TVA Says Third Quarter Base Revenues Are $130 Million Less Due To COVID-19

Tuesday, August 4, 2020

TVA reported $7.4 billion in total operating revenues on more than 108 billion kilowatt-hours of electricity sales for the nine months ended June 30. Sales of electricity were about 5 percent lower compared to the same period of the prior year due to overall milder weather and impacts of the COVID-19 pandemic. Total operating revenues decreased about 9 percent from the same period of the prior year driven primarily by lower sales volume, lower fuel cost recovery revenues, and lower effective base rates.

Given the unique variables created by the pandemic, TVA has developed internal forecasts based on a range of external data sources to forecast its potential impact on TVA’s load demand and revenues. For the nine months ended June 30, TVA estimates base revenues were approximately $130 million lower due to the impacts of the COVID-19 pandemic. 

Based on current estimates, TVA anticipates base revenue could be as much as $100 million lower than planned for the fourth quarter of 2020 due to impacts of COVID-19. However, economic impacts continue to evolve as projections are refined. TVA’s estimate of the impact to its financial position, results of operations and cash flows will continue to change over the remainder of the year. 

“TVA remains operationally and financially healthy, which enables us to continue providing uninterrupted vital services, as well as support communities during this challenging time,” said Jeff Lyash, TVA’s president and chief executive officer. “Our work to maintain stable, low rates is particularly impactful. In addition, our customers who have become long-term partners have received over $100 million in credits on their bills so far this fiscal year.”

TVA’s fuel, purchased power, operating and maintenance, tax equivalents, and interest expense were all lower in the nine months ended June 30, versus the same period of the prior year. TVA’s fuel and purchased power expense was 14 percent lower year-over-year, primarily driven by lower effective fuel rates and lower energy sales due to impacts of COVID-19 and milder weather, as well as the increased availability of nuclear and hydroelectric power.

Operating and maintenance expense was $275 million lower, driven primarily by less project write-offs and regulatory asset recovery for certain environmental cleanup costs that did not occur in the current year. TVA continues to implement various cost savings initiatives in response to the COVID-19 impacts. 

Interest expense was $859 million for the first nine months of fiscal year 2020, which was a 5 percent decrease from the same period of the prior year, driven by lower average debt balances. TVA’s debt remains at the lowest level in almost 30 years. 

“While it was expected that the pandemic would have some impact on sales, TVA’s proactive efforts to reduce expenses, improve the efficiency of our operations, invest in cleaner asset investments, and lower debt have all put us in a good position,” said John Thomas, TVA’s chief financial officer. “In fact, cash flow has been steady, and TVA reduced debt by $1 billion in the first nine months of this fiscal year after adjusting for extra cash holdings.”

Additional highlights from TVA’s Third Quarter Report include:

As part of the Strategic Financial Plan approved by the TVA Board in 2019, TVA began offering a 20-year Valley Partnership Agreement option to local power company customers. As of August 3, 2020, 141 local power companies had accepted the offer and are now TVA long-term partners. Bill credits available to long-term partners totaled over $100 million in the nine months ended June 30, 2020.

Due to higher volatility in the financial markets from COVID-19, TVA increased its target balance of cash and cash equivalents in March by $500 million as a precautionary measure. TVA has maintained uninterrupted access to the financial markets since the outbreak of the pandemic. In May, TVA issued $1 billion of power bonds to take advantage of the historically low interest rate environment and to meet its ongoing funding needs.

In response to the pandemic, TVA is offering up to $1 billion of credit support available as an option to local power companies through the deferral of wholesale power payments, based on the needs of individual local power companies, along with the Back-to-Business credit program that provides relief to certain larger customers when returning to operations. TVA remains committed to supporting communities and customers across the Tennessee Valley.

Despite record-setting heat experienced during October 2019 and record-setting cold during November 2019, TVA's service territory experienced overall milder weather during the nine months ended June 30. Total heating and cooling degree days in the nine months through June 30 were 9 percent below normal, and 8 percent below the same period in the prior year.

TVA continued to maintain 99.999 percent reliability in delivering energy to its customers, despite record setting weather.

Rainfall and runoff in the Tennessee Valley through the third quarter of 2020 were 153 percent and 161 percent of normal, respectively. 

TVA's reliability and economic development efforts continue to attract and encourage the expansion of business and industries in the Tennessee Valley. Over $7.1 billion in investments and more than 58,400 jobs were created or retained through the third quarter of 2020.

