Tennessee Valley Authority Reports Quarterly Results for the Period Ended December 31, 2024
Tennessee Valley Authority Reports Quarterly Results for the Period Ended December 31, 2024
The Tennessee Valley Authority (TVA) filed its quarterly report for the period ended December 31, 2024. The report does not provide specific financial figures, but notes that the TVA is a corporate agency of the United States created by an act of Congress. The report indicates that the TVA has not filed all reports required by the Securities Exchange Act of 1934 during the preceding 12 months, but has been subject to such filing requirements for the past 90 days. The TVA is not a large accelerated filer, accelerated filer, or emerging growth company, and has elected not to use the extended transition period for complying with new or revised financial accounting standards. The report does not provide any specific financial information, including revenue, net income, or cash flow.
TVA’s Solid Financial Performance Amid Evolving Energy Landscape
The Tennessee Valley Authority (TVA), a federally-owned electric utility, has reported its financial results for the three months ended December 31, 2024. Despite the challenges of the changing energy landscape, TVA has maintained a strong financial position, delivering reliable power to its customers across the Tennessee Valley region.
Sales of Electricity TVA’s primary source of revenue is the sale of electricity. During the three-month period, TVA sold 38,031 million kilowatt hours (kWh) of electricity, a 2% increase compared to the same period in the prior year. This growth was driven by increased demand from local power company customers and industries directly served by TVA.
The company’s customer base is diverse, with sales to local power companies accounting for the majority of revenue, followed by industries directly served and federal agencies. TVA’s two largest local power company customers, Memphis Light, Gas and Water Division and Nashville Electric Service, each contributed 8% of total operating revenues.
TVA’s rate structure is designed to provide pricing signals that reflect the cost of serving customers during different seasons and times of day. This includes time-of-use demand and energy charges, as well as a grid access charge that helps recover fixed costs. The company also offers a Partnership Agreement option that aligns the length of local power company contracts with TVA’s long-term commitments, providing benefits to participating customers.
Financial Results TVA’s operating revenues for the three-month period increased by $155 million, or 5.6%, to $2.92 billion compared to the same period in the prior year. This was primarily due to a $96 million increase in base revenue, driven by a 5.25% wholesale base rate increase effective October 1, 2024, as well as higher sales volume.
Operating expenses also increased by $131 million, or 5.5%, to $2.51 billion. This was largely attributable to:
- A $9 million increase in fuel expense, primarily due to higher coal prices, partially offset by a decrease in nuclear generation availability.
- A $35 million increase in purchased power expense, driven by less nuclear generation and higher market prices.
- A $38 million increase in operating and maintenance expense, mainly due to higher payroll and benefit costs, as well as increased nuclear outage expenses.
- A $36 million increase in depreciation and amortization expense, primarily related to the decision to retire the Kingston Fossil Plant and higher amortization of finance leases and regulatory assets.
- A $13 million increase in tax equivalents expense, reflecting the higher revenue from electricity sales.
Despite the increase in operating expenses, TVA’s operating income grew by $24 million, or 6.2%, to $413 million for the three-month period.
Generating Sources TVA’s power supply mix continues to evolve, with a focus on reducing carbon emissions and increasing the use of renewable energy sources. During the three-month period, nuclear generation accounted for 36% of total power supply, followed by natural gas and/or oil-fired generation at 23%, coal-fired generation at 14%, and hydroelectric generation at 8%.
The company is also investing in new natural gas-fired generation to replace its retiring coal-fired fleet, with pre-commercial operations beginning at the Johnsonville Aeroderivative CT Units 25-28 in the first quarter of 2025. Additionally, TVA is pursuing the development of small modular reactors at its Clinch River site, which could help establish a new supply chain for advanced nuclear technology.
Liquidity and Capital Resources TVA maintains a strong liquidity position, with primary sources of liquidity including cash from operations, proceeds from the issuance of short-term and long-term debt, and access to various credit facilities. As of December 31, 2024, the company had $553 million in cash, cash equivalents, and restricted cash.
TVA’s debt securities, which include power bonds and discount notes, are not obligations of the U.S. government, and the government does not guarantee their payments. The company also has long-term debt associated with certain variable interest entities, primarily related to lease financing arrangements.
During the three-month period, TVA entered into new natural gas contracts, natural gas storage contracts, and a power purchase agreement, as well as a new lease financing arrangement, to support its ongoing operations and capital investment plans.
Key Initiatives and Challenges TVA continues to navigate the evolving energy landscape, with a focus on maintaining reliability, reducing carbon emissions, and investing in new generation technologies. The company’s natural gas-fired generation projects, including the Cumberland Combined Cycle Plant and the Kingston natural gas units, are progressing, although the Cumberland project has faced some legal challenges related to the required pipeline construction.
The company is also exploring the potential development of small modular reactors at its Clinch River site, which could help establish a new supply chain for advanced nuclear technology. However, this project remains subject to TVA Board approval and further regulatory review.
In late 2024, TVA’s service area was impacted by Hurricane Helene, which caused significant damage in East Tennessee and Western North Carolina. The company is working on debris management and expects to receive reimbursement from the Federal Emergency Management Agency for its related expenses.
TVA’s corporate governance has also seen some changes, with the departure of two TVA Board members and the upcoming retirement of the company’s President and CEO, Jeffrey J. Lyash, by October 2025.
Outlook and Challenges TVA’s financial performance during the three-month period demonstrates its ability to navigate the evolving energy landscape and maintain a strong financial position. The company’s focus on diversifying its generation mix, investing in new technologies, and managing its costs has contributed to its success.
However, TVA faces several challenges going forward, including the ongoing transition away from coal-fired generation, the development of new natural gas and nuclear projects, and the potential impact of changing environmental regulations and executive actions.
The company’s ability to effectively manage these challenges and continue to provide reliable and affordable power to its customers will be crucial in the years ahead. TVA’s strong liquidity position and access to various financing options should help the company navigate these challenges and make the necessary investments to support the region’s energy needs.
Overall, TVA’s financial results for the three-month period ending December 31, 2024, demonstrate the company’s resilience and its commitment to serving the Tennessee Valley region with safe, reliable, and affordable electricity.