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TVA fiscal year 2022 revenue exceeds $12 billion for first time

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TVA fiscal year 2022 revenue exceeds $12 billion for first time

The Tennessee Valley Authority reported $12.5 billion in total operating revenues on 163 billion kWh of electricity sales for the year ended Sept. 30, 2022, the first time TVA’s annual revenue exceeded $12 billion.

Total operating revenues increased 19% over the same period last year, primarily due to an increase in fuel cost recovery revenue driven by higher fuel and purchased power market rates.

Sales of electricity increased about 3% compared to the prior year, driven by economic growth in TVA’s service area and weather.  Weather conditions were closer to normal for 2022 despite extreme temperatures in the summer that set several power demand records.     

“TVA, in partnership with our local power company customers, accomplished many things in 2022, including maintaining industry-leading reliability during challenging conditions this summer while keeping energy costs among the lowest in the nation,” said Jeff Lyash, TVA president and chief executive officer. “This was our third year holding base rates flat despite growing inflation pressures, and we will continue that stable trend into a fourth year in 2023. In addition, TVA’s continuing financial strength and stability allows us to return hundreds of millions of dollars in rate credits back to our customers to support local communities.”

Fuel and purchased power expense was $1.8 billion higher, driven primarily by higher fuel and purchased power prices. Lower nuclear output due to the extended outage for the Watts Bar Unit 2 steam generator replacement project, as well as fewer significant rain events that lowered hydroelectric generation, also contributed to higher fuel and purchased power expense. While the average price of natural gas was almost 90% higher in 2022 as compared to 2021, TVA actively hedges much of the fuel that it uses, and more than half of TVA’s power supply comes from carbon-free sources like nuclear, hydroelectric and other renewables, which are not exposed to swings in fuel prices.

“TVA’s diverse generation system and proactive fuel purchasing practices translate into electricity rates in the areas served by TVA and our local power company partners that are among the lowest in the nation,” said TVA’s Chief Financial and Strategy Officer John Thomas. “While natural gas prices nearly doubled over the past year, the effective rate paid by TVA customers was only 15% higher.”

Operating and maintenance expense increased by $96 million, driven by labor escalation; information technology investments; additional inventory reserves and write-offs; an increase in natural gas, hydroelectric and coal maintenance projects; and an increase in nuclear outage days.  Depreciation and amortization expense increased $521 million over the prior year, primarily due to a change in depreciation rates following an updated depreciation study. The study included planning assumptions to potentially retire the remainder of TVA’s coal-fired fleet by 2035.     

Interest expense was $36 million lower for the year ended Sep. 30, 2022, which was a 3% decrease from the prior year due to lower average debt balances and lower average long-term rates. TVA’s total debt and financing obligations decreased in 2022 to the lowest level in 35 years.

TVA’s net income was $1.1 billion for the fiscal year 2022, which was $404 million lower than the prior year, due mainly to higher operating expenses. 

During fiscal year 2022, TVA published its first ever Diversity, Equity, Inclusion and Accessibility (DEIA) report, which highlights TVA’s progress and key programs to promote DEIA within its workforce and across the seven states it serves. In addition, the seven-year, $326 million Boone Dam remediation project was completed on time and under budget. Boone Dam, on the South Fork Holston River in Tennessee, impounds water for a 89 MW hydroelectric powerhouse.

TVA is a corporate agency of the U.S. that provides electricity for nearly 10 million people in parts of seven southeastern states. Of the 73 generating sites TVA owns, 29 are conventional hydroelectric plants and one is a pumped storage facility.