TVA reported Friday a net income of $577 million for the first six months of fiscal year 2015, a $349 million increase compared with the same period last year.
Total operating expenses through the second quarter ended March 31, were $392 million lower than the same time last year, primarily because of lower fuel and purchased power expenses, and lower operating and maintenance costs.
“It takes a collective effort by all of our employees to produce the sort of results we have seen so far this year,” TVA President and CEO Bill Johnson said. “Our employees are committed to delivering sustainable improvements in our business, while remaining focused on serving the people of the Tennessee Valley by delivering affordable, reliable power, being good stewards of our natural resources, and creating jobs in our communities.”
Continuous improvement initiatives led to $56 million of savings versus last year, largely due to lower labor costs. TVA remains on track to achieve its three-year goal of reducing annual O&M expenses by a sustainable $500 million in fiscal 2015, said officials.
TVA reported $496 million of net income on $2.86 billion in revenue for the second quarter, compared with $295 million of net income on $2.94 billion in revenue during the same period the year before.
For the first half of FY 2015, TVA generated $46 million less operating revenue than a year ago resulting primarily from lower fuel recovery revenues. Lower fuel rates saved TVA’s customers $133 million versus last year, said officials.
Total sales of electricity for the first half of the fiscal year were down 1.5 percent versus the same period last year. Sales to local power company customers fell 1.2 percent for the first six months of the year as compared with the same period last year because of extreme weather patterns. However, colder winter weather still drove the number of heating degree days in the first half of the year 10 percent higher than normal.
TVA set a new all-time demand record for the month of February when temperatures averaged 7 degrees across its service area the morning of Feb. 19 and peak power demand exceeded 32,000 megawatts.
“This winter tested the resiliency of our system,” Mr. Johnson said. “Through our balanced energy portfolio, the dedication of our employees and the cooperation of our customers, TVA again met a period of record demand safely and reliably. This was truly a team effort.”
Compared with last year, total operating expenses were 8.7 percent lower in the first half of the year, driven by a $255 million, or 15.9 percent, decline in operating and maintenance expense. Fuel and purchased power expenses were $142 million, or 8 percent lower than the same period last year because of lower overall fossil and natural gas fuel rates.
TVA has invested $1.4 billion in construction expenditures so far this fiscal year, $266 million more than last year. Investments in cleaner capacity expansion at the Watts Bar Nuclear Plant’s Unit 2 reactor project and two new combined-cycle natural gas facilities at the Paradise and Allen coal sites, remain the primary drivers of the increase, said officials.
“Our efforts to diversify TVA’s generating portfolio further are providing lower, more stable fuel costs for our customers,” Chief Financial Officer John Thomas said. “We continue to make investments in new capacity that will balance our system, provide a cleaner portfolio, and ensure our transmission system reliability meets our customers’ expectations.”
During the second quarter, the TVA board of directors approved resolutions authorizing a power purchase agreement with a planned 80-megawatt, utility-scale solar farm in Alabama and the acquisition of a 700-megawatt, combined-cycle gas plant in Mississippi, which was subsequently completed in April.
Also during the quarter, TVA released a draft Integrated Resource Plan for public review. The plan provides an evaluation of options to meet a variety of demand growth scenarios over the next 20 years. A final version is expected to be presented to the TVA Board later this summer.
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter and six months ended March 31, 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.