TVA Reports Increase in Operating Revenues, Net Income in 2007

December 12, 2007

TVA today filed its 2007 annual report on Form 10-K with the Securities and Exchange Commission, reporting operating revenues of more than $9.2 billion, up slightly from the previous year, and net income of $383 million, an increase of $54 million from 2006.

Total operating expenses for the 2007 fiscal year that ended Sept. 30 were $7.7 billion, a 1.9-percent increase from the previous year. Fuel and purchased power costs in 2007 were almost $3.4 billion, an increase of $49 million from 2006. Operating and maintenance costs increased less than one half of 1 percent. TVA power sales decreased about 1 percent from 2006.

Net interest expense for the year was $31 million lower than in 2006. TVA also reduced its balance of debt and other financing obligations by $530 million to a total of $24.7 billion at the end of the fiscal year. Total assets were $33.9 billion on Sept. 30.

“TVA faced several challenges in 2007 that impacted cash flow, operations and financial results,” said TVA President and CEO Tom Kilgore. “The most significant challenge was adverse weather conditions – the year-long drought and hot August temperatures.”

As a result of the driest year on record in the Tennessee Valley, hydroelectric generation during 2007 was 9 percent lower than 2006, 42 percent lower than 2005 and 35 percent lower than 2004. Because of the lower hydroelectric power available, TVA relied more heavily on higher cost generation sources, which negatively impacted cash flow.

During August, which was the hottest month on record in the TVA service area, TVA met an all-time record demand for electricity of 33,482 megawatts on Aug. 16. TVA generated and purchased an additional amount of power to meet the peak demands.

Kilgore said that despite the challenges, 2007 was a year of “new beginnings for TVA,” including development of the Strategic Plan that calls for a renewed commitment to energy efficiency, the restart of Unit 1 at Browns Ferry Nuclear Plant as the first nuclear generating unit brought into service this century and the TVA Board’s decision to complete Unit 2 at Watts Bar Nuclear Plant to help meet growing demand for power in the Valley.

Looking ahead to 2008, Kilgore said TVA will continue to improve its efforts to control costs and increase efficiencies. “For the 12,000 employees of TVA, continuous improvement is a way of life,” he said.

TVA also today submitted a report to the U.S. Office of Management and Budget on compensation paid to officers during 2007. The annual report on Form 10-K includes information on executive compensation.

The annual report on Form 10 K, which includes additional financial, operational and descriptive information, such as financial statements for the year ended Sept. 30, 2007, 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 St., N.E., Washington, D.C. 20549. TVA’s SEC reports are also available on the SEC’s website at www.sec.gov, on TVA’s website at www.tva.com/finance or by calling TVA toll-free at (888) 882-4975.

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.

(This release and TVA’s annual report on Form 10-K may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying the forward-looking statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements. Some of these factors are discussed on pages 4 and 5 of TVA’s annual report on Form 10-K filed with the SEC.)

Media Contact

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

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