Tamarack Valley Energy
Annual Report 2022

Plain-text annual report

Building the Future Together FY 2022 Annual Report 2Tennessee Valley waterways offer beauty and recreational opportunities for tourists and locals alike. TENNESSEE VALLEY AUTHORITY Contents Letter from TVA CEO Jeff Lyash .......................4 People Advantage ..............................................8 Powerful Partnerships .....................................18 Operational Excellence....................................32 Igniting Innovation ...........................................40 Financial Strength ............................................50 TVA Leadership ................................................56 This GUIDE TO USING TVA’S ANNUAL REPORT AND FORM 10-K This Annual Report is intended to provide highlighted information of interest about TVA’s business and operations during its fiscal year (FY) ended Sept. 30, 2022. This Annual Report should be read in conjunction with TVA’s Form 10-K Annual Report for the year ended Sept. 30, 2022, filed with the Securities and Exchange Commission. The Form 10-K provides additional financial, operational and descriptive information, including TVA’s financial statements. The Form 10-K also provides important information about various material risks to which TVA is exposed in the course of its operations, which are important to consider before investing in any TVA securities. The 2022 TVA Annual Report and Form 10-K do not contain all information about TVA securities that is important for making investment decisions. Please refer to the appropriate Offering Circular, and any relevant supplements, for detailed information about TVA securities. TVA’s Form 10-K may be found at www.tva.com/investors. STATEMENT/FACTORS THAT MAY AFFECT OUR BUSINESS We have included in this letter and 2022 TVA Annual Report “forward-looking statements” relating to our operations, results of operations and other matters that are based on our current expectations, estimates, assumptions and projections. Words such as “will,” “plan,” “believe” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is described or forecast in these forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include, but are not limited to, the factors discussed in our Form 10-K and Quarterly Reports on Form 10-Q under the sections entitled “Forward-Looking Information,” “Risk Factors” and “Management’s Discus- sion and Analysis of Financial Condition and Results of Operations.” Our forward-looking statements speak only as of the date of this letter and the 2022 Annual Report or as of the date they are made, and we undertake no obligation to update them. TVA ANNUAL REPORT FY 2022 3 Dear fellow stakeholders, Tracy and I have been blessed with nine grandchildren, each with unique personalities, talents and perspectives. It is a joy to be part of their lives and lifting them up as they grow. Almost everything we accomplish in life is the product of support and encouragement from others…family, friends, community. From our parents’ guidance during childhood, to the efforts of teachers, coaches, mentors and spiritual leaders…it’s easy to see how almost everything we become is built on the shoulders of others. Nine decades ago, TVA arose as a force for good. To lift up a struggling region of our nation. TVA’s very foundation is built upon a strong mission to benefit the public good. It’s a mission that has stood the test of time. Today, the challenges are different yet no less critical to the communities we serve. At TVA, our strength lies in our collective power. And that power comes from the unique experiences, perspectives and knowledge each individual brings to the table. Building the Future... With You Mission of Service Every day, we deliver on our mission, focused on: • Energy: affordable, reliable, resilient and clean • Environmental Stewardship: protecting and preserving public lands and water • Economic Development: attracting jobs and capital investment 4 TENNESSEE VALLEY AUTHORITY Providing support when it’s needed most Our team members take this mission of service to heart, and they rise to the call time and again. An example of this dedication to community lies in TVA’s response to the devastating tornado outbreak that left a swath of destruction miles long across Kentucky last December. When I reflect on our team members’ response to tragedies such as this one, I’m grateful. Around the clock, more than 300 TVA transmission employees rebuilt damaged transmission structures and reconnected lines. Other employees addressed critical needs — food, water, supplies, equipment. I met with my friend Marty Ivy of Mayfield Electric and Water Systems to see firsthand the storm system’s toll on lives and property. It was astonishing. Meanwhile, the outpouring of support was incredible. The strength of partnerships — support for each other in times of need — cannot be overstated. Similarly awe-inspiring is the spirit of innovation TVA’s team members bring to their roles each day, from that very first day in 1933. Throughout its history, TVA has been an innovator. It was among the first to harness the river system for power generation and flood control. Then, at the dawn of the commercial nuclear age, TVA constructed some of the earliest nuclear reactors in the nation. Today, we recognize the urgency and TVA’s unique position to lead in developing solutions that will help deliver a carbon- free energy future for our region and the nation. It requires innovation and partnerships to go further, faster to make our vision a reality. Marty Ivy, of Mayfield Electric and Water Systems, TVA’s Jeff Lyash, Jeannette Mills and Don Moul survey the damage. TVA Customer Relations manager Brent Powell organized holiday donations for the Mayfield community post-storm. Left: Christopher Smith, TVA Community Relations TVA ANNUAL REPORT FY 2022 5 manager for the north region, provided support in the community. To help achieve this, we are expanding our renewable generation and researching emerging technologies. We are optimizing our existing nuclear fleet and demonstrating excellent performance. And we are looking ahead as we explore advanced nuclear technology — small modular reactors — as part of our pursuit of a net-zero carbon energy future. Delivering on our promises As we innovate and help our neighbors, we also continually work to lower our costs. These savings are passed on to our communities. We recognize the impact inflation has had on families and are focused on doing everything we can to keep energy costs as low as possible. Residential customers served by the top 100 U.S. utilities pay around 80% more for energy than customers served by TVA, and our industrial rates are lower than more than 95% of the nation. A big part of delivering on our promises is ensuring we provide reliable, resilient energy. The strength of our power system was demonstrated during record freezing temperatures last February and record-setting peak and daily energy records in both May and June. TVA has delivered energy with 99.999% reliability for 23 consecutive years, putting our performance in the top quartile among the nation’s largest utilities. To ensure our customers can always count on us, we continually invest in our system. This year, such investment included significant infrastructure improvements to the grid and the completion of a seven- year remediation project at Boone Dam in upper East Tennessee. This project was the largest dam modification project in TVA history. It was completed safely, on time, and under budget; and it is receiving national accolades as a geotechnical engineering feat. Economic development is also fundamental to TVA’s work in the region. This past year, TVA helped create or retain an estimated 66,500 jobs and more than $10.2 billion in projected capital investments. For these and other achievements, Site Selection magazine recognized TVA as a “Top Utility for Economic Development” for the 17th consecutive year. TVA dams control flooding along the Tennessee River watershed. TVA manages the Tennessee River, which attracts an estimated 285,000 paddlers each year. 6 TENNESSEE VALLEY AUTHORITY Living our values At TVA, our core values — Safety, Integrity, Inclusion and Service — define how we interact with our customers, communities and — most importantly — each other. These are more than just words. We hold ourselves and each other accountable to these values every day. We are committed to a TVA that truly values inclusion with diversity, which treats people with respect and dignity, and where everyone can do their best work and be their best self every day. I am pleased to report that TVA became the first federal agency to earn the coveted Compliance Leader Verification™ from Ethisphere® — a global leader in ethical business practices. This honor demonstrates that TVA fosters a culture of ethics and integrity that builds public trust. Joining the TVA family was one of the best decisions I’ve ever made. I am honored to serve with such a talented and dedicated group of individuals. Our mission drives and inspires us to pursue new ideas and innovative solutions that improve our service to the people who call our region home. It’s an exciting time to be at TVA. It’s a time of challenges and opportunities, a time when the innovative spirit of our workforce will be called upon to solve complex issues and open the door to new ways of thinking. It’s the beginning of a highly emergent period in the development of our nation’s clean energy future, and TVA is helping lead that transformation. Safety We are committed to the safety and well-being of each TVA employee and the communities we serve. Integrity We are honest and straightforward. Inclusion We strive to treat everyone with dignity and respect by welcoming each person’s individuality so we can all reach our full potential. Throughout the history of TVA, we have been defined more than anything by our ability to respond to challenges. Those challenges take many forms — war, tornadoes, ice storms, record heat waves, droughts, financial market uncertainty, political and regulatory uncertainty. Despite these challenges, we continue to demonstrate that we are up to the task. Jeff Lyash President and Chief Executive Officer TENNESSEE VALLEY AUTHORITY Service We are proud to serve in the communities in which we live, work and play. TVA President and CEO Jeff Lyash joins partners at the opening of a Fast Charge Network electric vehicle charging site in Martin, Tennessee. TVA ANNUAL REPORT FY 2022 7 PEOPLE ADVANTAGE Building the Future... Together The strength of TVA is our people. Together, we are building a stronger future — one that propels our region forward as an innovative, thriving and beautiful place to call home. ‘Precise choreography’ Team works together to accomplish heavy lift at Watts Bar Nuclear Plant Safety always comes first. TVA employees and contractors live by these words, and never were they truer than when TVA replaced four steam generators at our Watts Bar Nuclear Plant Unit 2 in Spring City, Tennessee. The complex project, which required a year of planning and a few months of execution, will help support decades of reliable generation of carbon-free energy. “From a complexity standpoint, the only thing that would have been more complex would have been constructing an entire unit,” said Tim Rausch, Executive Vice President and Chief Nuclear Officer at TVA. “We moved steam generators weighing 800,000 pounds each, and the team of TVA employees and 1,200 supplemental workers performed more than 26,000 tasks during the outage.” Carol Barajas TVA vice president, nuclear projects and subsequent license renewal 8 TENNESSEE VALLEY AUTHORITY “The project combined state-of-the-art technology, precise choreography and extensive planning put into action — all with an accuracy that is measured in millimeters and completed in a nuclear energy environment,” he said. The person at the heart of the choreography was Carol Barajas, vice president of the Watts Bar steam generator replacement project. Under Carol’s leadership, the team — which included laborers from every trade imaginable — completed the work with no impact to individual, radiological, nuclear or environmental safety. Prior to being taken offline for the scheduled outage, Unit 2 had produced more than 11.4 billion kilowatt-hours of carbon-free energy during its previous 18-month operation cycle, enough to supply the annual energy needs of 912,000 homes. The project was accelerated because in November 2020, during the previous Unit 2 outage, TVA discovered degradation of one of the steam generators. Unit 2 generators were planned to be replaced in Fall 2023, but the project was moved up by 18 months as a proactive measure. “We’ve optimized Watts Bar Unit 2 performance for the next 40 to 60 years,” Rausch said. PEOPLE POWER MORE THAN 10,000 Employees are the backbone of TVA MORE THAN 19,000 Retirees have established TVA’s legacy APPROXIMATELY 18% Of the workforce are Veterans 58% Of employees are represented by Unions 17 Unions represent TVA employees and contractors Carol Barajas and Tim Rausch, Executive Vice President and Chief Nuclear Officer, stand next to a mobile crane used for the Watts Bar steam generator replacement project. TVA ANNUAL REPORT FY 2022 9 Carol Barajas, who led the Watts Bar steam generator replacement project, leads a tour of local officials inside the steam generator replacement outage control center. The project’s safety work included rigorous safety and protocol training related to working in a nuclear facility. The project team also paid close attention