Milder weather cut power use in the Tennessee Valley by 7 percent this winter compared with a year ago, cutting net income for the Tennessee Valley Authority by a third during the first three months of 2017 compared with a year ago.
TVA said today it earned $211 million on sales of more than $2.5 billion in the fiscal quarter ended March 31. In the same period a year earlier, TVA earned $318 million on revenues of $2.53 billion.
But net income for TVA was still up in the past six months and TVA officials said the utility is adding new and cleaner generation without any major rate hikes for electric users in its 7-state region.
Revenues rose 5 percent from a year ago during the first half of TVA's fiscal year primarily due to higher base rates and increased fuel cost adjustments, TVA reported in a filing with the Securities and Exchange Commission today.
"These results demonstrate that TVA remains on track in operating more efficiently and keeping rates low," TVA President and CEO Bill Johnson said in the quarterly earnings statement. "We've been able to complete major capital projects that provide clean, reliable and affordable energy for the seven-state Tennessee Valley region while managing our debt, even with a decline in electricity sales."
Watts Bar Unit 2 entered commercial operation on October 19, 2016, as the nation's first new nuclear unit in the 21st Century. In addition, a new gas-fired generation facility at TVA's Paradise Fossil Plant site in Kentucky began commercial operation on April 7, 2017. With the completion of the new Paradise facility, the coal-fired Paradise Units 1 and 2 were retired on April 15.
TVA also added the River Bend Solar Energy Center in northern Alabama in November.
The combined cycle gas-powered facility at the Allen Fossil Plant is expected to be completed in 2018, replacing TVA's 58-year-old coal plant in Memphis.
"TVA's generation fleet continues to become more diversified and this is helping us provide low-cost energy in a reliable and efficient manner," Johnson said.
But Johnson said fuel and purchased power expenses increased $109 million in the first half of the fiscal yea due to higher effective fuel rates, driven by significantly less hydroelectric generation and higher market prices for natural gas.
"With the drought conditions we experienced in the first half of the year, which limited power production from our dams, Watts Bar Nuclear Unit 2 played an important role in keeping costs low," Johnson said.
Non-fuel operating and maintenance expenses for the first six months were up by about 2 percent, or $31 million, from the same period in 2016, attributable to an increase in planned nuclear refueling outage days.
"TVA's effective rates are lower today after several years of improving efficiencies of our operations, and reducing annual operating expenses by over $800 million," said TVA Chief Financial Officer John Thomas. "We are maintaining that momentum in 2017, focusing on off-setting inflationary pressures with efficiencies."