TVA boosts profits to 4-year high in 2014

Tennessee Valley Authority headquarters and TVA logo

The Tennessee Valley Authority overcame a 2.4 percent decline in power sales to record its highest income in four years in fiscal 2014.

TVA said today it earned $469 million on revenues of more than $11 billion in the year ended Sept. 30. A year earlier, TVA earned $271 million on revenues of $10.8 billion.

"We had a strong financial year in 2014 highlighted by further improvements in TVA's operating and maintenance costs, an area we have been acutely focused on over the last two years," TVA President and CEO Bill Johnson said in a statement released today. "We have taken considerable strides in our efforts to reduce our controllable costs, our O&M costs, to align with our revenue and growth expectations for the future."

Operating and maintenance expense decreased $87 million in 2014 compared to 2013, largely due a $122 million decrease related to TVA's costs savings initiatives.

TVA is on pace to cut its annual operating expenses by $500 million a year by 2015. In fiscal 2014, TVA paid down nearly $1.2 billion in debt even while spending a record amount of capital investments building another unit at the Watts Bar Nuclear Plant, installing scrubbers at the Gallatin Fossil Plant and starting work on new gas-fired plants.

"The work we have done the last two years allowed us to continue to make substantial investments that support a reliable, well-balanced asset portfolio while reducing our total debt and obligations,"TVA Chief Financial Officer John Thomas said.

Sales to local power companies were moderately higher in 2014 as compared with 2013, due largely to the cold winter from the Polar Vortex in January.

But that sales gain to distributors was offset by the May 2013 shutdown of U.S. Enrichment Corp.'s operations in Paducah, Ky., formerly TVA's largest customer.

A rate increase of nearly 2 percent in 2014 boosted overall revenues despite the drop in electricity sales.

Fuel expense decreased $90 million in 2014 compared with 2013 primarily due to the timing of TVA's fuel cost recovery mechanism and a reduction in sales volume, but was somewhat offset by higher purchased power costs in 2014.

As a federally owned corporation, TVA is owned by the government. The utility's' net income is used to either pay down TVA's $23 billion of statutory debt or to fund capital improvements.