to the weather, since the large crane lifting the 67-feet-long by 15-feet-wide steam generators could not be used on highly windy days. Barajas said two major undertakings that contributed to the success of the project included: • Building a permanent structure onsite to accommodate the large team, thus making multidisciplinary team meetings and access to the Watts Bar facility easier, and LEADERSHIP Savoy magazine named Jeannette Mills, Executive Vice President and Chief External Relations Officer, to its 2022 Most Influential Black Americans in Corporate America list. Forbes magazine ranked TVA among the Top 15 Best Employers by State for 2022 for the fourth consecutive year. • Using full-scale mockups to practice critical tasks such as cutting concrete around the generators, which helped the team validate assumptions and consider all contingencies prior to work on the actual generators. At the end of the day, though, the project’s most important element was its people. “The piece that led to our success was establishing a culture of continuous improvement, one that gave everyone a voice for feedback and that was agile to pivoting and making adjustments as necessary,” said Barajas, who today is vice president of nuclear projects and subsequent license renewal at TVA. “Leaders spent time in the field every day, and we worked to ensure that every person knew they were playing a role in the project’s success.” Barajas’ positive attitude was one of the reasons she was tapped to lead the project, Rausch said. “Carol has a great attitude about work and life, and this project required her to lead this large, diverse team in a way that would achieve precise choreography and safety,” Rausch said. “She worked through good days and challenging days in a way that made people want to be part of the project’s success.” Sue Collins, Executive Vice President and Chief People and Communications Officer, said Barajas’ experience is a prime example of TVA’s strategic approach to providing growth opportunities at TVA. 10 TENNESSEE VALLEY AUTHORITY INTEGRITY “This year, TVA became the first federal agency in the nation to earn the Compliance Leader Verification™ designation from Ethisphere®. This designation means that TVA has a best-in-class Ethics & Compliance program. While we are pleased with this accomplishment, we will continue to evolve our ethical culture and refine our processes.” —David Fountain, TVA Executive Vice President & General Counsel “Our people are our strength,” Collins said. “Carol grew from this experience, as did everyone who participated on the project. The team was open to different perspectives and worked inclusively toward solutions together. It’s what built TVA in the past and what will build TVA in the future. It’s the TVA way.” INCLUSION Talent Dimensions and the Global ERG Network named TVA a 2022 Diversity Impact Award Top 10 Diversity Action Award recipient. TVA is named No. 4 on the 2022 DiversityInc Top Companies for Utilities list. Bill Kilbride (left), Chair of the TVA Board of Directors, visits Watts Bar Nuclear Plant Unit 2 for an up-close look at the steam generator replacement work. TVA ANNUAL REPORT FY 2022 11 ‘We go in listening’ Environmental justice approach creates a brighter future for our communities “We began by looking at all of the programs we offer in lower-income communities — programs such as Home Uplift, School Uplift and Community Centered Growth — and the picture emerged that we have been doing a lot of this work already,” said Skip Markham, senior manager of Regulatory Affairs at TVA. “So now, we’re being more strategic and more focused in our outreach, and we’re also working within TVA to enhance communication and bring consistency to our efforts.” Horn said TVA’s Environmental Justice, which sits within TVA’s Sustainability Program, is about creating a brighter future for our neighbors and partners. “We are working to ensure that everyone has the opportunity to move forward and that no one gets left behind,” she said. “The ultimate goal is to have environmental justice be part of every decision we make across TVA. Everything we do should be through the lens of considering those less fortunate. It’s TVA’s mission. It’s who we are.” TVA Allen Fossil Plant restoration project team members and community partners help clean up the Tchulahoma Corridor in Memphis. For Janice Horn, there is nothing more important than listening. Listening to people in neighborhoods across the Tennessee Valley. Listening to community partners. And listening to her teammates. As senior program manager of Environmental Justice at TVA, Horn is leading our efforts to coordinate how we support and engage with people in disadvantaged communities. “It is important that we meet our stakeholders where they are — in their communities, and that we listen to what they need,” Horn said. “We don’t go in talking; we go in listening. Then, once we know what they need, we can tell them about programs that might help and how they can access them.” While working with stakeholders is foundational to TVA’s mission and the public power model, TVA is creating more structure around our environmental justice work to align with presidential executive orders that frame federal agencies’ recent efforts to address disproportionate health, environmental, economic and climate impacts on disadvantaged communities. During FY 2022, TVA created a multidisciplinary Environmental Justice Core Team that is developing a framework for how to better identify disadvantaged communities and meet their needs and established a broader Environmental Justice Regulatory and Policy Team for enterprise-wide perspective and coordination. “The ultimate goal is to have environmental justice be part of every decision we make across TVA.” —Janice Horn, TVA senior program manager of Environmental Justice 12 TENNESSEE VALLEY AUTHORITY ‘A positive impact’ TVA is committed to supporting our Veterans In 2004, Scott Venables finished eight years of service in the U.S. Army. While considering what to do next, a friend told him that TVA offered training and preference to Veterans. That information changed his life. Venables participated in TVA’s multi-skill training program, then was hired by TVA as a pipe fitter — a job he held for 16 years. Today, he is the maintenance coordinator at our Gallatin Fossil Plant in Sumner County, Tennessee. “As an employer who treats Veterans well, TVA is amazing. There is no other way to put it,” Venables said. “My annual salary is much higher than it would be without TVA’s initial training and employment, and that has positively impacted my whole family — my wife, my kids and even my parents, who we take on vacations they might not have gone on otherwise.” Venables, who served four years as a combat engineer and four years as an Apache helicopter crew chief, is paying it forward as an active member in TVA’s Veterans Employee Resource Group (ERG). With more than 1,800 Veterans employed at TVA, the group serves as a hub for networking, professional and personal support for fellow “We have high regard for all who protect our country. It’s important for us to give back and find ways to support our Veterans, their families and Veteran-owned businesses in the Tennessee Valley.” —Allen Clare, TVA executive sponsor of the Veterans ERG and vice president of River and Resources Stewardship Veterans, and a source of camaraderie among those who have served. Its members also support Veterans outside TVA, such as Veterans impacted by extreme weather events or those who are without housing. At TVA, we actively recruit Veterans, offer paid military leave and guaranteed job retention for active-duty Reservists and members of the National Guard, and support military spouses and families. “We have high regard for all who protect our country,” said Allen Clare, executive sponsor of the Veterans ERG and vice president of River and Resources Stewardship at TVA. “It’s important for us to give back and find ways to support our Veterans, their families and Veteran-owned businesses in the Tennessee Valley.” 2022 Military Friendly® Supplier Diversity Program Award TVA ranked No. 1 for 2022 and a Top 10 designation three years in a row. 2022 Military Friendly® Employer Award TVA is ranked No. 3. 2022 Military Friendly® Spouse Friendly Employers Award TVA is ranked No. 8. VETS Indexes 5-Star Employer Recognizes veteran employers that distinguish themselves TVA ANNUAL REPORT FY 2022 13 ‘A one-of-a-kind project’ Boone Dam technical director recognized for engineering leadership As technical director of the largest dam safety modification in TVA history, Chris Saucier knew the success of our Boone Dam Remediation Project hinged on one thing: teamwork. Saucier led a cross-functional, 60-member team that designed the dam repair and oversaw its construction to return the dam to service for the people of the Tennessee Valley. The seven-year, $326 million project included the challenging construction of an underground cutoff wall to eliminate seepage and ensure dam safety. Thanks to Saucier, his team and many dedicated TVA partners, the site was reopened to the public in May 2022 and the reservoir has returned to normal operations. Along with the numerous technical advancements achieved during the project, Saucier facilitated new strategies for agency reviews and approvals required for project closure and reservoir operation, further advancing TVA’s implementation of risk-informed decision-making in its Dam Safety program. Following the final stage of remediation, which demonstrated successful performance during reservoir refilling, an external independent review board recognized many of the project’s practices as new standards for the industry. “This is really about the contributions of a whole team. It reflects efforts of a lot of people inside TVA who have worked together successfully. This project is recognized as being special by people all over the world, but most importantly, it was special for those we serve right here in the Tennessee Valley.” —Chris Saucier, 2022 Recipient, TVA Ike Zeringue Engineering Award 14 TENNESSEE VALLEY AUTHORITY in North Georgia as well as Douglas Dam and Cherokee Dam in eastern Tennessee. A father of five, he is passionate about his family — and also his work. He considers his TVA engineering award to be a team award. “This is really about the contributions of a whole team,” he said. “It reflects efforts of a lot of people inside TVA who have worked together successfully. This project is recognized as being special by people all over the world, but most importantly, it was special for those we serve right here in the Tennessee Valley.” For his efforts, TVA named Saucier this year’s winner of our highest engineering honor — the Ike Zeringue Engineering Award. Additionally, out of 106,000 engineers employed by federal agencies, he was nominated as a Top 10 finalist for Federal Engineer of the Year. “This was a technical project, a one-of-a-kind project,” Saucier said of the project at Boone Dam, located in Kingsport, Tennessee. “It was a huge technical accomplishment.” Credit for the success of the project, he noted, should go to the talented people who found innovative solutions to complex challenges. “With a strong team working together, we can do anything,” he said. At TVA, Saucier has worked as a geotechnical engineer in Dam Safety and in Civil Projects and has been involved with repairs at Blue Ridge Dam Chris Saucier led a cross-functional, 60-member team that designed the Boone Dam repair and oversaw its repair and remediation. TVA ANNUAL REPORT FY 2022 15 TVA’s Sara Bayles, one of the leaders of the accessible nature outing, cheers for a participant as she holds Sadie, the 3-year-old boa constrictor. Opposite page: TVA’s Damien Simbeck discusses native plants with the group. Smiling from ear to ear Accessible nature outing provides a path toward inclusion On a beautiful morning in June 2022, participants of an accessible nature outing experienced the beauty of the outdoors together at the TVA Native Plant Garden Trail in Muscle Shoals, Alabama. “It was something that would make me feel more important to the community,” said Tyler Patterson, a 30-year-old participant in the adaptive program at Muscle Shoals Parks and Recreation. Representatives from TVA and two partners, the Alabama Department of Conservation and Natural Resources and the Muscle Shoals National Heritage Area, organized the program to give people of varied abilities the opportunity to explore native birds, insects and plants along the paved trail. Event leaders pointed out and explained sensory aspects of nature so all participants — from children through adults — could enjoy the trail. Some participants said they’d never participated in this type of event because outdoor activities often are geared toward more able-bodied people. Finn Bayles, a 12-year-old from Florence, Ala., has a visual impairment. He greatly enjoyed the day. “Most trails aren’t accessible, and I think it’s good for people with special needs to do something fun,” he said. TVA places emphasis on diversity with inclusion everywhere — from the workplace to recreational trails. The coordinators said the day exceeded their expectations, and they plan to expand the programming. “I smiled from ear to ear,” said Sara Bayles, TVA Watershed representative. “I loved seeing them learn.” As the group ventured into the woods, Damien Simbeck from TVA Natural Resources guided the group, sharing his knowledge with the participants. Heads turned, searching for objects to mark off on the bingo boards, and eyes followed the movement of birds overhead. 