Miller Park dominates the foreground in this early morning view of the Chattanooga skyline. Landmarks such as the Joel W. Solomon Federal Building, Park Plaza, the TVA Building, Lookout Mountain, the Public Library and the Electric Power Board Building are seen in the background. Rain coats the sidewalks and streets of downtown Chattanooga on January 29, 2018. The tri-state had expected snow, but the few flakes made no impact on travel.Mother Nature helped the Tennessee Valley Authority to both boost its electricity sales and cut its power generation costs in the final three months of 2018.
As a result, America's biggest government-owned utility said Thursday it earned $423 million in the first quarter of its fiscal year, or 47 percent more more than a year ago. This week's frigid temperatures in the Tennessee Valley are expected to give TVA another boost in its financial results during the winter quarter.
The gain in income for TVA came as the utility also reported a record first quarter for attracting new industry to the Tennessee Valley. In the three months ended Dec. 31, TVA said more than $4.3 billion of new capital investment was announced with projections of more than 25,000 new jobs from the projects.
The projects announced in the quarter included the $230 million Amazon operations center in Nashville, projected to generate 5,000 jobs, and another Amazon fulfillment center in Marshall County, Mississippi, expected to create more than 850 jobs.
TVA is on pace for a record year in economic development following the $11.3 billion and 65,400 jobs added in the Valley during all of fiscal 2018.
During November, TVA recorded its second highest peak power demand ever for the month at 26,714 megawatts when the 7-state average temperature in the Tennessee Valley fell to 24 degrees Fahrenheit. The cold November followed an unseasonably warm October, which also boosted air conditioning use.
According to the U.S. Bureau of Census, about 80 percent of the Tennessee Valley homes use electric heat in some form, either heat pumps, electric baseboards or plug-in space heaters, TVA spokesman Scott Fiedler said.
In addition to managing the temperature volatility, TVA's system benefited last year by the highest annual rainfall recorded in 129 years of record keeping. Rainfall last year was 53 percent above normal, which boosted hydro generation from TVA's 29 power-generating dams by 42 percent. Hydroelectricity generation is TVA's cheapest source of power.
"Our robust hydroelectric power fleet was able to take advantage of the excess rainfall to generate additional low cost energy that helped offset otherwise higher fuel expenses," TVA CEO Bill Johnson said in an earnings report.
TVA also continued to cut its debt, reducing its financial obligations by 6 percent, or $1.6 billion. That helped to lower TVA's interest expenses by $302 million, TVA Chief Financial Officer John Thomas said.
TVA is no longer building any major new baseload power plants so its capital expenditures are declining from the peak levels reached in recent years.
"Consistent execution of TVA's financial plan is helping TVA reduce debt," Thomas said. "And reducing debt will continue to have a positive impact on financial results and power rates in the future, just as we have seen so far this fiscal year."
TVA said its effective delivered cost of electricity averaged 7.04 cents per killwatthour in the final three months of 2018, or 4 percent more than a year earlier.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340