To amend the Tennessee Valley Authority Act of 1933.

Amends the Tennessee Valley Authority Act of 1933 to increase the membership of the board of directors of the Tennessee Valley Authority (Corporation) from three members to nine members. Requires that: (1) two members be residents of any State; (2) three be residents of Tennessee; (3) one each be a resident of Alabama, Kentucky, and Mississippi; and (4) one be a resident of either Georgia, North Carolina, or Virginia. Requires the President, in making appointments to the Corporation, to consider recommendations of individuals in the service area and seek directors from such area. Provides that the terms of office of directors shall be three years.

Provides that directors shall receive: (1) a stipend, if not otherwise employed by the Corporation or the Federal Government; (2) compensation at level V of the Executive Schedule for each day of actual performance, limited to 60 days a year (80 days for the Chairman); and (3) travel expenses.

Directs the board to appoint a person to serve as chief executive officer for the conduct of management duties not specifically reserved to the board.

Directs the board to create an electric rate review committee, composed of board members, to hold public hearings on electric power rates and make recommendations to the board for rate adjustments.

Directs the board to create an audit committee, composed of board members independent of the management of the Corporation, to recommend to the board an external auditor, review such auditor's reports, and make recommendations to the board as necessary.

Authorizes the board to create such other committees as deemed appropriate.

Requires the board to conduct public hearings on issues that would have a substantial effect on the electric rate payers in the region or the economic, environmental, social, or physical well-being of the people of the region.

Authorizes the board to: (1) establish an annual fund of a fixed amount from which the board may grant awards to employees in recognition of superior performance or meritorious acts; and (2) authorize supplements on an annual basis to the basic pay of individual employees when recruitment or retention problems are caused by substantially higher pay for comparable levels of work in the Federal Government, or for which no similar positions are found in the Federal Government.

Transfers the authority to appoint staff from the board to the chief executive officer.