Tennessee Valley Authority
TVA Reports 2009 Fiscal Year Second Quarter Results
May 1, 2009
Power sales during the second quarter of 2009 decreased by 9.4 percent from sales for the second quarter last year, and power sales for the first six months of fiscal year 2009 were 5.6 percent below sales for the first six months of fiscal year 2008 according to TVA’s quarterly financial report filed with the Securities and Exchange Commission today.
“The effects of the economic downturn are resulting in less demand for power in the TVA region,” said TVA Chief Financial Officer Kim Greene, noting that sales could decline further if commercial and industrial customers continue to reduce production or cease operation. “The decrease in power sales, continuing expenses to clean up the Kingston ash spill, and the impact of the market decline on our pension and other investments are among the factors that make this a challenging year financially.”
“On the positive side, our customers are benefitting from lower fuel and purchased power costs, which resulted in reductions in our fuel cost adjustment in January and April of this year,”Greene said. “We have now rolled back the majority of the increase in power rates from Oct. 1, 2008 and continue to provide reliable service at competitive prices.”
Greene said that TVA is reducing its operating costs and capital expenses to help offset some of the financial pressures in 2009.
TVA reported a net income of $133 million for the quarter that ended March 31, 2009, compared to a net income of $135 million for the second quarter of 2008. For the six months that ended March 31, TVA reported a net loss of $172 million, compared to a net income of $143 million for the first six months of the previous year.
Operating revenues for the six months that ended March 31, 2009 were $6 billion, compared to $4.9 billion for the corresponding period last year. Total operating expenses for the first half of the 2009 fiscal year were $5.5 billion, compared to $4.1 billion a year ago. Both revenues and expenses were affected by increases in fuel and purchased power. Expenses were also impacted by costs associated with the cleanup of the Kingston ash spill. Offsetting these increases is the reduction in revenues due to lower power sales.
For the six-month period that ended March 31, 2009 TVA has recognized total charges of $675 million related to expected cleanup costs for the ash spill, including $150 million for the second quarter. Actual costs incurred for the cleanup through March 31 have totaled $77 million.
Net interest expense for the first six months of 2009 was $648 million, about 5 percent less than a year ago.
Hydro generation for the first half of 2009 was about 60 percent higher than it was during the first half of the 2008 fiscal year. Rainfall for the six-month period that ended March 31 was 86 percent of normal, while runoff – the amount of water that reaches streams and reservoirs – was 66 percent of normal. Conditions have improved; however, parts of the Tennessee Valley remain under drought conditions.
TVA’s quarterly report on Form 10-Q provides additional financial, operational and descriptive information, including unaudited financial statements for the quarter and six months ended March 31, 2009, 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 www.sec.gov and copies are available 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 9 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 quarterly report on Form 10-Q 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 3 and 4 of TVA’s quarterly report for the quarter ended March 31, 2009 on Form 10-Q filed with the SEC.)
Media Contact
John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000
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(888) 882-4975 (toll-free)
(888) 882-4967 (toll-free International)