TVA Reports Higher Income

KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported Tuesday that operating revenues for the six months ended March 31, 2014, were unchanged from the same period a year ago, despite lower revenues from directly served industries.

“Power sales to the 155 local power companies that distribute TVA power across the Tennessee Valley were up almost 8 percent for the first six months of this fiscal year,” President and CEO Bill Johnson said.

“This was largely the result of the cold weather, particularly in the second quarter, but it also reflects a small and encouraging sign of underlying improvement.”

Total sales were down 2 percent for the first half of the year, compared with the same period in 2013, impacted by lower sales to industries directly served by TVA, particularly U.S. Enrichment Corp., TVA’s largest directly served customer until it closed last year.

For the first six months, TVA had $228 million in net income on $5.3 billion in operating revenue, compared with a net loss of $191 million on similar operating revenue for the first half of 2013.

The 2014 results were driven by lower expenses for fuel and operations and maintenance, partially offset by higher purchased power and depreciation expense.

“Even as we make headway in improving cost efficiency to keep rates low, we maintained TVA’s signature level of high reliability during some of the most extreme winter weather in decades,” Johnson said. “Overall, I am pleased with TVA’s results so far this fiscal year.”

Total operating expenses for the six months of fiscal 2014 were 8 percent lower than the same period last year, driven by 18 percent lower fuel expenses, partially offset by higher purchased power expense. Fuel expense decreased $260 million from the same period in the prior year, primarily due to the timing of fuel cost recovery and a lower-cost mix of power generation, including 15 percent more from nuclear power generation, 9 percent less from coal, and 25 percent less from natural gas.

Compared with the same period last year, operating and maintenance expenses were down $195 million, or 11 percent, in the first six months of fiscal year 2014. The reductions were driven primarily by lower refueling outage and other project expenses, and cost savings initiatives undertaken by management, including lower contract labor and material expenses.

“We’re making good progress on improving our financial health,” Chief Financial Officer John Thomas said. “We’ve reduced debt by $1.2 billion and invested $1.4 billion to improve reliability of our assets.”

TVA reported $295 million of net income on $2.9 billion in revenue for the second quarter of 2014, compared with $54 million of net income on $2.7 billion in revenue for the same period in 2013.