Federal Reports

The Tennessee Valley Authority’s (TVA) Power Supply Plans (PSPs) combine optimized capacity and generation plans that balance load and power supply and provide detailed dispatch and generation forecasts used in resource decisions, budgeting, and analysis. PSPs incorporate key planning assumptions, including load and commodity forecasts, fleet characteristics, and other inputs, applying least cost planning methodology. TVA’s 2025 Draft Integrated Resource Plan identified the TVA region is experiencing increasing demand for electricity driven by population, employment, and industrial growth, weather trends, and increasing electric vehicle usage. Due to the importance of effective power supply planning to meet future load and energy demand requirements, we performed an evaluation of TVA’s analysis of the reliability of the PSP. The objective of our evaluation was to evaluate TVA’s process for analyzing the reliability of the PSP and taking corrective actions as necessary.

We determined TVA took steps to analyze the reliability of some elements of the PSP and took corrective actions as necessary. While TVA does not have a Standard Program and Process defining analysis of the reliability of the PSP, we found that TVA utilized several procedures and practices to provide governance of its power supply planning process. Additionally, we identified examples of corrective actions TVA had taken to improve the reliability of some aspects of the PSP.

We also found some elements of the PSP process that could impact its reliability. Specifically, we identified (1) significant variance in near-term planned system changes, (2) misalignment of cost assumptions in the modeling and approvals process, (3) some PSP input controls not working as designed, and (4) several Standard Programs and Processes past their review cadence.

Our objective was to assess the company’s management and oversight of this program and to identify any risks to its successful delivery.

We found that the company is in the process of identifying car builders for the first phase of the Long Distance Fleet Replacement Program—intended to replace equipment on 9 of 15 long distance routes. The company plans to use up to $7 billion it received through the 2021 Infrastructure Investment and Jobs Act for this first phase. Early challenges in developing design requirements for the trainsets, however, have delayed the schedule. Moreover, the complexity of the program itself poses an innate risk of cost increases and additional delays. Given the program’s significant size, any such increases or delays could have cascading impacts on the company’s ability to accomplish other major capital projects and maintain its existing long distance service. We also found that although the company has established a management framework to execute the program once it selects a car builder, it has not fully developed contingency plans for the program’s highest risks or established clear lines of authority, resulting in slow decision making.

Because the company is in the process of amending its requirements for the trainsets, we are not making a recommendation in this area but note that any future decisions that would add complexity to this program warrant thoughtful consideration and caution. Regarding the management framework, we recommend the company review and clarify roles, responsibilities, and lines of authority for each stage of the program; fill program vacancies; and identify contingencies for its high impact risks.

USDA OIG was asked to respond to questions regarding potential anomalies related to locality pay, including telework situations.