BY THE NUMBERS
• $12 million - Net loss for TVA in the spring quarter, down from $23 million last year
• 6 percent - Decline in TVA revenues this year over last due to drop in power sales and cheaper rates
• 0.4 percent - Projected annual growth in TVA power load for the next couple of year, half of what TVA previously projected
• 6.6 cents - Average cost per kilowatthour of electricity sold by TVA this year, down from 6.7 cents a year ago
• 8.73 inches - July rainfall in Chattanooga, 76 percent above normal
• 12.6 - Percent cooler for July temperatures in Chatttanooga this year compared with normal, as measured by cooling degrees below normal for cooling days in July in Chattanooga
Source: Tennessee Valley Authority
The mild and wet weather is taking the heat off electricity bills this summer in the Tennessee Valley, but it’s also both costing and generating plenty of cold cash for TVA.
The Tennessee Valley Authority announced Monday it sold 4 percent less power to local distributors and took in 6 percent less revenue than a year ago because of the mild weather, weak economic recovery and cheaper fuel prices. But TVA enjoyed record generation last month from its rain-swollen reservoirs, which produce TVA’s cheapest source of power when water pours through the utility’s 29 power-generating dams.
Because of the loss in May of its biggest industrial customer — the U.S. Enrichment Corp. plant in Paducah, Ky., — TVA also is nearly cutting in half its projected future growth in power sales to only 0.4 percent more a year, down from the projected 0.7 percent a year ago and only a fraction of the 3 percent annual growth pace of a generation ago.
In addition to the mild weather, industrial power sales have been cut by the relatively weak economic recovery and the increased efficiency of new equipment and appliances.
“Our distributors, industrial customers and households in the valley are being more efficient with their energy use and our change to more seasonal and time-of-day pricing is encouraging customers to shift more of their load away from the peak hours,” TVA Chief Financial Officer John Thomas said Monday
TVA said it cut operating and maintenance expenses this spring by $16 million, primarily through retiring less efficient and older coal units. But overall operating costs rose because of more outages at TVA nuclear plants this year.
“We’re having to live within our means,” TVA President Bill Johnson said.
Johnson said the slowdown in the growth of power demand “is generally a good thing for our customers” and will help TVA avoid having to spend so much building as much new power generation as it has in the past. TVA also is planning to idle 18 coal-fired units, including two units each at its Widows Creek plant in Alabama and John Sevier plant in Tennessee already shut down.
But the slowdown in the growth rate also means TVA must pare its expenses to remain competitive and won’t invest as much each year in building new nuclear or gas-fired generation, Johnson said.
After cutting expenses last year through its “diet and exercise” program, TVA is asking for voluntary retirements and resignations from its staff and cutting contractor positions this year to help cut $100 million from its operations and maintenance budget this year.
Even with such cuts, however, TVA said Monday it lost $12 million on revenues of $2.6 billion in the fiscal quarter ended June 30. In the same period a year ago, TVA lost $23 million on revenues of $2.74 billion.
For the first nine months of its fiscal year, TVA said it lost $203 million on sales of $7.92 billion. In the same period of fiscal 2012, TVA $290 million on sales of $7.95 billion.
Thomas said he still expects TVA to finish the entire fiscal year in the black due to higher sales and seasonal rates in the summer — traditionally the peak period for power demand that accounts for one third of TVA power sales each year.
Last month, was cooler and wetter than normal, helping to cut air conditioning use by nearly 13 percent below normal but also allowing TVA to generate a record July high of 1,858 gigawatthours of hydro-generated power, TVA spokesman Duncan Mansfield said.
So far this year, rainfall above Chattanooga in the Tennessee Rivershed has totaled nearly 51 inches, or just an inch shy of the normal annual total for precipitation in the region.
Contact Dave Flessner at email@example.com or at 757-6340
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 ...