Selected Financial Data – Nine Months Ended June 30

Sales, Revenues & Expenses

2020

2019

Sales (millions of kWh)

108,396

113,609

 

 

 

Operating Revenues ($ millions)

$ 7,350

$ 8,079

 

 

 

Fuel & Purchased Power Expense

1,844

2,134

Operating & Maintenance Expense

2,014

2,289

Interest Expense

859

902

 

 

 

Net Income

$ 652

$ 829

 

 

 

Net Cash Provided by / (Used in) ($ millions)

 

 

Operating Activities

$ 2,496

$ 2,479

Investing Activities

(1,467)

(1,533)

Financing Activities

(528)

(945)

 


New Hamilton County Business Licenses

Generating Justice: TVA’s New Pro Bono Program

Chattanooga Chamber Of Commerce Awards Virtually Honor Community Champions


Here are the new business licenses from the County Clerk's office: 1 PERFECTION PAINTING PATRICIA VIGIL 900 AIRPORT RD LOT 97 CHATTANOOGA TN 37421 A&B LAND, LLC BENJAMIN L FOLKINS ... (click for more)

Attorneys and other legal professionals at the Tennessee Valley Authority, Office of the General Counsel, have launched TVA’s first pro bono program, Generating Justice, to provide free legal ... (click for more)

The Chattanooga Chamber virtually hosted the Chamber Awards Thursday, honoring this year's Chamber Award winners and the 2020 Chattanooga Area Manager of the Year, as well as Small Business Award ... (click for more)



Business

New Hamilton County Business Licenses

Here are the new business licenses from the County Clerk's office: 1 PERFECTION PAINTING PATRICIA VIGIL 900 AIRPORT RD LOT 97 CHATTANOOGA TN 37421 A&B LAND, LLC BENJAMIN L FOLKINS 10179 LEE HWY OOLTEWAH TN 37363 A-TEAM ELECTRIC CHARLES EVERETT 3810 NORTHVIEW AVE CHATTANOOGA TN 37412 ABODE HOMES, LLC DUSTIN PLUMMER 1213 ROSEWOOD TRAIL MOUNT JULIET TN 37122 ... (click for more)

Generating Justice: TVA’s New Pro Bono Program

Attorneys and other legal professionals at the Tennessee Valley Authority, Office of the General Counsel, have launched TVA’s first pro bono program, Generating Justice, to provide free legal assistance in local communities. As part of the Generating Justice program, TVA’s OGC is working with several legal aid organizations and law firms to address community legal needs. TVA is ... (click for more)

Breaking News

TSA Discovers Loaded Firearms At All Major Tennessee Airports In 1 Week

In the span of a week (Sept. 13-20), the Transportation Security Administration discovered eight loaded firearms at security checkpoints in Tennessee, including at least one in every major airport in the state. Nashville International Airport (BNA) 9/14/2020; loaded Sig Sauer .380 caliber 9/17/2020; loaded Sig Sauer .380 caliber 9/17/2020; loaded North American Arms ... (click for more)

Woman Injured When Car Crashes Into The Brainerd Pharmacy Early Monday Morning

A woman was injure early Monday morning when her car crashed into Brainerd Pharmacy. CFD crews worked the accident with an entrapment. The call came in at 5:53 a.m. Squad 13 arrived on the scene and found a vehicle inside the Brainerd Pharmacy. They requested additional companies for manpower and began extrication efforts. The woman was removed from the vehicle after crews ... (click for more)

Opinion

From Exclusion To Inclusion: The Need For A New Chattanooga Way

Executive Summary: A New Chattanooga Way The Chattanooga renaissance that local leaders brag about took almost 40 years to reach fruition. It took risk. It took vision. It took billions of dollars. The physical renaissance is a farce if it fails to lift all Chattanoogans. The evidence in this report suggests the renaissance is incomplete. A New Chattanooga Way would include ... (click for more)

Roy Exum: Thank You, Bill Zinkeler

There is one story in the Bible that I try to never forget. It’s the one where the Lord Jesus healed 10 lepers but only one came back with thanks. Man, forget those other nine … I strive to be the one who comes back. After all God has done in my life … I may fail again and again. I may be ‘a back-slider,’ and a disappointment to the Kingdom, but, brother, not thanking God every ... (click for more)