TVA ups incentive payments to recruit business
Valley on pace for another record year
Midway through its fiscal year, the Tennessee Valley Authority is on pace for a potential record year for new investment in its seven-state region.
TVA said Thursday it has helped attract more than $6.3 billion of new business investments that collectively are projected to add over 46,000 jobs in the fiscal year which began last October. The biggest single announcement in the Valley so far this year came from Volkswagen of America, which announced plans in January to invest another $800 million and add at least 1,000 more jobs at the Chattanooga assembly plant, where VW plans to begin making electric vehicles by 2022.
“This facility will be Volkswagen’s first electric vehicle production facility in North America and TVA is excited to partner with Volkswagen and to support the future of transportation electrification,” TVA CEO Jeff Lyash told industry analysts in a conference call Thursday. “We’re off to a great start in economic development.”
Last year, TVA’s economic development department worked on business additions or expansions valued at more than $11 billion, up by more than a third from the previous investment peak reached in 2014. Over the past six years working with state and local government development agencies, TVA has helped recruit or encourage more than $50 billion of new business investment in TVA’s region by offering incentives, discounted power rates and technical and infrastructure support for the new investments.
TVA disclosed in its quarterly earnings report released Thursday that it has spent $154 million in its first six months on incentives paid for business expansions, up from $145 million in the same period a year earlier. TVA does not disclose details of the payments or rate incentives given to individual companies.
Fiscal 2019 has also been aided by Amazon’s plans to invest $230 million in its operations center in Nashville that will add more than 5,0000 direct jobs and 8,000 other indirect jobs — the biggest single job announcement in Tennessee history.
Despite such investment and higher industrial power sales, TVA said a milder winter still cut its overall electricity sales in the first three months of 2019, lowering revenues and income for America’s biggest governmentowned utility during the quarter.
TVA earned $241 million on sales of $2.7 billion in its second fiscal quarter of 2019. Sales of electricity decreased 4% for the three months ended March 31, 2019, as compared to the same period of the prior year due to warmer-thannormal winter temperatures following a bitterly cold winter in 2018.
But TVA is still on pace to report net income for the entire year of more than $1 billion for the fourth time in the past five years. In the first half of its fiscal year, net income was down 11% from a year ago but still totaled $664 million for the six-month period despite an overall 1% drop in power sales in the period.
Operating and maintenance expenses were up $267 million, or 21% higher than the six-month period ended March 31, 2018, primarily due to $135 million of additional funds for write-offs related to the planned retirement of Bull Run and Paradise coal plans and $108 million of accelerated recovery of deferred environmental costs.
TVA’s interest expense was down 5% from a year earlier in the first half of the fiscal year as TVA cut its total outstanding debt as of March 31 to just over $23 billion, down $635 million since the start of the current fiscal year in October. TVA’s debt is now the lowest in 25 years.
RESPONDING TO RECORD RAINS
TVA said fuel costs were kept down by abundant rains, which set records both for all of calendar 2018 and for the month of February. TVA Chief Financial Officer John Thomas said TVA’s hydro generation was up 40% above normal as a result.
Heavy winter rains swelled the level of the Tennessee River by more than 12 feet in Chattanooga but TVA used its network of 49 dams to help limit flooding in the area and used its 29 power-generating dams to produce more power.
“Not only did TVA help prevent approximately $1.6 billion dollars of flood damage earlier this year, we were able to turn much of that rainfall into lowcost, carbon-free energy, providing increased value to those we serve,” Lyash said.
With additional output from TVA’s 29 power-generating dams and a 465-megawatt output upgrade of TVA’s oldest nuclear plant at Browns Ferry in Alabama, TVA is expecting to generate a majority of its power in the current fiscal year from non-carbon sources, including nuclear, hydro, wind and solar generation.
CLEANER, GREENER POWER
So far this year, 56% of TVA’s power has come from sources other than burning fossil fuel. TVA’s carbon dioxide emissions are down 51% from the levels of 2005.
Although TVA’s solar and wind generation is below neighboring utilities in North Carolina and Georgia, TVA announced plans in January for two more solar facilities to generate 297 megawatts for Google’s data centers, including the $600 million facility being built near Bridgeport, Alabama. In November, TVA announced plans for 377 megawatts of solar generation to support Facebook’s data center in Huntsville, Alabama.
Last week, a 53-megawatt solar array opened in Millington, Tennessee at the Naval Support Activity (NSA) facility — the largest solar farm built so far in Tennessee. Nashville-based Silicon Ranch, which also built the 8-megawatt solar farm at Volkswagen in Chattanooga in 2012. Lyash said TVA also recently announced a request for proposals from energy providers for another 200 megawatts of renewable energy.
“We’ve made significant additions in our renewables as well as nuclear and natural gasfired generation in recent years and this has helped diversify our power fleet,” Lyash said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.
“Not only did TVA help prevent approximately $1.6 billion dollars of flood damage earlier this year, we were able to turn much of that rainfall into low-cost, carbon-free energy, providing increased value to those we serve.” – TVA CEO JEFF LYASH