TVA Reports Higher Electricity Demand in Fiscal Year 2010

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Nov 19, 2010, 03:05 ET

KNOXVILLE, Tenn., Nov. 19, 2010 /PRNewswire/ -- Extreme summer and winter temperatures and a slowly improving economy increased demand for electricity from the Tennessee Valley Authority by about 6 percent in fiscal 2010, compared with the previous year, the utility reported Friday in its annual Form 10-K, filed with the Securities and Exchange Commission. TVA also maintained 99.999 percent service reliability for the 11th straight year and reduced its electricity prices by more than 9 percent from 2009 levels.

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TVA's revenues decreased 3.4 percent during the fiscal year, which ended Sept. 30, to $10.9 billion, from the previous year. The $381 million drop resulted mainly from lower prices. TVA also collected less money through the fuel cost adjustment portion of power bills, which changes monthly to reflect the costs of coal, natural gas and other purchases TVA must make to produce electricity for the 9 million people in its seven-state service territory.

"Not many utilities would say they had a good year when revenues were down," President and CEO Tom Kilgore said. "But TVA did have a good year when we produced more electricity than the year before with lower revenues. Because TVA doesn't make a profit, one way we measure success is keeping prices low for our customers."

The average monthly wholesale rate for electricity from TVA during fiscal 2010 was 6.17 cents per kilowatt-hour, compared with 6.8 cents for 2009 -- a reduction of 9.3 percent. Local power distributors buy electricity at wholesale rates and then sell it to homes and businesses at retail prices that are consistently below the national average.

"Our fuel costs were less than forecast for part of the fiscal year, which was reflected in lower prices for our customers," Chief Financial Officer John Thomas said.

TVA's operating expenses were down about 7 percent to $8.6 billion, attributed in part to a 32 percent decrease in purchased power costs. The savings were partially offset by an increase in operation and maintenance charges, including a $344 million increase in pension and retirement benefit expenses.

TVA reported $972 million in net income for reinvestment in fiscal year 2010, up by more than 34 percent from the year before. As a government-owned corporation, TVA does not make a profit, and it reinvests net income in its power business, specifically on projects that expand and improve TVA's infrastructure. TVA receives no taxpayer money and is self-financing.

In accordance with its renewed corporate vision of being a leading producer of cleaner low-cost electricity, TVA added to its renewable energy portfolio during fiscal 2010. The corporation signed seven contracts to purchase a total of up to 1,380 megawatts of wind power capacity from the Midwest, which has a greater capacity to produce wind power than the Southeast. TVA also contracted with a company to manage a demand response program with large business and industrial customers to reduce TVA's peak electricity load by up to 560 megawatts.

The 10-K report also includes compensation information for top TVA executives, as required by the Securities and Exchange Commission.

TVA's annual report on Form 10-K provides additional financial, operational and descriptive information, including audited financial statements for the year that ended Sept. 30, 2010, 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 also are available on the SEC's website at www.sec.gov, and copies are available on TVA's website at www.tva.com/finance or by calling TVA toll free at 888-882-4975.

(This release and TVA's annual report on Form 10-K 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.)

The Tennessee Valley Authority, 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