Damning Report by Inspector General Exposes the Truth About TVA’s Luxury Jet

Guest Blog | April 3, 2018 | Energy Efficiency, Energy Policy

After watchdog groups raised questions about the Tennessee Valley Authority’s (TVA) purchase of seemingly unnecessary and exorbitant aircraft, TVA’s Office of Inspector General (OIG) released a report summarizing its own audit of the purchase and use of two of TVA’s most recent luxury toys, a 2015 Cessna Citation 560 XLS+ jet and a 2015 Beechcraft King Air 350i. Strangely missing from this TVA OIG audit is a review of the second jet, a 2017 Cessna Citation 560 XLS+  and a EC 145 Mercedes-Benz style helicopter, both purchased under  CEO Bill Johnson’s “life style of the rich and famous” tenure at TVA. The OIG audit clearly shows that TVA could not justify the 2015 purchase of one jet, and yet Johnson went out and bought a second jet in 2017.

In the audit the majority of  justifications communicated by TVA executives for the 2015 jet purchase were systematically shown to be imaginary at the best and dishonest at worst. These purchases follow a growing pattern of extraordinary salary and bonuses paid to TVA’s top executives including CEO Bill Johnson as the highest paid Federal employee in the nation current receiving over $6.5 million dollars annually.

The OIG findings come on the heels of a TVA proposal to increase costs for residential and small business customers, adding fixed fees to already inflated residential small business rates that have been increased over the past few years as TVA gave large industrial customers big rate cuts. 

Clearly no longer your grandfather’s TVA, the “public power” utility has been using ratepayer money to fly TVA’s top executives, and even their spouses, around in style. TVA’s jet was more likely to be flying empty, than with the nine passenger capacity TVA claimed it needed to accommodate with an $11 million jet.

The OIG audit covered only a 20-month period – from July 1, 2015 to February 28, 2017 – and only focused on the one TVA Cessna jet. Given that TVA’s second jet and high-end luxury helicopter were also purchased recently, it is more than likely that TVA was failed to do any cost-effectiveness review before making the decision to spend millions of dollars on these extra toys.

We are glad to see the OIG audit, given that TVA has refused to reply to Freedom of Information Act (FOIA) requests sent by SACE for all flight logs and records of TVA’s jets. Despite Bill Johnson’s recent claim that TVA is the “most transparent entity on the planet” and that TVA “shares anything with anybody,” TVA has refused to release any information related to use of TVA’s luxury aircraft via FOIA requests. Instead, SACE worked with the Energy and Policy Institute to get records from the Federal Aviation Association via FOIA requests, receiving a response and documents within two weeks of filing that request. The FAA records show that at least 19 times in a two year period, TVA’s aircraft went to Raleigh, NC, where Bill Johnson has a second home. This OIG report is only the tip of the iceberg – and we believe the OIG should expand its audit to review the purchase and use of all of TVA’s aircraft since January 2013. 

Bill Johnson seems to be treating TVA’s jet like a cab, having it pick him up and drop him off at his second home in NC or flying him to locations, like Pittsburgh, PA, that were unrelated to business travel.  Like a kid caught by his parents and trying to explain its way out of the situation, TVA threw excuse after excuse at the OIG who remained unconvinced. 

TVA made several dubious, if not out-right dishonest, assertions about why it needed to purchase an almost $11 million Cessna jet.

The investigation by OIG focused on three main questions:

1) whether TVA’s decision to purchase these aircraft was reasonable compared to other utilities

2) how to cost and use of the aircraft compared to industry standards, and

3) whether the use of the aircraft is consistent with applicable laws and regulations.

The results of OIG’s investigation paints a picture of corporate greed that is the polar opposite of how TVA should be operating as a federal public power provider – tasked with providing low-cost power to the residents of the TN Valley.

