The mildest winter in nearly five decades might have been great for consumers paying heating bills, but it didn’t do much to help the Tennessee Valley Authority. The agency saw about a 2 percent decline in power sales during fiscal 2017.
"In 2017 we had an even milder winter—the mildest since 1965—and then a somewhat normal summer. So that ended up, overall, with less sales," John Thomas, TVA's chief financial officer, told a Nov. 15 call discussing year-end results.
At the same time, TVA noted that fuel and purchased power expenses totaled $70 million, an increase of about 2 percent from a year ago. TVA said the rise was largely driven by higher prices for natural gas and lower hydroelectric production.
The power provider to some 150 electric cooperatives and municipal utilities reported net income of $685 million for the fiscal year ending Sept. 30, compared to $1.2 billion during fiscal 2016. It cited a one-time pension contribution of $500 million as one of the factors.
TVA has committed to making annual contributions of $300 million to its pension fund over 20 years. Thomas said favorable results provided the opportunity to make the extra contribution.
TVA also said it had higher planned nuclear outage expenses. Its Watts Bar Unit 2 was idled from late March until early August due to a ruptured condenser.
It was the first new reactor in the United States since 1996, and Bill Johnson, TVA's CEO, said nuclear power benefits the agency.
"The strategic asset investments we have made in the power system—more natural gas and nuclear, in particular—are yielding significant benefits. As a result, our effective power rates are about 2 percent lower than what we were charging customers in 2013," Johnson told the call.
He expects coal "to be part of TVA's generation mix for years to come," but added that the agency is also moving in other directions.
"TVA has added over 3,700 megawatts of clean energy, and retired several thousand megawatts of coal-fired generation capacity in recent years. These actions have significantly improved the ability of TVA's power system to provide clean, low-cost and reliable energy," said Johnson.
Johnson also said that by the end of December, TVA plans to retire all four units at its Johnsonville plant near Waverly, Tennessee, reducing coal-based generation by an additional 428 megawatts.