TVA Revenues Total Nearly $7 Billion, Interest Expense Down in 2001
October 24 , 2001
JACKSON, Tenn. — TVA ended the 2001 fiscal year with revenue of nearly $7 billion, reflecting increased power sales and lower interest expense, and reduced debt by more than $600 million, according to unaudited financial results presented to the TVA Board today.
The TVA Board, meeting in Jackson, Tenn., approved a recommendation by TVA Chief Financial Officer David N. Smith to reduce the carrying value of certain TVA assets by $3.4 billion. The asset valuation adjustment will be charged against TVA’s existing $3.7 billion in retained earnings.
“TVA is financially stronger as evidenced by the 2001 financial results, and we are meeting our customers’ needs by providing affordable, reliable electric power,” said TVA Chairman Glenn McCullough Jr. “These adjustments will more accurately reflect the value of our assets and help TVA maintain competitive prices in the electricity marketplace of the future.”
Smith told the Board that devaluation of assets is a “non-recurring accounting adjustment” that has no impact on cash flow, rates, or TVA’s ability to service its debt. TVA does not expect any change in its triple-A bond rating, Smith said.
“This accounting adjustment is a good example of TVA applying best business practices, which will strengthen our competitive position in the long run,” said TVA Director Skila Harris.
Asset values being reduced are Watts Bar Nuclear Plant Unit 2, $1.72 billion; Bellefonte Nuclear Plant, $500 million; the canceled Hartsville Nuclear Plant, $410 million; and deferred debt refinancing costs, $789 million. After the adjustment, TVA will have total assets valued at $29.7 billion. The reduction in asset values does not prevent TVA from making the assets, such as Watts Bar 2 or Bellefonte, productive in the future.
According to financial results for the 2001 fiscal year, which ended Sept. 30, power sales increased by 1.2 percent over sales the previous year and interest expense was down $103 million from the 2000 fiscal year.
TVA reduced debt by $610 million in 2001, $160 million more than projected, for a total reduction of almost $2.4 billion since 1997. Interest expense in 2001 accounted for 23 percent of TVA revenue, down from a high of 34 percent in 1997 and the lowest percentage in more than 15 years.
TVA also was able in 2001 to increase generating capacity, add miles of transmission lines, install new customer delivery points, and invest in clean air equipment to improve reliability and protect the environment.
TVA is the nation’s largest public power producer, and its power system is self-financed. TVA provides power to large industries and 158 power distributors that serve 8.3 million consumers in seven southeastern states.
.
Media Contact:
John Moulton, Knoxville (865-632-8048 or 632-6000)
