KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported $7.4 billion in total operating revenues on more than 108 billion kilowatt-hours of electricity sales for the nine months ended June 30, 2020. Sales of electricity were about 5% lower compared to the same period of the prior year due to overall milder weather and impacts of the COVID-19 pandemic. Total operating revenues decreased about 9% from the same period of the prior year driven primarily by lower sales volume, lower fuel cost recovery revenues, and lower effective base rates.
Given the unique variables created by the pandemic, TVA has developed internal forecasts based on a range of external data sources to forecast its potential impact on TVA’s load demand and revenues. For the nine months ended June 30, 2020, TVA estimates base revenues were approximately $130 million lower due to the impacts of the COVID-19 pandemic.
Based on current estimates, TVA anticipates base revenue could be as much as $100 million lower than plan for the fourth quarter of 2020 due to impacts of COVID-19. However, economic impacts continue to evolve as projections are refined. TVA’s estimate of the impact to its financial position, results of operations and cash flows will continue to change over the remainder of the year.
“TVA remains operationally and financially healthy, which enables us to continue providing uninterrupted vital services, as well as support communities during this challenging time,” said Jeff Lyash, TVA’s president and chief executive officer. “Our work to maintain stable, low rates is particularly impactful. In addition, our customers who have become long-term partners have received over $100 million in credits on their bills so far this fiscal year.”
TVA’s fuel, purchased power, operating and maintenance, tax equivalents, and interest expense were all lower in the nine months ended June 30, 2020, versus the same period of the prior year. TVA’s fuel and purchased power expense was 14% lower year-over-year, primarily driven by lower effective fuel rates and lower energy sales due to impacts of COVID-19 and milder weather, as well as the increased availability of nuclear and hydroelectric power.
Operating and maintenance expense was $275 million lower, driven primarily by less project write-offs and regulatory asset recovery for certain environmental cleanup costs that did not occur in the current year. TVA continues to implement various cost savings initiatives in response to the COVID-19 impacts.
Interest expense was $859 million for the first nine months of fiscal year 2020, which was a 5% decrease from the same period of the prior year, driven by lower average debt balances. TVA’s debt remains at the lowest level in almost 30 years.
“While it was expected that the pandemic would have some impact on sales, TVA’s proactive efforts to reduce expenses, improve the efficiency of our operations, invest in cleaner asset investments, and lower debt have all put us in a good position,” said John Thomas, TVA’s chief financial officer. “In fact, cash flow has been steady, and TVA reduced debt by $1 billion in the first nine months of this fiscal year after adjusting for extra cash holdings.”
Additional highlights from TVA’s Third Quarter Report include:
|Selected Financial Data – Nine Months Ended June 30|
|Sales, Revenues & Expenses)||2020||2019|
|Sales (millions of kWh)||108,396||113,609|
|Operating Revenues ($ millions)||$7,350||$8,079|
|Fuel & Purchased Power Expense||1,844||2,134|
|Operating & Maintenance Expense||2,014||2,289|
|Net Cash Provided by / (Used in) ($ millions)|
TVA executive management will host a conference call to discuss third quarter fiscal year 2020 results at 9:30 a.m. EDT, on Tuesday, Aug. 4. The event will be conducted as a webcast and as a dial-in teleconference. Participants will be able to hear the discussion and see slides via webcast, but will need telephone access to ask questions. Pre-registration for the conference call is required. Please click here to pre-register. 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 844-308-6432 in the United States, or 412-717-9611 outside the United States. Participants should ask to be joined into the Tennessee Valley Authority call.
A replay will be available one hour after the end of the conference call, by calling toll free 877-344-7529 in the United States or 412-317-0088 outside the United States and using the conference number 10144400. A webcast replay and transcript will also be available for one year on TVA’s website at http://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 June 30, 2020. TVA’s quarterly report and other SEC reports are available without charge on TVA’s website at http://www.tva.com/investors, on the SEC’s website at http://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 companies 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.
Tammy Wilson, Knoxville, 865-632-3366 or 888-882-4975
Josh Carlon, Knoxville, 865-632-4133 or 888-882-4975
Investor Relations website
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