In a trend that is probably not unfamiliar to others generating electricity, the Tennessee Valley Authority reported that sales of electricity in fiscal year 2020 were about 5% lower compared to 2019, “due to overall milder weather and impacts of the COVID-19 pandemic.”
TVA reported $10.2 billion in total operating revenues on more than 151 billion kWh of electricity sales for FY2020. Total operating revenues decreased about 9% from the prior year driven primarily by lower sales volume, lower effective base rates and lower fuel cost recovery revenues. TVA estimates base revenues were about $185 million lower due to the impacts of COVID-19.
TVA’s fuel, purchased power, operating and maintenance, tax equivalents, and interest expense were all lower in 2020 than in 2019. TVA’s fuel and purchased power expense was 15% lower year-over-year, primarily driven by lower effective fuel rates and lower energy sales due to impacts of milder weather and COVID-19, as well as the increased generation of nuclear power.
“TVA’s strong financial position helped us absorb the impacts of the pandemic in 2020 and still provide extra support for our customers,” said Jeff Lyash, TVA president and chief executive officer. “And TVA was in a position to reduce effective power rates for customers for 2021, when our communities need relief the most. This would not have been possible without the ongoing financial discipline of our employees.”
Operating and maintenance expense was $370 million lower, driven primarily by less project write-offs and regulatory asset recovery for certain environmental cleanup costs that did not occur in the current year. TVA continues to implement cost savings initiatives in response to the COVID-19 impacts.
Interest expense was $1,142 million in 2020, which was a 5% decrease from 2019, driven by lower average debt balances. TVA’s debt has decreased to the lowest level in over 30 years.
TVA is a corporate agency of the U.S. that provides electricity for nearly 10 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. Of the 73 generating sites TVA owns, 29 are conventional hydroelectric plants and one is a pumped storage facility.