16 TENNESSEE VALLEY AUTHORITY “Inclusion is at the heart of who we are at TVA. It is the lever that turns diversity into results — for business, but more importantly, for people.” —Megan Flynn, TVA Vice President, Talent & Culture and Chief Diversity & Inclusion Officer TVA ANNUAL REPORT FY 2022 17 POWERFUL PARTNERSHIPS Building the Future... with Partners We are stronger together. At TVA, partnerships are everything — with local power companies, directly served customers, industry partners, governments, communities and schools. We are in this together, creating a culture of caring for the Tennessee Valley and beyond. ‘Unbelievable’ devastation In Mayfield’s darkest hour, TVA responds with warmth and light to neighbors’ plight During the late evening of Friday, Dec. 10, 2021, a violent tornado raged across western Kentucky. Communities including Bowling Green and Pembroke felt the storm’s wrath, yet it was the city of Mayfield where the EF4 tornado produced the most catastrophic damage. The next morning’s dawn light showed the massive scale of destruction — lives lost, homes flattened and a historic downtown buried beneath bricks and other debris. TVA responded immediately to provide support and resources to more than 250,000 residents in western Kentucky and northwest Tennessee who lost a great deal more than power. “Even as we were working with local power companies to restore damaged structures and lines to return power, these storms were continuing to devastate towns, families and businesses,” said TVA President and CEO Jeff Lyash. “Our thoughts and prayers go out to those who lost loved ones and suffered loss of homes and buildings, and those who lost their entire community.” 18 TENNESSEE VALLEY AUTHORITY TVA is the nation’s largest public power system, partnering with 153 local power companies to supply electricity to approximately 10 million people across seven Southeastern states and 58 directly served customers, including 51 industrial customers and seven military and federal installations. TVA team members supported crews heading into the field as part of rapid response efforts. “TVA offered support for meals, for lodging, for lineworkers, moral support — they gave me hope that we were going to get throught this,” said Marty Ivy, General Superintendent, Mayfield Electric and Water Systems. “We felt like someone cared.” In the aftermath, TVA field tech Scott Stockton delivered food to responders, stopping in cornfields where groups of linemen huddled in the near darkness, grateful for the hot meal — fuel to keep them going as they worked 24/7 to restore power to their neighbors. “It looked like a bomb had gone off,” Stockton said. “The linemen and responders are warriors that helped provide warmth and light to all those left in the dark.” Passing through the most affected areas, Stockton found a bewildered man wandering outside a destroyed pharmacy in the dark with nothing but a plastic bag full of clothes. His home demolished, the man had nowhere to go until Stockton gave him a ride and some food. “He didn’t have anyone, but he had us — he had TVA,” Stockton said. TVA’s initial restoration began Friday night when the first lines went out of service. Engineers, operations, administrative staff and supply chain team members all began supporting crews heading into the field as part of the rapid response efforts. “TVA offered support for meals, for lodging, for lineworkers, moral support — they gave me hope that we were going to get through this. We felt like someone cared.” — Marty Ivy, General Superintendent, Mayfield Electric and Water Systems TVA ANNUAL REPORT FY 2022 19 Dawn light showed the massive scale of destruction after an EF4 tornado hit Mayfield, Kentucky, late on Dec. 10, 2021. “The devastation in Mayfield was unbelievable,” said TVA customer relations manager Brent Powell. “But the response was amazing. People from all over the country poured into western Kentucky to provide supplies, food, toys and volunteer hours. TVA employees stepped up by purchasing items on the Amazon wish list, which continued to support the community through the next few months.” While the TVA power system remained stable, it suffered heavy damage, as did multiple local power company (LPC) systems and facilities. “We’re in this for the long haul. We are part of these impacted communities, and we are going to be here to support for however long it takes to get our neighbors back on their feet.” — Justin Maierhofer, TVA vice president, north region TVA crews arrived that night to work on the top priorities of repairing electric system damage, delivering emergency relief supplies and providing portable trailers to LPCs with damaged buildings. “TVA’s system lost 100 power structures, 31 transmission lines and 21 customer connection points,” said Doug Bailey, vice president of Transmission Field Operations. “TVA crews worked 24/7 to completely restore the power system in about 136 hours — an impressive feat.” TVA dedicated 21 of its own line crews, two additional contractor crews and three TVA helicopters to the effort. “Our folks know our system and know how to get things done because they’re working inside it every day,” Bailey said. “That’s why our own construction workforce is our single greatest asset.” TVA’s Mayfield customer service center became temporary housing for linemen and emergency personnel. Lining its walls were community donations of pallets of water and food, piles of blue tarps and a collection of hammers and nails to protect people’s homes. 20 TENNESSEE VALLEY AUTHORITY TVA also provided generators and electronics to improve cellular and internet capability as well as shower and restroom facilities. In the weeks and months that followed, TVA’s north region community relations team members continued to address the needs of families through Emergency Management donation sites and Family Resource & Youth Service centers. “Our team was able to act quickly, not only to repair damaged transmission lines, but also to get boots on the ground connecting with customers, local officials and the community. We were able to get real-time feedback on what was needed where and when, so TVA’s resources were put right where they were needed,” said vice president of the north region, Justin Maierhofer. Some of TVA’s actions: • Donated an initial $100,000 to relief efforts. • Supplied food and support to the Mayfield Electric team as they continued their rescue and recovery efforts. • Coordinated with local officials to deliver 7,000 bottles of water to Mayfield due to the destruction of their city water system. • Donated 10,000 surgical masks, 1,000 tarps with hammers and nails, cots and blankets, and personal care items. • Delivered portable transformers to speed the restoration of damaged substations. • Supplied portable trailers to impacted local power companies to assist with recovery efforts. • Opened TVA’s Mayfield service center for use as a central location for repair supplies and restoration support. • Routed additional power system repair supplies and components to the impacted area. • Relocated TVA line crews to the area and brought in contract crews to support. TVA provided three helicopters to assist in power restoration. Crews worked night and day to get the power system back up and running in 136 hours. • TVA vegetation maintenance personnel cleared trees and other debris to support transmission line repair. • TVA Police assisted local law enforcement with traffic control. “I can’t thank my brothers and sisters at TVA enough for their contribution to my community in its time of need,” Powell said. “We’re in this for the long haul,” Maierhofer said. “We are part of these impacted communities, and we are going to be here to support for however long it takes to get our neighbors back on their feet.” TVA immediately responded with support and resources to impacted residents in western Kentucky and northwest Tennessee. TVA ANNUAL REPORT FY 2022 21 ‘The bond of community’ When ice storms cut power to the Memphis area, TVA responded When wintry storms swept through parts of TVA’s west region in February of 2022, nearly one-third of the Memphis-area population, or 240,000 residents, found themselves without power. “I call it a tragedy when people don’t have power. They have no way to keep warm, cook food or have a hot meal,” said the Rev. James Delaney, pastor of St. John Missionary Baptist Church in the Orange Mound community. “Not only did TVA provide food, but it was cooked, too.” In addition to donating 5,000 meals, TVA offered 700 snack bags to Memphis Light, Gas and Water’s front-line team as they worked to restore power. Other community support included establishing two warming centers and providing essential items such as sleeping bags, blankets, toiletries, disposable masks and hand sanitizer at locations throughout the city. In the Westwood area, TVA stationed a food truck at Mount Vernon Church for families braving the cold. The Rev. Melvin Watkins is pastor there. “As citizens who are tied together through the bond of community, it is important for us to TVA provided meals to Memphis Light, Gas and Water teams as they worked to restore power. We also established warming centers and distributed essentials throughout Memphis. be there for one another and demonstrate our commitment to stand alongside one another, especially during challenging times like power outages,” Watkins commented. “This is why I commend TVA for demonstrating what it means to be a community and to care for those who needed their help.” Gabe Franceschi, director of Government and Community Relations, coordinated TVA’s storm response, along with other west region leaders. He called the team’s efforts “service in action.” “The heart of TVA’s mission is service,” Franceschi said. “I appreciate the team for their hard work, long hours and dedication. Together, we worked with local elected officials, non-profit agencies and community leaders to identify where the need was greatest and provided support to those who were hardest hit.” Delaney said the effects of such giving go a long way. “It was an excellent thing that happened,” he said. “When people have a need, it’s great to say that you’ll pray for them, but it’s even better when you come to their aid. So, that moves it from excellent to superb.” “...I commend TVA for demonstrating what it means to be a community and to care for those who needed their help.” — Reverend Melvin Watkins, Pastor of Mount Vernon Church in Memphis, Tennessee 22 TENNESSEE VALLEY AUTHORITY ‘A big difference’ Children breathe easier thanks to School Uplift After their school received a grant from TVA’s EnergyRight® School Uplift program, students in the Pickett County K8 school in Byrdstown, Tennessee, are breathing easier. Literally. Pickett County K8 used School Uplift funds to improve ventilation in classrooms and hallways as well as install LED lighting throughout the school. Prior to the improvements, none of the school’s air filtration systems worked properly. In partnership with Volunteer Energy Co-Op, TVA’s EnergyRight® School Uplift program provided funds that enabled Pickett County K8 school to improve ventilation and install LED lighting. Eighth-grader Johnny Jenkins recalls how his allergies would flare up. “It was awful, and I was tired all the time,” he said. “It’s hard to do your work and pay attention.” Jenkins said his sinus infections are practically gone, thanks to the new HVAC and filtration systems. “I’ve noticed a big difference. I’ve been able to breathe easier.” Now in its third year, School Uplift is a free initiative that helps public schools cut energy waste and engage students, faculty and staff in behavioral changes that help save energy. The grants range from $10,000 to $200,000, and TVA invests, on average, $3.2 million in the program each year. School Uplift is expected to help up to 100 schools each year improve their facilities and reduce energy usage by as much as 10%, which could save each school an average of $8,000 per year. The program is expected to result in $5.8 million in lifetime energy cost savings for the 100 schools that participate each year. “Helping schools save money on their power bills ensures resources are allocated where it matters most — educating our children,” said Cindy Herron, vice president of TVA Energy Services & Programs. “Helping schools save money on their power bills ensures resources are allocated where it matters most — educating our children.” —Cindy Herron, TVA vice president, Energy & Services Program The ABCs of School Uplift Active energy management training Participating public schools receive behavior-based strategic energy management (SEM) training. Promote engagement from faculty and students with easy, actionable energy-saving tips and energy-efficiency practices. Building stronger communities Together, we can do even more. School Uplift energizes students, families, teachers, business owners and statewide leaders, uniting them with a common cause: improving local schools and the communities they serve. Competitive and need-based grants Participating public schools compete among their annual cohort to become eligible for grants for much-needed energy upgrades to improve the learning environment. TVA ANNUAL REPORT FY 2022 23 About 106,000 students across the region enjoyed hands-on science, technology, engineering and math activities through $1 million in STEM grants awarded in FY 2022. Energizing classrooms STEM education and grants ignite innovation in the next generation Molly Turner, a teacher at Auburn School (K-8) in Auburn, Kentucky, has no trouble sparking imagination in her students these days. She is among 233 recipients of a science, technology, engineering and math (STEM) grant. She used it to purchase two 3D printers. She said her young students are learning about how exciting engineering can be while also strengthening their problem-solving skills. “My students have always been excited to come to my STEM class, but now that excitement is through the roof,” she said. TVA partners with schools to fund STEM education grants and robotics competitions. In FY 2022, TVA partnered with BVI, a nonprofit TVA retiree organization, to provide $1 million in STEM grants. The STEM program, operated in partnership with the Tennessee STEM Innovation Network managed by Battelle, enabled 106,000 students to participate in STEM activities. “TVA is committed to supporting STEM education to help develop today’s students into tomorrow’s engineers, scientists and IT professionals,” said Jeannette Mills, TVA Executive Vice President and Chief External Relations Officer. “It’s inspiring to be able to contribute to the innovators of the next generation.” Grants have been awarded to schools in both urban and rural areas to meet the diverse needs of local communities. Robotics programs also provide outlets for young inventors to stretch their STEM smarts. Although many robotics competitions were suspended during the pandemic, they are expected to be in full swing in the 2022-23 school year. TVA supports equipment and registration costs for robotics teams. More than 500 teams, covering all seven states in our region, have benefited from funds allocated in FY 2022. TVA anticipates an even greater impact in FY 2023. “STEM education is so important to developing a well-qualified workforce and, ultimately, to supporting economic development in the Valley,” said Bert Robinson, director of Government and Community Relations. “These are our future scientists, engineers and technicians — and it’s a privilege for TVA to play a part in helping them get started.” 