File photo of members of the Tennessee Valley Authority board. AP Photo/Bill Poovey.
CHATTANOOGA, Tenn. (AP) — A shortfall in the Tennessee Valley Authority's pension fund is affecting electric ratepayers.
The Chattanooga Times Free Press reports that TVA has added nearly $1.3 billion from customers to the fund since 2008 when investment markets tanked.
However, the federal utility didn't add any money to the fund in 2012. Chief Financial Officer John Thomas says he expects market gains will make up the shortfall in 10 to 15 years. The fund currently stands at $7 billion, though it should be at $11.5 billion.
"TVA is going to stand behind its obligations to employees and retirees," Thomas said. He noted that even though the fund paid out $650 million to retirees in fiscal year 2012, it gained $500 million from market growth.
However, some retirees say they think the board should have approved a discretionary $300 million contribution in 2012. In 2011, the board put $270 million in the fund and it put $1 billion in the fund in 2009.
Less than 20 years ago, the fund had an overabundance of around $2 billion. Before 2008, the utility didn't contribute for at least six years.
Harry Dressler of Dressler Strategic Advisors Inc. in Florida, a national pension expert who looked over TVA's August quarterly report to the U.S. Securities and Exchange Commission said ratepayers should question why they are shouldering part of the pension fund.
"What they're saying is, 'We're financing our pension with future revenues,'" Dressler said.
TVA officials have said one of the main reasons for last year's $234 million rate hike that increased bills by 2 percent was the $300 million it placed in the pension fund.
The utility did not increase its rates in 2012.
Thomas said the pension has had more liabilities than assets for around a decade, and that the situation isn't unusual.
"The (TVA) plan today is not at risk, and it will continue to improve," he said.
The federal utility provides electricity to 9 million people in Tennessee, Kentucky, Mississippi, Alabama, Georgia, North Carolina and Virginia.
Information from: Chattanooga Times Free Press, http://www.timesfreepress.com
Copyright 2012 The Associated Press.