TVA Reports First Quarter Fiscal Year 2023 Financial Results

Key Points

• Power sales were up 3% driven by weather impacts from Winter Storm Elliott and continued strong economic growth in the Tennessee Valley.
• TVA returned $53 million in pandemic credits to customers – part of more than half a billion dollars in support returned to communities since the start of the pandemic.
• TVA's diversified power system continued to help keep rates low despite higher fuel prices, with 56% of power coming from nuclear, hydroelectric and renewables.

KNOXVILLE, Tenn., Jan. 31, 2023 /PRNewswire/ -- The Tennessee Valley Authority reported $3.0 billion in total operating revenues on 38 billion kilowatt-hours of electricity sales for the three months ended Dec. 31, 2022. 

Total operating revenues increased 17% over the same period last year, primarily due to an increase in fuel cost recovery revenue, which was driven by higher fuel rates and higher sales volume for the quarter.  Sales of electricity increased approximately 3% compared to the same period of the prior year, driven by weather impacts and continued strong economic growth in TVA's service area.

In late December 2022, Winter Storm Elliott brought several days of extremely cold temperatures to the Tennessee Valley region and many parts of the nation.  TVA set an all-time record for single-day energy demand and recorded its highest-ever winter peak demand during the storm.  Prior to late December 2022, TVA had been experiencing milder weather than during the same three-month period in 2021, partially offsetting the impacts of Elliott in the quarter's financial results.       

"TVA has one of the nation's largest, most diverse, and cleanest generation portfolios," said Jeff Lyash, TVA president and CEO. "Ongoing investments in our generation and transmission systems, and strong partnerships with local power companies and direct-served customers helped us overcome the unprecedented challenges of Winter Storm Elliott, which affected large areas of the country." 

"While the widespread cold temperatures forced other U.S. utilities to join TVA in taking difficult but necessary actions to maintain a stable electric grid and prevent far lengthier power outages, we understand the inconvenience power interruptions – no matter how brief – can cause. We will learn from this event and put actions in place to further strengthen the resiliency of the power system."  

Fuel and purchased power expense was $271 million higher in the first quarter of 2023 over the same period of the prior year, primarily due to higher prices.  Operating and maintenance expense increased by $47 million over the same period last year, driven by costs related to TVA's New Nuclear Program approved by the Board of Directors in February 2022 and increased labor costs.  Depreciation and amortization expense increased $23 million primarily due to an increase in amortization expense of decommissioning costs recovered in rates. 

"It is a testament to the hard work of TVA's team to control costs and produce ongoing strong financial results in 2022 that we can leave base rates unchanged in 2023 for the fourth consecutive year, a true accomplishment in these times of rising inflation," said TVA's Chief Financial and Strategy Officer John Thomas. "TVA's performance also supports the continuation of pandemic credits and other programs that help keep power rates steady for our customers while spurring economic growth in the region during 2023."

Interest expense was $1 million lower for the three months ended Dec. 31, 2022, due to lower average balances and rates on long-term debt.  TVA's net income was $101 million for the first quarter of fiscal year 2023, which was $90 million higher than the same period of the prior year, mainly due to higher operating revenues. 

Additional highlights from TVA's first quarter fiscal year 2023:

• Credits from the 2.5% monthly base rate Pandemic Recovery Credit totaled $53 million for the three months ended Dec. 31, 2022. Since the credit was initiated at the beginning of the COVID-19 pandemic, TVA has returned more than half a billion dollars to local power companies to help support recovery efforts in the communities we jointly serve.
• In December 2022, the Southeast Hydrogen Hub, of which TVA is a member, was notified by the Department of Energy that the Hub's preliminary proposal was reviewed, and the proposal was encouraged to advance to the application stage. TVA anticipates the Hub will build on existing infrastructure to utilize advancing technologies to enhance the production, storage, transport, and delivery of hydrogen to transition the energy economy toward a decarbonized future.
• In December 2022, TVA signed four power purchase agreements for a total of 160 megawatts of solar generation expected to come online in 2025, in support of TVA's long-term goal to add significant amounts of additional solar by 2035.
• In January 2023, TVA announced the decision to retire its two-unit coal-fired Cumberland Fossil Plant – the largest remaining coal facility in TVA's fleet - in two stages. TVA will build a 1,450-megawatt combined-cycle natural gas plant on the Cumberland reservation that is expected to be operational by the end of calendar year 2026 to replace some of the generation.
• As of January 30, 2023, 147 of 153 local power companies have entered 20-year agreements with TVA. Bill credits to 20-year partners totaled $48 million for the first quarter of fiscal year 2023.
• TVA's economic development efforts, reliable power, and competitive rates continued to help attract and expand businesses and industries in the Tennessee Valley in the first three months of fiscal year 2023, announcing projected capital investments of more than $2.7 billion that are expected to create or retain more than 21,700 jobs.

TVA's executive management team will host a conference call to discuss first quarter fiscal year 2023 results at 9:30 a.m. ET, on Tuesday, Jan. 31. 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.

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 1321258. 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 Dec. 31, 2022. 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 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.

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SOURCE Tennessee Valley Authority