Overall, OIG’s report found:

1) most utilities of comparable size to TVA do not own and use an expensive, luxury jet to conduct business

2) TVA failed to mitigate costs, seemingly purchasing the Cessna jet in order to cater to the expensive tastes of its CEO and top executives, and

3) TVA violated federal laws and regulations in using the Cessna jet for personal use, including carrying the TVA’s CEO, Bill Johnson, on trips to his second home in Raleigh, N.C. and to carry spouses of TVA’s CEO and the spouses of TVA’s top executives.

Excuses, Excuses, Excuses

TVA’s excuse for investing in high-end aircraft was that it needed an aircraft that is large enough to carry nine passengers and land within a 4,000 foot runway. According to TVA, the over $11 million Cessna jet was the only aircraft that fit the bill. The jet was supposedly unique, TVA failed to shop around, purchasing the jet without any competitive bidding process or concern for keeping costs low. Not only did TVA fail to obtain any competitive bids, OIG found zero evidence that TVA did any of the required economic analysis before buying the jet. The only documents TVA presented to OIG were created AFTER the jet was purchased.  It would seem that TVA was dead-set on purchasing this specific luxury jet, regardless of cost or actual need.

TVA’s own Aviation Services department recorded jet hourly operating cost as two times more expensive compared to King Air turboprop – $4,542/hour vs. $2,249/hour. Throughout its report, OIG reiterates that the cheaper, more efficient turboprop fits all the needs of TVA – enough passenger room, can land on airport runways that TVA uses and can travel easily to anywhere within the TVA service territory. So why did TVA choose to purchase not one but two luxury jets? Because it wanted to.

One of the two primary reasons cited by TVA was that they needed an aircraft that would carry nine passengers. In reality, of the 1,389 flight legs audited by the OIG, the plane carried nine passengers on 2 times or 0.1% of the time the Cessna jet was used. In fact, it was more common for the jet to have ZERO passengers than it was to have nine. In total, 22% of the time TVA’s luxury jet was flying with no passengers on board. The majority of the flights, almost 70%, had anywhere from one to four passengers.

The second major reason cited was that TVA needed an aircraft that could land on a runway as short as 4,000 feet – the implication being that TVA would have need to land often at smaller, more rurally located airports. As it turns out, of the 93 airports TVA aircraft utilize, only three have runways at or near a 4,000 feet max. And those three airports? TVA doesn’t even have to use those anymore because one airport has another runway that is 5,000 feet, another airport recently increased their runway to over 5,000 feet and the last airport isn’t used because there’s an airport within 20 miles of it that has a 5,000 foot runway.

“Based on the flight data, the aircrafts usage does not support the justifications given for the [jet] – the need to carry nine passengers and land of a 4,000 foot runway.” TVA Office of Inspector General

After shooting down the two main reasons TVA had for purchasing the jet, OIG took a look at whether or not the use of the jet actually saved valuable executive travel time, another key claim by TVA. TVA said that its Cessna jet was 43% faster than a cheaper King Air option, saving valuable executive time.  According to the audit, 95% of TVA’s flights were for distances within 600 miles and “time savings are negligible for flying a mid-size or light-size jet than a turboprop for shorter distances, such as those less than 600 miles.” Even for the few flights that TVA took that were further than 600 miles, like to West Palm Beach, FL, the average time saved by using a jet versus the cheaper turboprop was a meager 30 minutes. What is truly amazing is that the majority of flights were between Knoxville and Chattanooga – about a 90 mile trip. By the time you factored the drive time between the TVA offices and the airports in Chattanooga and Knoxville, average car driving time was within 30 mins of the expensive jet travel.

Even after the OIG raised this particular issue with TVA, TVA continued to manipulate data to support its invalid claims. TVA claimed that operation cost were 7% more for the jet compared to the turboprop, which TVA considered negligible compared to alleged gains in “safety.” But OIG found that the difference in costs is closer to 18% greater for the jet and that TVA arrived at its lower number because its calculation assumed a 600-mile average flight. But the TVA jet only took trips over 600-miles 5% of the time over the 20-month period. The vast majority of TVA’s jet flights were less than 300 miles – 77% of them. So why does TVA use these trips as its “average” trip when making cost calculations? This appears to be a blatant manipulation of data to fit its particular needs at any given time.

