevertheless, any progress it makes toward its
goals and objectives will put TVA in a better competitive position.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-AIMD-99-295
     TITLE:  Tennessee Valley Authority: Assessment of the 10-Year
	     Business Plan
      DATE:  09/22/1999
   SUBJECT:  Energy marketing
	     Financial analysis
	     Strategic planning
	     Competition
	     Utility rates
	     Federal corporations
	     Loan repayments
	     Electric utilities
IDENTIFIER:  TVA 10-Year Business Plan

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Rev-LG logo.eps GAO United States General Accounting Office

Testimony Before the Subcommittee on Water Resources and
Environment, Committee on Transportation and Infrastructure, House
of Representatives

For Release on Delivery Expected at 10 a. m. Wednesday, September
22, 1999

TENNESSEE VALLEY AUTHORITY

Assessment of the 10- Year Business Plan

Statement of Linda M. Calbom Director, Resources, Community, and
Economic Development Accounting and Financial Management Account
and Information Management Division

GAO/T-AIMD-99-295

  GAO/T-AIMD-99-295

PAGE 2 GAO/ XXXX- 98-??? NAME OF DOCUMENT

Page 1 GAO/T-AIMD-99-295

Mr. Chairman and Members of the Subcommittee: I am pleased to be
here today to summarize the results of our work analyzing the
Tennessee Valley Authority's (TVA) 10- year business plan. My
testimony is based on our April 1999 report, 1 which assesses the
plan in depth.

Restructuring of the electricity industry has led to wholesale
competition, which, combined with other factors, has caused
wholesale electricity prices to fall in many parts of the country.
This increased competition led TVA management to develop this plan
to position TVA to be more

competitive by, among other things, reducing its high debt
servicing and other fixed costs. Because of concerns about TVA's
ability to achieve the 10year plan's objectives by 2007 when
competitive pressures are likely to be greater and when many of
TVA's long- term contracts could expire we were asked to determine
whether TVA will be able to reduce debt as envisioned in the plan
and whether its goals and assumptions regarding

capital expenditures and revenues and expenses are achievable or
reasonable. Specifically, my testimony today will discuss the
findings from our April 1999 report concerning  whether the plan
objectives address the key issues confronting TVA,  major costs
that were not included in the plan,  whether the goals and
assumptions in the plan are achievable or

reasonable, and TVA's plans to formally update the plan for
significant changes. In summary, TVA's 10- year plan is moving TVA
in the right direction by addressing the most important issues
facing TVA: its high fixed financing costs and limited financial
flexibility and the large amount of deferred

assets that TVA has not recovered through rates. However, because
TVA's actual experience and assumptions about certain major costs
have varied in significant ways from those envisioned in the 10-
year plan, it is unlikely that TVA will generate sufficient cash
flow to reduce debt and the corresponding fixed interest costs to
the extent stated in the plan through

1 Tennessee Valley Authority: Assessment of the 10- Year Business
Plan (GAO/AIMD-99-142, April 30, 1999).

Page 2 GAO/T-AIMD-99-295

2007. TVA has acknowledged that its debt reduction goal will not
be achieved until at least 2009. To the extent it does not
sufficiently reduce debt and related fixed costs and increase
financial flexibility during the 10- year period, TVA's ultimate
strategic objective to be able to offer

competitively priced power by the end of 2007 could be
jeopardized. However, since it is not possible to accurately
predict what the market price of power will be in 2007, TVA could
still achieve its objective of offering competitively priced
power, even if it does not fully achieve the plan's other goals
and objectives. Conversely, depending on the market price of
power, TVA could fully achieve all of the goals and objectives

outlined in the plan and still not be positioned to offer
competitively priced power in 2007 and beyond. Nevertheless, any
progress it makes toward its goals and objectives will put TVA in
a better competitive position.

I would now like to provide a brief background on (1) TVA's role
in the electricity industry, (2) current restructuring efforts and
their potential impact on TVA, and (3) the general provisions of
TVA's plan. I will then provide more details of the findings I
just summarized.

