TVA Touts Financial Progress

NASHVILLE, Tenn. – The Tennessee Valley Authority’s strong operational and financial performance for fiscal year 2014 were highlighted at its board of directors’ quarterly meeting Thursday.

“The performance of TVA employees in 2014 demonstrated their commitment to serving the people of this region and specifically to improving TVA’s operations, reducing costs and delivering greater value,” TVA President and CEO Bill Johnson told the board. TVA’s fiscal year ended Sept. 30.

Johnson said employees worked safely and found ways to significantly reduce costs. “By the end of the fiscal year, we had realized $300 million in sustainable cost reductions,” Johnson said. “We are well on our way to our three-year goal of reducing operation and maintenance costs by $500 million in 2015.”

TVA has reduced its debt by more than a billion dollars from the previous year while still investing in a number of major capital projects. These include clean-air equipment at the Gallatin Fossil Plant, natural gas plants at Allen (Memphis) and Paradise (Kentucky), as well as significant progress toward the completion of Watts Bar Nuclear Plant Unit 2, and investments in the transmission system to maintain and improve reliability across the Valley.

“We also reached another milestone that reflects TVA’s sound financial condition over the long term,” Johnson said. “In September, we made the final payment on the federal government’s original investment in TVA.”

Today, TVA does not receive any taxpayer funding. In the early years, Congress provided an appropriation of a billion dollars to build the dams and first coal plants. When the power system became self-financing in 1959, TVA began paying back that appropriation, plus interest. TVA has now repaid the U.S. Treasury for the cost of its creation.

Johnson told the board that employees faced unique challenges in supplying electricity throughout the Tennessee Valley and he commended them on their work. “The 2014 Polar Vortex was one of the most demanding times in the history of the TVA power system,” Johnson said. “During that series of record low temperatures – and record high power demands – employees kept the lights on across the region. The strong performance across the power system was a credit to our dedicated employees, many of whom were outdoors, doing hazardous work in frigid weather.”

In discussing TVA’s improved nuclear program performance, Johnson said an important milestone was reached when all six nuclear units were returned to normal oversight by the Nuclear Regulatory Commission. “Our nuclear plants generate large amounts of carbon-free electricity. Their safe, reliable operation is essential to our ability to deliver low-cost electricity to our customers. In fact, the improved performance of the nuclear fleet saved TVA and our customers about $200 million in fuel costs last year,” Johnson said.

TVA’s keen focus on improving quality of life in the Valley was demonstrated through its economic development efforts. Partnering with other state and local governments and community organizations, TVA helped attract and retain more than 60,000 jobs across the region along with a capital investment of about $8.5 billion.

According to Johnson, TVA is moving toward a more diverse and reliable generating portfolio that uses least-cost planning principles, demonstrates environmental commitment, serves customers in a variety of future conditions, provides greater rate stability by using diverse fuel sources, and promotes economic prosperity across the Valley.

As part of this effort, TVA continues to review its coal-fired units. Under an agreement with the Environmental Protection Agency, the state of Kentucky and others, TVA must determine by the end of this calendar year whether to install air pollution controls on Units 1 and 4 at Shawnee Fossil Plant, convert those units to burn biomass, or retire them.

“We are currently conducting an Environmental Assessment of the options and I encourage members of the public to comment on the options,” Johnson said. The public comment period is open now through Nov. 10. Information can be found at http://www.tva.com/environment/reports/shawnee_units1+4/index.htm .

“Our employees gained momentum in 2014, and they have set the stage for continuous improvement in 2015,” Johnson told the board. “Our priorities for 2015 look significantly like our priorities for 2014. Our mission is constant, and our priorities support that mission – keep rates low, live within our means, meet our customers’ expectations for reliability, provide a balanced portfolio, and be responsible stewards.”

TVA will hold a call Monday, Nov. 17, with investors and news media to review its FY 2014 financial performance. The 10-K annual report will be available the same day.

During the board meeting, the board acted to:
•Approve FY 2015 estimated tax equivalent payments of $542 million to be paid to state and local governments. Also, approve the final FY 2014 tax equivalent payments of $533 million.
•Approve FY 2014 performance-based employee incentive program multiplier of 1 and CEO compensation for FY 2015.
•Approve regulatory framework for local power company service practices.
•Recognize the service of departing Directors Barbara Haskew and Bill Sansom, whose terms end this year.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving 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.