TVA loses $67M in first quarter of 2014

KNOXVILLE, Tenn. ― The Tennessee Valley Authority reports that operating expenses declined and its bottom line results improved in the first quarter of fiscal year 2014 compared with the same quarter a year ago.

“Our efforts to keep rates low and reliability high for our customers by working more efficiently helped to offset lower sales and revenues reported in the first quarter of 2014,” TVA president and CEO Bill Johnson said.

TVA reported a $67 million net loss on operating revenues of $2.38 billion in the first quarter of 2014, an improvement over a $245 million loss on revenues of $2.58 billion for the same period last year.

TVA’s first-quarter filing to the U.S. Securities and Exchange Commission covered the three months ended Dec. 31, 2013, a period between summer and winter when lower demand for electricity typically results in a net loss.

Compared with last year, operating and maintenance expenses were down $112 million, or 12 percent, in the first quarter of 2014. This was driven by a $91 million decrease in expenses from planned outages, projects and scheduled maintenance, and a reduction in contract labor through cost-saving initiatives. A $10 million increase in coal-fired operation outages partially offset the O&M savings.

Total operating expenses were 14 percent lower than the same period last year, driven primarily by a 32 percent decrease in fuel expenses. TVA’s nuclear and hydroelectric generation increased 29 percent and 30 percent, respectively, compared to the first quarter of last year, helping to drive the lower fuel costs. A 2 percent increase in purchased power expense also partially offset higher gas prices.

Operating revenues, impacted by lower fuel recovery costs, were $197 million lower compared with last year’s first quarter. TVA’s use of less-expensive nuclear and hydroelectric generation helped reduce fuel costs recovered through rates by $255 million, a decrease partially offset by a $60 million increase in base revenue.

Total electricity sales were down 3 percent for the quarter, primarily due to the loss of TVA’s largest directly served customer. But sales to local power companies were 7 percent higher as a result of cooler weather than a year ago and some growth in electric demand.

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