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.
TVA officials have vowed to hold TVA wholesale rates steady for the next decade under its 10-year plan adopted this summer.
"The new 10-year strategic financial plan builds on the success the TVA team has achieved over the past six years in reducing operating costs, lowering debt and investing in our generating and transmission system," said TVA Chief Financial Officer John Thomas. "Our effective wholesale rate today is actually less than it was when we started in 2013, and our debt now stands at its lowest level in nearly 30 years."
At a TVA board meeting Thursday in Memphis, TVA President Jeff Lyash highlighted TVA's financial, environmental and reliability performance in fiscal 2019.
"Due to this high performance over the past several years, we were able to maintain flat rates for the coming year and take additional actions, including the long-term partnership program with local power companies and a new 10-year strategic financial plan, that should extend those stable rates for the next decade," Lyash said.
Among the past year's achievements highlighted by Lyash, TVA:
* Cut carbon emissions to 60% below TVA's 2005 emissions and is on pace to reduce such carbon dioxide emissions by 70% below the 2005 levels by 2030.
* Managed the Tennessee River amid heavy rains to prevent $12 billion in flood damage.
* Helped add or retain more than 66,000 jobs from nearly $9 billion in capital investment by TVA's economic development program, earning TVA listing among the "Top 10 Utilities" for economic development by Site Selection magazine for the 14th consecutive year.
* Completed the extended power uprate at Browns Ferry Nuclear Plant to add 465 megawatts of additional energy from the three reactors at the Alabama plant.
* Delivered power to its customers with at least 99.999% reliability for the 20th consecutive year.