24 TENNESSEE VALLEY AUTHORITY “TVA is committed to supporting STEM education to help develop today’s students into tomorrow’s engineers, scientists and IT professionals.” — Jeannette Mills, Executive Vice President and Chief External Relations Officer ‘Becoming better stewards’ TVA works with partners to create a more sustainable future When it comes to building a sustainable future, no one can do it alone. local power company partners with TVA on possible solutions. At TVA, we’re working with partners to learn what sustainability means to them, then collaborating to create cleaner, more environmentally friendly ways of doing business and living in this world. They bring incredible solutions to the table. Take, for example, BrightRidge, a local power company operating in the Northeast Tennessee region. BrightRidge is a leader in carbon reduction and innovation, having developed two solar farms, a community solar program and a nascent electric vehicle charging network. It also partnered with TVA and the Tennessee Department of Environment & Conservation to bring the first electric school bus in Tennessee to the Washington County School System. BrightRidge wanted to connect with its customers to learn about their needs and sustainability goals, and it worked with TVA to create a sustainability workshop. “TVA uses our feedback to develop programs and resources that we can take back to our customers and communities, with the collective goal of becoming better stewards of the resources we have,” he said. TVA seeks feedback from our stakeholders as well. In FY 2022, we hired a third-party company to conduct interviews with companies and organizations in our seven-state region to learn more about their sustainability priorities and ways we can work together on new opportunities. “Partnerships and engagement are vital to moving forward,” said Rebecca Tolene, Vice President, Environment and TVA’s Chief Sustainability Officer. “We listen as stakeholders identify their sustainability priorities, and we discuss ways TVA can help create positive change. We are building the future together.” At the first workshop in September 2022, BrightRidge customers — representatives from hospitals, education institutions, municipalities, commercial businesses and others — gathered to discuss green jobs, carbon reduction possibilities and economic development. TVA staff members presented information on our programs, services and support opportunities. Jeff Dykes, Chief Operating Officer of BrightRidge, said customers and communities share information about what they need from BrightRidge, and then the TVA works with partners across the Valley to enable electrified transportation. TVA ANNUAL REPORT FY 2022 25 ‘The heartbeat of our communities’ Initiative shines a light on small businesses and propels growth Between its vibrant programming and classic Art Deco interior, the circa 1928 Ritz Theatre has a big following in the small town of Sheffield, Alabama. Today, the theater’s future shines brighter, thanks to TVA’s EnergyRight® Community Centered Growth initiative. Community Centered Growth partners with local power companies in economically distressed areas to provide energy efficiency upgrades to community-based small businesses. The goal is twofold: invigorate small businesses and empower sustainable growth in communities that need it most. Upgrades at the Ritz included new LED lighting, a new HVAC unit, a large energy-efficient fan in the workshop and a new cooler for the concession area. “The Ritz has been the heart of downtown development initiatives in the past,” said Steve Hargrove, general manager of Sheffield Utilities. “We knew this type of financial support would free up money the Ritz has invested so it could pursue its long-term plans to expand its programs and educational outreach.” Eligible communities fall within National Opportunity Zones, underserved areas identified by census data and factors such as income and population. Over the past two fiscal years, 80 businesses have received funding through the initiative. Each year, four local power companies work with community leaders in their service territory to identify 10 small businesses to participate. The most common upgrades have been new indoor lighting, security lighting, HVAC systems and kitchen equipment. In addition to financial benefits to the businesses, the initiative has recorded environmental benefits as well — including saving 1 gigawatt of energy and reducing participants’ carbon emissions by 450,000 pounds to date. Another example is in North Nashville, Tennessee, where 24-year-old Anthony Williams manages Ed’s Fish and Pizza House, a drive-thru opened by his great-uncle in 1972. TVA and Nashville Electric Service approached him about participating in the Community Centered Growth pilot, and his business received a new HVAC system that has decreased its energy bill by 20%. “To see the impact of Community Centered Growth around this neighborhood is just phenomenal, because you’re seeing your neighbors being uplifted,” said Antonio Carroll, a representative with Nashville Electric Service. “You’re able to help folks who are helping themselves and help those who want to continue to help the neighborhoods they serve.” Carolyn Greer, senior program manager with TVA Energy Services & Programs, agreed. “Small businesses are the heartbeat of our communities,” she said, “and it is gratifying to provide support that will sustain them as well as their communities.” TENNESSEE VALLEY AUTHORITY The Ritz Theatre’s future shines brighter, 26 thanks to TVA’s EnergyRight® Community Centered Growth initiative. The TVA Home Uplift team and local partners join together in Memphis. ‘I am so grateful’ Home Uplift improves residents’ health and homes’ energy efficiency When 80-year-old Jerry Perry’s HVAC system went out in his Middle Tennessee home, the retired hair stylist didn’t have the money to replace it. He sat in his home this past winter, wearing as many as four coats and adding wood to his small fireplace to keep warm. Thanks to a partnership between TVA EnergyRight® and Middle Tennessee Electric, Perry was able to participate in the Home Uplift program, which provides free energy upgrades in qualifying residents’ homes. “It was life-changing,” Perry said. “I am so grateful. Words can’t express how I feel.” Fifty-six local power companies currently are involved with Home Uplift, which has upgraded more than 3,700 homes in the Tennessee Valley since the program’s inception in 2018. Each home, on average, receives upgrades totaling $10,000. Funding for Home Uplift is provided by TVA in partnership with local power companies. Third-party donors also participate. For example, in Middle Tennessee, the First Baptist Church in Murfreesboro donated $5,000, which TVA matched. In FY 2022, Home Uplift achieved milestones such as its 500th upgrade in Memphis and its 700th upgrade in Nashville. As the program expands across the Valley, TVA has looked for ways to increase community awareness, including offering outreach materials and applications in Spanish as well as Kurdish and connecting with local community-based organizations to promote the program. For the average home, upgrades such as a new HVAC system, insulation and tighter seals around windows and doors reduce homeowners’ energy bills by as much as $500 a year. TVA EnergyRight® has upgraded more than 3,700 homes in the Tennessee Valley since 2018 Fifty-six local power companies currently are involved with Home Uplift Home Uplift has served 125 veterans The benefits of Home Uplift, however, stretch far beyond monetary savings. “Two of the top priorities for EnergyRight® are health and safety,” said Bethany Kitch, Home Uplift senior program manager for TVA Energy Services & Programs. “A well-insulated home reduces the risk of illness, which means more days at work and fewer days at the doctor’s office. That’s one of the many reasons Home Uplift fits directly with our mission of making lives better for the people in the Valley.” TVA ANNUAL REPORT FY 2022 27 ‘The impact will be multi-generational’ Reliable, low-cost energy brings high-paying jobs to the region When Sinova Global, a Canadian company, asked Dave Tuten to help evaluate where the company should build its new silicon metal plant, the experienced manufacturing executive had one answer: somewhere in TVA’s service territory. “TVA was a major factor in Sinova Global’s deciding to build in Lake County, Tennessee,” said Tuten, who today is the company’s Chief Operating Officer. “We knew that TVA would provide access to responsible, reliable power from sustainable sources, that it is dedicated and committed to economic development, and that the process for getting work agreements and partnering would be easy. In short, it was a great fit with Sinova Global’s way of doing business.” Sinova Global is on track to open its silicon metal plant near Tiptonville in early 2024, bringing 140 high-paying jobs to the area — one of the most economically distressed in the region. The company will be TVA’s newest and one of its largest directly served customers and is providing a vital resource while operating in a sustainable manner. Sinova Global announced its decision in December 2021. With plans to use more than 100 megawatts of TVA energy, the 149-acre site will refine ultra-high-quality quartz into silicon metal for products such as solar cells, next-generation batteries and parts for electric vehicles. “The impact this will have in Lake County will be multi-generational,” Tuten said. “We are building a distinctive company in Tennessee, and a range of stakeholders — including our communities and partners across the region and beyond — will benefit from these efforts.” “TVA was a major factor in Sinova Global’s deciding to build in Lake County, Tennessee. We knew that TVA would provide access to responsible, reliable power from sustainable sources.” — Dave Tuten, Sinova Global Chief Operating Officer 28 TENNESSEE VALLEY AUTHORITY The Tennessee RiverLine Partnership is working to create a network of paddling, hiking and biking experiences along the Tennessee River. Expanding ecotourism Growing activity on the Tennessee RiverLine leads to economic growth opportunities The pink and orange hues of the sunset reflect off waves as an inflatable kayak glides across the Tennessee River. communities along the Tennessee River and encourage sustainable economic growth in its watershed. Shannon Carter, a schoolteacher from Rossville, Georgia, shares this 10-foot-long kayak with her daughter as they float along, immersed in peace. The waterways of the Tennessee Valley offer beauty, biodiversity and recreational opportunities for tourists and locals alike, while also providing a boost to the local economy. Carter is among 285,000 paddlers who ply the Tennessee River annually, a number TVA and Tennessee RiverLine would like to see increase. TVA is proud to be a founding member of the Tennessee RiverLine Partnership, a regional initiative working to create a network of paddling, hiking and biking experiences that will stretch along the Tennessee River from Knoxville, Tennessee, through parts of Alabama and Mississippi, to Paducah, Kentucky. The continuous water trail system will connect In a study published in June 2022 by the Howard H. Baker Jr. Center for Public Policy, researchers from the University of Tennessee and the University of Alabama found that the Tennessee RiverLine could attract as many as 807,936 new paddlers. The study found that this growth could increase spending in the region up to $103.8 million annually and increase total employment by 1,959. Twenty communities are now enrolled in the RiverTown program, which invites communities near the river to become an active participant and featured destination in the RiverLine system. “The RiverLine project is expected to positively affect the health of Valley residents as well as the environmental health of the river itself, making life better for the people of the Tennessee Valley,” said Allen Clare, TVA’s vice president of River and Resources Stewardship. TVA ANNUAL REPORT FY 2022 29 Regional Relations TVA’s regional model, which we implemented in FY 2021, enhances our ability to cultivate strong local relationships and engage more deeply with specific community needs and issues. The critical priorities of each community vary, and our shift to this regional model strengthens our partnerships with local organizations and helps us better align our priorities and resources to meet communities’ needs. 