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Message From Frank Alford, Chairman, Board of Directors, TVA Retirement System

May 22, 2009

As Chair of the TVARS Board, my fellow board members and I have a responsibility to all System members, both active and retired, to make decisions that are in their best interest.

With all the recent national headlines regarding pension plan problems, many of you are wondering about the safety of the TVA Retirement System pension plan. Everyone wants to know if their benefits are secure and that they can count on them. I am confident retirees will continue to receive their vested pension benefits just as they always have and that the vested benefits of active employees will be there for them when they retire.

The TVARS Board has been open and honest regarding the status of the System. As previously communicated, the recent poor performance of the financial markets has significantly impacted the assets of all pension plans, including ours. It is clear that we and other pension plans are in unprecedented times. To assist the Board with making the right decisions for the long-term future of the Plan, we have done the following:

TVARS Board members engaged Mercer, its actuary, to perform a "Recalibration Study". This Study consists of:

* Benchmarking TVA's Retirement System against its competitors
* Interviews with the individual Board members
* Interviews with TVA’s Chief Financial Officer and Chief Administrative Officer
* Providing guidance on the System's asset-to-liability mix
* Working with TVA to provide the best information possible as TVA begins its 2010 budgeting process

The TVARS Board has engaged Wilshire, its investment consultant, to:

* Provide a recommendation on the TVARS asset mix going forward
* Provide due diligence on investment managers
* Assess the total risk profile of the System

Contrary to rumors regarding various scenarios, the TVARS Board has not voted on any benefit changes or modified its investment policy. It is unfortunate these rumors have fueled speculation. As part of the Board’s fiduciary responsibility the Board has engaged Mercer to provide advice regarding the contributions to, and assets and liabilities of, this System. We continue to work toward a recommended contribution request for FY 2010. Our partnership with TVA has been a long one, with the same goal, to provide a competitive pension plan. As we work toward this common goal, we will continue to provide you with information regarding these matters.

Frank Alford
Chairman, Board of Directors
TVA Retirement System

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