News from the Tennessee Valley State, Local and National news

TVA blames warm weather for drop in revenue

By Duncan Mansfield
Associated Press Writer

KNOXVILLE — While many have enjoyed the mild winter in the Southeast, the Tennessee Valley Authority said Thursday those warmer temperatures have cooled off power sales.

The nation's largest public utility said operating revenues are about $95 million lower than planned for the first quarter and net income is expected to be $46 million below budget.

Knoxville-based TVA won't release a full earnings report for the three-month period ending Dec. 31 for another few weeks. But TVA President and CEO Tom Kilgore briefed TVA directors on the financial outlook during a meeting in Memphis on Thursday.

The revenue drop, he said, was "because of the weather, principally."

He noted that the number of "heating degree days" — when the average temperature falls below 65 degrees — is about 7 percent below normal in the first quarter. And they are down nearly 14 percent in January, he said.

"But I can say for the last week, and we hope going forward, the cold spell is actually doing better," said Kilgore, joking that "wet and cold or wet and hot, that is TVA weather" because it means power sales will rise and production costs will fall from hydroelectric generation.

TVA's weather forecasters predicted January would be slightly warmer than normal, but are expecting February and March to be slightly colder than usual, which could be a plus for power sales.

April, May and June are expected to be slightly warmer than normal, which also could help power sales hum along with air conditioners.

TVA, a self-financing government corporation, is operating under a fiscal 2007 budget of $9.3 billion.

The agency relies on power sales to some 8.6 million consumers in Tennessee, Kentucky, Alabama, Mississippi, Georgia, North Carolina and Virginia.

As a public agency, TVA issues bonds for financing but no stock.

Kilgore said reductions in operating and maintenance costs and in the need for purchased power from others helped offset higher fuel expenses, particularly for coal, and lower power sales in the first quarter.

Meanwhile, Kilgore said the $1.8 billion restoration of the Unit 1 reactor at the Browns Ferry Nuclear Plant in Alabama is 98.3 percent complete.

The unit, shuttered since 1985, has been loaded with fuel and is expected to start up in May.

Also, a reactor at the Sequoyah Nuclear Plant near Chattanooga that automatically shut down for 36 hours after an air line break Tuesday was returning to full power Thursday, he said.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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