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TVA Reports Increased Operating Revenues in 2008 Annual Report

Posted on: Tuesday, 16 December 2008, 16:39 CST

KNOXVILLE, Tenn., Dec. 16 /PRNewswire/ -- TVA today filed its fiscal year 2008 annual report with the Securities and Exchange Commission, reporting a record $10.4 billion in operating revenues -- an increase of 11.3 percent from 2007.

The increased revenue in 2008 was primarily a result of rate and fuel cost adjustment increases, driven by a 21-percent increase in fuel and purchased power costs. Power sales in 2008 were almost flat, increasing by less than a half of 1 percent over sales in 2007.

TVA President and CEO Tom Kilgore said TVA faced several challenges in 2008, including continued low hydro generation because of lingering drought conditions and sharply rising commodity prices, including coal and purchased power.

Despite the challenges, he said that TVA productivity is at an all-time high during 2008, as the total number of employees declined to one of the lowest levels ever while electricity production increased to the highest level ever. The employment level at TVA was about 11,600 employees in 2008 -- the fourth lowest in TVA history. At the same time, energy requirements met by TVA topped 180,000 gigawatt-hours.

"Our productivity measured in power delivered per employee was about 15.5 gigawatt-hours per employee during 2008, compared to about 11 gigawatt-hours per employee 10 years ago," Kilgore said. "This ratio demonstrates our ability to provide more electricity to our customers with fewer employees."

Fuel and purchased power costs were $4.2 billion in 2008, an increase of $727 million from the previous year, forcing TVA to increase its fuel cost adjustment on Oct. 1, the beginning of the 2009 fiscal year. Some moderation in those costs will result in a decrease in the fuel cost adjustment to customers in January.

With rainfall and runoff below normal for the third consecutive year, TVA's hydro generation for 2008 was 26 percent less than 2007. Hydro production in 2008 was 57 percent lower than it was in 2005.

In the 2008 annual report filed on Form 10-K with the SEC, TVA also reported net income of $817 million, compared to $423 million in net income in 2007. The $394-million increase is primarily due to a one-time accounting adjustment of $350 million. This one-time adjustment is due to a reclassification of expenses associated with the non-nuclear asset retirement trust. Excluding this one-time adjustment, TVA's net income was $467 million.

As economic conditions have deteriorated, TVA power sales in the early part of fiscal year 2009 are about 2 percent below expectations and are expected to remain lower than the amount budgeted for 2009.

"To help offset anticipated declining revenues, the TVA Board has challenged us to reduce our non-fuel operating and maintenance costs in 2009," said TVA President and CEO Tom Kilgore. "In the coming months, we will look at all our internal spending, including any capital expenditures that can be postponed, and try to match any losses in revenue."

Despite a recent decline in power sales, TVA projects that power demand will increase over the long term requiring the addition of new generation assets, including Unit 2 at Watts Bar Nuclear Plant, which is scheduled to be completed by 2013.

TVA is also committed to an ambitious Energy Efficiency and Demand Response program working with customers to reduce peak power demand by up to 1,400 megawatts -- more than the amount generated by one nuclear unit -- by 2012.

"During our 75th year, the employees of TVA looked back with pride on TVA's evolving role as a power provider, steward of the Tennessee Valley's natural resources and catalyst for sustainable economic development," Kilgore said. "At the same time, our diamond anniversary gave all of us at TVA the inspiration to tackle tough challenges in the coming years, including coping with the slowdown in the economy, rising fuel costs and an ongoing drought."

TVA's annual report on Form 10-K provides additional financial, operational and descriptive information, including financial statements for the year ended Sept. 30, 2008, 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 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 also today submitted a report to the U.S. Office of Management and Budget on compensation paid to officers during 2008.

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 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.)

SOURCE Tennessee Valley Authority

Source: PR Newswire

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