The Tennessee Valley Authority earned only about a third as much in net income this spring as it did a year ago due to milder weather and energy efficiency cutting into power usage this year and additional write offs for TVA's coal ash cleanup and shuttered power plants reducing income.
But the federal utility is still continuing to pay down its debt and is on pace to earn more than $1 billion in the current fiscal year for the fourth time in the past five years.
TVA said today that it earned $165 million in net income on quarterly revenues in the April-June period on nearly $2.6 billion in revenues. In the same period a year ago, TVA earned $470 million on $2.7 billion in revenues.
Net income for the nine months ended June 30, 2019, was $829 million, down 32 percent from net income of $1.2 billion for the same period of fiscal year 2018.
TVA's fuel and purchased power expense was 3 percent lower than the nine-month period ended June 30, 2018, driven by a $114 million decrease in fuel expense. Lower commodity prices and significantly more hydroelectric generation from increased rainfall helped drive fuel expense down.
"We were pleased to be able to keep our power rates essentially flat through the first nine months of this year," Jeff Lyash, TVA's president and chief executive officer, said in a statement today. "The diversity of TVA's power system let us benefit from lower natural gas prices and higher hydroelectric production to keep costs low for our customers."
TVA raised its base wholesale power rates nearly 2% last October, but its monthly fuel cost adjustments for the fuel portion of its power bills have offset tht increase for most consumers.
TVA continued to pay down its debt, cutting its net long-term debt by $1.08 billion in the past 12 months, according to TVA's financial filing today with the U.S. Securities and Exchange Commission. That helped cut TVA's interest expense by $40 million, or 4% less than a year ago, n the nine-month period ended June 30, 2019.
"We continue to get TVA's financial house in order by keeping controllable costs low and being responsible with TVA's balance sheet," said John Thomas, TVA's chief financial officer. "Our customers are benefitting in 2019 from our cleaner, more diverse power system, lower debt and more efficient operations."
TVA said operating and maintenance expense was up $408 million in the first nine months of the fiscal year, or 22 percent higher than the previous year, due to a number of costs:
- $162 million of accelerated recovery of deferred environmental costs, including the ongoing cleanup of TVA's coal ash disposal sites.
- $160 million of project write-offs for the anticipated retirement of certain generating units, and
- $66 million of increased outage expense due to additional nuclear plant outage days.
In today's earnings announcement, TVA also said its economic development programs helped attract more than $8 billion in investments and more than 58,500 jobs to TVA's 7-state region during the past nine months.