NORTH MISSISSIPPI — In its report for the first quarter of fiscal year 2010, the Tennessee Valley Authority (TVA) said reduced power sales and wetter-than-normal weather are key factors that influenced the agency’s financial performance during the three-month period that ended Dec. 31, 2009.
TVA reported net income for re-investment of $150 million in its quarterly report on Form 10-Q filed Feb. 3 with the Securities and Exchange Commission (SEC). That’s compared with a net loss of $305 million for the first quarter of the previous fiscal year, which included $525 million in expenses from the Kingston ash spill recovery effort. Those costs related to the ash spill have subsequently been reclassified by the TVA board as a regulatory asset to be recovered in future rates over 15 years.
Operating revenue for the first quarter was $2.3 billion, a decrease of $728 million, or about 24 percent for the quarter compared with the same period a year ago, mainly resulting from a 4 percent decline in power sales and changes in TVA’s fuel cost adjustment. These decreases were partially offset by an increase in TVA’s base power rates of 8 percent, which provided $165 million in revenue.
“Persistent economic weakness in the TVA service area meant reduced power sales, which we expect will continue throughout the year,” said TVA’s interim CFO John Hoskins. “However, better availability of low-cost power from TVA dams and reduced fuel costs are resulting in lower prices for our customers.”
Operating expenses decreased $1.2 billion from a year ago, primarily because of lower fuel and purchased power expenses as well as costs from the Kingston ash spill.
The weather had a positive impact on the quarterly results. Rainfall in the eastern Tennessee Valley was 134 percent of normal for the quarter. As a result, TVA was able to increase its low-cost hydroelectric generation by 161 percent compared with the first quarter a year ago.
TVA’s capital budget for 2010 includes spending for construction of environmental controls, new generation sources and dry storage facilities for coal combustion products.
Estimated expenses for cleanup costs related to the Kingston recovery effort range from $933 million to $1.2 billion. The estimate does not include costs such as damages that might be awarded in litigation or fines that could be imposed. As ash removal continues, it is possible that additional remediation not included in the estimate may be required.
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