TVA Reports Fiscal Year 2009 Financial Results
Nov. 25, 2009
TVA filed its annual report on Form 10-K with the Securities and Exchange Commission on Wednesday, reporting net income of $726 million for fiscal year 2009 that ended Sept. 30, compared with net income of $817 million for the previous fiscal year.
TVA, which does not make a profit, reinvests net income in its power business, specifically on projects that expand and improve TVA’s infrastructure. These projects include new generation, environmental controls and transmission improvements. TVA receives no taxpayer money.
Total operating revenues for fiscal year 2009 were approximately $11.3 billion, an 8.4-percent increase from fiscal year 2008, while total operating expenses were almost $9.3 billion in 2009, up 13.2 percent from 2008. Although power sales volume declined 7.1 percent from the previous year, operating revenues were higher primarily because of increases in base rates and fuel cost adjustments during the year.
An increase in revenue from municipalities and cooperatives, primarily due to base rate increases effective April 1, 2008 and Oct. 1, 2008 and increases in the fuel cost adjustment, contributed significantly to the $873 million increase in operating revenues in fiscal year 2009. Power sales to directly served industries and federal agencies also contribute to operating revenues.
Net interest expense for 2009 was approximately $1.3 billion, a 7.6-percent decrease from interest expense in the 2008 fiscal year.
The economic downturn combined with milder summer weather contributed to the reduction in power sales. Other financial challenges were related to the ash spill at the Kingston Fossil Plant, coal combustion product facilities at TVA fossil plants, a court ruling in a lawsuit filed by the state of North Carolina requiring TVA to add controls to reduce emissions from several of its coal-fired plants earlier than planned and the funded status of the TVA pension plan.
“TVA faced several significant challenges in fiscal year 2009 that impacted results of operations and our financial condition,” said TVA Chief Financial Officer Kim Greene. “Despite the challenges, TVA also experienced some positive business developments during the year, a decrease in purchased power and natural gas prices, increased hydroelectric generation as drought conditions eased, continued 99.999 percent reliability of the transmission system, and economic development announcements by Hemlock Semiconductor and Wacker Chemie of plans to invest more than $2.2 billion in capital investments and create an estimated 1,000 jobs in the TVA service area.”
Rainfall during fiscal year 2009 was 103 percent of normal. As a result of higher-than-planned rainfall, TVA was able to increase its low-cost hydroelectric generation by 64 percent over fiscal year 2008 levels.
Estimated expenses for the cost of the clean-up related to the Kingston ash spill range from $933 million to $1.2 billion. The estimate does not include certain costs, such as damages that might be awarded in litigation or fines that might be imposed. The cost of the clean-up will be collected in rates over 15 years. Ash spill clean-up costs incurred through Sept. 30 totaled $231 million.
TVA also made a discretionary $1 billion contribution to its pension fund during fiscal year 2009 as an advance contribution for the years 2010 through 2013.
TVA’s annual report on Form 10-K provides additional financial, operational and descriptive information, including audited financial statements for the year that ended Sept. 30, 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 creates economic development opportunities and 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 5-6 of TVA’s annual report Form 10-K filed for the fiscal year ending Sept. 30, 2009 filed with the SEC.)
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