TVA boosts income even after lowering rates, boosting assistance during pandemic
The Tennessee Valley Authority nearly doubled its net income from last year this winter, despite giving discounts and support payments to local utilities and communities to help cope with the ongoing COVID-19 pandemic.
The federal utility company is well on its way to generating over $ 1 billion in annual earnings this year for the fourth year in a row. In a quarterly earnings report released Tuesday, TVA said it both increased net income and reduced electricity bills for the nearly 10 million people it serves seven states in the Tennessee Valley this winter.
TVA reported Tuesday that in the first three months of 2021 it made $ 456 million on sales of more than $ 2.5 billion. For the same period last year, TVA posted net income of $ 256 million on sales of nearly $ 2.5 billion.
For the first half of the current fiscal year, which began last October, TVA reported net income of $ 640 million, compared to $ 447 million the previous year.
As America's largest state-owned utility, TVA profits are used to pay off the utility's debt.
TVA said the pandemic doesn't seem to affect electricity sales. Electricity sales for TVA this winter were 3% higher than a year ago, largely due to colder weather than the mild winter of 2020. The number of heating degree days increased 8% year over year, but the Tennessee Valley did not have winter storms, the Texas and took more than 4 million people out of power, at least temporarily, and resulted in the deaths of at least 111 people from hypothermia and other storm-related causes.
TVA has maintained 99.999% reliability for over 20 years.
"The industry-leading reliability of the TVA power system kept the light and heat in the Tennessee Valley region this winter under conditions that caused severe disruption in other parts of the country," TVA President Jeff Lyash said in a statement Tuesday. "The dedicated efforts of TVA's 10,000 employees and the diversity and resilience of the TVA power system continued to serve the 10 million people who rely on us every day, just as they have for the past 88 years."
TVA's tax equivalents and interest expense were lower in the first two quarters of fiscal 2021 than in the prior-year periods, while operating and maintenance costs rose slightly by $ 26 million, mainly driven by an increase in planned downtime costs and an escalation in the workforce . TVA's fuel and electricity costs were 8% lower year-over-year, mainly driven by a smaller recovery in fuel costs due to volatility in natural gas and purchasing power markets, as well as lower effective fuel rates due to lower coal prices, core fleet performance and more hydropower generation.
"As we continue to deliver reliable power in the most extreme conditions, TVA's electricity bills continue to be among the lowest in the industry and region," said John Thomas, TVA's chief financial officer. "In fact, TVA's customers will be paying effective wholesale prices in 2021, which will be lower than a decade ago, and we expect our prices to remain stable for the remainder of the decade."
As part of the strategic financial plan approved by TVA's board of directors in 2019, TVA began offering customers of local utility companies a 20-year option to a Valley partnership agreement. By May 3, 2021, 142 local energy supply companies had accepted the offer and are now long-term TVA partners. Billing credits available to long-term partners were over $ 90 million for the first two quarters of fiscal 2021.
In 2020, the TVA also launched a Pandemic Relief Credit, which went into effect from October 2020 as a monthly base rate of 2.5 percent totaling around $ 200 million for 2021. As of March 31, 2021, the TVA had granted a Pandemic Relief loan of approximately $ 104 million in credits.
TVA also offers the Back-to-Business Loan Program, which helps certain larger customers get back to business easier, as well as the Community Care Fund, which supports TVA and LPCs to support local initiatives that engage with the Address the difficulties caused by the COVID-19 pandemic.
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