TVA Power Sales, Operating Revenues Increase in 2005
Higher Fuel and Purchased Power Costs Increase Operating Expenses
November 28, 2005
TVA operating revenues totaled nearly $7.8 billion for the 2005 fiscal year, an increase of $261 million from 2004, reflecting a 3.5-percent increase in power sales.
Warmer summer weather and higher industrial demand contributed to the increase in electricity sales during 2005, and TVA met an all-time peak power demand of 31,924 megawatts on July 26.
Total operating expenses for the fiscal year that ended Sept. 30, 2005, were $6.5 billion, a 10.7-percent increase from last year. A $520-million increase in fuel expenses and purchased power costs accounted for most of the difference. Fuel and purchased power costs in 2005 were 25 percent higher than the previous year.
“Overall TVA’s integrated power system had its most successful year on record, supplying our customers with more than 171 billion kilowatt hours of electricity,” said TVA President and Chief Operating Officer Tom Kilgore. “At the same time, the rising prices of coal, natural gas and purchased power significantly increased our operating expenses in 2005 and will continue to be our toughest challenge in 2006.
“Natural gas and coal prices increased more than 35 percent and 11 percent respectively from 2004. The greatest increase in fuel and purchased power expenses occurred after two hurricanes crippled natural gas production and transportation. Nearly 32 percent of the natural gas production remains shut-in more than two months after hurricanes Katrina and Rita,” Kilgore said.
TVA was able to keep its controllable costs — both operating and maintenance costs and spending for capital projects — a total of $229 million below below 2005 budgeted costs, which helped offset the higher expenses for fuel and purchased power during the fiscal year.
Among the highlights for the year, TVA’s 11 fossil plants achieved the best reliability records ever recorded for a fiscal year, with six units setting continuous run records. The coal-fired plants generated 98.4 billion kilowatt hours of electricity, a 4-percent increase over 2004 generation.
The transmission system completed its sixth consecutive year of 99.999 percent reliability. Generation at TVA dams was 13 percent above normal even though rainfall was 9 percent below normal. All five operating nuclear units generated at near full capacity during the summer months when the power system met all-time records for peak demand, and equipment reliability at the nuclear plants was the best ever with just 6.2 days offline due to equipment failure.
Net income was $85 million for the 2005 fiscal year compared to $386 million in 2004. Net income was significantly reduced in 2005 by higher fuel and purchased power expense. Increases in coal and natural gas costs were the primary contributors to the lower net income.
TVA reduced financing obligations by $301 million in 2005 compared to $278 million in 2004. Net interest expense for the year was $62 million lower when compared to 2004.
TVA is the nation’s largest public power provider and is completely self-financed. TVA provides power to large industries and 158 power distributors that serve approximately 8.6 million consumers in seven southeastern states.
Media Contact
John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000
