The Tennessee Valley Authority board of directors on Thursday discussed TVA’s improved financial and operational performance, and the addition of cleaner generating sources to TVA’s diversified energy mix.
TVA President and CEO Bill Johnson reported that first quarter fiscal year 2015 revenues were up, and operations and maintenance costs down, resulting in net income of $81 million on $2.4 billion in revenues.
“We are making good progress toward our goal of reducing annual costs by a sustainable $500 million by the end of 2015,” Mr. Johnson said. “In addition, improved operations at our coal and nuclear plants means we are buying less power from more expensive sources.”
The board moved Thursday to increase TVA’s gas-fired and renewable power capacity by adopting resolutions authorizing the CEO to conclude agreements to:
- Acquire Quantum Utility Generation’s Choctaw combined cycle natural gas plant near Ackerman, Miss. TVA has been buying power from the 700-megawatt plant since 2008. This would be TVA’s sixth combined cycle plant, with two more under construction, all since 2007.
- Establish a power purchase agreement with NextEra for electricity from its planned 80-megawatt solar farm in Lauderdale County, Ala. The installation would be significantly larger than any existing solar facility in the Tennessee Valley.
The business sensitive and confidential terms of the arrangements were not released.
“Both transactions offer good value for TVA ratepayers and are consistent with our Integrated Resource Plan for meeting energy requirements today and tomorrow,” Mr. Johnson said. “We can purchase the gas plant for substantially less than it would cost to build one, and the solar power is at a price competitive with other energy sources.”
Mr. Johnson noted that the administration’s recently released FY 2016 budget proposal concluded its strategic review of TVA and recognized TVA’s improved financial and operational performance. “TVA remains committed to its mission of service in the region and to being financially healthy. Our priority is keeping energy affordable and reliable for the people of the Valley,” Mr. Johnson said.
TVA is working in partnership with its customers – local power companies and directly-served industrials – on a strategic pricing plan that will establish a long-term direction for fair and competitive rates for TVA and its customers. At Thursday’s meeting, the board extended an “off-peak” pricing pilot program that was slated to end before the strategic plan is finalized. The plan is expected to come before the board in August.
Johnson said TVA is focused on producing electricity more efficiently, with cleaner, more diverse energy sources. TVA is working toward an optimal generation portfolio that is based on least-cost planning, demonstrates environmental stewardship, serves customers in a variety of future conditions, and promotes economic prosperity. “Overall, we must be able to efficiently match power supply to changing demands over the long term and from day to day,” Mr. Johnson said.
TVA also had a good first quarter in economic development, a key component of its mission. “Together with our partners we have helped attract and retain more than 27,400 jobs and about $2.8 billion in capital investments for the region so far this year,” Mr. Johnson said. Over the past five years, the total economic development impact has been about 300,000 jobs and $35 billion in capital investment.
During the board meeting, Jeffery Phillips was recognized as TVA Engineer of the Year and presented with the Ike Zeringue Engineer of the Year award. Mr. Phillips, a senior design engineer for the power transmission system, has utilized innovative thinking to help TVA save money and ensure system reliability, resulting in low-cost, reliable power for TVA’s customers.
In other action, the board:
- Designated Executive Vice President and General Counsel Sherry Quirk as TVA corporate secretary.
- Recertified the TVA Regional Energy Resource Council, an advisory panel created in 2013 to provide input on the development and management of energy resources in the Tennessee Valley.
- Extended the GUBMK fleet services contract for three years.
- Heard an update on TVA’s right of way activities from Senior Vice President for Transmission Jacinda Woodward.