Warmer temperatures this winter cost TVA $425 million of cold cash in the past six months as electricity sales declined so far this year compared with a colder 2015.
But the utility said today it still earned $281 million in net income in the first half of the current fiscal year after cutting its fuel and operating expenses.
In its quarterly financial report filed today with the U.S. Securities and Exchange Commission, TVA said electricity sales in the first half of TVA's fiscal year fell by 7 percent from a year agp, cutting net income for the federal utility in half compared with the previous year.
TVA reported that it earned $281 million for the first six months of the fiscal year ending March 31, 2016 on sales of nearly $4.78 billion. A year ago, TVA reported net income of $577 million on sales of $5.2 billion.
The $296 million drop in net income was primarily due to the extremely mild winter experienced in TVA's service territory compared to record-setting cold temperatures in 2015.
"The real story here is we've been able to maintain a healthy financial picture despite lower revenues," TVA President and CEO Bill Johnson said in a statement released today. "The cost efficiencies we've achieved in the past few years, combined with our diversified power fleet, are keeping power prices lower for customers, even with lower sales."
Over the past three years, TVA has cut more than $500 million in annual operating expenses by cutting more than 2,000 staff and contractor jobs, closing some of its oldest coal units and streamlining other operations. TVA said its operating expenses for the past six months were 2 percent lower than the previous year. TVA cut its fuel and purchased power expenses and lowered its interest expenses, TVA Chief Financial Officer John Thomas said.
"The ability to generate more power from natural gas-fired resources also allowed us to take advantage of cheaper gas prices, while supporting planned outages in our nuclear fleet," Thomas said.
TVA expects to add to that nuclear fleet this summer. In its quarterly financial report, TVA said it expects the achieve commercial operation at its Unit 2 reactor at the Watts Bar Nuclear Plant by this summer. The new reactor — the first in the United States to come on line in two decades — should begin limited power generation later this month, more than four decades after construction began on the plant near Spring City, Tenn.
"We are not rushing this," Johnson said. "As with all their work at Watts Bar Unit 2, the team is working carefully to power the unit the right way, and achieve commercial operation in a safe and quality manner."