Background As you know, TVA operates as a power generator,
producing electricity for sale to entities such as municipal and
cooperative power distributors who

market power to end users. The Energy Policy Act of 1992 (EPAct)
provides TVA with certain protections from competition.
Additionally, under the TVA Act of 1933 (TVA Act), as amended, TVA
is not subject to most of the regulatory and oversight
requirements that must be satisfied by commercial electric
utilities; instead, all authority to run and operate TVA

is vested in its board of directors. In 1959, the Congress amended
the TVA Act by establishing what is commonly referred to as the
TVA fence, which prohibits TVA with some exceptions from entering
into contracts to sell power outside the service area that TVA and
its distributors were serving

on July 1, 1957. Under EPAct, TVA is exempt from having to allow
other utilities to use its transmission lines to transmit power to
customers within TVA's service area. This legislative framework
generally insulates TVA from

direct wholesale competition and, as a result, TVA remains in a
position similar to a regulated utility monopoly.

EPAct's requirement that utilities make their transmission lines
accessible to other utilities to transmit (wheel) wholesale
electricity has enabled wholesale customers to obtain electricity
from a variety of competing suppliers and has resulted in
increased wholesale competition in the

Page 3 GAO/T-AIMD-99-295

electric utility industry across the United States. Because EPAct
exempts TVA from having power wheeled to consumers in its
territory, TVA has not been directly impacted by the ongoing
restructuring of the electric utility

industry to the same extent as other utilities. However, if TVA
were to lose its exemption from the wheeling provisions of EPAct,
its customers would have the option of obtaining their power from
other sources after the expiration of their contracts. Under
legislation proposed by the administration to promote retail
competition in the electric power industry, which TVA supports,
TVA's exemption from the wheeling provisions of

EPAct would be eliminated after January 1, 2003. If the
legislation is enacted, TVA may be required to use its
transmission lines to transmit the power of other utilities for
consumption within TVA's service territory. In addition, the
proposed legislation would remove the statutory restrictions that
prevent TVA from selling power outside its service territory.
Other bills on electricity restructuring have also been introduced
that could also

impact TVA's operations, but as of September 17, 1999, none have
been passed. Most of TVA's power is sold to municipal and
cooperative power distributors who would be directly affected in
the future by retail competition through their customers' ability
to choose alternate power suppliers. Further, industry
restructuring and the possibility of TVA losing its legislative
protections have made many of TVA's customers more aware of price
differences among utilities, raised expectations of lower prices,
and increased demands for more competitive pricing.

Because of these ongoing industry restructuring efforts, TVA
management, like many industry experts, anticipates that TVA may
lose its legislative protections in the future. Even if TVA does
not lose its legislative protections, TVA's management has
recognized the need to take action to better position TVA to be
competitive in an era of increasing competition and customer
choice and, in July 1997, issued a 10- year business plan with
that goal in mind. TVA established a 10- year horizon for
implementing the key changes outlined in the plan largely because
TVA officials expect to be facing greater competitive pressures
within that time frame and many of its

long- term contracts with customers could begin to expire in 2007.
The published plan, which formed the basis of our evaluation,
contains three strategic objectives:  reducing TVA's cost of power
in order to be in a position to offer

competitively priced power in 2007,  increasing financial
flexibility by reducing fixed costs, and

Page 4 GAO/T-AIMD-99-295

 building customer allegiance. In developing the 10- year plan,
TVA set several goals and made certain assumptions about the
future. These goals and assumptions, and our analysis of whether
they are achievable or reasonable, are discussed in detail in our
April 1999 report. I will provide a summary of this analysis
today, with particular emphasis on the goals or assumptions that
we did not find achievable or reasonable.

