TVA finances show zero-carbon energy sources are high priority

Tennessee Valley Authority reported about $5.3 billion in operating revenues through the six-month period ending March 31 on Friday. It's about a 5 percent increase from last year, driven by high power demand through the bitterly cold winter months.

TVA has netted about $462 million in power sales this quarter and about $750 million from the start of the fiscal year. Expenses have remained mostly flat because of increased hydroelectric production and low-cost natural gas.

TVA Chief Executive Officer Bill Johnson said efforts made to diversify TVA's power system have allowed customers to have lower rates.

The utility has also cut carbon emissions by nearly half of what they were at peak in 2005. Johnson said more than half of the power TVA produced in the first six months of this fiscal year was carbon-free.

TVA retired its Allen and Johnsonville fossil plants this quarter, cutting about 32 percent from TVA's coal-fired assets.

By 2027, TVA expects coal will make up just 22 percent of its power system.

"We have continued to invest in our coal fleet, which remains an important part of TVA's system, but part of getting cleaner and more diversified means retiring some coal-fired assets," Johnson said.

And, TVA added more nuclear capacity. Its nuclear generation has increased about 14 percent in the last 10 years and the utility expects it will increase by another 3 percent in the next decade.

Upgrades made at Browns Ferry Nuclear Plant will provide enough electricity to power an additional 280,000 homes. Extended power upgrades at Browns Ferry Units 1 and 2 will be completed by next spring.

Nuclear outage days decreased this year, helping operating and maintenance expenses to go down by about $34 million, or 2 percent, from last fiscal year.

A combined cycle natural gas plant in Memphis went online last week, and Johnson said TVA is investing in 3,500 miles of fiber to connect its systems and prepare the utility to work in cleaner energy options without disrupting the grid.

“These results are helping TVA realize its strategic objectives to keep rates low while

prudently managing debt and investing in a cleaner, more diverse power system,” TVA Chief Financial Officer John Thomas said.

Wholesale renewables entice businesses

Renewable energy sources make up about 13 percent of TVA's energy portfolio. Ten percent of that is hydroelectric power. Wind and solar make up the other 3 percent, though the utility plans to increase that to 5 percent in the next decade.

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The company has more than 1,200 megawatts of wind and solar and 70 megawatts of biomass under contract, Johnson said.

Bolstering the Tennessee Valley economy by recruiting new businesses to the area is one of the missions in TVA's charter, and the utility has found that industry customers favor renewables.

The company reported its economic improvement efforts have led to the creation of more than 40,000 jobs and $8 billion in capital investment in the region this fiscal year.

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Google, one of the larger incoming businesses, is building a data center on the same northeast Alabama ground that used to host a TVA fossil plant.

Google has made a commitment to use 100 percent clean energy, and TVA's ability to provide the company with solar, wind and hydroelectric energy was a determining factor in getting the internet giant to the region.

TVA spokesman Jim Hopson explained the utility will reserve some of the renewable power it generates specifically to cover the new data center's needs.

"Renewable power is intermittent and variable; it's not suitable to power data centers directly since they need constant, reliable power," Hopson said. "Rather, we cover their reliability needs around the clock and credit renewable generation to cover each kilowatt-hour used."

Residential efficient and renewable energy

While TVA is supporting carbon-free and renewable energy on the wholesale end, a rate structure change the TVA Board will vote on next week may hurt residential solar and energy efficiency investments.

Environmental, solar and ratepayer groups have voiced fears in the past that the utility's proposed "grid access charge" will discourage conservative energy practices and penalize customers who rely on home solar panels and energy-saving appliances.

The change mirrors fixed rates implemented by other utilities to maintain grid infrastructure in the face of increasing energy-efficient technology and declining population growth.

The benefit of the change, Thomas said, is that energy-use charges will be less volatile, so customers aren't paying as much during extremely hot or extremely cold weather.

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TVA has not yet disclosed the amount of the grid access charge it will propose at the May 10 TVA Board meeting in Muscle Shoals, Alabama.

But, the utility's draft environmental assessment for the proposal offers up three decreases on energy-usage charges, ranging from a quarter of a cent to one cent per kilowatt hour.

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TVA has estimated the smaller proposed decreases would result in residential customers paying about a dollar more per utility bill, and Thomas said he expects local distributors will be "minimally impacted."