Clean Energy Advocates Question TVA’s New CEO

Guest Blog | November 5, 2012 | Press Releases

Today’s appointment of former Progress Energy CEO William Johnson as the new CEO of the Tennessee Valley Authority (TVA) was met with surprise and questions from a leading advocate for clean energy and a longtime watchdog of TVA. The Southern Alliance for Clean Energy’s executive director, Dr. Stephen Smith stated “While we will maintain an open mind, I’m surprised that TVA’s Board would hire Mr. Johnson with his controversial past.” Smith was referring to the sudden removal of Johnson by the Duke Energy Board in July just hours after his appointment as CEO of the company following the merger with Progress Energy. This highly unusual series of events sent shockwaves through the utility industry setting off regulatory hearings and triggering considerable back and forth between the two companies. “While we may never know the full story of why Johnson was so abruptly dismissed,” said Smith, “There are some known facts which would make one question whether or not he is the best fit to lead TVA.” Under Johnson’s leadership, Progress Energy Florida chose to self-manage an upgrade project at its troubled Crystal River 3 (CR3) nuclear reactor located north of Tampa, FL as opposed to bringing in outside experts. Progress chose a “do it yourself” approach to a complex steam generator upgrade that led to major cracks in the containment vessel. Progress Energy’s attempts to repair the cracks have led to further damage to the containment structure. The reactor has been offline since 2009, will cost at least $1.5 billion to repair and, if it can be successfully repaired, it won’t be back in service until 2016. Customers are already paying $300 million per year for replacement power. The critically damaged reactor is now commonly referred to as the “Humpty Dumpty” reactor. Johnson oversaw the company’s failed decision to “self-manage” the steam generator upgrade, rather than have experienced vendors execute the upgrade. He has been accused of failing to communicate the seriousness of the reactor’s problems leading up to the merger, low balling the cost to repair and doggedly wanting to fix the reactor despite mounting evidence that shutting it down may be the better fiscal decision for ratepayers in Florida. Moreover, Progress Energy has spent over $1 billion on developing the proposed Levy County nuclear reactors in Florida that may never be built. Its questionable management of the project includes pursuing an overly aggressive construction schedule and imprudently relying upon the assumption that a Limited Work Authorization would be granted to it by the Nuclear Regulatory Commission. It was not granted, thereby derailing fundamental contracting, and scheduling and driving up cost and uncertainty for Progress Energy customers. Delays in construction and spiking cost estimates forced the company into a recent settlement agreement that allows Progress Energy to charge customers $3.45 per month though 2016 to cover the cancellation costs of its engineering and procurement contract for the development of the reactor project. Progress Energy Florida’s energy savings in 2011 through its energy efficiency programs trails leading utilities in the Southeast. For instance, Duke Energy saved 0.70 percent of its sales in 2011 through energy efficiency while Progress Energy Florida saved less than half that amount – only 0.30 percent of its sales through efficiency programs in that same year. Additionally, Progress Energy Florida’s cost (cents per lifetime kWh saved) for achieving its tepid energy savings is significantly higher than peer utilities in the Southeast. Based on the above mismanagement of its energy portfolio, it should come as no surprise that Progress Energy Florida ranks dead last in the latest JD Power and Associates Residential Customer Satisfaction Survey of large utilities in the South. To his credit, Johnson’s ouster led to an outpouring of support by some of his former employees. It appears that he was well liked. SACE has had extensive experience with Progress Energy under Johnson’s leadership in regulatory proceedings in North and South Carolina and Florida, and has generally found Progress Energy is not a leader on energy efficiency nor is eager to embrace renewable energy in those proceedings. “TVA needs a CEO that can lead the agency into the 21st century,, bringing an open, clear-headed approach to TVA’s nuclear troubles,” noted Smith. “The new CEO must work successfully with many stakeholders with diverse interests and needs.” “Based on our past experiences with companies under his direction, we have real concerns about whether he will support TVA’s efforts to grow energy efficiency and clean renewable energy and if he can work effectively with stakeholders across the Valley,” said Smith. This is a developing story and SACE will update with additional information and resources via our SACE’s blog here. # # # # Founded in 1985, the Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that create global warming solutions and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at