Electricity sales down with mild temperatures; heavy rainfall boosted low-cost power, TVA says

KNOXVILLE—The Tennessee Valley Authority reported Monday that electricity sales were lower in the third quarter of fiscal year 2013 than for the prior period due largely to mild temperatures, while heavy rainfall boosted low-cost hydroelectric generation.

“Both sales and revenues were down in the third quarter. This was offset largely by our efforts to reduce operating costs,” TVA President and Chief Executive Officer Bill Johnson said. “We are focused on making sure TVA lives within our means to continue to keep rates low for our customers and the people of the Tennessee Valley.”

Sales to local power companies were 4 percent lower in the third quarter and were 2 percent higher in the first nine months of 2013 compared with the same periods last year. Lower sales to directly served industrial customers were offset by higher off-system sales as a result of excess generation, TVA said in a filing Monday to the U.S. Securities and Exchange Commission for the third quarter ended June 30, 2013.

Total revenues declined 6 percent in the quarter and were relatively flat for the year to date compared with the same periods last year. The third-quarter decrease was driven by declines in base revenue as local power companies selected new wholesale rate structures and in fuel cost recovery due to lower electricity sales.

Fuel expense decreased $31 million in the third quarter compared with a year ago, benefitting from a 226 percent increase in low-cost hydroelectric generation and record rainfall. “The performance of the River Operations staff in managing more than 40 inches of rain this year across the Valley has been a true highlight,” Johnson said.

Fuel costs for the year to date are $271 million higher than the same period a year ago due to nuclear outages requiring more generation from higher-cost sources, particularly coal.

Operating and maintenance (O&M) expense decreased $16 million in the third quarter as TVA continued to retire or idle less-efficient coal-fired units. O&M expense was $37 million higher for the year to date due to four nuclear refueling outages and a steam generator replacement project in the first nine months of 2013 compared with two nuclear refueling outages in same period of 2012.

“We continue to concentrate on improving cost management through asset planning, on performance improvement, and on economic development to ensure we remain competitive and meet our goal of becoming a national leader in low-cost energy,” Chief Financial Officer John Thomas said.

For the quarter ended June 30, 2013, TVA reported a net loss of $12 million on $2.6 billion in operating revenues, compared with a net loss of $23 million on $2.8 billion in revenues in the same period a year ago.

For the first nine months of fiscal 2013, TVA had a net loss of $203 million on $7.9 billion in operating revenues, compared with a net loss of $290 million on $7.9 billion in operating revenues in the same period of 2012.

TVA executive management hosted a third quarter fiscal year 2013 financial conference call on Monday morning. A replay will be available one hour after the end of the conference call until 5 p.m. EDT, Aug. 13, by calling toll free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10029967. 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 June 30 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.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving nine 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.