Warmest December in 50 years proves costly for TVA

Warmest December in 50 years proves costly for TVA

Utility loses $37 million in first fiscal quarter

February 3rd, 2016 by Dave Flessner in Business Around the Region

The TVA building and Market Street in downtown Chattanooga are seen from the roof of the Edney Building.

Photo by Dan Henry /Times Free Press.

The warmest and wettest December in a half century proved costly for the Tennessee Valley Authority, which sold 8 percent less electricity at the end of 2015 than it did a year ago and lost $37 million in the first quarter of the utility's fiscal year as a result.

"TVA typically budgets for a small loss in the first three months of its fiscal year." TVA President Bill Johnson said during an earnings call with industry analysts Wednesday.

But the drop in power sales was especially acute during the first quarter of fiscal 2016, especially since colder-than-normal weather boosted power usage from electric heaters in the same time a year earlier.

The federal utility reported a net loss of $37 million on revenues of $2.28 billion in the final three months of calendar 2015. In the same period a year earlier, TVA earned $81 million on revenues of $2.41 billion.

Despite a $56 million drop in fuel costs, TVA's operating expenses were up $52 million over the previous year due to an additional nuclear plant refueling outage and extra expenses for repairs at the Boone Dam.

Abundant rains in December boosted generation from TVA's cheapest energy source — its 29 hydroelectric dams. During December's record- breaking rains, TVA estimates its dams helped avert $130 million of flood damage in just the Chattanooga area.

"This past December was both the warmest and also one of the wettest in TVA history," TVA Chief Financial Officer John Thomas said. "Guntersville Reservoir, for example, had 9 inches of rainfall on Christmas Day alone — something that happens only every 100-200 years."

While record rains fell during the holidays across TVA's seven-state region, temperatures remained unseasonably high with the thermometer rising into the 70s on Christmas Day in Chattanooga.

EPB in Chattanooga said the number of heating days at the end of 2015 totaled 352, or only about 53 percent of the normal 660 degree days in a typical December.

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