Electricity Markets

TVA touts reliability following call to sell off power line assets

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The Tennessee Valley Authority maintains a highly reliable system that provides value for its business and utility customers, Bill Johnson, TVA president and chief executive officer said in response to a proposal to sell off TVA’s transmission assets.

In the last 20 years, TVA has provided bulk transmission service with 99.999 percent reliability, Johnson said Aug. 3 during a quarterly earnings conference call.

TVA’s high level of reliability “is important because the region’s economy runs on the electricity TVA and our local power company partners deliver safely, reliably and efficiently every day,” Johnson said.

The Trump administration in mid-June proposed reorganizing various federal agencies, which would include divesting the transmission assets held by TVA and three of the Power Marketing Administrations: Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration.

The administration said the plan would “encourage a more efficient allocation of economic resources and mitigate unnecessary risk to taxpayers.”

But the American Public Power Association said that selling TVA and PMA transmission assets and/or increasing PMA rates by changing the current cost-based structure would threaten the ability of the PMAs to provide reliable, cost-based power to the approximately 1,200 public power systems and rural electric cooperatives in 33 states and the millions of customers they serve.

Previous proposals to sell the federal power marketers’ assets have died in Congress.

TVA owns about 16,000 miles of transmission lines in seven states that provide power to about 10 million people.

The way TVA manages its assets fulfills its requirements in the TVA Act and adds value for the region, Johnson said.

“Studies conducted on previous [divestiture] proposals have validated that TVA’s public power model provides the best value and does so without any taxpayer funding, and as a result Congress has never chosen to make the changes in the TVA Act that would be necessary to sell our assets,” Johnson said.

TVA adding capacity at nuclear plant

TVA is adding capacity at its 3,400-megawatt Browns Ferry nuclear plant near Athens, Alabama, by replacing equipment during scheduled outages, Johnson said. TVA added 155 MW at one of the plant’s units earlier this year and expects to add similar amounts to two other units this fall and spring.

Looking ahead, Johnson said he would be surprised if an upcoming integrated resource plan finds a need for new baseload power plants over the next 20 years, saying that a decline in electric demand appears permanent.

We’ve seen per capita usage peak in this country because of efficiency,” Johnson said. “I don’t know what the IRP is going to conclude, but you can see the trend, and the trend is to more flexible mid-merit to lower end base, and large renewable, particularly here, would be large solar.”

By aligning TVA’s spending with its sales revenue, TVA has been able to keep its effective power rate essentially flat, according to Johnson.

“Maintaining that momentum for the future requires us to focus on reducing debt, which will permanently reduce costs and assure that TVA’s rates remain as low as feasible,” Johnson said.

TVA’s capital needs are declining sharply and the federal power marketer is starting to see its debt decline, according to Johnson.

So far this year, TVA has had a total effective rate of 6.85 cents per kilowatt-hour, down 1 percent from 6.88 cents per KWh, reflecting a drop in fuel costs.

TVA’s income jumped to $1.2 billion in the first nine months of its fiscal year, up from $546 million in the year-ago period. Revenue climbed to $8 billion from $7.7 billion on record-setting hot weather, according to John Thomas, TVA chief financial officer.

Coal-fired power plants supplied 19 percent of TVA’s power in the first nine months, down from 25 percent a year ago, according to Thomas. Nuclear generation increased to 41 percent from 38 percent, hydroelectric power climbed to 14 percent from 12 percent and natural gas-fired production inched up to 18 percent from 16 percent. Power purchases slipped to 8 percent from 9 percent.