The Tennessee Valley Authority is extending $1 billion of credit support to local power companies like EPB to give power cooperatives and municipal utilities more flexibility for their customers in paying electric bills due to the economic upheaval caused by the coronavirus.
"The impact of the COVID-19 outbreak on the communities we serve is unprecedented and creates a degree of economic uncertainty in the weeks and months ahead," TVA President Jeff Lyash said Thursday. "We recognize that we have a responsibility to leverage TVA's resources and expertise to provide local power companies the stability and flexibility to address the unique challenges faced by their customers."
TVA announced Thursday that it will allow a portion of a local power company's monthly TVA wholesale power payments to be deferred for a period during the ongoing COVID-19 response "and an appropriate repayment plan will be put in place." Lyash said the new initiative, which is unprecedented in TVA's 87-year history, follows TVA' earlier move to allow local power companies to halt disconnection of electric service.
EPB announced last week it will suspend any power cutoffs during the current coronavirus threat.
The spreading COVID-19 pandemic is expected to hurt both consumers and their utilities as more people struggle to pay their electric bills and power consumption declines. Lyash estimates power sales could drop by 3% or more due to the shutdown of schools, stores, factories and other businesses and cutbacks in jobs, travel and overall economic. Already, Lyash said commercial power use is down, although residential electricity consumption has increased as work and schooling has shifted to home environments and people are spending more time and using more energy at home.
TVA is both the wholesale supplier and regulator for the 154 power cooperatives and municipalities that collectively distribute TVA-generated electricity to 10 million people and businesses. Unlike investor-owned utilities regulated by state Public Service Commissions, the TVA Act gives broad authority to the TVA board to set its own rates and schedules. Lyash said that allows TVA to respond quickly to the changing market and to focus on serving the public, not company shareholders.
After paying down its debt to the lowest level in 30 years, Lyash said TVA's balance sheet is strong enough to afford more flexibility to its customers who may be hard hit by the coronavirus as it spreads across America. TVA estimates about 70% of the cost of delivering power to the ultimate user is fixed in transmission lines, power plants and other infrastructure that cost the same regardless of how much power is sold.
"What you see is reduced revenue (due to lower power sales) coming into local power companies and challenges for those local power companies to address specific needs of their customers during this uncertain time," Lyash said.
The credit support for the local power companies is part of TVA's economic development mission to help its 7-state service region, Lyash said. But the TVA CEO said he hopes to limit credit extensions and any debt deferrals to those local power companies that truly need the assistance.
"The strength of public power is a passionate commitment to serve people over balance sheets," said Lyash. "We recognize our responsibility to help maintain the stability and health of these 154 local power companies and to help the Valley position to be able, as we get through this COVID-19 crisis, to recover economically."
Contact Dave Flessner at email@example.com or at 423-757-6340.