The Tennessee Valley Authority reported $12.5 billion in total operating revenues on 163 billion kilowatt-hours of electricity sales for the year ended Sept. 30, the first time TVA’s annual revenue exceeded the $12 billion level. Total operating revenues increased 19 percent over the same period last year, primarily due to an increase in fuel cost recovery revenue driven by higher fuel and purchased power market rates.
Sales of electricity increased approximately 3 percent compared to the prior year, driven by economic growth in TVA’s service area and weather. Weather conditions were closer to normal for 2022 despite extreme temperatures in the summer that set several power demand records.
“TVA, in partnership with our local power company customers, accomplished many things in 2022, including maintaining industry-leading reliability during challenging conditions this summer while keeping energy costs among the lowest in the nation,” said Jeff Lyash, TVA president and CEO.
"This was our third year holding base rates flat despite growing inflation pressures, and we will continue that stable trend into a fourth year in 2023,” said Mr. Lyash. “In addition, TVA’s continuing financial strength and stability allows us to return hundreds of millions of dollars in rate credits back to our customers to support local communities.”
Fuel and purchased power expense was $1.8 billion higher, driven primarily by higher fuel and purchased power prices. Lower nuclear output due to the extended outage for the Watts Bar Unit 2 steam generator replacement project, as well as fewer significant rain events that lowered hydroelectric generation, also contributed to higher fuel and purchased power expense. While the average price of natural gas was almost 90 percent higher in 2022 as compared to 2021, TVA actively hedges much of the fuel that it uses, and more than half of TVA’s power supply comes from carbon-free sources like nuclear, hydroelectric, and other renewables, which are not exposed to swings in fuel prices.
“TVA’s diverse generation system and proactive fuel purchasing practices translate into electricity rates in the areas served by TVA and our local power company partners that are among the lowest in the nation,” said TVA’s Chief Financial and Strategy Officer John Thomas. “While natural gas prices nearly doubled over the past year, the effective rate paid by TVA customers was only 15 percent higher.”
Operating and maintenance expense increased by $96 million driven by labor escalation, information technology investments, additional inventory reserves and write-offs, an increase in natural gas, hydroelectric, and coal maintenance projects, and an increase in nuclear outage days. Depreciation and amortization expense increased $521 million over the prior year, primarily due to a change in depreciation rates following an updated depreciation study. The study included planning assumptions to potentially retire the remainder of TVA’s coal-fired fleet by 2035.
“We understand the importance of a clean energy future, which is why TVA is executing a defined plan that we laid out in our Strategic Intent and Guiding Principles document, proactively taking a national leadership role in decarbonization,” said Mr. Lyash.
"Along with significant investments in our existing carbon-free generation, such as Watts Bar Unit 2 steam generator replacement this year, we issued an industry-leading request for proposals for 5,000 megawatts of carbon-free energy to be available by 2029 and signed partnerships with Ontario Power Generation and GE-Hitachi to pursue advanced nuclear technologies.”
Interest expense was $36 million lower for the year ended Sep. 30, which was a 3 percent decrease from the prior year due to lower average debt balances and lower average long-term rates. TVA’s total debt and financing obligations decreased in 2022 to the lowest level in 35 years.
“After decreasing obligations for six consecutive years, we have reduced debt by over $7 billion while simultaneously investing more than $17 billion in our power system since 2013,” said Mr. Thomas. “TVA is in its best financial condition in decades and, even with rising inflation and interest rates, electric consumers in our service area will continue to benefit from TVA’s financial discipline and the significant cleaner energy investments we have made.”
TVA’s net income was $1.1 billion for the fiscal year 2022, which was $404 million lower than the prior year due mainly to higher operating expenses.
Additional highlights from TVA’s fiscal year 2022 include:
Credits from the 2.5 percent monthly base rate Pandemic Recovery Credit available to all TVA customers for 2022 totaled $228 million, which is money that stayed in local communities to help with recovery efforts. In August, TVA took advantage of its continued strong financial position to extend the credits for 2023, which is expected to total about $230 million.
As of Nov. 14, 147 of 153 local power companies have entered 20-year agreements with TVA. Bill credits to 20-year partners totaled $199 million for the year ended Sep. 30.
TVA published its first ever Diversity, Equity, Inclusion and Accessibility report, which highlights TVA’s progress and key programs to promote DEIA within its workforce and across the seven states it serves.
In May and June 2022, TVA experienced multiple record-setting peak and daily energy records, and the TVA power system was able to deliver energy reliably through these demands.
Recently released data from the U.S. Department of Energy, Energy Information Administration shows that Tennessee was the number one state for reduction of carbon intensity from 2016-2020, due in large part to TVA’s coal retirements and additional nuclear and solar additions.
In July, TVA issued a carbon-free Request for Proposals (RFP) for up to 5,000 megawatts of carbon-free and renewable energy projects – believed to be the largest such request of its kind.
TVA entered an agreement with GE-Hitachi and Ontario Power Generation to support TVA’s planning and preliminary licensing for a potential deployment of a small modular reactor at the Clinch River Nuclear site and provide additional information needed as TVA continues to analyze the viability of advanced nuclear technology. Such collaborations help reduce the financial risk that comes from development of innovative technology, as well as future deployment costs.
The TVA Board approved a program for up to $200 million to help develop new nuclear technologies.
Watts Bar Unit 2 returned to service in July 2022 after replacing all four of its original steam generators with more efficient models that added about 20 megawatts of additional energy that will support decades of additional reliable, carbon-free generation in the Tennessee Valley.
Unit 3 at TVA’s Browns Ferry Nuclear Plant ran for 690 consecutive days and produced more than 20 billion kilowatt-hours of carbon-free electricity prior to its scheduled refueling and maintenance outage earlier this year - enough electricity to power the average home for about 1.8 million years.
The 7-year, $326 million Boone Dam remediation project was completed on time and under budget.
TVA's economic development efforts, combined with TVA’s reliable, resilient, low-cost, and cleaner energy, continue to help attract and encourage the expansion of business and industries in the Tennessee Valley, with over $10.2 billion in proposed investments and approximately 66,500 jobs expected to be created or retained in 2022.
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Selected Financial Data – Twelve Months Ended September 30
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Sales, Revenues & Expenses
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2022
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2021
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Sales (millions of kWh)
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162,608
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157,353
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Operating Revenues ($ millions)
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$ 12,540
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$ 10,503
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Fuel & Purchased Power Expense
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4,488
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2,721
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Operating & Maintenance Expense
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2,986
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2,890
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Interest Expense
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1,052
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1,088
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Net Income
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1,108
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1,512
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Net Cash Provided by / (Used in) ($ millions)
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Operating Activities
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$ 2,948
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$ 3,256
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Investing Activities
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(2,663)
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(2,338)
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Financing Activities
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(283)
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(921)
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