Plan Objectives Address Key Issues Confronting TVA

Implementation of the 10- year plan is moving TVA in the right
direction and addresses important issues facing TVA: its high
fixed financing costs and limited financial flexibility to respond
to competitive pressure and the large amount of deferred assets
that have not been recovered through rates. These deferred assets,
which totaled about $8.5 billion as of the beginning

of the plan period, are primarily the result of investments made
since the 1970s in nuclear generating plants that were never put
into production. This helped contribute to TVA's large debt, which
totaled about $27 billion as of September 30, 1998, and resultant
high fixed financing costs. TVA's ability to meet its strategic
objective of being in a position to offer

competitively priced power by 2007 and to improve its financial
flexibility hinges largely on its being able to meet its goal of
reducing debt to about $14 billion by 2007. While not specifically
stated in the plan, TVA also plans to recover through rates all
but $500 million of its deferred asset costs by

the end of the period covered by the plan. 2 The year 2007 is key
for TVA because it expects to face greater competitive pressures
by then and because many long- term contracts with customers could
expire at about that time. As a result, the plan emphasizes
changes designed to enable TVA to offer competitive rates by the
end of 2007. The more progress TVA makes toward addressing the key
issues it faces while it maintains its legislative protections and
before its customer contracts could begin to expire, the better
positioned it will be to successfully operate in a competitive
market.

These issues were highlighted in reports 3 we issued in 1995 and
1997, in which we stated that TVA's annual financing costs and
deferred assets were substantially greater than those of the
utilities with which TVA would most 2 The remaining $500 million
is TVA's estimate of the net realizable value of its deferred
assets at the end of 2007.

Page 5 GAO/T-AIMD-99-295

likely have to compete. We also reported that these high fixed
costs and deferred assets would limit TVA's flexibility to adjust
its rates in a competitive environment. TVA, through its 10- year
plan, is taking steps to address these issues. Other utilities are
taking similar actions to prepare for competition. For example,
utilities we previously identified in 1995 as those most likely to
compete with TVA are also taking steps to refinance debt at lower
interest rates and accelerate recovery of the costs of their
regulatory assets. However, as we reported in 1995 and 1997, these
other utilities generally have fewer financing costs and deferred
assets than TVA, giving

them more flexibility to respond to changing market conditions. To
the extent TVA recovers the costs of its deferred assets and
increases its financial flexibility, it will increase its ability
to adjust rates as necessary to meet changing market conditions.
TVA's focus on these areas before the full advent of competition
is key to its chances of being competitive without legislative
protections. Plan Does Not Include Certain Major Costs

While focusing on the right issues, TVA's plan does not fully
address certain costs. Not addressing these costs could jeopardize
full achievement of the plan's objectives. Specifically, the plan
does not include the following: The capital costs of additional
generating capacity that may be acquired to meet growth in demand
for power. The plan assumes that TVA would meet the increasing
demand for power over the plan period by purchasing power from
other utilities. The costs of the power purchases are reflected as
operating costs in the 10- year plan. However, since the plan was
finalized,

TVA officials have told us that they plan to evaluate other power
supply options and to invest in new capacity if the resulting
long- term increase in costs to produce power (interest and
operating expense) would ultimately be less than the cost of
purchased power. TVA has already decided to invest

in new capacity rather than purchasing power in at least one case
in 1998, TVA announced plans to purchase eight gas- fired
combustion turbine units that will be used to replace a like
amount of purchased peaking power that was assumed in the original
plan. According to TVA officials, while they

expect this decision to result in a positive cash flow by 2010,
the decision to invest in new generating capacity will require
about $65 million more in 3 Tennessee Valley Authority: Financial
Problems Raise Questions About Long- term Viability (GAO/ AIMD/
RCED- 95- 134, August 17, 1995) and Federal Electricity
Activities: The Federal Government's Net Cost and Potential for
Future Losses, volumes 1 and 2, GAO/AIMD-97-110

and 110A, September 19, 1997).

Page 6 GAO/T-AIMD-99-295

cash disbursements through 2007 than would have been necessary to
purchase a comparable amount of power from other utilities.

 The costs of complying with new environmental regulations. Known
environmental costs alone total an estimated $500 million to $600
million. In addition, costs for complying with a proposed

environmental regulation that is likely to be implemented before
2007 could amount to another $450 million to $500 million, some of
which would be incurred before 2007.  The cost of nonpower
programs that, to date, have been funded

primarily through appropriations. The plan assumes that TVA will
continue to receive appropriations for its nonpower programs, such
as flood control and navigation. While this assumption was
reasonable when the plan was developed, these appropriations,
which amounted to $70 million in fiscal year 1998, have been
steadily declining since 1994 and are expected to be substantially
reduced or discontinued beginning in fiscal year 2000.

