KNOXVILLE, Tenn. (Press Release) ― The Tennessee Valley Authority today reported a net income of $685 million for the fiscal year ended September 30, 2017, as compared to $1.2 billion for the prior year, on slightly higher revenues. The lower net income was largely driven by the additional $500 million contribution TVA elected to make to the retirement system.
TVA reported total operating revenues of $10.7 billion for the year ended September 30, 2017, up one percent from the prior year, primarily due to higher fuel cost recovery revenues. TVA’s power sales were down about two percent for the year, impacted by extremely mild weather that affected sales to local power companies. Fuel and purchased power expenses were $70 million, or about two percent, higher than the prior year, largely driven by higher prices for natural gas and lower hydroelectric production.
“The prolonged warmer weather over the summer and fall, combined with our efforts to improve operational efficiency, created a level of strong performance by TVA employees that allowed us to accelerate our long-term financial plans,” said TVA Chief Executive Officer Bill Johnson. “As a result, we were able to provide low-cost power, carry out our responsibilities for stewardship and economic development, invest more than $2 billion in capital improvements to our system and still reduce our debt and financing obligations by nearly $200 million – the first year TVA has lowered debt levels since the implementation of the long-range financial plan in 2013.” This will help reduce interest expense going forward, which will assist with decreasing O&M in future years.
Total operating and maintenance expense was $520 million higher for the year ended September 30, 2017, as compared to the prior year. This was due to the additional pension contribution of $500 million, and higher planned nuclear outage expenses. When excluding these items, operating and maintenance expense was lower in 2017 than the previous year.
“Favorable results provided TVA the opportunity to make $800 million in total contributions to our retirement system in 2017,” said TVA Chief Financial Officer John Thomas. “The additional funding has put us on a more confident path to fully fund the pension plan, and will help ensure the health of our retirement system for the future.” In 2017, TVA committed to contributing $300 million annually over 20 years to the pension fund.
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