TVA's Financial Position Continues to be Strong

KNOXVILLE, Tenn., Aug. 1, 2017 /PRNewswire/ -- The Tennessee Valley Authority today reported $7.7 billion in operating revenues through the nine months ended June 30, 2017. This reflects a 5 percent increase from the same period a year ago, on slightly lower electricity sales. The higher revenues were primarily driven by higher fuel cost recovery revenues. Power sales were down to the local power companies due to milder weather and increasing energy efficiencies in the first half of the year.

Total operating expenses increased slightly during the nine months as compared to the same period last year due to higher fuel and purchased power expense, which was up by about 9 percent.

"We continue to focus on executing to our long-term financial plan and this, along with our diverse generation portfolio, has been instrumental in keeping rates lower for our customers despite challenging operating conditions this year," said TVA Chief Executive Officer Bill Johnson. "While conditions improved in the third quarter, our financials continue to reflect the warm, dry conditions and lower hydroelectric output in the first half of the fiscal year, along with higher average natural gas prices."

Operating and maintenance expense was up $73 million for the first nine months of this fiscal year, or 4 percent higher, compared to the same period last year, driven by higher planned nuclear and other outage expenses, partially offset by labor and other cost reductions.

"The efficiencies we gained through the past several years reduced our annual operating expenses by over $800 million. This is especially important in a year like 2017 when we have more challenging operating conditions," said TVA Chief Financial Officer John Thomas. "We are committed to maintaining low rates and managing debt prudently, and our year-to-date financial results reflect that."

Additional highlights of TVA's third quarter fiscal year 2017 results include:

    --  Net income for the nine months ended June 30, 2017 was $546 million,
        down 5 percent from net income of $572 million for the same period of
        fiscal year 2016.
    --  The summer of 2016 was hotter and drier than normal in the Tennessee
        Valley -- a trend that continued into the first six months of 2017.
        Rainfall returned to normal levels in the third quarter;  however,
        runoff during the first nine months of 2017 was 23 percent below normal,
        resulting in conventional hydroelectric generation being 22 percent
        lower during the first nine months of 2017 as compared to the same
        period of the prior year.
    --  TVA's power generating portfolio continues to become cleaner and more
        diverse with two new generating sources declared commercially
        operational during the fiscal year to date - Watts Bar Nuclear Unit 2 in
        October 2016, and Paradise natural gas combined-cycle in April 2017.
    --  Work on the selective catalytic reduction system ("SCR") at Gallatin
        Fossil Plant continues. The first SCR was placed in service in June 2017
        and the second in July 2017.
    --  Work on emissions reduction equipment for Units 1 and 4 at the Shawnee
        Fossil Plant is underway, and these scrubbers and SCRs are expected to
        be operational in the fall of 2017.
    --  TVA has been able to fund capital projects in 2017 primarily from
        operating funds rather than additional debt, and anticipates continuing
        to generate sufficient operating funds to avoid additional debt or even
        reduce debt in coming periods.

               Selected Financial Data

              Nine Months Ended June 30

    Sales, Revenues & Expenses              2017         2016
    --------------------------              ----         ----

    Sales (millions of kWh)              109,698      110,506

    Operating Revenues ($ millions)       $7,664       $7,330

    Fuel & Purchased Power                 2,300        2,112

    Operating & Maintenance                2,159        2,086

        Outage O&M                           238          171

    Interest Expense                       1,017        1,015

    Net Income                              $546         $572


    Net Cash Provided by /(Used
     in)                                    2017         2016

    ($ millions)
    -----------

    Operating Activities                  $1,979       $1,878

    Investing Activities                 (1,898)     (2,253)

    Financing Activities                    (80)         376

    Net Change in Cash & Cash
     Equivalents                               1            1

TVA executive management will host a conference call to discuss third quarter fiscal year 2017 results at 9:30 a.m. EDT, on Tuesday, August 1, 2017. The conference call can be accessed from TVA's website via webcast, at http://www.tva.com, on the Investor Relations home page. For quicker access to the live conference call, please pre-register through TVA's website before the scheduled start time, and follow the instructions provided. 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 (866) 777-2509 in the United States, or (412) 317-5413 outside the United States.

A replay will be available one hour after the end of the conference call until 9:30 a.m. EDT, August 1, 2018, by calling toll free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10095234. A webcast replay and transcript will also be available for one year on TVA's website at http://www.tva.com/investors.

TVA's quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter ended June 30, 2017. TVA's quarterly 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.

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 distributors serving over 9 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:      Gail Rymer, Knoxville, 865-632-2911

                        TVA Public 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

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SOURCE Tennessee Valley Authority