TVA looking into ways to avoid future power outages

Despite December power outages, TVA electricity sales, profits rise

Staff file photo / The Tennessee Valley Authority building is shown in downtown Chattanooga.
Staff file photo / The Tennessee Valley Authority building is shown in downtown Chattanooga.

The Tennessee Valley Authority, which boasted 99.999% reliable power delivery for more than 20 years, was forced to cut power to most of its customers for the first time in its nearly 90-year history during the two days before Christmas when cold weather froze equipment needed to operate TVA's biggest coal plant and several natural gas generators.

TVA President Jeff Lyash said Tuesday the federal utility is working to address the underlying causes for the shortfall in electricity during Winter Storm Elliot to avoid any repeat of the power outages.

"We will learn from this event and put actions in place to further strengthen the resiliency of the power system," Lyash pledged Tuesday in a conference call with industry analysts.

In its quarterly earnings report released Tuesday, TVA disclosed that it lost 8,000 megawatts of power it was counting on during the cold weather when the Cumberland Fossil plant shut down and gas-fired generators failed to operate during the single-temperature weather Dec. 23-24.

TVA's nuclear, hydro, coal, gas and solar power plants are capable of generating more than 32,000 megawatts of electricity, and TVA contracts to buy up to 6,000 megawatts of electricity from other power producers. But the generation problems before Christmas cut TVA's available power by more than 20% and forced the utility to impose rolling blackouts when a new winter peak demand of 33,427 megawatts was reached Dec. 23.

The power demand would have been much higher had such an event occurred when more schools and factories were operating and if TVA and local power companies had not already taken a number of steps to curtail power usage.

Since the December outages, Lyash said TVA identified more than 240 improvements needed to maintain better power delivery and most of the upgrades have now been implemented.

TVA is conducting both internal and independent outside reviews of the actions taken both before and during Winter Storm Elliot. In addition, the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. have announced they will open a joint inquiry into the power shortfalls at TVA, Duke Power Co. and other utilities during that storm.

"The National Weather Service referred to Elliot as a once-in-a-generation storm, and in a matter of hours, we saw temperature drops of more than 40 degrees as well as gale force winds across much of our territory," Lyash said.

He said TVA and its local power companies have emergency power procedures in place for exactly that reason to ensure grid stability under the most extreme conditions. "Although we did not want to implement those (rolling blackouts) and we understand their inconvenience, those procedures worked," he said.

Despite the unprecedented power outages in December across the Tennessee Valley, TVA still sold and delivered more power during the most recent fiscal quarter, boosting profits for the federal utility more than nine-fold from the same period a year ago.

TVA reported a 3% increase in electricity sales in the final three months of the calendar year 2022. Due to double-digit increases in electricity charges from higher fuel cost adjustments, TVA's overall revenues increased by 17% over the same time a year ago to top $3 billion. Net income for TVA jumped from $11 million in the last three months of 2021 to $101 in the most recent fiscal quarter.

TVA has not increased its base power rates since 2019, but the utility adjusts its fuel costs every month based on the changing expense of coal, natural gas and purchased power. Next month, TVA will boost its electricity costs again, in part to cover costly power purchases made during December.

In Chattanooga, EPB's effective power rate in February, combining both basic and fuel cost charges, will be up by nearly 13.2% above a year ago. For the typical residential customer using 1,295 kilowatt-hours of electricity a month, the higher fuel cost adjustment will mean power bills next month will be $13.79 higher than they were in February 2022.

Despite the double-digit rate hikes in the past year, Lyash said TVA residential rates remain in the lowest 25% of the top 100 U.S. utilities, and TVA is continuing to provide local power companies with a pandemic relief credit.

"It is a testament to the hard work of TVA's team to control costs and produce ongoing strong financial results in 2022 that we can leave base rates unchanged in 2023 for the fourth consecutive year, a true accomplishment in these times of rising inflation," TVA Chief Financial Officer John Thomas said in a statement.

TVA reported that its economic development staff attracted $2.7 billion of business additions and expansions in the most recent fiscal quarter. The announced investments are projected to create or retain more than 21,700 jobs in the Tennessee Valley.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.