The Tennessee Valley Authority reported Tuesday that operating expenses declined and its bottom line results improved in the first quarter of fiscal year 2014 compared with the same quarter a year ago.
“Our efforts to keep rates low and reliability high for our customers by working more efficiently helped to offset lower sales and revenues reported in the first quarter of 2014,” TVA President and CEO Bill Johnson said.
TVA reported a $67 million net loss on operating revenues of $2.38 billion in the first quarter of 2014, an improvement over a $245 million loss on revenues of $2.58 billion for the same period last year.
TVA’s first-quarter filing to the U.S. Securities and Exchange Commission covered the three months ended Dec. 31, 2013, a period between summer and winter when lower demand for electricity typically results in a net loss.
Compared with last year, operating and maintenance expenses were down $112 million, or 12 percent, in the first quarter of 2014. This was driven by a $91 million decrease in expenses from planned outages, projects and scheduled maintenance, and a reduction in contract labor through cost-saving initiatives. A $10 million increase in coal-fired operation outages partially offset the O&M savings.
“We continued to see positive results from our efforts to achieve sustainable operating and maintenance cost reductions during the first quarter,” Chief Financial Officer John Thomas said. “The actions we are taking now help position TVA to remain financially healthy and meet our goal of reliable, low-cost and cleaner energy for the people of the Valley.”
Total operating expenses were 14 percent lower than the same period last year, driven primarily by a 32 percent decrease in fuel expenses. TVA’s nuclear and hydroelectric generation increased 29 percent and 30 percent, respectively, compared to the first quarter of last year, helping to drive the lower fuel costs. A 2 percent increase in purchased power expense also partially offset higher gas prices.
Operating revenues, impacted by lower fuel recovery costs, were $197 million lower compared with last year’s first quarter. TVA’s use of less-expensive nuclear and hydroelectric generation helped reduce fuel costs recovered through rates by $255 million, a decrease partially offset by a $60 million increase in base revenue.
"We were pleased to see such strong performance from our nuclear and hydro power assets and our entire fleet during the quarter, helping us provide low-cost reliable power,” said Mr. Johnson. “This demonstrates the value and flexibility of TVA’s well-diversified power system.”
Total electricity sales were down three percent for the quarter, primarily due to the loss of TVA’s largest directly served customer. But sales to local power companies were seven percent higher as a result of cooler weather than a year ago and some growth in electric demand.
TVA executive management will host a first quarter fiscal year 2014 financial conference call at 9 a.m. EST on Tuesday, Feb. 4. The conference call webcast can be accessed on TVA’s website at http://www.tva.com/finance. For quick access to the live conference call, please pre-register now by going to 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 (877) 270-2148 in the United States or in Canada, or (412) 902-6510 outside the United States. A replay will be available one hour after the end of the conference call until 9 a.m. EST, Feb. 18, 2014, by calling toll free (877) 344-7529 in the United States or (412) 317-0088 outside the United States and using the conference number 10039735. A webcast replay and transcript will also be available for one year on TVA’s website at http://www.tva.com/finance.
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, 2013, and is available to investors and the public. TVA SEC reports are also available without charge on TVA’s website at http://www.tva.com/finance or 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 quarterly report on Form 10-Q and annual report on Form 10-K for a discussion of factors that could cause actual results to differ from those in the forward-looking statements.)