The Tennessee Valley Authority’s strong operational and financial performance for fiscal year 2015 was highlighted at its board of directors’ quarterly meeting Friday.
“The performance of TVA employees in 2015 was outstanding, and I am not someone who uses that word lightly,” TVA President and CEO Bill Johnson told the board. “Employee expertise and dedication were evident across TVA in delivering on our mission to provide lower cost, reliable and cleaner power, environmental stewardship and economic development for the people of the Valley.” TVA’s fiscal year ended Sept. 30.
Mr. Johnson said employees were aligned on TVA’s priorities and objectives. “This resulted in not only meeting the three-year goal of a $500 million sustainable reduction in operating and maintenance costs, but exceeding it by more than $100 million,” he said.
In addition to the good operating performance, TVA and its ratepayers benefitted from lower fuel and purchased power costs during the year, resulting in an eight-percent reduction in operating expenses – a savings of $760 million.
During the year, TVA invested more than $3 billion in the power system and environmental improvements including clean air equipment at the Gallatin Fossil Plant, natural gas plants at Allen (Memphis) and Paradise (Kentucky), completing construction at Watts Bar Nuclear Plant Unit 2, and the acquiring the Ackerman Gas Plant. About $340 million was invested in the transmission system.
“By controlling costs, TVA was able to better its cash flow allowing us to fund some of these investments with cash rather than debt,” said TVA CFO John Thomas. “This helped bring the total debt below plan by $1.2 billion, realizing a relatively small increase in total financial obligations.”
Mr. Johnson emphasized, “Reducing operating and maintenance costs and managing debt are part of TVA’s long-term financial plan so that we can continue supplying the region with reliable and affordable power for years to come.”
Strong operating performance was demonstrated when TVA experienced the third highest winter peak demand in its history and an all-time high demand in February. “This, along with managing the largest five-day swing in system load in TVA history – a 164 percent increase in power demand – demonstrates why we are now in our 16th consecutive year of reaching 99.999 percent reliability in delivering electricity to our customers,” Mr. Johnson said. “The strong performance is a credit to our employees and their focus on our mission of service to the people of the Tennessee Valley.”
Other operation and financial highlights include:
- The completion of the updated Integrated Resource Plan, the high-level road map for TVA to meet the Valley’s energy needs for the long term.
- The continued improvement in nuclear performance and achievement of major milestones, including receiving from the U.S. Nuclear Regulatory Commission the operating license for Watts Bar Nuclear Plant Unit 2 and the license renewal for Sequoyah Nuclear Plant for an additional 20 years.
- The initiation of the Strategic Pricing Plan to better meet TVA’s diverse customers’ needs.
TVA’s work as a good steward of the Valley’s natural resources included helping the region have cleaner air, managing the Tennessee River system and making the region’s recreation areas more accessible to the public. Much attention has been paid to TVA’s power generation portfolio with a focus on providing cleaner energy sources including installing environmental controls on existing coal plants, closing some coal plants and building and acquiring natural gas plants, completing Watts Bar Nuclear Unit 2 to add cleaner baseload power, optimizing hydroelectric generation and developing a path forward for increased renewables, including solar and wind.
Other stewardship activities have included approving about 1,700 permits for river access or structures, making campgrounds ADA accessible, leading river cleanups, performing archeological surveys and improving recreation areas for equestrian, mountain bike and hiking use.
A core component of TVA’s mission is helping improve the quality of life in the Valley through economic development. Supplying reliable, affordable electricity is the single most important contribution TVA makes to economic development in the region. Partnering with other state and local governments and community organizations, TVA helped attract and retain more than 76,200 jobs across the region and a capital investment of more than $7.8 billion.
In setting the stage for TVA’s performance in 2016, Mr. Johnson said because of employees’ 2015 achievements, he has high expectations for the coming year. “Every level of achievement is the starting point for even greater achievement,” he said. “Our work is bound by certain strategic imperatives – rates, debt, assets and stewardship. Central to this is our people and their drive for performance excellence. Our mission is constant, and our priorities are consistent with our long-term financial plan, shorter-term operational plans and our mission of service to the region.”
TVA will hold a call Monday, Nov. 23, with investors and news media to review its FY 2015 financial performance. The 10-K annual report will be available the same day.
During the board meeting, the board acted to:
- Approve FY 2016 estimated tax equivalent payments of $535 million to be paid to state and local governments. Also, approve the final FY 2015 tax equivalent payments of $542 million.
- Approve the payouts for the FY 2015 performance-based employee incentive programs and CEO compensation for FY 2016.
- Renew the charter of the Regional Resource Stewardship Council
- Recognize the service of Director Richard Howorth, whose term ends this year. (The president has renominated Howorth and his nomination is before the U.S. Senate.)