Mild Weather Impacts TVA’s First Quarter Earnings
KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported a net loss of $37 million for the first three months of fiscal year 2016 ending Dec. 31, 2015. Net income was $118 million lower compared to the same period last year due in part to $131 million lower operating revenues, representing a 5 percent decrease, primarily driven by weather. Temperatures in the Tennessee Valley in December were the mildest in more than 50 years, contributing to 8 percent lower sales of electricity compared to the same period a year ago.
Operating expenses for the first quarter of 2016 increased by less than 1 percent versus the same period in the prior year. Operating costs were helped by $56 million lower fuel and purchased power expense as a result of lower sales, more hydroelectric and natural gas-fired generation, as well as lower natural gas prices. Non-fuel operating and maintenance costs were $52 million higher than in the same period last year, driven primarily by nuclear refueling outages and remediation work at Boone Dam.
“TVA customers continue to benefit from the diversity of our power system, which helped keep costs lower in the first quarter, despite unusual conditions,” said TVA President and CEO Bill Johnson. “Increased output from TVA’s robust hydroelectric system and low-cost natural gas-fired power helped offset lower revenues, limiting the impact on TVA’s financial performance. We are also maintaining good discipline in managing our costs, which is particularly important in periods of lower sales and revenues.”
TVA’s mission of environmental stewardship includes management of the Tennessee River system for multiple benefits, including flood control. With record-breaking rainfall in December 2015, TVA personnel worked to avert millions of dollars of potential flood damage in the Tennessee Valley during the first quarter of 2016, and worked with the U.S. Army Corps of Engineers to reduce impacts on the Ohio and Mississippi Rivers through coordinated use of TVA’s system of dams.
“This past December was both the warmest and also one of the wettest in TVA history,” said Chief Financial Officer John Thomas. “Guntersville Reservoir, for example, had 9 inches of rainfall on Christmas Day alone - something that happens only every 100-200 years.”
“It is in these times that we are reminded of the value of TVA’s stewardship mission and that TVA is more than a power company,” Johnson added. “It was the dedication of TVA’s employees that helped prevent the loss of life and property across the Tennessee Valley.”
TVA executive management will host a conference call to discuss first quarter fiscal year 2016 results at 10 a.m. EST, on Wednesday, Feb. 3, 2016. The conference call can be accessed from TVA’s website via webcast at Investors, 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 (877) 270-2148 in the United States, or (412) 902-6510 outside the United States.
A replay will be available one hour after the end of the conference call until 10 p.m. EST, Feb. 3, 2017, by calling toll free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10077797. A webcast replay and transcript will also be available for one year on TVA’s website at tva.com/investors.
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter ended Dec. 31, 2015, and is available to investors and the public. TVA financial reports are also available without charge on TVA’s website at tva.com/investors or on the SEC’s website at 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 annual report on Form 10-K, and Quarterly Report on Form 10-Q, 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.