The Tennessee Valley Authority: The Cost of Power

The Tennessee Valley Authority: The Cost of Power

  • Case
  • Teaching Notes

The Tennessee Valley Authority (TVA) must make a strategic decision to ensure sufficient power generation while at the same time continuing to provide affordable power to a growing number of customers in its service area. Complicating the decision is that TVA is faced with replacing a significant part of their existing power generation capability. Potential sources of new power generation include the construction of nuclear, natural gas, coal, and renewable energy production plants or the purchase of power needs from other electricity producers. The power generation options have highly differing costs, expected cash flows, and useful lives. Moreover, any construction decision is constrained by a limited capital budget. Not simply a financial decision, any strategy must also consider the political, social, and environmental impacts of ...

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