Sequestration could lead to $23 million in budget cuts at TVA

The automatic federal spending cuts set to start taking effect Friday could result in $23 million in budget cuts at the Tennessee Valley Authority, a spokesman said Wednesday.

But the federal spending cuts—also referred to as sequestration—would probably not lead to temporary layoffs at the public utility, TVA spokesman Duncan Mansfield said. The federal cuts would trim $85 billion from defense and domestic spending for the rest of the fiscal year.

“We anticipate that we would not have to do furloughs, and we would be able to manage that through head count attrition,” Mansfield said. “At this point, we are not seeing an immediate impact.”

TVA has 12,000 to 13,000 employees, and they received a notice on Tuesday that executives did not expect furloughs.

Although TVA’s power programs are self-financing, part of the utility could be affected by the sequester, if it goes into effect Friday. It’s not clear if Congress and President Barack Obama will reach a last-minute deal as they have in previous fiscal crises.

Mansfield said $455 million in administrative expenses could be subject to sequestration. Using a target rate of 5 percent, TVA voluntarily calculated the impact of the spending cuts on part of its administrative expenses in its power program at roughly $23 million.

It’s a relatively small part of TVA’s $11 billion budget.

Mansfield said TVA can achieve the necessary cost savings without affecting the delivery of safe, reliable electricity.

TVA is a corporation owned by the U.S. government, and it provides electricity for nine million people in parts of seven southeastern states. TVA says it receives no taxpayer money.

Although the sequester could begin Friday, its effects might not be felt for several weeks. Federal furlough notices are likely to be among the first steps the government takes, the Washington Post reported.

The Post said both sides are hoping to resolve the battle by late March, when a stopgap measure funding the government expires. However, the president and congressional Democrats have clashed with Republicans in the House and Senate over the right mix of spending cuts and tax increases.

Obama is scheduled to discuss the spending cuts with congressional leaders at the White House on Friday.