TVA estimates that these additional costs will total at least $1
billion over the remaining life of the plan and will likely be
higher. Most Goals and Assumptions of the Plan Are Achievable or
Reasonable, but Debt Reduction and Some Others Are Not

We assessed 10 goals and assumptions TVA made about the future in
developing the 10- year plan. Based on economic forecasts,
comparisons with TVA's results of past operations, and the
opinions of industry experts, we concluded that seven of the goals
and assumptions were achievable or reasonable, two were
unachievable, and one was uncertain. The goals and

assumptions we assessed, and our conclusions about each, are
summarized in table 1 and are discussed in our April 1999 report.
A discussion of the two goals we found unachievable and the
assumption we found uncertain is included below.

Page 7 GAO/T-AIMD-99-295

Table 1: GAO Conclusions About 10- Year Plan's Goals and
Assumptions

a At the time our report was issued, TVA officials told us that if
they were to prepare the 10- year plan today, they would increase
the projection for the future market price of wholesale power in
2007, due primarily to new environmental regulations; however,
they have not formally updated their projections. Both their
original projection and any proposed revisions still fall within a
reasonable range compared

to other projections of market prices we obtained.

Capital Expenditure Limitation Goal is Unachievable

The plan assumes that capital expenditures will be limited to
about $600 million per year and excludes any capital costs for
increasing generating capacity and complying with new
environmental regulations. However, as discussed previously, known
environmental costs alone total an estimated $500 million to $600
million. In addition, costs for complying with a proposed
environmental regulation that is likely to be implemented within
the plan period could amount to another $450 million to $500
million, some of which would be incurred before 2007. Also, the
costs for meeting growth in demand for power with additional
generating capacity, which are not fully estimable at this time,
could further increase

TVA's required capital expenditures within the period covered by
the 10- year plan. 4 Even though upward revisions in TVA's
projected market price of wholesale power could offset some of
these additional costs, TVA

is likely to exceed its annual $600 million planned capital
expenditures limit, thus making this goal unachievable.

Goal or assumption assessed GAO conclusion

Future market price of power a Reasonable Increase in demand for
power Reasonable Increase in fuel costs Reasonable Supply chain
savings Achievable Capital expenditure limitation Unachievable
Increased revenues Uncertain Debt reduction and recovery of
deferred assets Unachievable Cost improvement initiatives
Achievable Labor force reductions Reasonable Customer relations
improvements Achievable

4 TVA believes any capital investments for generating capacity
will lower its cost of power relative to the estimate contained in
the plan.

Page 8 GAO/T-AIMD-99-295

Assumption About Increased Revenues Is Uncertain

TVA's revenues increased significantly in fiscal year 1998 due to
a rate increase and to increased energy sales. TVA's fiscal year
1998 revenues totaled about $6.7 billion, compared to $5. 9
billion in fiscal year 1997 an increase of about $800 million.
According to TVA, about $350 million of the increase is attributed
to the rate increase; the balance is attributable to increased
sales volume that resulted from extreme weather in the summer
months and other factors. The 10- year plan assumes that this rate
increase is sustainable and will generate additional revenues of
about $325 million annually through 2007.

However, based on the decline in TVA's average revenue per
kilowatthour (kWh) over the past 10 years, and expectations of
increasing competition in the electricity industry, we agree with
some industry experts who question TVA's ability to meet the
plan's assumption about future revenue. Specifically, an analyst
from the Congressional Budget Office (CBO) with expertise in
issues related to TVA and consultants from ICF Kaiser

Consulting Group (which was hired by the Edison Electric
Institute, an industry group for investor- owned utilities, to
analyze TVA's 10- year plan) questioned TVA's ability to meet its
future revenue projections given the decline in its average
revenue per kWh over the last several years.

