Rainfall helps TVA fortunes

TVA's 29 hydroelectric dams are generating nearly three times as much power as normal in the current fiscal year because of above average rain and snowfall, TVA President Tom Kilgore said today.

During a TVA board meeting today in Bristol, Va., Mr. Kilgore said rainfall in the Tennessee Valley was 34 percent above normal in the utility's first fiscal quarter. Runoff from that rain was more than twice the normal amount and TVA's hydroelectric generation -- the utility's cheapest source of power -- was 391 percent of what was budgeted.

The abundant rainfall, combined with cheaper prices for coal and natural gas, helped TVA cut its fuel costs by 27 percent below what the agency budgeted last year for fiscal 2010. That helped TVA cut the fuel cost adjustment portion of customer bills in each of the past five months, although colder weather will boost rates up again in March.

"The hydro facilities are fully "fueled" right now and, in fact, we're spilling a lot of water right now," Mr. Kilgore told the TVA board. "We don't like to do that, but we also have to maintain our mission of flood control."

Extra hydro generation has helped cut TVA's overall operating expenses. TVA gets nearly 10 percent of its power from hydroelectric generation, including its Raccoon Mountain Pumped Storage facility in Chattanooga.

Among 23 electric utilities in the Southeast and Midwest, TVA had the 7th lowest residential rates at the end of 2010, Mr. Kilgore said. Average residential rates charged by TVA were about 15 percent below neighboring utilities.

TVA Chairman Mike Duncan said the heavy rains have helped TVA to meet what he was told were the two most important missions of TVA: keep rates low and lake levels high.

"The good news this year has come from falling fuel prices and falling rain," he said.

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