The Tennessee Valley Authority improved its financial and operational performance in the first quarter of fiscal year 2017, compared to 2016, according to utility President and CEO Bill Johnson.
Speaking on TVA's first-quarter fiscal 2017 earnings call Jan. 31, Johnson noted that when the federal utility closed its books on 2016, performance had been "very strong," and said that momentum was carried into the next fiscal year to achieve "even better results."
The Tennessee Valley has experienced more "normal" weather so far this year, which has resulted in higher sales, Johnson noted. He added that last winter had some of the mildest temperatures the region had seen in over five decades, which took a toll on results.
Johnson pointed out that unlike last year, when there was an excessive amount of rainfall, extended drought conditions that carried over from summer limited power production from TVA's dams, which caused fuel prices to be higher.
While the cost of energy for producing electricity was "not as favorable," according to Johnson, the higher revenues, along with efficiencies TVA has built into its business, helped improve its bottom line.
TVA swung back to profitability in the first quarter of fiscal year 2017, reporting net income of $102 million thanks to higher sales of electricity. The company posted a net loss of $37 million in the prior-year period.
Revenues from electricity sales for the most recent quarter grew to $2.51 billion from $2.25 billion a year ago, while total operating revenues increased to $2.55 billion from $2.28 billion. Due to higher fuel costs, operating expenses also increased to $2.12 billion in the fiscal 2017 first quarter from $2.05 billion in the corresponding period in fiscal 2016.
On the earnings call, Johnson pointed to recent changes to TVA's board of directors, including the unanimous election of V. Lynn Evans as chairperson. Evans replaced Joe Ritch, whose term, along with directors Pete Mahurin and Michael McWherter, expired Jan. 3. She is the first female and African-American to hold the position.
Johnson noted that President Donald Trump will be able to nominate replacements for the vacancies on TVA's board, adding, "We will keep you posted as this process moves forward."
"Last week President Trump also issued a presidential memorandum that freezes hiring at federal agencies in the executive branch," Johnson said. "We are reviewing the memorandum to determine the best way to address its requirements. I would not expect it to have a material impact on us in the short term."
"There's also been some speculation by the news media of possible impacts to TVA's business model by the new administration," he said. "We have not received any requests for informational review from the administration and remain committed to executing our long-term business plan."
The utility's board in August 2016 approved its fiscal 2017 capital plan and budget, which allocated more than $2 billion for investments in cleaner energy sources.
TVA was able to meet several near-record peak demands earlier in January, as temperatures "dipped to frigid levels," Johnson noted, adding that the completion of the newest unit at its Watts Bar nuclear plant was well-timed to help the utility meet this goal. Unit 2 at Watts Bar Nuclear achieved commercial operation in October 2016, marking the first new addition to the U.S. nuclear generation fleet in 20 years.
Additionally, significant progress is being made on several projects, including the Paradise CC natural gas facility being built in Muhlenberg County, Ky., according to Johnson. The project is "substantially complete" and the new units are expected to enter commercial operation this spring.
The utility's other gas-fired project, the Thomas H Allen CC plant in Shelby County, Tenn., is also making progress. The facility is on schedule to begin commercial operation in 2018, which will allow the utility to be able to retire the existing coal-fired units at the plant, Johnson said.