KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported $5.1 billion in total operating revenues on 74.1 billion kilowatt-hours of electricity sales for the six months ended March 31, 2020. Sales of electricity were about 3% lower as total degree days impacted by overall heating and cooling were 11% below the same period in the prior year. Total operating revenues decreased about 7% from the same period of the prior year driven primarily by lower fuel cost recovery revenues, lower sales volume, and lower effective base rates.

TVA outlined its response to the ongoing COVID-19 pandemic in its filing with the Securities and Exchange Commission. Its efforts have focused on protecting employee health while maintaining its vital infrastructure mission that helps protect the health of the nearly 10 million people it serves.

The pandemic did not significantly impact the Tennessee Valley region until well into the second quarter. TVA’s revenues and sales are expected to be more materially impacted in the second half of 2020. Based on initial forecasts of early data, TVA anticipates base revenue to be lower than plan by between $300 million and $500 million for the remainder of 2020. The ultimate impact depends on factors beyond TVA’s knowledge or control, including the duration and severity of the outbreak, actions taken to contain its spread and mitigate its effects, and broader impacts on the country and region’s economy.

Due to these expected reductions in revenue associated with the COVID-19 pandemic, TVA is implementing various cost savings initiatives. TVA’s estimate of the impact to its financial position, results of operations and cash flows will be evolving over the remainder of the year.

Additionally, operations and delivery of energy to customers have not been materially impacted by the pandemic, and TVA continues to monitor the situation to ensure reliable service while protecting the safety and health of its workforce and sustaining business operations.

Recognizing the potential financial impact on local power companies, TVA also announced that it is making up to $1 billion of credit support available as an option to local power companies through the deferral of wholesale power payments, based on the needs of individual local power companies.

“TVA has a unique responsibility to maintain vital services, including a reliable power system and river management system, to help ensure public health and safety during this challenging time,” said Jeff Lyash, TVA’s president and chief executive officer. “We believe that using the strength of TVA’s balance sheet to support our partners and customers during this difficult time is just as vital to ensure a successful recovery for the Tennessee Valley.”

The TVA Board did not implement a base rate increase for 2020. Additionally, local power  companies that elected to sign up for an optional 20-year Valley Partnership Agreement are now  receiving a 3.1% bill credit.

TVA’s fuel, purchased power, operating and maintenance, tax equivalents, and interest expense were all lower in the first two quarters of fiscal year 2020 than in the same periods of the  prior year. TVA’s fuel and purchased power expense was 11% lower year-over-year, driven by  lower effective fuel rates, decreased volume of purchased power and overall demand that was  lower due to weather.

Operating and maintenance expense was $212 million lower, driven primarily by prior year  project write-offs and regulatory asset recovery for certain environmental cleanup costs that did not  occur in the current year.

Interest expense was $576 million for the first six months of fiscal year 2020, or a 4% decrease from the same period of the prior year, driven by lower average balances of debt. TVA’s  debt remains at the lowest level in almost 30 years. 

“The impact of the COVID-19 pandemic on the communities we serve is unprecedented,  and we know there will be continued economic uncertainty in the weeks and months ahead,” said  John Thomas, TVA’s chief financial officer. “TVA’s success in recent years in reducing costs,  investing in more efficient generation, and reducing debt will help us keep power rates low, maintain  reliable operations, and support our partners with greater flexibility, all of which become even more  critical during this difficult time.”

TVA executive management will host a conference call to discuss second quarter fiscal year  2020 results at 9:30 a.m. EDT, on Tuesday, May 5. The event will be conducted as a webcast and  as a dial-in teleconference. Participants will be able to hear the discussion and see slides via  webcast, but will need telephone access to ask questions. Pre-registration for the conference call is  required. Please click here to pre-register. Once pre-registered, the dial-in number will be provided  via an email. If you are unable to pre-register, you may access the conference call by dialing toll  free 844-308-6432 in the United States, or 412-717-9611 outside the United States. Participants  should ask to be joined into the Tennessee Valley Authority call.

A replay will be available one hour after the end of the conference call, by calling toll free  877-344-7529 in the United States or 412-317-0088 outside the United States and using the  conference number 10139713. A webcast replay and transcript will also be available for one year  on TVA’s website at tva.com/investors.

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,  2020. TVA’s quarterly report and other SEC reports are available without charge on TVA’s website  at tva.com/investors, on the SEC’s website at 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 a corporate agency of the United States that provides  electricity for business customers and local power companies serving 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. 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.