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CHATTANOOGA, Tenn. (AP) – The Tennessee Valley Authority is encouraging many of its employees to retire early or resign.

The nation’s largest public utility outlined its plan on Wednesday to reduce its workforce and cut spending so that it can save $500 million a year in operating costs and keep rates more in line with neighboring utilities.

The Chattanooga Times Free Press reports severance packages are being offered to all non-nuclear employees who have been with the company for at least a year.

“In order to perform our mission, we must curtail our spending and focus on internal cost management,” utility spokesman Duncan Mansfield said. “We will continue with our core business, but some things we will stop doing.”

TVA officials say they hope the offer helps the utility limit or avoid major layoffs later this year when the utility plans to close more coal plants and limit other operations.

The cuts could have a big effect in the Chattanooga area, where nearly a third of TVA employees work.

TVA President Bill Johnson set a goal last year of cutting operating and maintenance expenses $150 million this year and $200 million next year. That’s on top of $150 million the utility cut last year in ongoing expenses in addition to reducing its staff and contractor workforce by more than 700 employees.

Power sales have decreased by nearly 10 percent from 2007, and TVA lost its largest industrial customer last year when the U.S. Enrichment Corp. shut down its uranium enrichment plant in Paducah, Ky.

Mansfield said the severance offer is open to employees until Feb. 18.

TVA supplies power to about 9 million people in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

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