TVA Reports Second Quarter Fiscal Year 2024 Financial Results

Rhea-AI Summary

TVA reported $5.9 billion in total operating revenues for the second quarter of fiscal year 2024, with a 3% increase in electricity sales compared to the same period last year. The company successfully met record power demand and is focusing on clean energy transition. Despite a 1% decrease in total operating revenues due to lower fuel costs, TVA's net income rose to $434 million, primarily driven by lower operating expenses.

Positive

• TVA reported a 3% increase in electricity sales for the second quarter of fiscal year 2024.

• The company successfully met an all-time power demand record during the quarter.

• TVA is committed to a clean energy transition while maintaining focus on delivering affordable, reliable, and resilient energy.

• TVA's net income for the six months ended March 31, 2024, increased to $434 million, $285 million higher than the same period of the prior year.

Negative

• Total operating revenues decreased by 1% primarily due to a decrease in fuel cost recovery revenue.

• Operating and maintenance expenses increased by $106 million over the same period last year.

• Interest expense was $528 million for the first half of fiscal year 2024, slightly lower than the same period last year.

Insights

Energy Sector Financial Analyst

The Tennessee Valley Authority's (TVA) recent financials indicate a modest increase in electricity sales volume, up 3%, which is a positive sign of demand resilience in the face of fluctuating energy prices. Despite this, a decrease in total operating revenue, driven largely by reduced fuel cost recovery revenue, suggests a favorable environment for consumers but presents a potential concern for TVA's revenue growth. However, a significant reduction in fuel and purchased power expenses, which dropped by $331 million, signals improved cost efficiency. The 58% carbon-free energy generation mix reflects the ongoing industry trend towards sustainable energy, which could enhance TVA's long-term market position and potentially attract investors with an interest in environmentally responsible companies. Net income showing a substantial increase to $434 million is a strong positive, highlighting a robust financial performance likely due to a combination of decreased operating expenses and possibly more efficient operations. Investors should note, the increased operating and maintenance expenses, pointing to higher labor costs, could indicate future financial pressure in maintaining profitability if not offset by continued operational efficiencies or rate adjustments.

Environmental, Social and Governance (ESG) Analyst

From an ESG perspective, TVA's report showcases a commitment to carbon reduction with a majority of their power supply being carbon-free. This aligns with global shifts towards sustainable energy, potentially increasing the attractiveness of TVA to ESG-focused investors. The clean energy transition mentioned signals ongoing investments in sustainable infrastructure, which could have long-term benefits in terms of regulatory compliance and customer demand. However, investors should weigh the costs associated with these transitions and their potential impact on TVA's financial health. The all-time power demand record met during Winter Storm Heather demonstrates TVA's capacity for reliability and resiliency—key aspects from a social and governance standpoint. Stakeholders concerned with sustainable practices and operational dependability may find TVA's current direction and performance to be a good match for their investment criteria.

Utilities Market Analyst

The growth in electricity sales volumes despite a decrease in operating revenue indicates a competitive pricing environment in the utilities sector. TVA's strategy of maintaining low effective rates to benefit customers while still achieving higher net income is noteworthy for investors, as it suggests a balance between customer affordability and profitability. The decline in depreciation and amortization expenses due to the full depreciation of the Bull Run Fossil Plant suggests a leaner asset base, which could impact future capital expenditure needs and depreciation costs—important factors when assessing the financial health of a utility. The utilities market is typically characterized by stable demand and TVA's record power demand reflects this. However, investors should closely monitor whether the increased operational costs could squeeze margins or lead to rate hikes that might affect demand elasticity.

• Register now for today's 9:30 a.m. ET conference call discussing TVA's second quarter financial results.
• TVA reported $5.9 billion in total operating revenues as sales of electricity increased approximately 3% compared to the same period last year.
• Total operating revenues decreased 1% primarily due to a decrease in fuel cost recovery revenue, driven by lower fuel and purchased power prices.
• During the quarter, TVA successfully met an all-time power demand record of 34,577 megawatts, surpassing the previous record of 33,482 set in August 2007.

KNOXVILLE, Tenn., April 30, 2024 /PRNewswire/ -- The Tennessee Valley Authority reported $5.9 billion in total operating revenues on 78 billion kilowatt-hours of electricity sales for the six months ended March 31, 2024. Total operating revenues decreased 1% over the same period last year, primarily due to a decrease in fuel cost recovery revenue, driven by lower fuel and purchased power prices. Sales of electricity increased approximately 3% compared to the same period of the prior year, primarily driven by an increase in heating degree days. 