30 TENNESSEE VALLEY AUTHORITY Dan Pratt TVA Senior Vice President, Regional Relations Mark Yates TVA Regional Vice President, West Region Justin Maierhofer TVA Regional Vice President, North Region Carol Eimers TVA Regional Vice President, East Region Jared Mitchem TVA Regional Vice President, South Region Delivering on our promise • TVA estimates it will have given $1.4 billion in credits back to our customers by the end of FY 2023 to invest in the communities we serve. • TVA and LPCs created the Community Care Fund program to help local charitable organizations provide assistance to those most impacted by the pandemic. Since April 2020, the Community Care Fund has contributed almost $18 million, with TVA and LPCs each contributing nearly $9 million. TVA has committed to adding an additional $3 million to the available Community Care Funds in FY 2023. • TVA donated more than $9 million in community contributions and disaster relief in FY 2022 to help strengthen partnerships across the Valley. TVA ANNUAL REPORT FY 2022 31 OPERATIONAL EXCELLENCE Building the Future... with Excellence Our mission of service requires operational excellence. The region depends on that excellence for its safety, for its electricity on the hottest and coldest of days, and for the commitment to delivering reliable, resilient energy — today and tomorrow. Delivering on a promise Community celebrates modern engineering feat with Boone Dam re-opening After discovering water and sediment seeping below Boone Dam in 2014, TVA committed to doing whatever it took to address the problem. The $326 million project was a major geotechnical engineering feat that included 2 million hours of dam remediation. In May 2022, after seven years of intensive remediation work, TVA completed the extensive repair at the Kingsport, Tennessee, site — thus returning recreational Boone Lake back to the public and resuming generation of carbon- free energy at the Boone Dam hydropower facility. “This is the largest dam repair in TVA history,” Don Moul, TVA Executive Vice President and Chief Operating Officer, said. “We made a commitment to complete this effort safely within seven years and to do it right the first time with a high-quality repair. We delivered on our promise to the Tri-Cities region.” The $326 million project was a major geotechnical engineering feat that included 2 million hours of dam remediation. 32 With partners, TVA constructed a seepage barrier in several phases, including two years of around-the-clock construction of a non-erodible underground cutoff wall. After that, workers restored the crest of the dam to its previous elevation and constructed a floodwall. In April 2022, for the second year in a row, TVA received the Excellence in Construction Project Award from the United States Society on Dams for the team’s efforts. Moul said safety for the public and our employees was our No. 1 priority throughout the project. Teamwork and an eye on operational excellence were key to everything we did. Several years ago, when inspections determined the extent of the problem, TVA took interim safety measures such as lowering the lake elevation. Throughout the project, TVA engineers collaborated with nationally recognized experts in dam safety and owners of large dams, such as the U.S. Army Corps of Engineers. “TVA executed a highly technical project on a rapid schedule, all while maintaining the safety of the public and its workers and engaging the local community,” said Chris Saucier, technical director TENNESSEE VALLEY AUTHORITY “This is the largest dam repair in TVA history. We made a commitment to complete this effort safely within seven years and to do it right the first time...We delivered on our promise to the Tri-Cities region.” —Don Moul, TVA Executive Vice President and Chief Operating Officer TVA operates one of the largest, most reliable, and cleanest energy systems in the nation. More than half our energy supply comes from carbon-free sources. Third-largest nuclear fleet in the United States, providing approximately 40% of TVA’s energy One of the largest high-voltage transmission systems in North America TVA received the Excellence in Construction Project Award from the United States Society on Dams for the team’s efforts to repair Boone Dam. 33 TVA ANNUAL REPORT FY 2022TVA board member Brian Noland, TVA senior leaders and partners celebrate in May 2022 when recreational Boone Lake re-opened for public use following completion of TVA’s Boone Dam restoration project. crowd that gathered on a sunny day just prior to Memorial Day weekend, which marked the celebratory occasion of Boone Dam’s reopening. “Environmental stewardship by providing a beautiful recreational area for families to picnic, swim and relax; economic development with a lake that helps communities in the Tri-Cities region prosper; and electricity that is clean, reliable and generated right here at the Boone Dam hydropower facility.” “The Boone Dam project exemplifies all three aspects of TVA’s mission of service — environmental stewardship, economic development and energy.” —Jeff Lyash, TVA President and Chief Executive Officer of the project and a principal project manager in TVA Dam Safety. Community outreach was an important aspect of the project. TVA worked closely with the Boone Lake Association and Boone Dam Repair Coalition on efforts such as new ramp extensions, a new swim beach and other activities to enable local residents to enjoy the lake while work continued on the dam. TVA experts also partnered with the Tennessee Wildlife Resources Association to plant grasses and shrubs and stock the lake with fish. “The Boone Dam project exemplifies all three aspects of TVA’s mission of service — environmental stewardship, economic development and energy,” Jeff Lyash, TVA President and Chief Executive Officer, said to a 34 TENNESSEE VALLEY AUTHORITY Jeff Lyash, TVA President and Chief Executive Officer, speaks at the Boone Dam celebration event. Delivering reliable energy 24/7 TVA meets record energy demands through partnerships, operational excellence This summer was a hot one. For TVA, that meant high energy demand. During a two-week period in June, TVA had six days with energy demand above 30,000 megawatts, including the highest recorded June power demand of 31,161 megawatts. In July, we experienced six days above 30,000 megawatts as well. To put that in perspective, one megawatt is enough to power 585 homes. Meeting those demands requires operational excellence — in planning, in preparation and in execution. TVA also partners with our local power companies, their end-use customers and our directly served customers. “Keeping upwards of 30,000 megawatts flowing day after day is not an easy task — even for a system as large and diverse as TVA’s,” said Jacinda Woodward, Senior Vice President of Power Operations at TVA. “Add to that our commitment to keep power rates low, and it is quite a balancing act.” TVA maintains one of the largest, most diverse generation portfolios in the nation. This diversity provides tremendous flexibility. Since 2000, the TVA system has maintained 99.999% reliability. One of the ways TVA met the demand was through Demand Response programs such as our EnergyRight® Interruptible Power program, which offers incentives for participating customers that agree to allow TVA to request a suspension of a portion of their energy load, with up to 30 minutes notice, during times when the power system is constrained. Participants receive demand credits in exchange for load curtailment up to 12 hours. Magotteaux Inc. in Pulaski, Tennessee, receives power from our local power company partner, PES Energize, also based in Pulaski. A company representative said Magotteaux enrolled in the Summer Interruptible program as an opportunity to receive monthly demand credits on its power bill in exchange for curtailment, noting that the program also provided the company some opportunity to perform preventive maintenance on its critical pieces of equipment during curtailment. “Magotteaux has around a 50-year partnership with PES Energize and TVA,” said Corey Foreman, senior project engineer at Magotteaux. “The reliable power from PES and TVA and the incentive programs offered through their partnership are what helps keep Magotteaux competitive.” 38,111 megawatts Summer Net Capability 99.999% reliability Industry-leading performance consistently delivered to customers since 2000 $17.2 billion invested in a cleaner and more diverse energy generation mix since 2013 10,000 megawatts of solar capacity targeted by 2035 TVA ANNUAL REPORT FY 2022 35 Tamieka G. Russell, account manager at PES Energize, said the biggest benefit of the Summer Interruptible program is savings. “Inflation is at a 40-year high and the workforce is at its lowest, so industries are looking for ways to save and meet corporate goals,” she said. “The Summer IP created an avenue for reducing cost.” “Our partnership with TVA is nothing short of amazing,” Russell added. “Programs and services are created with the end-use customer in mind. Without TVA, we could not provide exceptional services to customers like Magotteaux. We couldn’t be more appreciative of the partnership.” Detailed planning and our strategically diverse power system contributed tremendously to our success in meeting summer demand peaks. Using our hydroelectric power and our nuclear assets allowed us to meet the demand while keeping costs low, and using our simple combustion turbine gas units—which normally serve only peaking power—around the clock helped keep reliability high. And then, there are our dedicated employees, such as Hunter Cason, a coal-hauling foreman at Gallatin Fossil Plant outside Nashville. “During the triple-digit days, we knew our work was helping provide reliable power for our friends, families, grandmothers and literally the 10 million people of the Valley who rely on us,” Cason said. “We are here for them because we believe in the mission of TVA to make life better for people.” Nuclear excellence delivers value At TVA, numbers help tell our nuclear operations story We operate the nation’s third-largest nuclear fleet, which meets approximately 40% of the energy needs of TVA’s service territory. TVA operates three nuclear plants, and as an example of the sheer volume of their output, Unit 3 at our Browns Ferry Nuclear Plant near Athens, Alabama, ran for 690 consecutive days and produced more than 20 billion kilowatt-hours of electricity prior to its scheduled refueling and maintenance outage earlier this year. To put this into perspective, that’s enough to power the average home for about 1.8 million years. TVA’s nuclear performance is critical to life in the Tennessee Valley, because it helps ensure our power is reliable and clean, and our energy costs stay among the lowest in the nation. “Every step we take to further the performance and reliability of our nuclear fleet helps deliver greater value for everyone we serve In June 2022, TVA received the Nuclear Energy Institute Top Innovative Practice Award for our commitment to safety, cost-savings and industry leadership. The award highlighted an improvement TVA engineers made to support steam generator inspections. 