As shown in figure 1, from 1988 through 1997, TVA's average
revenues per kWh declined steadily, despite a steady increase in
the amount of kilowatthours of energy sold. This decline in
average revenues per kWh was attributable to the credits given to
large industrial customers. The actual decline in average revenues
per kWh over the past 10 years contrasts sharply with the increase
projected in the 10- year plan for 1998 through 2007.

Page 9 GAO/T-AIMD-99-295

Figure 1: Comparison of Average Revenue per kWh to Kilowatthours
Sold

Source: GAO analysis based on data from TVA.

In order to offer competitive rates to its industrial customers,
TVA offers price breaks to its larger industrial customers. In
fact, to offset the impact of the last rate increase, TVA expanded
its existing credit program to include companies with commitments
to purchase firm loads of more than one megawatt. (Previously this
credit had been limited to industrial

customers with firm load commitments of more than five megawatts.)
Although restructuring of the electric utility industry is
expected to put downward pressure on rates, the 10- year plan
assumes that TVA will not have to offer any additional price
breaks to its large industrial customers through 2007. This
assumption is questionable given that TVA has offered

new credits to reduce the rates of its larger industrial customers
for the past 10 years and competition in the industry is
increasing.

Because restructuring of the electric utility industry is expected
to continue to cause future wholesale and retail electricity
prices to fall, TVA will likely feel pressure to continue to
reduce rates. In addition, recent

Page 10 GAO/T-AIMD-99-295

media coverage about competition has made many utility customers
more aware of price differences among utilities and raised
expectations of lower prices. All of these factors combined make
it uncertain whether TVA can generate an additional $325 million
in annual revenues on a sustained basis through 2007.

Debt Reduction and Deferred Assets Recovery Goals Are Unachievable

The 10- year plan calls for reducing debt to about $14 billion by
2007. This reduction, in turn, would lower TVA's annual interest
costs by half from about $2 billion in 1997 to about $1 billion in
2007. The additional cash that is made available as debt is paid
down and interest costs are reduced can be used to further reduce
debt. This interrelationship is integral to meeting the debt
reduction goal. In addition to reducing interest costs by reducing
debt, TVA is pursuing other interest savings by refinancing
outstanding debt, as discussed in our April 1999 report.

TVA's ability to meet its strategic objective of being in a
position to offer competitively priced power by 2007 depends, to a
large extent, on meeting its debt reduction goal. The plan calls
for the cash flow needed to achieve

this debt reduction to be provided by a combination of planned
revenue enhancements, cost savings initiatives, and capital
expenditure limitations. However, as discussed previously, the
plan excluded additional capital costs related to investing in new
generating capacity to meet growth in

demand for power, complying with new environmental regulations,
and funding nonpower programs that were previously funded through
appropriations. TVA exceeded its debt reduction goals for the
first 2 years of the plan but does not expect to meet its original
estimates for the remaining years due to the additional capital
expenditures for new generating capacity and environmental
regulations discussed previously.

As a result of the changes in certain of its cost estimates, TVA
now does not expect to reduce debt by one- half until fiscal year
2009, about 2 years after the plan's original target date. This
revised goal is reflected in TVA's fiscal year 2000 federal budget
request and has been acknowledged publicly by

TVA officials. TVA's original and revised debt reduction timetable
is shown in figure 2.

Page 11 GAO/T-AIMD-99-295

Figure 2: Original and Revised Debt Reduction Timetables

Source: GAO analysis based on data from TVA.

TVA's planned revenue enhancements and cost savings were also
intended to provide TVA with the opportunity to recover a portion
of the cost of deferred assets. As noted previously, TVA expects
to recover all but about $500 million the estimated net realizable
value of its deferred assets. However, TVA's ability to include
the costs of these assets in its rates without further rate
increases is directly related to its ability to meet the plan's
revenue and cost savings targets. To the extent TVA does not
recover the cost of its deferred assets while it is legislatively
protected from competition, competitive pressures could prevent it
from selling power at rates sufficient to recover the cost of
these assets indefinitely.

Page 12 GAO/T-AIMD-99-295

Achieving its debt reduction goals and minimizing its deferred
assets is key to TVA meeting its strategic objective of increasing
financial flexibility. This in turn is key to its ability to offer
competitively priced power in 2007 and beyond TVA's ultimate
objective.

