The Tennessee Valley Authority achieved record net income in the past year, leading America’s biggest government-owned utility to cut its debt to the lowest level in 30 years and paving the way this year for the first cut in TVA electric prices for most local power companies in the Valley in over six years.
TVA said today it earned a record high $1.4 billion in net income on revenues of more than $11.3 billion in the fiscal year ended Sept. 30. Despite a 1.2% drop in electricity sales from the previous year, TVA’s net income jumped 26.6% in fiscal 2019 compared to the previous year to a record high of more than $1.4 billion. That topped TVA’s previous yearly profit record of $1.23 billion set in 2016 and allowed TVA to cut its total debt obligations by $1.4 bilion in the past year to below $22.2 billion for the first time since the 1980s.
In its annual financial report filed today with the U.S. Securities and Exchange Commission, TVA said its 7-state region experienced overall milder than normal weather during 2019, despite record-setting cold weather experienced during November 2018 and record-setting heat during September 2019. This overall milder weather drove lower energy sales, but revenues were still up to $84 million in the past year due primarily to TVA’s wholesale rate increase of nearly 2% implemented in October 2018.
TVA income rose far more than revenues, in part, because of lower fuel costs which were aided by higher production of hydroelectricity from its 29 power-generating dams and lower interest expenses due to the decline in both TVA’s overall debt and interest rate costs in the past year.
With improved earnings and lower debt, TVA directors voted in August not to raise its base wholesale rates in the current fiscal year and TVA is offering a 3.1% rebate to lower power charges to local power companies that sign 20-year service agreements with TVA. So far, about 85% of the 154 local power companies have signed such long-term contracts, although EPB in Chattanooga is still studying whether to commit to such a long-term power arrangement with TVA.