Weather, Nuclear Refueling, Storm Impact TVA’s 3rd Quarter
August 11, 2011
KNOXVILLE, Tenn. ― Refueling outages at nuclear plants and a devastating storm combined with lower electricity demand to impact third-quarter financial results, the Tennessee Valley Authority said Thursday.
TVA’s third-quarter report to the Securities and Exchange Commission said expenses from a series of deadly tornadoes on April 27-28 and outages at three of TVA’s six reactors contributed to lower net income for the three-month period ended June 30.
“It was a matter of timing and duration for the refueling outages, along with maintenance projects to increase our plant reliability,” Chief Financial Officer John Thomas said.
One unit was refueled each at the Browns Ferry, Sequoyah and Watts Bar nuclear plants during the period. Five of six TVA reactors have been refueled since October.
The April storms left nearly 850,000 homes and businesses without power and damaged more than 90 large transmission lines. Electricity was restored for most distributor customers within a week, but rebuilding the transmission system in Alabama, Mississippi and Tennessee took until July.
“This was a significant event and the response of TVA employees was outstanding, but it obviously had some financial impact,” Thomas said.
In the third-quarter report, TVA estimated the storm cost $39 million for structural repairs, including $29 million in capitalized expenditures and $10 million in operating and maintenance expenditures. In addition, TVA spent $95 million on replacement power until the Browns Ferry Nuclear Plant and two units at Widows Creek Fossil Plant were reconnected to the grid in late May and early June.
Electricity sales volume declined 5 percent in the third quarter compared with a year ago. Lower demand from homes and businesses was weather-driven as well, first by outages from the April storms and then by cooler-than-normal temperatures in May and June.
TVA reported a net loss of $240 million on $2.7 billion in revenues for the third quarter, compared with net income of $199 million on $2.6 billion in revenues for the same period a year ago. TVA is a self-financing government-owned enterprise that receives no taxpayer money.
For the nine months ended June 30, TVA reported a net loss of $35 million on $8.5 billion in revenues, compared with net income of $779 million on $7.6 billion in revenues for the same period of the prior year.
Fuel expenses rose by $75 million, to $584 million, for the three-month period ended June 30, while power purchases increased by $110 million, to $387 million. Operating and maintenance expenses were up $237 million, to $994 million, compared with the third quarter of 2010.
“Economic recovery in our region, like the rest of the country, has been slow,” Thomas said. “That may have been impacted somewhat by the April storms, but recent national events have caused concern about when the economy might recover.”
One aspect of TVA’s power system that has benefited from the weather is hydroelectric generation, TVA’s least expensive energy source. Because of wetter-than-normal conditions, hydro production was up 47 percent in the third quarter compared with 2010.
The third-quarter report also noted the completion date for Watts Bar Nuclear Plant’s Unit 2 has been extended from late 2012 into 2013 and the two remaining units at John Sevier Fossil Plant will be idled by Dec. 31, 2012.
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter that ended June 30, 2011, and is available to investors and the public. The public may read reports or other information that TVA files with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. TVA SEC reports are also available on the SEC’s website at http://www.sec.gov or on TVA’s website at http://www.tva.com/finance or by calling TVA toll free at 888-882-4975.
The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.
(This release may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying these statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements.)
Duncan Mansfield, Knoxville, (865) 632-4660
TVA Media Relations, Knoxville, (865) 632-6000
Ann Storberg, Knoxville, (865) 632-4425
TVA Investor Relations, Knoxville, (888) 882-4975