Aided by cost cuts and increased power sales, the Tennessee Valley Authority started its fiscal 2018 by nearly tripling its quarterly net income even with lower average power rates in the three-month period ended Dec. 31.
TVA said Friday it earned $288 million on electricity sales of nearly $2.55 billion in the first quarter of the utility's fiscal year. In the same period a year ago, TVA reported net income of $102 million on sales of $2.54 billion.
TVA officials said January's cold spell, which generated the biggest single power consumption day in the utility's 85-year history, will generate even more revenues and income this quarter.
Power sales were up about 2 percent in the past quarter on more normal weather following the milder fall in 2016.
Even with higher sales volume at the start of fiscal 2018, fuel and purchased power expenses were still down 14 percent in the past quarter, or $115 million, primarily due to an increase in TVA's cheapest power source - hydroelectric production from TVA's 29 power-generating dams "fueled" by more abundant rains last year.
TVA sets new records
› On Jan. 17 when temperatures stayed well below freezing all day, TVA delivered 706 million kilowatthours, an all-time single-day record in TVA's 85-year history.› TVA met three of the top 12 all-time winter power peaks last month › TVA's Browns Ferry Nuclear Power Plant in Alabama recently set a 3-unit continuous run record of 285 days.› Browns Ferry's three reactors generated more than 28 billion kilowatthours of electricity in 2017, an-all time record for any TVA nuclear plant.› TVA helped attract $5 billion of business investment with 20,600 more jobs in the final three months of 2017 - the best start for economic development success ever in the first fiscal year quarter.Source: Tennessee Valley Authority
TVA also benefited by slightly lower natural gas prices.
"Power consumers in the Tennessee Valley are seeing significant benefits from the investments we've made to diversify TVA's power system," TVA Chief Executive Officer Bill Johnson said in a statement. "More than half of the energy supplied by TVA in the first quarter came from carbon-free sources - nuclear, hydro and other renewables that are helping the power system deliver safe, reliable, and cleaner energy - at a lower cost.
Johnson said TVA residential rates are lower than 70 percent of its competitors and are about 2 percent below the rates charged five years ago due to lower fuel costs and more than $600 million of cuts in TVA's annual operating expenses.
Over the past four years, TVA has cut its staff by more than 2,000 employees.
"TVA customers are seeing the benefits of lower costs from each of our major expense categories - lower fuel and purchased power expense, greater efficiency in how we operate and declining interest on debt," TVA Chief Financial Officer John Thomas said.
Although interest rates are expected to edge higher this year, Thomas said TVA is continuing to cut its debt enough to continue to lower overall interest expenses.
With more normal rainfall, TVA also was able to increase hydroelectric generation in the first quarter, which accounted for about 9 percent of total power supply, versus only 5 percent during the same period last year.
"We're off to a good start in 2018," Johnson said. "While we remain focused on keeping those we serve safe and warm, we'll also be working this spring to keep our fleet well maintained and ready for the summer heat."
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.