Plan Has Not Yet Been Updated to Reflect Significant Changes

As previously mentioned, since the 10- year plan was issued in
July 1997, actual experience related to certain key goals and
assumptions has differed from that projected in the plan, and
certain expectations about the future

have changed. For example, at the time our report was issued, TVA
officials indicated that if they were to update the 10- year plan,
they would increase their projection for the future market price
of power and would include costs for new environmental
regulations. However, TVA has not formally updated the plan to
reflect these and other changes.

Changes in individual goals or assumptions or actual experience
that differs from that projected when the plan was developed can
affect the entire plan. For example, the unplanned purchase of
additional generating capacity results in a decrease in projected
cash flow through 2007. This affects the availability of cash to
pay down debt, which further impacts interest costs. The result of
these and other unplanned expenditures, such

as for new environmental regulations, is that TVA's time frame to
meet its debt reduction goal has been extended from 2007 to 2009.
In contrast, the change in TVA's assumption for the future market
price of power increases TVA's target price for power in 2007.
This means that even if TVA does not achieve all of its other cost
reductions and/ or revenue enhancements planned through 2007, it
could still be in a position to offer competitively priced power
at that time.

TVA officials told us that they have internally analyzed the
combined impact of the upward revision in the projected market
price of wholesale power in 2007 and lower- than- planned debt
reduction on TVA's ultimate objective, which is to be in a
position to offer competitively priced power in 2007. While TVA
officials acknowledge that they will not meet the debt reduction
goal by 2007, they believe, based on their internal analyses, that
TVA will still be in a position to offer competitively priced
power in 2007.

However, these analyses have not been formalized, nor have the
results been communicated to users of the plan.

Although TVA views the plan as a living document and recognizes
that projections in the plan will change over time, there is no
formal mechanism for communicating changes to those who use the
plan. In addition, there is

Page 13 GAO/T-AIMD-99-295

no mechanism available to plan users to gauge TVA's progress
toward achieving the plan's goals and objectives. Therefore, while
variances in results, changes in goals and assumptions, and
progress toward plan

objectives may be known to TVA, they are generally not known by
the plan's users. These users include public policymakers
considering legislation that might impact TVA's future, analysts
and investors who use

information in the plan when assessing the desirability of TVA's
debt offerings, and customers who are considering alternative
sources of electricity in the future. As a result, those who rely
on the plan to make

investment and policy decisions cannot fully assess the impact of
the variances and changes in assumptions on TVA's ability to meet
its strategic objectives as set forth in the plan.

The legislation proposed by the administration to promote retail
competition in the electric power industry, which was mentioned
previously, would require that TVA annually report several types
of information to the Congress. If enacted, the legislation would
require that TVA annually report, among other things, its progress
toward its goal of

competitively priced power, its prospects for meeting the
objectives of the 10- year plan, any changes in assumptions that
may have a material effect on TVA's long- range financial plans,
the amount by which its debt has been reduced, and the projected
amount by which its debt will be reduced. This type of reporting
to the Congress would help provide the information needed to
monitor TVA's readiness for a competitive environment.

Since we published our report, TVA officials have indicated that
they do plan to revise and reissue an updated 10- year plan.
However, they also stated that they anticipate the appointment of
two new board members soon, and expect that they will want to be
involved in such an action.

Notwithstanding this, until the plan is formally updated, the
Congress and other external users of the plan will not have the
current information needed to make policy, oversight, and
investment decisions related to TVA. Therefore, we reaffirm the
recommendation we made in our report in April to move quickly to
improve reporting by reissuing the plan to reflect evolving
conditions.

Mr. Chairman, that concludes my statement. I would be happy to
answer any questions you or other Members of the Subcommittee may
have.

Page 14 GAO/T-AIMD-99-295

Contact and Acknowledgment

For further information regarding this testimony, please contact
Linda Calbom at (202) 512- 9508. Individuals making key
contributions to this testimony include Rob Martin, Don Neff, Pat
Petersen, Jack Warner, and

Meg Mills.

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