KNOXVILLE ― The Tennessee Valley Authority reported $2.3 billion in total operating revenues on 36.7 billion kilowatt-hours of electricity sales for the three months ended Dec. 31, 2020.
Sales of electricity to local power companies were not significantly impacted by the ongoing COVID-19 pandemic but were slightly lower compared to the same period of the prior year due to milder weather. Sales to directly served industries and others increased.
Total operating revenues decreased about 11% over the same period of the prior year, driven primarily by lower demand volume, lower effective base rates, and lower fuel cost recovery revenues.
TVA’s tax equivalents and interest expenses were lower in the first quarter of fiscal year 2021 than in the same period of the prior year, while operating and maintenance increased slightly. TVA’s fuel and purchased power expense was 10% lower year-over-year, primarily driven by lower natural gas prices, improved nuclear fleet performance and more hydroelectric generation.
“The public power model works and its strength, combined with the dedicated work of our employees and partners, continues to show in these results,” said Jeff Lyash, TVA president and chief executive officer. “Our customers are paying lower rates than a decade ago, which makes an even greater impact on the continued recovery of the regional economy.”
Operating and maintenance expense was $26 million higher, driven primarily by an increase in planned outage expense and labor escalation.
TVA’s depreciation and amortization expense was $206 million lower during the quarter versus the same period in the prior year, due to a $201 million decrease related to the 2019 decision to accelerate the retirements of Bull Run and Paradise.
Interest expense was $281 million for the first quarter of fiscal year 2021, which was a 2% decrease from the same period of the prior year, driven by lower average debt balances.
“We were very pleased to see results in the first quarter that continued to demonstrate the improvements in TVA’s financial health,” said John Thomas, TVA’s chief financial officer. “These remarkable results can be attributed to overall lower operating costs and debt reduction, with the key benefit being overall lower rates for our customers.”
Additional highlights from TVA’s first quarter fiscal year 2021 include:
- As part of the Strategic Financial Plan approved by the TVA Board in 2019, TVA offers a 20-year Valley Partnership Agreement option to local power company customers. As of Feb. 11, 2021, 142 local power companies had accepted the offer and are now TVA long-term partners. Bill credits available to long-term partners totaled over $42 million in the first quarter of fiscal year 2021.
- In 2020, the TVA Board approved a Pandemic Relief Credit that became effective beginning in October 2020 as a 2.5% monthly base rate credit, approximately $200 million for 2021. As of Dec. 31, 2020, TVA had provided approximately $49 million in Pandemic Relief Credits. TVA is also offering the Back-to-Business credit program that provides relief to certain larger customers when returning to operations and the Community Care Fund where partnering with LPCs to support local initiatives that address hardships created by the COVID-19 pandemic. TVA remains committed to supporting communities and customers across the Tennessee Valley during the region’s ongoing recovery.
- TVA’s service territory experienced overall milder weather during the first quarter of the fiscal year 2021. Total heating and cooling degree days for the quarter ended Dec. 31 were 6% below normal, and 9% below the same period in the prior year.
- Rainfall and runoff in the Tennessee Valley during the first quarter of 2021 were 105% and 135% of normal, respectively.
- TVA’s economic development efforts, combined with our reliability and low costs, continue to attract and encourage the expansion of business and industries in the Tennessee Valley, with over $2.3 billion in investments and more than 32,100 jobs were created or retained during the first quarter of 2021.
Selected Financial Data – Three Months Ended December 31
|Sales, Revenues & Expenses||2020||2019|
|Sales (millions of kWh)||36,672||36,667|
|Operating Revenues ($ millions)||$ 2,304||$ 2,578|
|Fuel & Purchased Power Expense||575||642|
|Operating & Maintenance Expense||715||689|
|Net Income||$ 184||$ 192|
|Net Cash Provided by / (Used in) ($ millions)|
|Operating Activities||$ 595||$ 838|
TVA’s quarterly report on Form 10-Q provides additional financial, operational, and descriptive information, including unaudited financial statements for the quarter ended Dec. 31, 2020. TVA’s quarterly report and other SEC reports are available without charge on TVA’s website at http://www.tva.com/investors, on the SEC’s website at http://www.sec.gov, or by calling TVA toll free at 888-882-4975.
This release may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying these statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements. Please refer to TVA’s most recent annual report on Form 10-K and quarterly report on Form 10-Q for a discussion of factors that could cause actual results to differ from those in the forward-looking statements.
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power companies serving nearly 10 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.