36 TENNESSEE VALLEY AUTHORITY across the Valley,” said Tim Rausch, Executive Vice President and TVA Chief Nuclear Officer. “Families, industries, businesses and entire communities enjoy the direct benefits of low- cost, carbon-free and extremely reliable nuclear energy.” In 2022, TVA achieved Industry Top Quartile Fleet Performance, a rise from the fourth quartile in 2019. Rausch said we couldn’t achieve operational excellence without our talented nuclear staff, our commitment to continuous improvement and our significant equipment upgrades. Those upgrades included substantial investments in all three of our nuclear facilities, including a Spring 2022 upgrade of Browns Ferry Nuclear Unit 3, with four high-pressure feedwater heaters that are larger and more robust, and a Summer 2022 replacement of four steam generators at Watts Bar Nuclear Unit 2, in Spring City, Tennessee. These upgrades increased reliability and resiliency to TVA’s system. With an eye on continuous improvement, TVA strives to have the best nuclear fleet in the nation by the end of 2025. “Every step we take to further the performance and reliability of our nuclear fleet helps deliver greater value for everyone we serve across the Valley.” —Tim Rausch, TVA Executive Vice President and Chief Nuclear Officer Browns Ferry is TVA’s first and largest nuclear power plant, producing about 20% of TVA’s total power supply in FY 2022. TVA ANNUAL REPORT FY 2022 37 Environmental Stewardship ‘We live in a special place’ Biodiversity Policy helps protect our region for generations to come Ask Melanie Farrell about TVA’s new Biodiversity Policy, and she mentions two things in rapid succession: first, the policy’s importance to the health of the Tennessee Valley, and second, her family. “I have two small children, and our family spends a lot of time outside hiking, camping, boating and enjoying this beautiful area,” said Farrell, vice president of External Strategy and Regulatory Oversight at TVA. “The policy helps enrich this region today and protects the area for generations to come.” “TVA has always protected biodiversity, but we developed this formal policy to help strategically integrate biodiversity conservation into all aspects and all levels of our operations,” Farrell said. The policy, which was approved by TVA’s Board of Directors in November 2021, states that TVA will protect biodiversity through our stewardship of public lands, management of the Tennessee River system, local and regional partnerships, and integration of species and habitat conservation in project planning. “Our region is a biodiversity hotspot with so many unique plant and animal species. We live in a special place, and this policy helps us protect it.” —Adam Dattilo, TVA biodiversity senior program manager In FY 2022, TVA carried out 120 biodiversity projects and initiatives. The projects fell into three general categories: on-the- ground conservation; monitoring and research; and education and outreach. “We are taking a proactive approach,” said Adam Dattilo, biodiversity senior program manager at TVA. “Given the wide span of our operations across the region, this policy is helping unite how we talk about conservation work as an enterprise. Our region is a biodiversity hotspot with so many unique plant and animal species. We live in a special place, and this policy helps us protect it.” 38 TENNESSEE VALLEY AUTHORITY TVA botanists and biologists are working to protect and expand a colony of rare frosted elfin butterflies. In the dark of the night Botanists study and work to protect rare butterfly and its host plant At first blush, it sounds like a scene from a children’s movie: a group of people traipsing into the forest at night, using LED black lights to search for elusive butterflies and magical plants. But when that scene occurred in Summer 2022 in North Carolina’s Nantahala National Forest, it was — in fact — serious work. A few years after Tennessee naturalist Julius Basham and his father first discovered a colony of rare frosted elfin butterflies and their unique local habitat, yellow wild indigo plants, Basham led botanists from the Tennessee Valley Authority and the U.S. Forest Service to the secluded location beneath a TVA transmission line. Based on their findings, the partners are working to protect and expand the colony. During their nighttime trek, the botanists used LED blacklights to illuminate the butterflies’ larvae. They found 115 caterpillars and 81 host plants across 7 acres of TVA right of way. For the frosted elfin, yellow wild indigo is the only suitable habitat for the insect to lay eggs and attach a cocoon for hatching larvae. This unique process occurs during a two-week window in the summer when the plant blooms. “This would have never happened without Julius,” said Adam Dattilo, TVA biodiversity senior program manager and one of the botanists that conducted the survey. “He really put in motion a true conservation effort to save both the frosted elfin and its host plant.” TVA partners with the U.S. Fish and Wildlife Service on conservation efforts across the Tennessee Valley. Our work helped protect the snail darter, which recently was delisted after being protected under the Endangered Species Act since 1975. Photos courtesy of U.S. Fish and Wildlife Service. Endangered no longer Tiny snail darter makes big comeback thanks to TVA and partners For a fish the size of your pinky, the snail darter sure has made a big splash. adequate reservoir flows — all of which created the conditions necessary for snail darters to migrate and thrive in the Tennessee River watershed. After being protected under the Endangered Species Act since 1975, the tiny fish is now delisted, thanks to conservation work by TVA and our partners. “It is partners like TVA, who are committed to working together to change the trajectory of species like the snail darter, that give hope to ongoing conservation efforts across the country and promises that our natural resources will be enjoyed by future generations,” said Daniel Elbert, U.S. Fish and Wildlife Service field supervisor for the Ecological Services Program in Tennessee. The snail darter’s local story began in the 1970s as TVA closed in on finishing construction of Tellico Dam in East Tennessee. Biologists discovered the snail darter in the waters above the dam. Under the Endangered Species Act, TVA temporarily halted construction of the dam. To protect the fish from extinction, TVA, state and federal biologists relocated snail darters to various free-flowing rivers in the area prior to the Tellico Dam completion in November 1979. Over the years, we implemented new technologies to improve water quality and habitat and maintain Today, the snail darter is one of only 55 species to have been delisted due to recovery. As part of delisting protocol, TVA will continue to work with U.S. Fish and Wildlife Service officials to monitor snail darter populations for the next five years. “We’ve got fish that live nowhere else in the world but right here,” said Shannon O’Quinn, TVA water resources specialist. “Their habitat is improving, making it suitable to reestablish fish like the snail darter so they can flourish. We work tirelessly to make sure it stays that way.” Dennis Baxter received the 2022 Tennessee American Fisheries Society Lifetime Achievement Award after more than 35 years working as a TVA fisheries biologist. TVA ANNUAL REPORT FY 2022 39 IGNITING INNOVATION Building the Future... Through Innovation We recognize TVA’s unique position and responsibility to lead in developing solutions that will deliver a carbon-free energy future. We cannot meet the energy needs of tomorrow by making small changes to today’s power system. It will require innovation, collaboration and pushing TVA, the industry and the nation to go further, faster to make our vision for tomorrow a reality. Powering an EV transformation TVA and partners drive electric vehicles forward for a better tomorrow In early 2022, one of TVA’s local power company partners put the city of Fort Payne, Alabama, on the map by installing two electric vehicle (EV) fast chargers — the first in our regional Fast Charge Network. At TVA, we’re bringing together local power companies, state agencies and others to pave the way for well over 200,000 electric vehicles on Tennessee Valley roads by 2028. We’re taking a four-pronged approach to reducing and removing major barriers to electric transportation, including: • Building a public charging infrastructure • Attracting automakers and suppliers to the region • Adopting policies such as electric-vehicle rates • Heightening consumer awareness This is a responsible choice for our environment, noted Ray Knotts, senior manager of Energy Services and Programs at TVA. “We know that gas-powered transportation is the No. 1 source of pollution in the Valley,” Knotts said. “Buying an EV is a true win-win-win, as drivers, local power companies and communities all benefit.” Studies in 2019 showed a major barrier to owning an EV was range anxiety. “So we started working with local dignitaries, state agencies and local power companies to see how we could make a difference,” said Drew Frye, TVA manager of Commercial Energy Solutions. “Installing electric chargers emerged as the single most influential approach.” Launched in FY 2022, TVA’s Fast Charge Network aims to ensure drivers in the Tennessee Valley will never be more than 25 miles from a Fast Charge Network charging location. Once completed, the Fast Charge Network will include about 80 locations and 200 fast chargers, with multiple station owners and site hosts on interstates and major highways across TVA’s seven-state service area. To accelerate the Fast Charge Network, TVA is working alongside state agencies such as the Alabama Department of Economic and Community Affairs and the Tennessee Department of Environment & Conservation (TDEC) to fund 80% of fast-charger installation costs. 40 TENNESSEE VALLEY AUTHORITY “We’re at a pivotal point in our history. This age of electric vehicles may be as transformative to this region as TVA’s electrification of the Valley was back in the 1930s. Our public power model and our partnerships with local power companies and other agencies enable us to help power this transformation — working and investing today for the benefit of all our residents tomorrow.” —Jeff Lyash, TVA President and Chief Executive Officer President and CEO Jeff Lyash stands by the first charging location in Martin, Tennessee, as part of Fast Charge TN, a partnership between TVA, TDEC and Seven States Power Corp. TVA ANNUAL REPORT FY 2022 41 Andrea Harrington, general manager of Weakley County Municipal Electric System, dedicates Weakley County’s Fast Charge Network electric vehicle charging site in Martin, Tennessee. Currently, 116 of TVA’s 153 local power company partners are interested in the Fast Charge Network program. At the end of FY 2022, 32 charging sites were under contract with 24 different LPCs, and four were operational and open for EV drivers (Fort Payne, Alabama; Beaver Dam, Kentucky; Martin, Tennessee; and Cullman, Alabama). enjoy the environmental and economic benefits of electric transportation,” said Mike Shirey, general manager of Fort Payne Improvement Authority. “The support from TVA and grant funding from Alabama Department of Economic and Community Affairs made it possible to add charging stations without affecting our customers’ bills.” “We moved quickly to participate in this program because we want to make it easy for people to choose electric vehicles so our community can In addition to building the Fast Charge Network, TVA is working with partners to attract automakers and suppliers to the region. “The support from TVA and grant funding from Alabama Department of Economic and Community Affairs made it possible to add charging stations without affecting our customers’ bills.” —Mike Shirey, Fort Payne Improvement Authority 42 TENNESSEE VALLEY AUTHORITY Today, five auto manufacturers are focused on EV production in the Tennessee Valley: Ford (future electric pickup truck), GM (Cadillac Lyriq), Volkswagen (ID4), Nissan (Leaf) and a Mazda- Toyota joint venture. In 2022, two new EV suppliers joined a growing list of support companies as well. Envision AESC, a world-leading Japanese electric vehicle battery technology company, announced a $2 billion investment to build a state-of-the- art facility where 2,000 skilled employees will produce battery cells and modules to power next-generation EVs. The “gigafactory” will be powered by 100% renewable energy supplied by onsite generation and purchased locally from TVA. Another company, Tritium, a global leader in direct current fast chargers for EVs, announced plans to build a manufacturing facility in Lebanon, Tennessee, which will bring more than 500 jobs to the region. In total, the automakers and suppliers are responsible for approximately $13.8 billion in new capital investment in the Valley and more than 10,500 new jobs over the past 10 years. At TVA, our internal fleet electrification program is among the most aggressive in the electric utility industry. By 2030, we plan to transition 100% of our light-duty vehicles and 50% of our medium-duty vehicles to electric. Today, gas and diesel vehicles are the biggest sources of carbon emissions. With our EV initiatives, TVA and our partners aren’t just paving the way for more EVs on Valley roads; we are In the next five years, about 80 new fast charging stations are expected to be added along interstates and major highways of TVA’s seven-state service area. TVA has a goal of seeing more than 200,000 electric vehicles on Valley roads by 2028. laying the foundation for a clean-energy economy for this region and the nation. “We’re at a pivotal point in our history. This age of electric vehicles may be as transformative to this region as TVA’s electrification of the Valley was back in the 1930s,” said Jeff Lyash, TVA President and Chief Executive Officer. “Our public power model and our partnerships with local power companies and other agencies enable us to help power this transformation — working and investing today for the benefit of all our residents tomorrow.” TVA and its partners are working to pave the way for more than 200,000 electric vehicles on Valley roads by 2028. TVA ANNUAL REPORT FY 2022 43 Artist rendering shows a Small Modular Reactor at the Clinch River Nuclear Site located near Oak Ridge, Tennessee. FOR ILLUSTRATIVE PURPOSES ONLY ‘A nuclear innovation hub’ TVA leads the way toward a clean energy future Innovation is a priority and focus area for TVA as we work aggressively to build the Energy System of the Future. Nowhere is that more apparent than in our pursuit of advanced nuclear technology — a significant component of our decarbonization efforts. This year was a busy one. In February, the TVA Board of Directors announced the launch of our New Nuclear Program and approved up to $200 million in funding to explore advanced reactor technology options. The program will provide a disciplined, systematic roadmap for exploration of advanced nuclear technology. “Advanced nuclear technologies will play a critical role in our nation’s drive toward a clean energy future,” Jeff Lyash, TVA President and Chief Executive Officer, said. “We know it will take innovation and creativity as well as discipline and hard work, and we believe that together, with our partners, we can make this region a nuclear innovation hub for the entire country.” The New Nuclear Program is looking at a variety of advanced nuclear technology options that might meet both near- and long-term generation needs. The options include small modular reactors (SMRs), which have a smaller footprint than a regular nuclear plant, making them more flexible. 