The Tennessee Valley Authority boosted its net income by 68 percent in the the first three months of 2015 as the utility's cost-cutting measures offset a drop in electricity sales compared with a year ago..
TVA said today it earned $496 million on $2.86 billion in revenue for the second quarter. In the same period a year ago, TVA had net income of $295 million on $2.94 billion in revenue.
Total operating expenses in the three months ended March 31 were $392 million lower than the same time last year, primarily because of lower fuel expenses, and lower operating and maintenance costs.
For the first half of it current fiscal year, TVA generated $46 million less operating revenue than a year ago resulting primarily from lower fuel recovery revenues. TVA has a monthly fuel-cost adjustment that combined over the past six months to save TVA customers $133 million versus what they paid a year earlier.
Despite a colder winter, total sales of electricity for the first half of the fiscal year were down 1.5 percent versus the same period last year, including a 1.2 percent drop in sales to local power distributors such as EPB in Chattanooga.
Colder winter weather still drove the number of heating degree days in the first half of the year 10 percent higher than normal. TVA set a new all-time demand record for the month of February when temperatures averaged 7 degrees Fahrenheit across its 7-state service area the morning of Feb. 19and peak power demand exceeded 32,000 megawatts.
"This winter tested the resiliency of our system," TVA President Bill Johnson said in a statement today.. "Through our balanced energy portfolio, the dedication of our employees and the cooperation of our customers, TVA again met a period of record demand safely and reliably."
Compared with last year, TVA total operating expenses were 8.7 percent lower in the first half of the year, driven by a $255 million, or 15.9 percent, decline in operating and maintenance expense. Fuel and purchased power expenses were $142 million, or 8 percent lower than the same period last year because of lower overall fossil and natural gas fuel rates.
TVA invested $1.4 billion in construction expenditures in the first half of fiscal 2015, up $266 million from last year. Most of TVA's capital spending this year has been in building the Watts Bar Nuclear Plant's Unit 2 reactor project near Spring City, Tenn. and two new combined-cycle natural gas facilities at the Paradise plant in Kentucky and Allen plant in Memphis. TVA is building gas plants replace old coal plants TVA plans to shut down.
"We continue to make investments in new capacity that will balance our system, provide a cleaner portfolio, and ensure our transmission system reliability meets our customers' expectations," Johnson said.
TVA's cost-cutting initiatives led to $56 million of savings versus last year, largely due to lower labor costs after TVA cut its workforce by 2,000 employees over the past couple of years. Johnson said TVA remains on track to achieve its three-year goal of reducing annual operating and maintenance expenses by $500 million in fiscal 2015.