The Tennessee Valley Authority reported on May 1 a net income of $577 million for the first six months (October 2014-March 2015) of fiscal year 2015, a $349 million increase compared with the same period last year.
“It takes a collective effort by all of our employees to produce the sort of results we have seen so far this year,” TVA President and CEO Bill Johnson said.
TVA reported $496 million of net income on $2.86 billion in revenue for the second fiscal quarter, compared with $295 million of net income on $2.94 billion in revenue during the same period the year before.
For the first half of FY 2015, TVA generated $46 million less operating revenue than a year ago resulting primarily from lower fuel recovery revenues. Lower fuel rates saved TVA’s customers $133 million versus last year.
Total sales of electricity for the first half of the fiscal year were down 1.5$ versus the same period last year. Sales to local power company customers fell 1.2% for the first six months of the year as compared with the same period last year because of extreme weather patterns. However, 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 across its service area the morning of Feb. 19 and peak power demand exceeded 32,000 MW.
“This winter tested the resiliency of our system,” Johnson said. “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. This was truly a team effort.”
TVA has invested $1.4 billion in construction expenditures so far this fiscal year, $266 million more than last year. Investments in cleaner capacity expansion at the Watts Bar Nuclear Plant’s Unit 2 reactor project and two new combined-cycle natural gas facilities at the Paradise and Allen coal sites, remain the primary drivers of the increase.
The Watts Bar Unit 2 construction project continues on track with an estimate to complete ranging from $4.0 billion to $4.5 billion and commercial operation between September 2015 and June 2016. Based on construction and testing progress to date, fuel load is currently forecast for the summer of 2015 with commercial operation by December 2015. Challenges that could potentially affect the forecast include completing complex work and required documentation; reverification of previously completed systems; addressing emergent work identified during testing; current and emergent licensing issues; and successfully transitioning the site into dual-unit operation (that includes the existing Unit 1).
“Our efforts to diversify TVA’s generating portfolio further are providing lower, more stable fuel costs for our customers,” Chief Financial Officer John Thomas said. “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.”
During the second fiscal quarter, the TVA board of directors approved resolutions authorizing a power purchase agreement with a planned 80-MW, utility-scale solar farm in Alabama and the acquisition of a 700-MW, combined-cycle gas plant in Mississippi, which was subsequently completed in April. On April 14, TVA acquired this plant located in Ackerman, Mississippi, from Quantum Choctaw Power, an affiliate of Quantum Utility Generation. TVA had purchased the electricity generated by the plant since 2008. TVA acquired the plant for total cash consideration of $342 million.
Also during the second fiscal quarter, TVA released a draft Integrated Resource Plan for public review. The plan provides an evaluation of options to meet a variety of demand growth scenarios over the next 20 years. A final version is expected to be presented to the TVA Board later this summer.
TVA noted in its May 1 quarterly Form 10-Q report that Units 1-4 at its Raccoon Mountain Pumped-Storage Plant in Tennessee, with a total net summer capability of 1,616 MW, were taken out of service for maintenance activities in 2012 after an inspection of the turbines in each unit identified cracking in the rotor poles and the rotor rims. Maintenance overhauls on all four units were subsequently completed. However, an unrelated issue was identified in certain oil-filled power cables that convey power out of the facility, resulting in TVA limiting service to three units until resolved. As of March 31, three of the four Raccoon Mountain units were in service. The return to service date for the fourth unit is estimated to be in the third quarter of 2015.
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving 9 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.