TVA Reports Strong Financials for Fiscal Year 2017

November 15, 2017

KNOXVILLE, Tenn. ― The Tennessee Valley Authority today reported a net income of $685 million for the fiscal year ended September 30, 2017, as compared to $1.2 billion for the prior year, on slightly higher revenues. The lower net income was largely driven by the additional $500 million contribution TVA elected to make to the retirement system.

TVA reported total operating revenues of $10.7 billion for the year ended September 30, 2017, up one percent from the prior year, primarily due to higher fuel cost recovery revenues. TVA’s power sales were down about two percent for the year, impacted by extremely mild weather that affected sales to local power companies. Fuel and purchased power expenses were $70 million, or about two percent, higher than the prior year, largely driven by higher prices for natural gas and lower hydroelectric production. 

“The prolonged warmer weather over the summer and fall, combined with our efforts to improve operational efficiency, created a level of strong performance by TVA employees that allowed us to accelerate our long-term financial plans,” said TVA Chief Executive Officer Bill Johnson. “As a result, we were able to provide low-cost power, carry out our responsibilities for stewardship and economic development, invest more than $2 billion in capital improvements to our system and still reduce our debt and financing obligations by nearly $200 million – the first year TVA has lowered debt levels since the implementation of the long-range financial plan in 2013.” This will help reduce interest expense going forward, which will assist with decreasing O&M in future years.

Total operating and maintenance expense was $520 million higher for the year ended September 30, 2017, as compared to the prior year. This was due to the additional pension contribution of $500 million, and higher planned nuclear outage expenses.  When excluding these items, operating and maintenance expense was lower in 2017 than the previous year. 

“Favorable results provided TVA the opportunity to make $800 million in total contributions to our retirement system in 2017,” said TVA Chief Financial Officer John Thomas. “The additional funding has put us on a more confident path to fully fund the pension plan, and will help ensure the health of our retirement system for the future.” In 2017, TVA committed to contributing $300 million annually over 20 years to the pension fund.

Additional highlights of TVA’s fiscal year 2017 results include:

  • During 2017, TVA continued to move to a more balanced generating portfolio providing cleaner, more reliable and more affordable energy. Besides two newly commercialized generating sources during the fiscal year - Watts Bar Nuclear Unit 2 and natural gas-fired Paradise Combined Cycle - the Allen Combined Cycle Plant began pre-commercial operation in September 2017. It is expected to be completed in the spring of 2018.
  • TVA expanded its renewable energy supply by beginning to purchase power under a 75 MW contract for solar power from a facility in northern Alabama and also ventured into a one MW, self-constructed solar energy facility at its Allen site.
  • Because of a strong financial position in 2017, helped by greater operating efficiencies, TVA was able to fund capital investments primarily from operating funds instead of increasing debt. 

Selected Financial Data
For the Years Ended September 30

Sales, Revenues & Expenses 2017 2016
Sales (millions of kWh) 152,362 155,855
Operating Revenues ($ millions) $ 10,739 $ 10,616
Fuel & Purchased Power 3,160 3,090
Total Operating & Maintenance 3,362 2,842
Pension Cost / Contributions 800 275
Outage O&M 248 190
O&M excl. Pension & Outage 2,314 2,377
Interest Expense 1,346 1,136
Net Income $ 685 $ 1,233
Net Cash Provided by / (Used in) ($ millions) 2017 2016
Operating Activities $ 2,736 $ 3,042
Investing Activities (2,536) (3,113)
Financing Activities (200) 71
Net Change in Cash & Cash Equivalents - -

TVA executive management will host a conference call to discuss fiscal year 2017 results at 9:30 a.m. EST, on Wednesday, November 15, 2017. The conference call can be accessed from TVA’s website via webcast, at www.tva.com, on the Investor Relations home page. For quicker access to the live conference call, please pre-register through TVA’s website before the scheduled start time, and follow the instructions provided. Once pre-registered, the dial-in number will be provided via an email. If you are unable to pre-register, you may access the conference call by dialing toll free (866) 777-2509 in the United States, or (412) 317-5413 outside the United States.

A replay will be available one hour after the end of the conference call until 9:30 a.m. EST, November 15, 2018, by calling toll free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10095270. A webcast replay and transcript will also be available for one year on TVA’s website at www.tva.com/investors.

TVA’s annual report on Form 10-K provides additional financial, operational and descriptive information, including audited financial statements for the year ended September 30, 2017. TVA’s annual report and other SEC reports are available without charge on TVA’s website at www.tva.com/investors, on the SEC’s website at www.sec.gov or by calling TVA toll free at (888) 882-4975.

This release may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying these statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements. Please refer to TVA’s most recent annual report on Form 10-K for a discussion of factors that could cause actual results to differ from those in the forward-looking statements.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving more than 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.

Media Contact

Gail Rymer, Knoxville, 865-632-2911
TVA Public Relations, Knoxville, 865-632-6000 

Investor Relations

Tammy Wilson, Knoxville, 865-632-3366 or 888-882-4975
Josh Carlon, Knoxville, 865-632-4133 or 888-882-4975