Despite a 2.9% drop in electricity consumption from a milder winter this year, higher fuel charges still boosted what ratepayers paid the Tennessee Valley Authority in the past six months by nearly 9.3% to a total of nearly $6 billion in the first six months of TVA’s fiscal year.
Higher prices for natural gas, coal and purchased power boosted TVA’s fuel costs by $432 million in the first half of 2023 over the same period of the prior year. TVA has not increased its base rates in the past four years, but the utility adjusts its electricity charges each month to reflect the cost of fuel used to generate its power.
In its quarterly earnings report released Tuesday, TVA said the number of heating degree days in the first three months of 2023 was down 27% from the same period last year, cutting energy use so far this year even after a historic winter storm just before Christmas created the worst power outages in TVA’s 90-year history.
“Although TVA sustained several days of single-digit temperatures and experienced record-setting demand as a result of Winter Storm Elliott in late December 2022, these impacts were largely offset by TVA experiencing milder weather during the remainder of the six-month period,” TVA said in a filing Tuesday with the U.S. Securities and Exchange Commission.
Even with higher energy bills, TVA’s net income in the most recent quarter dropped to $48 million, or less than a fourth of the $209 million earned in the same period a year ago. For the first half of TVA’s fiscal year, net income was down by nearly a third to $149 million, compared with $220 million a year earlier.
TVA’s operating and maintenance expenses also increased by $103 million over the same period last year, driven by more more spending on new nuclear technologies and overall higher labor costs. The shutdown of more coal plants, including the decision to shut down the two remaining units at the Cumberland Fossil Plant in Middle Tennessee, also boosted depreciation expenses for TVA by $61 million.
Higher interest rates also boosted interest expenses by $3 million with higher rates on short-term debt offset by lower interest on long-term debt.
“I’m proud of our employees who work every day to keep our customer’s energy costs low despite the extreme temperatures in late December, which drove record demand,” TVA President Jeff Lyash said in a statement Tuesday. “We have one of the nation’s cleanest, most diverse generation portfolios — including nuclear, solar, gas and hydro.”
In calendar 2022, TVA’s emissions of carbon dioxide totaled 54 million tons, resulting in a TVA system average, as delivered, CO2 emission rate of 658 pounds per megawatt hour. TVA said that represents a 54% drop in mass carbon emissions and a 50% drop in the carbon emission rate below the 2005 levels when such measurements began.
Lyash said 59% of TVA’s power supply in the current fiscal year was carbon-free — coming from nuclear, hydroelectric, wind and solar generation.
Although TVA’s net income was down, the utility has maintained its 2.5% Pandemic Recovery Credit program for local power companies such as Chattanooga’s EPB. In the current fiscal year, TVA estimates the credit will give back $230 million to local power companies in the current fiscal year.
— Compiled by Dave Flessner