Colder Weather Improves Power Sales, Quarterly Earnings For TVA
April 30, 2010
KNOXVILLE, Tenn. -- Increased demand, primarily related to colder weather, boosted sales of electricity from the Tennessee Valley Authority by nearly 10 percent in the second quarter of the 2010 fiscal year as compared with the same time a year ago.
Sales to industrial customers also increased nearly 12 percent during the period which ended March 31.
“Economic conditions appear to be improving in some parts of our service area,” said Interim Chief Financial Officer John Hoskins. “Still, TVA is managing various challenges including the ongoing cleanup work at Kingston, funding large power system investment projects and helping to inspire industry and job growth in the region.”
TVA reported net income for reinvestment of $430 million in its quarterly report for March 31, 2010, on Form 10-Q filed Friday with the Securities and Exchange Commission. That compares with a net income for reinvestment of $133 million for the second quarter of the previous fiscal year, which included $150 million in expenses from the Kingston ash spill recovery effort. The TVA Board of Directors subsequently approved recovering those costs in rates over 15 years.
TVA, which does not make a profit, reinvests net income in its power business including energy efficiency projects, new generation, environmental controls and transmission improvements. TVA receives no taxpayer money.
Despite increased sales, operating revenue for the second quarter fell by 11 percent compared with the same period a year ago to $2.6 billion -- a drop of $311 million from the second quarter of 2009. The decrease primarily results from fuel cost adjustments since Oct. 1.
Operating expenses also decreased $628 million from a year ago to $1.9 billion, primarily because of a 51 percent reduction in fuel and purchased power expenses over that time.
These trends of increased sales and decreased revenues are also reflected in figures over the six-month period from Oct. 1, 2009, through March 31. During that time, sales were up 3 percent and revenues decreased 17 percent from the same time a year ago. Net income for reinvestment the first half of the fiscal year was $580 million compared with a net loss of $172 million for the same period a year earlier. The 2009 loss included $675 million in expenses from the Kingston ash spill recovery.
As financial markets improved during the first half of the fiscal year, investments in TVA’s nuclear decommissioning trust, asset retirement trust and pension funds all experienced gains.
Abundant rainfall during the winter also allowed TVA to increase lower-cost hydroelectric power generation by 82 percent compared with the first half of 2009.
“Increased hydro production allows TVA to reduce generation from fossil fuel plants, which also helps lower our fuel costs,” said Hoskins.
TVA expects to meet its capital budget for 2010, Hoskins said, which includes spending for construction of environmental control equipment, new generation and dry storage facilities for coal combustion products.
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter that ended March 31, 2010, and is available to investors and the public. The public may read reports or other information that TVA files with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. TVA SEC reports also are available on the SEC’s website at www.sec.gov, and copies are available on TVA’s website at www.tva.com/finance or by calling TVA toll free at 888-882-4975.
The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities and supplies up to 36,000 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA’s service territory are below the national average.
Scott Brooks, (865) 632-8031
TVA News Bureau, Knoxville, (865) 632-6000
TVA Investor Relations
(888) 882-4975 (toll-free)
(888) 882-4967 (toll-free International)