"TVA is a national leader in carbon reduction, but we aren't satisfied," said Jeff Lyash, TVA President and CEO. "We are committed to a clean energy transition, while maintaining our focus on delivering affordable, reliable, and resilient energy. Our investments in reliability and resiliency paid dividends last quarter as, during Winter Storm Heather, TVA successfully met the highest recorded peak demand for power in our history."

Fuel and purchased power expense was $331 million lower in the first half of fiscal year 2024 over the same period of the prior year, primarily due to lower effective fuel rates and lower purchased power market prices. For the first six months of fiscal year 2024, 58% of TVA's power supply was carbon-free — coming from nuclear, hydroelectric and other renewables.

Operating and maintenance expense increased by $106 million over the same period last year, driven primarily by increased labor and contract labor costs. Depreciation and amortization expense was $32 million lower than the same period last year, primarily due to the Bull Run Fossil Plant fully depreciating in the fourth quarter of 2023. 

"Our customers continue to benefit from TVA's low effective rates," said John Thomas, TVA Chief Financial and Strategy Officer. "TVA's strong financial results and diverse power system are helping keep the cost of power low today, even as we make substantial investments to ensure reliable, affordable power and build the energy system of the future."

Interest expense was $528 million for the first half of fiscal year 2024, or $2 million lower than the same period last year. TVA's net income was $434 million for the six months ended March 31, 2024, $285 million higher than the same period of the prior year, primarily due to lower operating expenses.

TVA's senior leadership team will host a conference call and webcast at 9:30 a.m. today to discuss the second quarter fiscal year 2024 results. Please click here to pre-register.  A webcast replay and transcript will also be available for one year on TVA's website at https://www.tva.com/investors

Selected Financial Data – Six Months Ended March 31
Sales, Revenues & Expenses	2024	2023
Sales (millions of kWh)	77,971	75,659
Operating Revenues ($ millions)	$                               5,919	$                           5,974
Fuel & Purchased Power Expense	1,868	2,199
Operating & Maintenance Expense	1,756	1,650
Interest Expense	528	530
Net Income	434	149
Net Cash Provided by / (Used in) ($ millions)
Operating Activities	$                               1,431	$                           1,154
Investing Activities	(1,772)	(1,495)
Financing Activities	348	342

TVA's quarterly report on Form 10-Q provides additional financial, operational, and descriptive information, including unaudited financial statements for the quarter ended March 31, 2024. TVA's quarterly report and other SEC reports are available without charge on TVA's website at http://www.tva.com/investors, on the SEC's website at http://www.sec.gov, or by calling TVA toll free at 888-882-4975.

This release may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying these statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements. Please refer to TVA's most recent annual report on Form 10-K and quarterly report on Form 10-Q for a discussion of factors that could cause actual results to differ from those in the forward-looking statements.

The Tennessee Valley Authority is the nation's largest public power supplier, delivering energy to 10 million people across seven southeastern states. TVA was established 90 years ago to serve this region and the nation by developing innovative solutions to solve complex challenges. TVA's unique mission focuses on energy, environmental stewardship, and economic development. With one of the largest, most diverse, and cleanest energy systems – including nuclear, hydro, solar, gas, and advanced technologies – TVA is a leader in our nation's drive toward a clean energy future.

TVA is a corporate agency of the United States, receiving no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation, and land management for the Tennessee River system, and assists local power companies and state and local governments with economic development and job creation. Learn more at Energy System of the Future.

Media Contact:	Melissa Greene, TVA Media Relations, Knoxville, 865-632-6000
	www.tva.com/news
	Follow TVA news on Facebook and Twitter
Investor Relations:	Investor Relations, 888-882-4975
	investor@tva.gov

 

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SOURCE Tennessee Valley Authority

FAQ

What were TVA's total operating revenues for the second quarter of fiscal year 2024?

TVA reported $5.9 billion in total operating revenues for the second quarter of fiscal year 2024.

How much did TVA's net income increase for the six months ended March 31, 2024?

TVA's net income increased to $434 million for the six months ended March 31, 2024, $285 million higher than the same period of the prior year.

What was the reason for the 1% decrease in total operating revenues?

The decrease in total operating revenues was primarily due to a decrease in fuel cost recovery revenue.