Knoxville, TN — Warmer-than-normal weather in the spring and early summer, along with an improving economy, helped boost Tennessee Valley Authority electricity sales by 6 percent in the third quarter of fiscal 2010, compared with the same period a year earlier.
“Average temperatures were nearly 5 degrees hotter than normal in May and June across our service area,” Chief Financial Officer John Thomas said. “Sales to large industrial customers during the period were up 12 percent over the same time a year ago, indicating some signs of growth in the regional economy.” TVA’s fiscal third quarter includes the months of April, May and June.
In addition to higher sales, TVA’s rates for electricity were slightly lower during the third quarter than the same period last year. The region experienced a wetter-than-normal fall and above-average rainfall in May, enabling TVA to run lower-cost hydroelectric generation at 36 percent above 2009 output through the first three quarters of the fiscal year.
“Increased hydro generation, combined with lower prices for fuel, allowed TVA to provide power to our customers at rates that were lower than the same time a year ago,” Thomas said.TVA reported net income for reinvestment of $199 million in its quarterly report for the three months ending June 30th, 2010, on TVA’s Form 10-Q filed Monday, August 2nd, with the Securities and Exchange Commission. That compares with a net loss of $167 million for the third quarter of the previous fiscal year, which included $258 million in expenses from the Kingston ash spill recovery effort. The TVA Board of Directors subsequently approved recovering those costs in power rates over 15 years.
TVA, which does not make a profit, reinvests net income in its power business, including new generation capacity, environmental controls, transmission improvements and energy efficiency projects. TVA receives no taxpayer money.
Despite increased sales, operating revenue for the third quarter increased by only 1 percent to $2.59 billion – up from $2.57 billion from the third quarter of 2009. Revenue remained nearly flat, mainly because of decreases in the fuel cost adjustment, which reflected reduced expenses for fuel and purchased power. Year-to-date revenues were down 12 percent from the nine-month period a year ago, mainly because of the lower fuel cost adjustment.
Fuel and purchased power expenses for the quarter dropped by nearly 25 percent from the same time a year ago. Operating expenses overall decreased $352 million from a year ago to $2.1 billion. Operating expenses for the first nine months of the fiscal year were also 27 percent lower than the same period a year ago, primarily because of lower fuel and purchased power expenses. Expenses recognized for the Kingston ash spill recovery are not present in the 2010 figures.
Financial markets continued to fluctuate greatly in the first nine months of the fiscal year. However, investments in TVA’s nuclear decommissioning trust, asset retirement trust and pension funds all experienced modest gains during the fiscal year-to-date. The decommissioning fund also met its federal funding requirements as of June 30th.
“A great deal of uncertainty remains in the economic outlook,” Thomas said. “Still, TVA will continue to maintain its infrastructure and invest in new power assets to provide reliable service for our customers.”
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter that ended June 30th, 2010, and is available to investors and the public. The public may read reports or other information that TVA files with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. TVA SEC reports also are available on the SEC’s website at www.sec.gov, and copies are available on TVA’s website at www.tva.com/finance or by calling TVA toll free at 888-882-4975.
About the Tennessee Valley Authority
The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities and supplies up to 33,700 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA’s service territory are below the national average.