44 They offer improved safety and security as well as reduced costs to operate — all while offering 100% carbon-free power that is reliable and resilient. TVA has the nation’s first early site permit for SMRs from the Nuclear Regulatory Commission (NRC) for the Clinch River Nuclear Site, and we are preparing an NRC construction permit application for a light-water SMR at the site, subject to required environmental reviews and Board approval. In June 2022, TVA signed a two-party agreement with GE Hitachi as an early step to support planning and preliminary licensing for a potential deployment of a BWRX-300 SMR at the Clinch River site. This agreement will help inform a future decision about deployment and enable us to refine cost and schedule estimates. As a public power company committed to pursuing advanced nuclear solutions, we have formalized key partnerships this past year, including with: • Oak Ridge National Laboratory to explore light-water SMRs and fourth-generation advanced nuclear reactors, building on our 2020 advanced reactor technology Memorandum of Understanding. • Ontario Power Generation (OPG) to collaborate as they explore the deployment of SMRs at OPG’s Darlington Nuclear Generating Station and we do the same at our Clinch River site. • A consortium assembled by Kairos Power with other North American utilities to help further develop technology for a Kairos Power advanced reactor. TENNESSEE VALLEY AUTHORITY We also have been working with the University of Tennessee since April 2020 to explore new nuclear technologies with the support of UT’s advanced modeling and simulation tools. “By the nature of our mission, TVA fills a unique role as one of the nation’s leading electric utilities but also a living laboratory,” Lyash said. “We were established not only to serve this region, but also the nation — by developing innovative solutions to solve complex problems.” ‘The holy grail’ of inspector gadgets Robots and drones could ensure reliability and resilience of the grid of tomorrow One TVA team is working closely with MSU on large drones designed to fly beyond the operator’s view. The aircraft would have increased range, endurance and payload capability compared to smaller versions. “In the UAS industry, aircraft that can fly beyond the line of sight are the holy grail,” said Walt Hodges, manager of TVA UAS Operations and Training, noting that current regulations are a limiting factor. “Everyone wants to get there. The value proposition is tremendous.” As one of the largest high-voltage transmission systems in North America, TVA’s grid is long enough to span the United States six times over. Someday soon, robots and drones might help us inspect and identify concerns on that 16,400- mile grid. “When people think of the power system, they probably don’t think of robots and drones, but these innovative technologies are becoming key tools for ensuring reliability and resiliency in the future,” said Chris Burge, senior program manager of TVA Grid Research & Development. Together with some of the most experienced engineers in the country, TVA’s teams are working with Tennessee Tech University on the development of robots specifically for use in substations for automated inspections; with other utilities and EPRI, a non-profit energy research and development organization, on the ability to adapt commercially available robots to perform inspections in substations; and with Mississippi State University (MSU) on unmanned aircraft systems (UAS), commonly known as drones. Robots and drones will never replace human expertise. Instead, they are being designed to be a tool that helps field personnel perform their tasks more safely, efficiently and effectively. Today, our grid is inspected using a combination of ground and airborne methods. Aerial inspections are performed by helicopters with sensors and, more recently, with small drones operated within visual line of sight of trained employees. TVA uses small drones to gather information about our assets across the region. 45 TVA ANNUAL REPORT FY 2022‘A cleaner future’ TVA leads the way toward a carbon-free economy Further and faster. That’s how TVA plans to move forward in reducing carbon emissions. To that end, with partners across the Tennessee Valley, we have taken bold steps toward a clean- energy future that stimulates economic growth and positions the region as a national leader in decarbonization technologies. For example, in July 2022, TVA issued a request for proposal for up to 5,000 megawatts of carbon-free energy that must be operational before 2029, which is one of the largest clean- energy procurement requests in the nation. TVA anticipates making selections for the carbon-free RFP in the second half of 2023. “TVA is uniquely positioned to lead in reducing carbon emissions for the region and the nation,” Jeff Lyash, TVA President and Chief Executive Officer, said. “This announcement is a clear signal to our industry, our partners and our nation that we need to move further and faster, together, to make a cleaner future a reality.” online, reducing our reliance on coal, expanding our storage portfolio by adding lithium-ion batteries, investing in our existing nuclear and hydroelectric fleets, and advancing our transmission system, including bringing our state-of-the-art Primary System Operations Center online. “Deploying increasing amounts of new clean- energy generation over the next decade is a critical component of the transition to a clean- energy future,” said Tom Kuhn, president of Edison Electric Institute. “We applaud TVA for its continued leadership in transforming the nation’s energy mix and for its forward-looking efforts to meet the evolving needs and expectations of the many communities that it serves.” Clean energy is fueling growth across TVA’s seven-state service territory. Our clean-energy programs are one element that helped drive our record-setting economic development performance in FY 2022 — and are expected to help create or retain approximately 66,500 jobs and more than $10.2 billion in projected capital investments. TVA issued a request for proposal for up to 5,000 megawatts of carbon- free energy that must be operational before 2029, which is one of the largest clean-energy procurement requests in the nation. As laid out in our “Strategic Intent and Guiding Principles” document, TVA is taking actions now to try to reduce carbon emissions by 70% through 2030, with a path to reduce carbon emissions by approximately 80% by 2035 and aspirations to achieve net-zero by 2050. Our plans to achieve this include bringing additional solar capacity And, since 2018, our award-winning Green Invest program has helped generate more than $3 billion in investment across the region. “There is no single answer to achieving our nation’s decarbonization and energy security goals,” Lyash said. “TVA is accelerating change across the industry to expand carbon- free technologies while integrating emerging technologies to meet customer-driven demand. We are building a future that leaves no one behind in the new clean-energy economy.” “We applaud TVA for its continued leadership in transforming the nation’s energy mix and for its forward-looking efforts to meet the evolving needs and expectations of the many communities that it serves.” — Tom Kuhn, President, Edison Electric Institute 46 TENNESSEE VALLEY AUTHORITY The Energy Information Administration ranks Tennessee as the largest contributor to the reduction in carbon intensity in the U.S. from 2016 to 2022. TVA expects to add 10,000 megawatts of solar capacity by 2035. TVA joined a coalition of utilities and others who are working to create the first hydrogen hub in the Southeast. OUR ASPIRATION Net-zero by 2050 OUR PATH ~80% by 2035 OUR PLAN 70% by 2030 Carbon Reduction Leadership 57% accomplished through CY 2021 TVA plans to bring on additional solar as we work toward our aspiration to achieve net-zero by 2050. TVA ANNUAL REPORT FY 2022 47 Connected Communities ‘It is transformative’ Connected Communities initiative provides equitable access to technology Solutions are at the heart of innovation, whether we’re developing advanced technologies that are new to the world or bridging gaps in existing services to create opportunities. At TVA, our new Connected Communities initiative is offering solutions that make a difference. We are partnering with communities to provide TVA grant funding starting in 2022 and extending through 2024. The projects will leverage technology to provide solutions such as broadband access, environmental risk monitoring, digital literacy training and next-generation career options. By expanding access to technology, TVA is investing in job creation, preparing for a modern grid system to further support clean energy resources, and opening more opportunities to connect with the community. equitable access to technology, development of technical job skills, and energy and environmental justice. After a call for pilot projects in Summer 2022, a team that included TVA, local governments, power companies and community-based organizations chose nine projects to share more than $3 million in “This is one of the most exciting grants I’ve ever been part of,” said Deb Socia, President and Chief Executive Officer of The Enterprise Center, a partner in the Connected Communities Orchard Knob Collaborative. “It is exciting to see how many partners are working together to bring about change, and it’s made possible by the grant from TVA.” About 36% of households in the Orchard Knob neighborhood in Chattanooga, Tennessee, do not have internet connectivity. A collaborative team — including EPB (Electric Power Board) of Chattanooga, Parkridge Medical 48 TVA’s Connected Communities initiative is offering solutions that make a difference for people in our communities. TENNESSEE VALLEY AUTHORITY TVA provided funding for Base Camp Coding Academy’s Graduate Institute, which kicked off in September 2022. Center, Habitat for Humanity and others — will work together to provide public Wi-Fi, digital resources, training on how to use the resources, home weatherization and telehealth services. Kagan Coughlin, co-founder of Base Camp Coding Academy, is equally excited about what the TVA grant is making possible. Located in the small town of Water Valley, Mississippi, the academy received funding to expand an existing software development training program for recent high school graduates. The new Graduate Institute will support Veterans and adults with prior work experience who want a new career. “These graduates will leave the program with no debt, and they will enter the tech workforce as software developers after almost a year of intense training,” Coughlin said. “It is transformative for the student, their families and the business community that needs their skills.” The Connected Communities initiative directly aligns with TVA’s Energy System of the Future and aspiration of net-zero emissions by 2050. By expanding access to technology, TVA is investing in job creation, preparing for a modern grid system to further support clean energy resources, and opening more opportunities to connect with the community. “Access to technology and other critical services is the foundation for success in the modern-day world,” Joe Hoagland, vice president of TVA Innovation & Research, said. “This initiative will help close the equity gap in communities across our region by offering broad-ranging, innovative solutions that will continue to make life better for the people we serve.” TVA ANNUAL REPORT FY 2022 49 FINANCIAL STRENGTH Building the Future... with Our Stakeholders TVA invests in our communities and our partners. Thanks to the financial strength we’ve worked hard to achieve, we invest heavily in our operations — which ensures our power system is operating at top capacity. And we invest in our communities, providing everything from Pandemic Recovery Credits to support for students. We are stronger together. Financial strength enables investment in operations TVA’s focus on financial strength and stability enables us to invest wisely — in partnerships, in communities, and in our operations as we develop the Energy System of the Future The seven-state region we serve benefits from these investments, with reliable, low-cost energy. We have maintained a 99.999% reliability rate for 23 consecutive years. current facility and be among the best in the nation,” said Greg Henrich, vice president of Transmission Operations & Power Supply at TVA. At TVA, we have one of the largest high-voltage transmission systems in North America. We are five years into a 10-year, $300 million fiber optic initiative that will improve the reliability and resiliency of our 16,400-mile grid. As of Sept. 30, 2022, TVA had spent $197 million on installation of the fiber optic lines and expects to spend an additional $103 million. A new energy management system (EMS), which was approved for $90 million, is being constructed for use in the Primary System Operations