TVA Reports Strong First Quarter Financial Performance
KNOXVILLE, Tenn. ― The Tennessee Valley Authority continued strong performance in first quarter of fiscal year 2017 after reporting the highest net income in its history for fiscal year 2016. TVA reported net income of $102 million for the quarter ended Dec. 31, 2016, up $139 million from the same period in the prior year, on higher sales of electricity.
Sales in the first quarter of fiscal year 2017 were up 2.3 billion kilowatt-hours, or 7 percent, over the same period in 2016. The Tennessee Valley has experienced more normal weather so far this year, resulting in the higher sales. Last year, the Valley experienced some of the mildest temperatures in over five decades during the same time period.
Revenues increased almost 12 percent, or $266 million, for the first quarter, compared to first quarter fiscal year 2016. The higher revenues helped generate net positive income in the first quarter, versus a loss in the same period last year.
Total operating expenses were up by $65 million, or about 3 percent, from the same period in 2016. The higher operating expenses were mainly driven by fuel costs that were about $88 million higher.
“Unlike last year, when we had an abundance of rainfall, the extended drought conditions that carried over from summer limited power production from TVA’s dams. This resulted in increased use of higher cost generation sources and higher fuel prices,” TVA President and CEO Bill Johnson said. “So, while the energy costs of producing electricity were not as favorable, the higher revenues, along with the efficiencies we’ve been able to build into the business, helped us improve the bottom line.”
Non-fuel operating and maintenance costs were relatively flat to that of the same period in the prior year.
“TVA is off-setting inflation and other cost pressures with efficiencies, and maintaining our cost-savings momentum,” said TVA Chief Financial Officer John Thomas. “Even with the increased power demand, TVA’s non-fuel operating costs were lower, helping us keep power rates low.”
TVA has reduced operations and maintenance expense by a sustainable $800 million over the past several years, which has helped the bottom line and also resulted in lower power rates. According to Johnson, the additional income will go right back into the TVA power system.
Nearly $3 billion is being invested in the power system across environmental, regulatory, capacity expansion and maintenance projects in 2017. Several of the projects will provide TVA with more flexibility in meeting power demand in the future. These include the Paradise combined-cycle natural gas facility in Kentucky, and the Allen gas plant in Memphis.
In addition, emission controls at Gallatin Fossil Plant near Nashville and the Shawnee Fossil Plant in Kentucky are on schedule and budget. Both should be completed in the fall timeframe.
TVA is also transforming all of its ash and gypsum ponds to dry storage over an eight to 10-year period as well as investing in its transmission system to maintain its reliable delivery. For 17 consecutive years, TVA has achieved 99.999 percent reliability in delivering power to its customers.
TVA executive management will host a conference call to discuss first quarter fiscal year 2017 results at 9:30 a.m. EST, on Tuesday, Jan. 31, 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, Jan. 31, 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 10094972. A webcast replay and transcript will also be available for one year on TVA’s website at www.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, 2016. TVA’s quarterly 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 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.
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