The Tennessee Valley Authority is beating its budget forecasts for the first half of the fiscal year, earning $202 million in the six months ended March 31 and allowing the utility to cut its debt and its power prices this month and next.
But both officials and critics of TVA cautioned this week that power rates may be headed higher as TVA shutters aging coal plants and upgrades its nuclear plants in the wake of the accident at Japan's earthquake-crippled Fukishimi nuclear plant.
TVA Chief Financial Officer John Thomas said preliminary earnings results for the first half of fiscal 2011 show the utility earned $202 millon on nearly $5.8 billion of electricity sales. In its budget plan for the year, TVA had expected to earn only $18 million in the first six months of this year on $5.6 billion of sales.
"We've had strong performance year to date," Thomas said. "When we have earnings, we reinvest them back in the system and the goal is to use our earnings to offset future rate increases."
But TVA President Tom Kilgore said fuel costs are likely to still push up monthly price adjustments over the summer months and TVA officials said they are also looking at making what could cost millions of dollars in nuclear plant improvements in response to the Japanese nuclear disaster.
Spike seen from ruling
Some Republican members of Congress also warned this week that TVA's decision to shut down 18 of its 59 coal-fired units could prove costly. On Thursday, TVA reached a settlement with the U.S. Environmental Protection Agency along with five states and three environmental groups to resolve lingering disputes over air pollution from TVA's fossil plants.
TVA will idle 2,700 megawatts of coal generation by 2017, invest up to $5 billion in other pollution controls and pay a $10 million penalty. Kilgore said the decision is best for air quality and ratepayers.
But TVA board member Mike Duncan, who voted against the agreement, said he expects the settlement "is going to be very expensive.
"It takes away some flexibility for us in capacity," he said. "We don't know what's going to happen in the future."
U.S. Rep. John Duncan, R-Tenn., said "EPA has gone power mad" and forced TVA to make costly plant shutdowns.
"This settlement will drive up utility bills for people in Tennessee and the surrounding states and hurt poor and lower-income people the most," he said in a statement.
U.S. Rep. Ed Whitfield, R-Ky., chairman of the House Energy and Commerce Committee's energy and power panel, said the agreement "is a prime example of what is wrong with national environmental policy in the U.S.
"It's being determined by privately settled lawsuits and monetary payoffs with absolutely no input from elected representatives," he said in a statement. "We intend for this to stop."