TVA Second Quarter Results Benefit From Lower Fuel Expense, Reduced Debt

KNOXVILLE, Tennessee, May 2 -- The Tennessee Valley Authority issued the following news release:

The Tennessee Valley Authority today reported $5.5 billion in operating revenues for the six-month period ended March 31, 2019, a three percent increase from the same period a year ago.

TVA's fuel costs were essentially flat - three percent lower than the six-month period ended March 31, 2018, due to lower commodity prices and significantly more hydroelectric generation driven by record-setting rainfall this winter.

"Not only did TVA help prevent approximately $1.6 billion dollars of flood damage earlier this year, we were able to turn much of that rainfall into low-cost, carbon-free energy, providing increased value to those we serve," said Jeff Lyash, TVA's president and chief executive officer. "The diversity of TVA's power system continued to benefit the people of the Tennessee Valley during the second quarter."

Operating and maintenance expense was up $267 million, or 21 percent higher than the six-month period ended March 31, 2018, primarily due to:

* $135 million of additional funds for project write-offs and materials and supplies inventory reserves and write-offs related to the anticipated retirement of certain generating units,

* $108 million of accelerated recovery of deferred environmental costs, and

* $41 million of increased outage expense due to additional planned nuclear outage days.

Interest expense was down $34 million for the six-month period ended March 31, 2019, or five percent lower than the same period a year ago, reflecting a lower overall debt balance.

"We continue to see the benefits of debt reduction in TVA's financial results," said John Thomas, TVA's chief financial officer. "The significant decrease in interest expense in the first half of this fiscal year is a direct result of lower overall debt balances, despite the higher interest rate environment."

Additional highlights of TVA's second quarter fiscal year 2019 include:

* Net income for the six months ended March 31, 2019 was $664 million, down 11 percent from net income of $750 million for the same period of fiscal year 2018.

* TVA's economic development efforts continue to attract and encourage the expansion of business in the Tennessee Valley, with over $6.3 billion in investments and more than 46,000 jobs created or retained through the second quarter of 2019.

* On January 31, 2019, Browns Ferry Unit 1 became the second unit to produce electricity at full extended power uprate power after Unit 3, which has been operating at higher output levels since July 2018. Unit 2 completed its EPU upgrade this spring and is currently undergoing testing and validation.

* TVA continues to update its Integrated Resource Plan to determine how it can maintain its focus on providing low-cost, reliable energy, supporting environmental stewardship, and spurring economic development in the Tennessee Valley over the next 20 years. TVA provided a draft of its most recent IRP to the public on February 15, 2019.