TVA Delivers on Its Mission of Serving the People of the Tennessee Valley
BLAIRSVILLE, Ga. – The Tennessee Valley Authority’s employees were on the job making life better for the region in fiscal year 2016. Their continued efforts to improve efficiencies and reduce operating and maintenance costs and their strong stewardship of the Tennessee Valley’s natural resources, environment and economy provided the foundation for TVA’s success in achieving and exceeding operational and financial performance.
“Across the region, employees met a high standard in 2016 in the key areas of our mission of service – energy, environment and economic development,” TVA President and CEO Bill Johnson told the TVA board of directors at its meeting today. “It was a strong year for TVA employees – they met goals and objectives and delivered results for the Tennessee Valley financially, operationally and in our relationships with customers and other stakeholders.”
During TVA’s fiscal year ended Sept. 30, management and employees have been focused on continuous improvement and performance excellence in several operational areas critical to fulfilling its mission of service. Johnson highlighted these performance areas during the board meeting including:
- Strong financial performance
- TVA continues to benefit from power system diversity – fuel and purchased power expense was down more than $300 million in 2016 versus 2015, and below budget.
- Debt and other financing obligations at the end of 2016 were $776 million below budget.
- TVA invested almost $3 billion in its power system in 2016, while debt increased by less than $100 million. These investments included: clean air equipment at Gallatin (Tenn.) and Shawnee (Ky.) fossil plants; new natural gas plants at Paradise (Ky.) and Allen (Memphis); Watts Bar Unit 2 construction; Browns Ferry Nuclear Plant up-rates; and, investments in the transmission system.
- TVA’s industrial rates remained in the top quartile
- Strong operational performance
- Improved performance across the generating fleet.
- Completed construction of Watts Bar Nuclear Unit 2 and declared commercial operations on Oct. 19, 2016.
- Achieved 99.999% reliability for the 17th consecutive year.
- Improved customer loyalty from 67% in 2015 to just under 75% in 2016.
- Awarded the 2016 Star of Energy Efficiency Award for Power Generation & Supply by the Alliance to Save Energy, recognizing TVA’s work to model energy efficiency as outlined in the 2015 updated Integrated Resource Plan.
- Strong stewardship performance
- Reduced CO2 emissions by 30 percent from 2005 levels and on a path to decrease by more than 60 percent by 2020.
- TVA and its partners attracted and retained more than 72,000 jobs and $8.3 billion in capital investment.
TVA Chief Financial Officer John Thomas provided the board with fiscal year-end results. “TVA’s customers continue to benefit from our cost efficiency achievements,” Thomas said. “Combined with the substantial savings in fuel expense as a result of our diversified power system, we are driving power rates down across the Tennessee Valley, helping our customers and supporting economic development.”
TVA achieved its highest net income ever of $1.2 billion in 2016, $641 million more than budget and $122 million more than last year. Operating and maintenance expenses have been reduced more than $800 million over 2013 budget levels. “As a result of the continuous improvement efforts of TVA’s employees, we ended the 2016 fiscal year with lower effective rates for our customers, lower expenses, lower debt balance and higher net come,” he said.
TVA will hold a call Tuesday, Nov. 15, with investors and news media to review its FY 2016 financial performance. The 10-K annual report will be available the same day.
The year wasn’t without its challenges. The region experienced the wettest December on record, and the hottest and driest summer since 2010 – with dry conditions continuing. During October, run-off across the Tennessee River watershed was less than one-tenth of an inch, the lowest in 142 years of recordkeeping. The lack of this valuable, low-cost, renewable resource means TVA has less hydro power available. TVA managed the river to meet commitments to stakeholders and release only the minimum amount of water necessary for downstream requirements such as water quality, commercial navigation and municipal and industrial water supply.
The challenges will continue into 2017. Power demands continue to be flat and TVA is currently projecting load growth of three-tenths of one percent over the long term with the possibility of going even lower. “Reduced load means less revenue, a challenge for any business,” Johnson said. “New technologies, new generating resources and new consumer preferences are also impacting our business and TVA is working with its customers to stay ahead of these changes.
“I continue to have high expectations of our management and employees to deliver on our strategic plan, the 10-year financial and asset plan, our three-year business plans and the annual goals and metrics that drive day-to-day performance,” he said. “In this way, we will continue to supply electricity at low rates and with high reliability to the people of the Valley.”
During the board meeting, the board acted to:
- Approve FY 2016 tax equivalent payments of $535 million tax equivalent payments to be paid to state and local governments. Also, approve the FY 2017 estimated tax equivalent payments of $517 million.
- Approve the payouts for the FY 2016 performance-based employee incentive programs and CEO compensation for FY 2017.
- Approve the long-term service agreements at Paradise and Allen plants.
- Recognize the service of Directors Joe Ritch, Peter Mahurin and Mike McWherter, whose terms end this year. (The President has re-nominated the directors and their nominations are before the U.S. Senate.)
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.