TVA puts limits on entertaining

August 6, 2004

TVA puts limits on entertaining

By Duncan Mansfield
The Associated Press

Tennessee Valley Authority directors clamped down Thursday on wining and dining, telling managers to be "prudent and responsible" in entertaining clients or risk firing.

The country's largest public utility acknowledged two weeks ago spending thousands of dollars entertaining power distributors, clients and employees at Bristol Motor Speedway and fancy restaurants in Washington and Nashville.

"It is clear that some excessive expenditures occurred in the past for hospitality," TVA Chairman Glenn McCullough and directors Skila Harris and Bill Baxter wrote Thursday.

"This use of resources is not consistent with TVA's commitment to cost effectiveness, and it reflects badly on TVA as a whole."

In a six-page memo, the board told top managers that while some entertainment expenses may be appropriate, "we expect each of you to model prudent and responsible behavior."

"I think we can conduct our business in a more moderate setting and really not lose very much effectiveness, and have it appear a lot more reasonable to the man on the street," said Ken Breeden, TVA's new executive vice president of customer service and marketing.

The customer service and marketing group is responsible for most of TVA's entertaining. Dick Tallent, a Breeden predecessor, received three retirement parties costing $35,000 before leaving TVA in January 2003.

Stephen Smith, director of the TVA watchdog group Southern Alliance for Clean Energy, said TVA's entertainment spending was "clearly very abusive at a time ... when TVA is laying employees off and claiming to exercise a conservative nature on spending."

"We welcome anything that would make TVA consistent with what they are saying," he said, challenging TVA's 158 power distributors, who are "actively participating in taking this money at ratepayers' expense," to follow suit.

Jack Simmons, president of the Tennessee Valley Public Power Association, which represents the distributors, said the policy was "an appropriate response" and praised its new standards of accountability.

"I don't think the price of a dinner determines how much is accomplished," he said, "but I think that using some prudence on the expenditure is the right way to go."

TVA will pay for meals, refreshments, food services, lodging, non-cash gifts and floral decorations under certain conditions, such as TVA-sponsored events, employee recruitment and funerals, the directors said.

But "personal recognition events" such as boss's day, birthdays and shower gifts are out. The TVA directors suggested a commonsense standard.

TVA will not pay for "any activity which due to its nature, location, timing,

participants, expense or other factors would likely be perceived by a reasonable member of the public as improper."

Presumably, this would rule out $199 bottles of wine and $45 cigars TVA officials charged on more than $22,000 in Washington restaurant bills over two days last year, or $75 veal chops ordered in two dinners costing $10,000 at Nashville restaurants in 2001 and 2003, or 50 pairs of Bauer binoculars given away as part of some $360,000 spent over three years entertaining at a Bristol Speedway skybox.

"Hospitality shall not be lavish, inappropriate to the circumstances or occasion or likely to reasonably be perceived as an improper or inefficient use of TVA resources or for the private benefit of any employees or other parties," the directive said.

TVA spokesman John Moulton said the TVA board wanted to emphasize adherence to a hospitality policy already in place.

Still, new policy manuals were being prepared and "training in the materials will be mandatory for managers and employees responsible for hospitality costs," the directors said.

Employees who violate the requirements will be subject to discipline "up to and including termination," the directors said.

Any entertainment costing more than $5,000 will require prior approval of a top TVA officer, and anything over $500 will require a vice president's OK.

The directive also says the highest ranking TVA official in attendance should always pick up the tab on his or her TVA credit card.

TVA, a self-supporting government corporation, provides electricity to about 8.5 million people in Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.