So who has been using this jet? As it turns out, its not just TVA executives, staff and Board members. In the time period audited by OIG, at least 9 spouses used the aircraft for a total of 30 days of travel. Bill Johnson’s wife took almost 20 trips herself  – or an average of once a month during the audit period.

TVA Violated Applicable Laws and Regulations

Perhaps some of the most damning findings in the OIG report concern TVA’s failure to comply with federal law and regulations about the purchase and operation of aircraft by federal agencies. Overall, OIG found that:

1) Cost comparison analyses prior to use of the jet were not performed;

2) Business justifications prior to use of the jet were not documented;

3) Necessary authorizations needed before use of the jet did not occur;

4) The aircraft was used for personal preference and convenience of TVA’s CEO, including flights to and from Bill Johnson’s second home located in Raleigh, NC, outside of TVA’s territory; and

5) Reporting on cost and use of the jet was inaccurate and incomplete.

Federal travel regulations state clearly that travel on government owned aircraft is allowed only when it is the most cost-effective mode of travel. But, TVA didn’t perform that kind of analysis – it simply defaulted to always using the luxury jet. When OIG surveyed at random 20 different individuals who used the aircraft over the audit period to see if any cost-effectiveness analysis was done BEFORE anyone traveled, the answers was a resounding no. Only 1 person (a TVA employee) had actually provided cost analysis, but it was only an estimation of the cost to travel via car and was never compared to the cost of the aircraft. So, it was pretty much useless. The responses from the 19 other people surveyed by OIG were all various excuses of why the required analysis wasn’t done – “we didn’t know we had to,” “we bring thousands of jobs to the valley,” “we thought someone else was doing that” or flat out assertions that it was “best use of executives’ time” aka “because we can.”

More than one federal regulation specifies that travel to and from locations “other than official duty stations” does not qualify as official travel and should not be covered by taxpayer, or in this case ratepayer, money. But TVA ratepayers have been paying for just that, with the OIG finding that TVA’s jet was used over a dozen times for the “personal preference and convenience of TVA’s CEO.”

When approached about these personal flights directly, TVA claimed all but one was for business purposes. But the business reasons TVA gave were not official government reasons, according to the OIG.

“Rather, they appeared to be for the convenience of the CEO who was either already at his second personal residence in Raleigh, NC… or was being dropped off at the location of his second residence or elsewhere for personal reasons…” TVA OIG

TVA then claimed that several of these flights were when the CEO was on leave and had to come back to address urgent matters – but OIG found no records indicating the CEO was on official leave at any point during the audit period. The one personal flight TVA admitted was allegedly so that Johnson could attend to a medical issue with his family. Bizarrely, TVA stated that Johnson did get approval from the TVA Board Chair to use the jet for personal reasons, there is no Board practice or other written policy that gives the Chair the authority to approve use of TVA’s jet in this way.

What the OIG found was a TVA out of control and out of touch with its customers. Why should families living in the Valley be on the hook for TVA’s luxury toys? TVA has continually raised rates on residential customers, while lowering rates for large industrial customers and buying jets and a luxury helicopter to fit their CEO’s perceived “needs”.

SACE calls on the following actions to be taken:

1. The OIG investigation needs to be expanded to include all aircraft use under Bill Johnson’s time at TVA, from January 2013 to the present.

2. All flight logs, including who was on the TVA planes and why, needs to be made public immediately.

3. A congressional oversight hearing should be convened to review this material and assure the proper protocols are in place.

4. Enforcement action should be executed on any laws that were broken.

5. The two jets and the luxury helicopter should be sold and the money returned to the ratepayers of the Tennessee Valley.

6. Bill Johnson should be fired and sent back to North Carolina where he can build a luxury air force on his own dime.


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