TVA debt rising after 30-year low
After falling last year to a 30-year low, the debt of the nation’s biggest government utility is rising again due to investments in new generation and transmission.
The Tennessee Valley Authority reported Tuesday that its long-term debt rose from $18.8 billion at the end of the last fiscal year on Sept. 30 to nearly $19.8 billion at the end of the most recent fiscal quarter. TVA is investing more than $2.8 billion to upgrade its transmission system over the next five years, including the construction of a $300 million system operations center in Meigs County, and TVA is planning to build more combined cycle natural gas plants and small modular reactors to boost its power generation.
TVA’s debt is still down by more than 20% from its peak reached more than a decade ago when the Government Accounting Office warned TVA that its borrowing levels could threaten its future. With the implied backing of the U.S. government, TVA is able to borrow money at lower rates than most investor-owned utilities and TVA has reported steady profits over the past decade and has boosted overall revenues while trimming its long-term debt.
TVA Chief Financial Officer John Thomas said Tuesday he expects that short-term interest rates for TVA will be pushed higher by the Federal Reserve Board, which is expected to again raise its short-term interest rate target by another quarter of a percentage point on Wednesday.