The Tennessee Valley Authority Board of Directors on Wednesday maintained a strong, stable course for wholesale base electric rates in fiscal year 2023, consistent with long-range financial plans to keep base rates flat through the end of the decade, said officials.
Over the past 10 years, TVA’s effective wholesale power rate has maintained an average of about 7 cents per kilowatt-hour, giving families needed relief from the pandemic, and record inflation and fuel prices.
"We recognize the effect any cost increase has on families right now, and TVA is focused on doing everything we can to keep power bills as low as possible,” said Jeff Lyash, TVA president and CEO. “Our strong financial position gives us confidence that we can maintain stable rates through 2030 to support the communities we are privileged to serve while preserving our ability to invest in our existing facilities and future capabilities.”
Nationwide, utility customers are experiencing higher bills than in the Tennessee Valley because residential power rates in TVA’s service area are lower than 80 percent of other utilities, according to the most recent data from the U.S. Energy Information Administration.
In addition, due to strong operational and financial performance, the Board increased a previously approved Pandemic Recovery Credit back to 2.5 percent for all customers, providing about $230 million to help alleviate the continued financial pressures of a volatile economy.
“TVA’s impact is greater than the electricity we provide,” said Mr. Lyash. “Through multiple credits and programs implemented since the start of the COVID pandemic, TVA expects to return about $1.4 billion through fiscal year 2023, helping our customers and communities as they deal with the challenges brought on by the pandemic and economy.”
TVA Decarbonization Efforts
The Board acknowledged TVA’s efforts to accelerate decarbonization efforts through its industry-leading request for proposal for 5,000 megawatts of carbon-free energy to be available by 2029 and collaboration with Ontario Power Generation on the feasibility of deploying grid-scale small modular reactors in Canada and the United States.
“We recognize the urgency to lead the nation in driving toward a clean energy economy,” said Mr. Lyash. “Unlike investor-owned utilities, TVA’s public power model is uniquely positioned to provide the leadership needed to create public-private partnerships that will push our industry and the nation to go further, faster to make our carbon-free vision a reality.”
This year, over half of the energy TVA supplies is carbon-free and not affected by fuel price volatility. Building on those results, TVA has laid out a strategy in its Strategic Intent and Guiding Principles targeting a 70 percent reduction in carbon emissions from 2005 levels by 2030 with a path toward an 80 percent reduction by 2035. TVA aspires to net-zero emissions by 2050 without impacting costs or reliability through collaborating with government, industry and research organizations to help develop the necessary technology to support decarbonization.
“TVA is outcome-focused and there is no single answer to realizing our nation’s decarbonization and energy security goals,” said Mr. Lyash. “TVA is accelerating change across the industry to expand carbon-free technologies to decarbonize the grid while integrating emerging technologies through innovative solutions to meet customer-driven demand and build a future that leaves no one behind in the new clean energy economy.”
Maintaining Strong Operational and Financial Performance
This summer, TVA met multiple record-setting electric loads when peak demand surpassed 30,000 megawatts for six days in both June and July. TVA’s power system was able to deliver low-cost, clean energy reliably through these demands.
“As the nation grapples with rising energy costs, TVA’s cleaner, more diverse power supply provides our region a strategic advantage that helps keep the price of power lower, which drives economic growth as well as helps family finances,” said TVA’s Chief Financial and Strategy Officer John Thomas. “Because of the dedication of our employees and strong operational performance, rates in TVA’s service area are lower than most of the largest utilities in the nation, which demonstrates the value of TVA’s community energy model, diverse generation fleet and proactive hedging programs.”
TVA’s net income was $476 million for the first nine months of the fiscal year, which was $433 million lower than the same period of the prior year due mainly to higher operating expenses.
Sales of electricity increased approximately 3 percent compared to the same period of the prior year. The increase in sales volume was primarily driven by economic growth in the Tennessee Valley, and in part by TVA’s partnership with state and local economic development agencies.
In the first nine months of the fiscal year, TVA attracted or retained more than 57,200 jobs and more than $9.6 billion in capital investment. Over the past five years, those figures are much larger – 350,000 jobs and $45.9 billion of investment in the region.
“TVA has one of the nation’s cleanest, lowest-cost, most reliable grids, and it’s fueling our region’s economic growth,” said Mr. Thomas. “We continue to invest in our system, including more than $1 billion in base capital investments in our FY23 budget, which will enhance our decarbonization efforts and help maintain stable rates.”
In other business, the Board approved:
Tax Equivalent payments of $512 million to be disbursed to the states for fiscal year 2022
Ernst & Young LLP as TVA’s independent external financial auditor for fiscal year 2023
Management’s request to delegate authority to the CEO to make the decision whether to proceed with the application for subsequent renewal of the operating licenses for Browns Ferry Nuclear Plant Units 1, 2 and 3, subject to all required and appropriate environmental reviews and reports to the Board
Revisions to TVA’s Flexibility Option for Valley Partners who choose to deploy their own generating assets
TVA places a high priority on transparency. Learn more about TVA’s diversity and inclusion efforts, sustainability, strategic planning, financial health, and new nuclear program at tva.com/about-tva/reports.