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Pension Funding vs Rate Payer Charges

TVA employee pension costs charged to ratepayers over the last ten years appear to exceed the amounts TVA chose to contribute to the pension fund by $605 million. The yearly amounts obtained from publicly available information are detailed in a January 20, 2013 letter to TVA’s President and CEO from Daniel Pitts, a TVA Retiree. Pension costs can fluctuate from year to year based on current market conditions and assumptions that TVA and its actuary use to estimate pension costs. Accordingly, there is no expectation that the amount of funds collected and contributed annually will closely correspond. However, over a multi-year period, it would be reasonable to expect that the cumulative amounts would be more closely aligned than the results presented in the letter. The following statement about the pension fund appears on page 6 of the 2012 TVA budget proposal submitted to Congress: “TVA’s proposed budget assumes that annual contributions continue in 2011 and 2012 consistent with recognized pension expense.” As indicated in the letter from Daniel Pitts, it appears that the underfunding of the pension fund relative to the amounts collected from rate payers could reach $1.0 billion in 2013.

Please let me know if any data was overlooked in this analysis or if there are errors of any kind and I will immediately append a correction. (E-mail me)