published Saturday, February 4th, 2012

Mild winter pushes Tennessee Valley Authority into the red

The Tennessee Valley Authority offices are located on Market Street in Chattanooga.
The Tennessee Valley Authority offices are located on Market Street in Chattanooga.
Photo by Jenna Walker.
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BY THE NUMBERS

• $173 million: Net loss for TVA in the final three months of 2011

• $260 million: The drop in power sales in December 2011 compared with a year ago

• 1,222: Average kilowatt-hours used by the average TVA residential customer in December, or 14.8 percent less than the same month a year ago

Source: Tennessee Valley Authority

Consumers are paying less to heat their homes this winter, but the mild winter is putting the heat on the nation’s biggest government utility.

The Tennessee Valley Authority on Friday reported a $173 million loss for the final three months of 2011 and cut its sales forecast for the year by 2 percent because of warmer-than-usual temperatures this winter.

The coldest temperature reached in December 2011 was 26 degrees — the highest such temperature for any December in the Tennessee Valley in 50 years.

The typical residential customer used 14.8 percent less electricity at the end of 2011 than the previous year, helping cut TVA power sales in the fourth quarter by $260 million compared with the same quarter a year earlier.

In response to an overall 5 percent drop in electricity sales in the quarter, TVA officials said Friday they want to cut expenses by not filling some vacancies and delaying some of this year’s $3.8 billion in capital projects until the weather and economy are more favorable.

“We’re certainly going to be looking at tightening our belt as we go through the next three to six months,” TVA Chief Financial Officer John Thomas told analysts during a conference call. “We still think there are opportunities to improve our productivity by finding ways to do the same work in more efficient ways.”

TVA President Tom Kilgore said managers “are looking very hard” at whether to replace retiring or terminated employees. Kilgore said he probably will not fill TVA’s No. 2 position when TVA Chief Operating Officer Bill McCollum, who was paid more than $2.5 million last year, retires at the end of June.

“I believe we have adequate talent and we may flatten the organization somewhat,” Kilgore said. “I could stand having the nuclear and fossil [power division heads] report directly to me [rather than through McCollum]. Don’t expect a big announcement about Bill’s replacement.”

TVA has about 12,500 employees and hundreds of contract workers employed across its seven-state region.

“The one thing we’re not going to do is to put any of our people or equipment in danger,” Kilgore said. “We have a very good safety record and we want to continue to maintain our assets. But there are always some ways to cut expenses.”

Thomas said it’s too early to revise TVA’s long-term expectations for power growth in the valley.

“While we see the first quarter sales were down and we think the second quarter will be down after the warm January, we’re still hoping for normal weather this summer,” Thomas said.

TVA forecasters predict there is a 90 percent probability of a warmer-than-usual spring this year in the Tennessee Valley.

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about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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