Center. The EMS is expected to be complete in 2026 and will have enhanced grid visibility, increased security and other advanced features. Central to the success of the grid of tomorrow is TVA’s new state-of-the-art Primary System Operations Center, which is being built in rural Meigs County, Tennessee. The secure facility is approximately 50% complete with construction and is expected to be constructed by the end of calendar year 2023 and fully operational in 2025. “When completed, the two-story concrete structure will far exceed the capabilities of our “Rigorous benchmarking and research help ensure the center and the new EMS will provide us with a more flexible and responsive system needed for the changing power system in the future,” Henrich said. “It will allow TVA to continue 99.999% reliability, build resiliency, provide low- 50 TENNESSEE VALLEY AUTHORITY cost electricity and attract industry and jobs to the Tennessee Valley.” TVA’s financial stability has enabled improvements and maintenance to our most-steadfast forms of renewable energy — the 49 dams in our power system. TVA has invested more than $900 million in dam safety projects since 2010. A sophisticated system of dams control flooding along the Tennessee River watershed, and each year the system prevents about $300 million in flood damage in the TVA region and along the Ohio and Mississippi rivers. To date, the operation of this system is estimated to have prevented more than $9.7 billion in flood losses across the Tennessee Valley. In FY 2022, TVA invested $4.6 million on analysis and preparation and $17 million in capital expenses for 27 strategic risk mitigation dam projects. In that same time period, we also spent $18.7 million on day-to-day care of the dams. Our unique mission provides us with an opportunity — and obligation — to serve in a Strength in stability • Entirely self-funded since 1999 • Maintained flat wholesale base rates since FY 2019 • Total financing obligations are at the the lowest level in 35 years leadership role in accelerating a clean-energy future for the region and nation. “TVA has one of the nation’s cleanest, lowest- cost, most reliable power systems, and it’s fueling our region’s economic growth,” said John Thomas, TVA’s Executive Vice President and Chief Financial and Strategy Officer. “We continue to invest in our system, including more than $1 billion in base capital investments in our FY 2023 budget, which will enhance our decarbonization efforts and help maintain stable rates.” Protecting and preserving the beautiful public lands and water of the Tennessee Valley is an important part of TVA’s mission. TVA ANNUAL REPORT FY 2022 51 ‘The right thing to do’ Credits support partners, customers in need In Fall 2020, at the height of the COVID-19 pandemic, Knoxville Utilities Board (KUB) fielded a lot of calls from worried customers who couldn’t pay their bills due to job loss, reduced hours and other situations. As the local power company (LPC) tried to determine how to meet its customers’ needs, TVA — a long-time partner — announced a special Pandemic Relief Credit program that would apply a 2.5% base rate credit for LPCs, directly served customers and the LPCs’ large customers. TVA provided a combined total of $449 million in Pandemic Relief Credits in FY 2021 and Pandemic Recovery Credits in FY 2022 for LPCs, their large commercial and industrial customers, and TVA directly served customers TVA expects to provide an additional $230 million in Pandemic Recovery Credits in FY 2023 KUB decided to distribute its entire Pandemic Relief Credit, which amounted to $7.2 million, to its customers in need. “When we found out we’d be getting this credit, it felt like the right thing to do — to pass that money on to our customers who were struggling,” said Tiffany Martin, Vice President and Chief Customer Officer at KUB. “For our customers, it created a sense of reassurance,” she added. “They realized that KUB is here and cares, and that TVA cares, too. We couldn’t have provided that help without TVA’s relief credits and partnership.” KUB developed the COVID Utility Relief Effort (CURE) program, which provided a one-time payment of up to $1,000 for residential customers and $3,000 for business customers. To date, it has provided 9,694 customers with more than $6.6 million in funding, and it launched Phase 2 of the program in Fall 2022. In addition to the FY 2021 credits, TVA provided 2.5% in Pandemic Recovery Credits in FY 2022, and the TVA Board approved a 2.5% Pandemic Recovery Credit for FY 2023. “TVA’s strong financial results put us in position to help our customers with recovery from the pandemic,” Jeff Lyash, TVA President and Chief Executive Officer, said. “We’re able to invest in our communities and our LPC partners because of the financial strength we’ve worked hard to achieve. This is a testament to the public power model.” Martin agreed. “TVA is a trusted partner,” Martin said, “and KUB, our customers and our communities benefit from their partnership.” TVA partners closely with customers. Here, TVA’s Dan Pratt, Jeannette Mills and Board Chair Bill Kilbride enjoy time with David Wade, President and 52 CEO, Electric Power Board of Chattanooga. TENNESSEE VALLEY AUTHORITY ‘Confidence in TVA’ Enterprise sees strong demand for its first 30-year bond since 2012 TVA priced $500 million of new 30-year maturity global power bonds on Sept. 8, 2022, with an interest rate of 4.25%. The offering marked TVA’s first 30-year bond since 2012, and the 4.25% rate is tied as the second-lowest ever for a TVA bond of 30 years or longer in maturity. As TVA Builds the Energy System of the Future, the proceeds of the bonds will be used for general power system purposes and to refinance existing debt. Despite an increase in interest rates in the first half of the year, long-term rates remained low in September, creating an opportunity for TVA to secure funding at attractive levels. “We were pleased to see a window of stability and an opportunity for TVA to take advantage of still historically low long-term rates,” said Tammy Wilson, Vice President, Treasurer and Chief Risk Officer at TVA. “With one of the nation’s largest electric power systems, TVA is a natural issuer of longer-maturity bonds. The success of this transaction shows the confidence investors have in TVA and the strength of the public power model.” Strong demand for high-quality investments of longer duration contributed to the success of the offering. The bonds drew interest from a variety of investors, including asset managers, pension funds and insurance companies, among others. “The new 30-year bond fits well in TVA’s debt profile, which has a low number of bonds maturing in the early 2050s,” Wilson said. “TVA debt levels remain at the lowest in 35 years, and the new bonds will help TVA maintain stable interest costs for decades to come.” Winning combination Student stock pickers manage millions Students at 25 universities across the Tennessee Valley gain experience managing a portion of the funds in TVA’s Asset Retirement Trust. The investment returns earned by the students are contributing to TVA’s mission of providing reliable, low-cost power by earning a return on our investment assets that are going to one day offset the decommissioning costs of our power assets. Students from each university actively manage an approximately $500,000 portfolio. It provides students with real-world experience that often leads to paid internships and gainful employment. The students banked a 25% return for 2021 and are successfully managing the volatility in the markets for 2022. Investment Challenge Program students have collectively outperformed the S&P 500 total return of 8.56% by 53 basis points annually since inception — an excess cumulative return of 80% — and have generated $16 million in investment returns. The program is an example of the power of partnerships. “TVA’s highly regulated cybersecurity program protects our technology assets and workforce, which in turn protects energy sources and promotes safety for our customers across the region.” —Andrea Brackett, TVA Vice President of Cybersecurity and Chief Information Security Officer 53 TVA ANNUAL REPORT FY 2022‘Building the future together’ Financial strength enables us to support customers, communities Fiscal year 2022 was a busy one at TVA, as we continued to work to advance cleaner energy while meeting record power demand and providing reliable, low-cost power for the region. We continue to focus on our five strategic priorities to achieve our mission, and one of these priorities is Financial Strength. We work with 153 local power companies, and today, 147 of our local power company customers, or 96%, are on 20-year evergreen power contracts. They accounted for 77% of total operating revenues this fiscal year. Our financial strength enables us to support our partners. Partner credits returned to our customers this fiscal year totaled $199 million. These credits have totaled more than $560 million since TVA introduced the 20-year contract option in 2019. Our strong financial results also have positioned us to help all of our customers with recovery from the pandemic. This year, the 2.5% Pandemic Recovery Credit we provided totaled $228 million. TVA has now provided $449 million in pandemic- related credits, which is money that stays in our communities to address local needs. Our focus on operational excellence and on a clean, diverse power supply is helping to offset rising energy prices and keep the price of power low for our customers. This fiscal year, more than half of the electricity supplied by TVA was from nuclear, hydroelectric and purchased power renewables, which are sources not directly impacted by the recent fluctuations in fuel prices. 54 TENNESSEE VALLEY AUTHORITY Our business model is based on generating the revenue needed to manage our system while keeping our power rates low and providing reliable and sustainable power, which creates an attractive business environment. Together, TVA and our partners in economic development had one of our best years yet, expecting to help create or retain approximately 66,500 jobs and more than $10.2 billion projected capital investments to our region. This year, our operating revenue was 19% higher than the year before, primarily due to higher fuel cost recovery revenue and higher power sales. Our total operating revenues for the year were $12.5 billion on 163 billion kilowatt-hours of electricity sales. “Our public power model continues to provide value to the communities and customers we are privileged to serve,” said Jeff Lyash, President and Chief Executive Officer at TVA. “We are building the future together, and it looks quite strong.” Residential rates lower than 80% of the top 100 U.S. utilities based on June 2022 12-month rolling average from U.S. Energy Information Administration (EIA) Industrial rates lower than more than 95% of the top 100 U.S. utilities based on June 2022 12-month rolling average from EIA data Return 5% of Power Revenues to States and Counties as tax equivalent payments, totaling nearly $512 million* in FY 2022, $5.3 billion* in past 10 years and $15.7 billion* since 1941 *Not including the tax equivalent impact associated with fuel cost adjustments TVA invests heavily in our operations, including our dams, to ensure our power system is operating at top capacity. TVA ANNUAL REPORT FY 2022 55 LEADERSHIP Enterprise Leadership Team The strength of TVA is our people, and our senior leadership team is no exception. With years of experience, our talented and diverse senior leaders are committed to and oversee all TVA strategy, policy and operations and are responsible for delivering TVA’s mission of service through reliable, low-cost energy, environmental stewardship and economic development. Timothy Rausch Executive Vice President and Chief Nuclear Officer Jeff Lyash President and Chief Executive Officer David B. Fountain Executive Vice President and General Counsel Jeannette M. Mills Executive Vice President and Chief External Relations Officer Sue Collins Executive Vice President and Chief People & Communications Officer John M. Thomas III Executive Vice President and Chief Financial & Strategy Officer Don Moul Executive Vice President and Chief Operating Officer 56 TENNESSEE VALLEY AUTHORITY Board of Directors Our board members are nominated by the President of the United States and confirmed by the Senate, and each serves a term of up to five years. The proceedings of their meetings are open to the public. When their terms expire, directors may remain on the board until the end of the current congressional session or until their successors take office, whichever comes first. As provided by the TVA Act and the TVA Bylaws, the principal responsibilities of the board are to establish broad strategies, goals and objectives; to set long-range plans and policies; and to ensure their implementation by the TVA staff, which is led by the Chief Executive Officer. Directors swear an oath to faithfully and impartially perform the duties of the office. A.D. Frazier Mineral Bluff, GA Beth Harwell Nashville, TN Bill Kilbride Chair of the Board Chattanooga, TN Brian Noland Johnson City, TN Jeff W. Smith Knoxville, TN TVA ANNUAL REPORT FY 2022 57 58 TENNESSEE VALLEY AUTHORITY Take a short survey, share your input and ask questions. 59 TVA ANNUAL REPORT FY 2022400 W. Summit Hill Drive Knoxville, TN 37902 tva.com/annualreport tva.com | facebook.com/TVA | @TVAnews | @TVA | linkedin.com/company/tva 60 22-4754 1122 TENNESSEE VALLEY AUTHORITY 

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