Tennessee Valley Authority (TVA) President and CEO Bill Johnson said Nov. 23 that the federal utility exceeded its targets for cost reductions during the past fiscal year.
As a federal entity, the TVA fiscal year runs from Oct. 1 through Sept. 30.
TVA reported more than $1.1bn of net income for fiscal year 2015 in its annual filing for the 12-month period. Net income was $642m higher compared with fiscal year 2014 due to $760m lower operating expenses – an 8% decrease. Total operating revenues for 2015 were 1% lower than the prior year, at $11bn, on sales of electricity that were essentially flat on a year-over-year basis.
TVA had publicly said a year ago that it wanted to reduce operating expenses $500m. During a conference call on FY 2015 results, Johnson said that he had personally expected that TVA could achieve a $540m reduction.
The deeper cut in operating costs is a tribute to TVA employees who were able to find ways to work more efficiently, Johnson said. TVA has previously discussed at length its coal plant retirements and its reduction in staff levels over time.
The deep cuts in operating costs were important because the incremental increase in demand for electric generation that TVA expected did not materialize.
“This was a strong year for TVA and our customers,” Johnson said. “We saw slightly lower operating revenues on essentially the same level of sales, meaning the effective rate our customers paid was lower.”
One of the bigger developments during the past year was the Nuclear Regulatory Commission (NRC) granting TVA approval to load nuclear fuel at Watts Bar 2, “which we expect to do soon,” Johnson said. The 1,150-MW nuclear unit is scheduled to begin commercial operations early in 2016.
In 2015, TVA’s asset portfolio was 47% non-emitting. TVA relied on nuclear for 34% of its energy; hydro 10% and wind-and-solar 3%. The other 53% was split between coal (36%) and natural gas (17%).
In 2020, TVA expects that its portfolio will be 55% non-emitting with nuclear accounting for 41% along with hydro (10%) and wind/solar (4%). Coal will shrink to 22% of the TVA portfolio in 2020 while natural gas will be 23%.