TheTennessee Valley Authorityhas been able to "maintain a healthy financial picture" despite lowerelectricity sales, according to President and CEO Bill Johnson.
"Salesof electricity and, as a result, revenues were down the first six months ofthis year compared to last year, when we experienced extremely cold weather,"Johnson said during the utility's May 3 second quarter fiscal year 2016earnings call.
However,because of cost efficiencies and a diversified power fleet, the TVA has beenable to keep power prices low, Johnson noted.
"Withour diverse power system, we were able to take advantage of lower market pricesand lower cost generation sources in the first half of the year, resulting inlower fuel and purchase power expenses than in the same period last year,"Johnson said. "The end result was the weather had a smaller impact on ourbottom line than it otherwise might have."
TheTVA is making progress on several projects that will even further diversify itsasset portfolio while using cleaner and more affordable energy, Johnson said,calling this a crucial time for the utility.
"Inthe renewables category, we recently signed a power purchase agreement for a53-MW solar project at the U.S. Naval facility in Millington, Tenn.,"Johnson said.
TheTVA on April 18 announcedthat it was partnering with SiliconRanch Corp. to build at Naval Support Activity Mid-South what itsaid will be the largest solar farm in Tennessee. The roughly 400-acre solarfarm is expected to be operational by mid-2018.
Additionally,the TVA in March awarded16.7 MW of solar capacity to four local power companies under its DistributedSolar Solutions pilot in partnership with the .
TheTVA has been integrating more renewable energy into its portfolio and said inits integrated resource plan, releasedin July 2015, that it plans to use more renewable energy and energy efficiencyin the coming decades. The utility said that renewables and energy efficiencywill help replacecoal-fired capacity it plans to retire and that more than half of its generatedenergy will be from nonemitting sources by 2020.
Moreover,the TVA is making progress on natural gas fired plants currently underconstruction, including at its Paradisesite in Kentucky, according to Johnson.
"Underthe [U.S.] EPA's Mercury and Air Toxics Standards, or the MATS rule, additionalcontrols for certain emissions including mercury are required for some of TVA'scoal-fired units by dates in the 2015-2016 time frame," Johnson said.
Twocoal-fired units will continue to operate at the Paradise plant untilconstruction of the gas-fired units are complete, with an overlap of about ayear before the two units can be shut down, he said. The two unitswere part of a small group of generating units to receive a temporaryreprieve from theMATS rule through an administrative order issued by the agency in April.
Johnsonsaid the administrative order will help the TVA maintain reliability until thecombined cycle project has been completed.
Asfar as the potential saleof the Bellefontenuclear plant, Johnson said he expects that a decision will be made at the May5 board of directors meeting. Moreover, he said TVA's Watts Barunit 2, which was granted an operating license by the Nuclear RegulatoryCommission in October 2015, is expected to reach "initial criticality"this month and commercial operation later this summer.
TheTVA on May 3 reportednet income of $318 million in the second quarter of fiscal year 2016,representing a decrease from $496 million in the same quarter of fiscal year 2015.The company's second quarter operating revenue dropped to $2.57 billion from$2.86 billion in the corresponding period of 2015 due mainly to a $145 milliondecrease in base revenue and a $147 million decrease in fuel cost recoveryrevenues. TVA's operating income for the most recent quarter totaled $589million, compared with $776 million in the same quarter last year.