KNOXVILLE, Tenn. — Tennessee Valley Authority said Wednesday that it will lay off 7,500 employees--23% of its work force--to help cover the high costs of restarting its troubled nuclear plants.
The layoffs are part of a $300-million cost-cutting program that includes restructuring of certain divisions and the deferral of construction at TVA's Bellefonte nuclear plant, in northern Alabama, that has cost more than $3.6 billion so far.
TVA, a U.S. government agency serving seven states, is the nation's largest power system.
Its customers are paying increased rates to finance the system's $16-billion investment in nuclear reactors, although, because of safety concerns, only one of its five licensed units is operating. The TVA also has three other reactors under construction and one that is complete but unlicensed.
The TVA had said previously that it would make the drastic job cuts because of longstanding problems in its nuclear power program. Congressional critics of the agency have complained that TVA has often circumvented safety requirements by going over the heads of regulators and appealing for political support for its nuclear operations.
Allegations that TVA's nuclear power manager, Steven White, lied about safety procedures at the agency's Watts Bar reactor in eastern Tennessee have been the subject of investigations by the Justice Department and the Nuclear Regulatory Commission, but no formal charges have been brought against him. An NRC staff review committee said last month that it found insufficient evidence that White lied to the investigative arm of the NRC.
The government-owned electric power agency has 32,941 employees at present. It said it has already outlined $290 million of the cost cuts.
The authority said 1,800, or 47%, of contract employees will be cut, along with 4,000, or 15.3%, of its full-time staff. The average use of hourly employees will be lowered by 23%.
"These actions are absolutely necessary for the survival of TVA," Chairman Marvin Runyon said in a statement. He said the personnel cuts were necessary for "operating a competitive power system with no rate increases for three years.
"We know the decisions we're announcing today are painful to TVA employees and their families and to the communities affected, but we firmly believe that these are the right actions to take," he said.
Many TVA employees donned pink clothes Wednesday in anticipation of the "pink slips" that they would be getting later in the day. Workers said that, even though they knew the layoffs were coming, it made the day of reckoning no easier to take.
"We're all devastated here," said TVA accounting clerk Ann Dingus, who did not yet know if she would be laid off. "It's our livelihood. This will affect our whole lives. It's almost like having a death in the family." The TVA is a government body that was created in 1933 as part of the New Deal. In addition to generating electrical power, it handles navigation on the Tennessee River and some of its tributaries. The TVA is a significant force in Tennessee and parts of Alabama, Kentucky, North Carolina, Mississippi, Virginia and Georgia.
As part of Wednesday's announcement, the authority also said it would stop work on the Bellefonte nuclear plant, which has been under construction for the past 14 years at a cost of more than $3.6 billion. It is not yet completed.
The utility said the combined impact of cost cutting and layoffs will allow it to enter 1989 without a rate increase.