KNOXVILLE ― The Tennessee Valley Authority Board of Directors approved a new commercial rate structure intended to support the expansion of electric vehicle charging infrastructure across the region during its meeting on Friday, while also recognizing the accomplishments of TVA employees as they serve the public during the extraordinary conditions of COVID-19.
As one of the fastest growing automotive production regions in the country, the Tennessee Valley is emerging as a key player in the development of electric vehicles. With abundant, reliable and increasingly cleaner electric power, TVA and its public power partners are in the best position to help enable the broader adoption of electric vehicles, which provide significant environmental and cost advantages.
“TVA is an industry leader in delivering low-cost, clean energy, and we intend to take a leadership role in electric vehicle transportation,” said Jeff Lyash, TVA president and CEO. “According to the Environmental Protection Agency, traditional forms of transportation are a leading source of carbon emissions while a single electric vehicle can reduce those emissions by 8,600 pounds per year.”
“TVA has reduced carbon emission by nearly 60% since 2005 and we have concrete plans to reach 70% by 2030. Actively supporting the electrification of transportation multiplies our own carbon reduction efforts and moves the entire region toward greater sustainability and economic opportunity in the future.”
The board’s ability to take such forward-looking action during a continuing pandemic is the result of the hard work and focus of TVA employees during fiscal year 2020, which resulted in record-setting performance. TVA’s Transmission team set an all-time record for system reliability while maintaining 99.999% reliability since 2000. The River Operations team also successfully managed the largest annual rainfall total in 138 years of recordkeeping while helping to prevent more than $1 billion in flood damage.
In addition, during FY20, the TVA team:
Achieved industry-leading safety performance even while implementing new COVID-19 safety protocols to protect employee health and rapidly responding to storm damage in middle Tennessee and Chattanooga.
“I am incredibly proud of our employees’ dedication and commitment to TVA’s mission of service, especially considering the unprecedented challenges of the pandemic,” said Lyash.
Overall, TVA’s FY20 operating revenue was down about 5% from projections due to a combination of weather factors and the impacts of the pandemic. That shortfall was offset by improved operational performance that lowered operating and maintenance costs, reduced fuel costs and exceeded TVA’s debt reduction target by more than $400 million, reducing debt to its lowest level in 30 years. FY20 net income is estimated at $1.4 billion.
Final FY20 financial information will be reported in TVA’s 10-K filing with the Securities and Exchange Commission, which will be publicly available Tuesday, Nov. 17.
“The team delivered exceptional financial results in FY20, which created the flexibility to allow TVA to take a number of special steps, such as the $200 million Pandemic Relief Credit and the Community Care Fund, that help with the ongoing impacts of COVID-19 in our communities without significantly impacting our financial position,” said John Thomas, TVA’s chief financial officer. “Combined with the 3.1% long-term partnership credits, we’ve effectively lowered our effective wholesale rate 5.5% in just a little over a year.”
“Combining both the base rate and fuel costs, TVA’s effective rates today are lower than they were ten years ago and our financial strength should allow us to keep those rates stable through at least the end of this decade.”
Formalizing the temporary FY21 spending authority it granted at its August meeting, the board approved a full FY21 budget of $9.8 billion, which includes $2.4 billion in continuing capital improvements to generating, transmission and infrastructure assets.
In other business, the board:
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving nearly 10 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.