TVA Maintains Reliability and Low Rates in 2020
KNOXVILLE, Tenn., Nov. 17, 2020 /PRNewswire/ -- The Tennessee Valley Authority reported $10.2 billion in total operating revenues on more than 151 billion kilowatt-hours of electricity sales for the fiscal year 2020. Sales of electricity were about 5% lower compared to the prior year due to overall milder weather and impacts of the COVID-19 pandemic.
Total operating revenues decreased about 9% from the prior year driven primarily by lower sales volume, lower effective base rates, and lower fuel cost recovery revenues. TVA estimates base revenues were approximately $185 million lower due to the impacts of the COVID-19 pandemic.
TVA's fuel, purchased power, operating and maintenance, tax equivalents, and interest expense were all lower in 2020 than in 2019. TVA's fuel and purchased power expense was 15% lower year-over-year, primarily driven by lower effective fuel rates and lower energy sales due to impacts of milder weather and COVID-19, as well as the increased generation of nuclear power.
"TVA's strong financial position helped us absorb the impacts of the pandemic in 2020 and still provide extra support for our customers," said Jeff Lyash, TVA president and chief executive officer. "And TVA was in a position to reduce effective power rates for customers for 2021, when our communities need relief the most. This would not have been possible without the ongoing financial discipline of our employees."
Operating and maintenance expense was $370 million lower, driven primarily by less project write-offs and regulatory asset recovery for certain environmental cleanup costs that did not occur in the current year. TVA continues to implement various cost savings initiatives in response to the COVID-19 impacts.
Interest expense was $1,142 million in 2020, which was a 5% decrease from 2019, driven by lower average debt balances. TVA's debt has decreased to the lowest level in over 30 years.
"TVA is one of the most competitive utilities in the nation, as our results through 2020 demonstrate," said John Thomas, TVA's chief financial officer. "The effective rate our customers pay is among the lowest in the country, and has been stable for the past seven years even while we have reduced debt by $6 billion and invested over $15 billion in the power system - and we remain on target to keep rates stable for this decade."
Additional highlights from TVA's fiscal year 2020 include:
-- As part of the Strategic Financial Plan approved by the TVA Board in
2019, TVA began offering a 20-year Valley Partnership Agreement option
to local power company customers. As of Nov. 16, 2020, 142 local power
companies had accepted the offer and are now TVA long-term partners.
Bill credits available to long-term partners totaled over $163 million
in 2020.
-- Due to higher volatility in the financial markets from COVID-19, TVA
increased its target balance of cash and cash equivalents in March 2020
as a precautionary measure. TVA continued to hold higher target cash
balances at Sept. 30, 2020. TVA has maintained continued debt market
access since the outbreak of the pandemic. In May, TVA issued $1 billion
of power bonds to take advantage of the historically low interest rate
environment and to meet its ongoing funding needs.
-- In response to the pandemic, TVA is offering up to $1 billion of credit
support available as an option to local power companies through the
deferral of wholesale power payments, based on the needs of individual
local power companies, along with the Back-to-Business credit program
that provides relief to certain larger customers when returning to
operations. TVA remains committed to supporting communities and
customers across the Tennessee Valley during the region's ongoing
recovery.
-- Despite record-setting heat experienced during October 2019 and
record-setting cold during November 2019, TVA's service territory
experienced overall milder weather during fiscal year 2020. Total
heating and cooling degree days in the year ended Sept. 30 were 6% below
normal, and 9% below the same period in the prior year.
-- TVA continued to maintain 99.999% reliability in delivering energy to
its customers, despite record setting weather.
-- Rainfall and runoff in the Tennessee Valley in 2020 were 150% and 156%
of normal, respectively.
-- TVA's reliability and economic development efforts helped recruit or
expand 188 companies into the TVA service area. Over $8.6 billion in
investments and more than 67,000 jobs were created or retained in 2020.
Selected Financial Data - Twelve Months Ended September 30
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Sales, Revenues & Expenses 2020 2019
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Sales (millions of kWh) 151,251 158,443
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Operating Revenues ($ millions) $10,249 $11,318
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Fuel & Purchased Power Expense 2,464 2,903
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Operating & Maintenance Expense 2,720 3,090
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Interest Expense 1,142 1,198
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Net Income $1,352 $1,417
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Net Cash Provided by /(Used in)
($ millions)
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Operating Activities $3,636 $3,720
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Investing Activities (2,015) (2,243)
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Financing Activities (1,422) (1,477)
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TVA executive management will host a conference call to discuss fiscal year 2020 results at 9:30 a.m. EDT, on Tuesday, Nov. 17. The event will be conducted as a webcast and as a dial-in teleconference. Participants will be able to hear the discussion and see slides via webcast, but will need telephone access to ask questions. Pre-registration for the conference call is required. Please click here to pre-register. Once pre-registered, the dial-in number will be provided via an email. If you are unable to pre-register, you may access the conference call by dialing toll free 844-308-6432 in the United States, or 412-717-9611 outside the United States. Participants should ask to be joined into the Tennessee Valley Authority call.
A replay will be available one hour after the end of the conference call, by calling toll free 877-344-7529 in the United States or 412-317-0088 outside the United States and using the conference number 10147632. A webcast replay and transcript will also be available for one year on TVA's website at http://www.tva.com/investors.
TVA's annual report on Form 10-K provides additional financial, operational, and descriptive information, including unaudited financial statements for the year ended Sept. 30, 2020. TVA's annual report and other SEC reports are available without charge on TVA's website at http://www.tva.com/investors, on the SEC's website at http://www.sec.gov, or by calling TVA toll free at 888-882-4975. A more public-facing TVA Annual Report is also available this year.
This release 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. Please refer to TVA's most recent annual report on Form 10-K and quarterly report on Form 10-Q for a discussion of factors that could cause actual results to differ from those in the forward-looking statements.
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power companies serving nearly 10 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.
Media Contact:
Jim Hopson, Knoxville, 865-632-8860
TVA Media Relations, Knoxville, 865-632-6000
www.tva.com/news
Follow TVA news on Facebook and Twitter
Investor Relations:
Tammy Wilson, Knoxville, 865-632-3366 or 888-882-4975
Josh Carlon, Knoxville, 865-632-4133 or 888-882-4975
http://www.tva.com/investors
(Distributed: Nov. 17, 2020)
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SOURCE Tennessee Valley Authority
