Rainfall, TVA Hydro Generation Remain Below Normal

November 29, 2007

As a result of continuing dry conditions in the Tennessee Valley, TVA’s hydroelectric generation – its cheapest source of power – remains significantly below normal for the first few months of the 2008 fiscal year, TVA President and CEO Tom Kilgore told the TVA Board today.

In an operations report to the Board, Kilgore said that yearly rainfall amounts in the Valley have been below normal for the past four fiscal years and decreasing each year, with the 2007 rainfall at 33 percent below normal. He said runoff – the amount of water that reaches the river and reservoirs – was 33 percent and 46 percent below normal in 2006 and 2007, respectively.

As a result, TVA’s power generation from hydroelectric plants was 24 percent below normal in 2006, 31 percent below normal in 2007 and 66 percent below normal so far this fiscal year, which began Oct. 1. Reduced hydroelectric generation helps drive up purchased power costs, which Kilgore said are about $20.6 million higher than projected so far this fiscal year.

“When you look at cumulative rainfall totals in the Valley since 2004, each year the rainfall amounts have progressively been worse, culminating with 2007 which was the driest year,” Kilgore said. “This lack of rainfall and runoff has led to significantly lower hydro generation the past two years, and we’re starting off fiscal year 2008 even lower than the previous two years.”

Meeting at TVA headquarters in Knoxville, Tenn., the Board approved a change in the formula used to calculate quarterly fuel cost adjustments to power rates. The change is designed to smooth fluctuations in the fuel cost adjustment from quarter to quarter throughout the year. The new baseline formula is effective Jan. 1, 2008.

The fuel cost adjustment for the three-month period beginning Jan. 1 will be about half the amount for the quarter ending Dec. 31. Because the fuel cost adjustment is a per kilowatt-hour charge, amounts that consumers will save depend on the amount of energy they use. Typical savings on consumers’ monthly power bills could range from $1.40 to $2.70 in the fuel cost adjustment portion of the bill.

The Board also:

• Set the 2008 compensation for Kilgore and his leadership team
• Authorized TVA staff to purchase gas generation facilities or construction sites to meet the need for additional peaking and intermediate generating capacity
• Approved contracts with AREVA and BHP Bilton to purchase uranium as part of TVA’s fuel supply needs for its nuclear plants after 2012.

Kilgore also updated the Board on TVA’s energy-efficiency initiatives, pointing out that since 1997 TVA and local power distributors have achieved a reduction in energy demand of 523 megawatts. He said TVA’s goal is to reduce the demand by 1,200 megawatts by 2013, and TVA will expand stakeholder involvement in helping develop ideas on how to reduce energy use.

Kilgore offered a few simple things people can do now to reduce energy use, which include:

• Turn down the thermostat in the winter and up in the summer
• Turn off lights and appliances when not in use • Use compact fluorescent lamps
• Make sure there is adequate insulation and weather stripping
• Change heating, ventilation and air conditioning filters regularly
• Use less power between 4 p.m. and 8 p.m. during the summer.

TVA is the nation’s largest public power provider and is completely self financing. TVA provides power to large industries and 158 power distributors that serve approximately 8.7 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

Media Contact

John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000

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