TVA sales flat in first quarter 2013, revenues consistent with prior year

KNOXVILLE—The Tennessee Valley Authority reported Tuesday that electricity sales were relatively flat in the first quarter of fiscal year 2013, total revenues were consistent with the prior year, and net income was down.

“TVA’s total operating revenues remain on plan,” new President and Chief Executive Officer Bill Johnson said. “We continue to drive performance and process improvements in order to provide cleaner and low-cost energy to our customers.”

Higher off-system sales as a result of excess generation and closer-to-normal temperatures for the period, compared with even warmer weather a year ago, contributed to a slight 0.2 percent increase in total electricity sales, TVA said in its quarterly filing to the U.S. Securities and Exchange Commission for the three months ended Dec. 31, 2012.

Sales to TVA’s municipal and cooperative power distributors were up primarily due to the weather. Offsetting these increases were lower sales to directly served industrial customers.

Operating revenues were $11 million higher compared with last year. The increase was primarily due to an $82 million increase in fuel cost recovery and a $14 million increase in other revenue sources, partially offset by an $85 million decrease in base revenue. TVA is transitioning to time-of-use rate structures with its customers, which may result in reduced overall effective base rates in certain periods and higher rates in others.

“As expected, the change in rate products is better aligning rates with the cost of service. We are seeing reduced base rates during transition months and winter months, and expect to see higher revenues during the summer months,” Chief Financial Officer John Thomas said. “However, cost-savings actions we took last year have positioned TVA to remain financially healthy throughout the year.”

Total operating expenses were 4 percent higher than the same period last year, driven primarily by a 24 percent increase in fuel expenses. Offsetting the higher fuel expense was a 23 percent decline in purchased power expenses, as TVA used more of its own generation sources to meet demand. Operating and maintenance expense increased by $39 million, or 4 percent, in the first quarter of 2013. This increase was primarily driven by a $111 million increase for nuclear refueling outages in the first quarter, compared with no refueling outages in the same period last year. Partially offsetting this increase was a $49 million decline in coal-fired operation outage and project expenses.

TVA reported a net loss of $245 million on operating revenues of $2.58 billion in the first quarter of 2013, compared with a net loss of $173 million on revenues of $2.57 billion in the same period last year.

TVA executive management held a first quarter fiscal year 2013 financial conference call on Tuesday, Feb. 5. A replay will be available until 5 p.m. Eastern Standard Time on Feb. 12 by calling toll-free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10023947. A webcast replay and transcript will also be available for one year on TVA’s website at http://www.tva.com/finance.

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, 2012, and is available to investors and the public. TVA SEC reports are also available without charge on TVA’s website at http://www.tva.com/finance or on the SEC’s website at http://www.sec.gov or by calling TVA toll-free at (888) 882-4975.

TVA provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia to a population of over 9 million people.

(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 quarterly report on Form 10-Q for a list of factors that could cause actual results to differ from those in the forward-looking statements.)