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TVA Power Demand Declines in Warmer Late Winter.

KNOXVILLE, Tenn., May 3, 2011 /PRNewswire/ -- Milder winter weather led to lower electricity demand across the Tennessee Valley Authority's seven-state service territory in the second quarter of the fiscal year, compared with the same period a year ago, the federal utility reported Tuesday.


In its quarterly financial filing with the Securities and Exchange Commission, TVA noted that power demand, which was mainly affected by sales to residential customers of local power companies that distribute TVA-produced electricity, declined 6 percent to 42.9 billion kilowatt-hours for the three-month period ending March 31, compared with the second quarter of 2010. Demand so far in fiscal year 2011 is about 2 percent less than a year ago.

The second-quarter results also were affected by increases in pension and post-retirement benefit expenses; higher operating and maintenance expenses from refueling nuclear plants and outages at coal-fired and gas-fired plants; and higher fuel and purchased power costs, which were partially offset by an increase in fuel-related revenue through the monthly fuel cost adjustment.

"Our balance sheet remains strong, and that positions us well for the challenges ahead," Chief Financial Officer John Thomas said, noting that TVA receives no tax money and makes no profit. "Most immediately, that will help support our recovery from the tornadoes that disrupted power to hundreds of thousands of people across our service area last week."

TVA was making significant progress in restoring service to areas in Alabama, Mississippi and Tennessee that lost electricity in severe storms swept across the region April 27 and 28. The storms damaged or destroyed numerous power lines, disrupting electric service across wide areas. Repairs to the power system were still under way Tuesday, and Thomas said TVA will calculate the financial impact of the storms over the coming weeks.

Also during the storms, the Browns Ferry Nuclear Plant entered safe shutdown status and activated backup power supplies while power lines in the region underwent repairs.

"The Browns Ferry Plant and its safety systems performed as designed, shutting down safely when the severe weather affected its external electricity service," Thomas said. "Browns Ferry was designed to withstand conditions far more severe than last week's storms. The plant, its safety systems and its staff performed well."

In discussing TVA's quarterly financial results, Thomas said demand from commercial and industrial customers of the local power companies served by TVA remained relatively flat compared with the same period a year ago. Power demand by TVA's directly served industrial customers was down about 4 percent. Electricity demand from federal agencies served by TVA was up 10.5 percent.

TVA revenues increased $346 million, or 13 percent, to $3.0 billion in the second quarter of 2011, compared with the same period a year ago when consumers benefited from lower fuel costs.

Operating expenses for the quarter increased $526 million, or 28 percent, to $2.4 billion, over the same period last year. Key factors included a $338 million increase in fuel expenses, an $85 million increase in purchased power costs and a $44 million increase in tax equivalent payments to state and local governments, which are based on sales revenue.

TVA ended the second quarter of fiscal 2011 with $253 million in net income for reinvestment in the power system, down $177 million from the same period a year ago. Because TVA does not make a profit, its net income is reinvested in its operations and infrastructure, which helps keep prices lower for consumers.

The quarterly report also discussed potential lessons to be learned by the nuclear industry from events in Japan and two key developments at TVA since the quarter ended March 31:

* A landmark clean air agreement, adopted by the TVA board of directors April 14, with the U.S. Environment Protection Agency, four states and three environmental advocacy groups to resolve litigation; to retire, idle or environmentally control more than two dozen coal-fired power generation units by 2020, and to invest $350 million in energy efficiency and renewable energy projects to be funded through power revenues.

* A new Integrated Resource Plan, accepted by the TVA board on April 14, that outlines power supply options for TVA over the next 20 years.

"The clean air agreement and the Integrated Resource Plan are significant accomplishments," Thomas said. "They also are important steps towards achieving our vision to be a national leader in low-cost and cleaner energy."

TVA's quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter that ended March 31, 2011, and is available to investors and the public. The public may read reports or other information that TVA files with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. TVA SEC reports are also available on the SEC's website at or on TVA's website at or by calling TVA toll free at 888-882-4975.

The Tennessee Valley Authority (NYSE: TVE), a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia - an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities that can produce about 34,000 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA's service territory are below the national average.

SOURCE Tennessee Valley Authority
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Publication:PR Newswire
Date:May 3, 2011
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