TVA Starts Fiscal 2018 with Solid First Quarter Results
KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported today in its FY18 first quarter financial disclosure a net income of $288 million for the three months ended Dec. 31, 2017. Net income was up $186 million from the same period last year, primarily due to overall lower expenses.
TVA’s total operating revenues of approximately $2.5 billion for the three months ending Dec. 31, 2017, were relatively flat when compared to first quarter last year. Power sales were up about two percent for the quarter on more normal weather, as milder weather affected sales during the same period last year. Even with higher sales volume, fuel and purchased power expenses were down $115 million, or about 14 percent, primarily due to an increase in low-cost hydroelectric production and slightly lower natural gas prices.
“Power consumers in the Tennessee Valley are seeing significant benefits from the investments we’ve made to diversify TVA’s power system,” said TVA Chief Executive Officer Bill Johnson. “More than half of the energy supplied by TVA in the first quarter came from carbon-free sources - nuclear, hydro and other renewables that are helping the power system deliver safe, reliable, and cleaner energy - at a lower cost.
“TVA’s residential rates are lower than 70 percent of our competitors,” Johnson said. “As a result of reductions in O&M, improved operations and lower fuel costs, the effective rate for consumers is 2 percent below 2013.”
With more normal rainfall, TVA was able to increase hydroelectric generation in the first quarter, which accounted for about nine percent of total power supply, versus only five percent during the same period last year. Natural gas-fired generation also increased by about 13 percent during the first three months of FY18, compared to the same period of the prior year. This was partially driven by the slightly lower natural gas prices.
Operating and maintenance expense was $32 million lower for first quarter FY18 compared to FY17. The decrease was partially due to fewer planned nuclear outage days and lower expenses related to identified efficiencies and staffing changes.
“TVA customers are seeing the benefits of lower costs from each of our major expense categories - lower fuel and purchased power expense, greater efficiency in how we operate and declining interest on debt,” said TVA Chief Financial Officer John Thomas. “The significant improvements in TVA’s power system and operations over the last few years are keeping TVA’s power rates low, while improving TVA’s financial health for the future.”
Additional highlights of TVA’s first quarter fiscal year 2018 results include:
- Increased revenue from higher energy sales and the base rate adjustment that became effective Oct. 1, 2017, was offset by lower fuel cost recovery.
- Total operating expenses decreased approximately eight percent during the first quarter of 2018 as compared to the same period of the prior year.
- During the first quarter of 2018, TVA completed installations of two selective catalytic reduction systems at the Gallatin Fossil Plant, as well as the installation of scrubbers and SCRs for Units 1 and 4 at the Shawnee Fossil Plant.
- Units 1-4 of the Johnsonville Fossil Plant were retired in December 2017.