Advisory commission approves TVA PILOT report, flags distributor credits and fuel impacts

Commission staff presented the commission's annual report on Tennessee Valley Authority (TVA) payments in lieu of taxes and the body approved the report by voice vote.

Mister Pettit presented the report and told commissioners TVA's total federal fiscal‑year PILOT payments were estimated to rise from about $600 million to $667 million, with Tennessee's share increasing by roughly $49 million to an estimated $410 million for the federal fiscal year cited. He said the increase was largely driven by higher effective base rates, sales volumes and fuel rates and warned that changes in fuel costs can move PILOT totals in either direction. ‘‘Lower fuel costs will generate less revenue from fuel cost recovery,’’ Pettit said.

Members pressed staff for clearer detail on distributor credits and the mechanics that let distributors claim credits for power purchased from third parties. Senator Yarbrough asked whether the credits reflect taxes that distributors ‘‘would otherwise owe to the state.’’ Pettit confirmed the credits generally offset taxes that would be owed to the state but said he would provide more specific, written detail on how the credits interact with payment caps and revenue calculations.

Commissioners also asked how long‑term wholesale contracts and the increasing presence of data centers could change the PILOT formula. Pettit and staff said those contract changes and data center demand will be reflected in future reports as contract terms and power‑purchase choices evolve.

The chair called for a voice vote to approve the TVA payments report; a motion was seconded and the report was approved unanimously.