Tennessee Valley Authority · NYSE:TVC
Tennessee Valley Authority — Investor Presentation (May 2015)
50 slides from Tennessee Valley Authority's investor presentation, May 7, 2015
Slide 1: Slide 1
Slide 2: President's Report
President’s Report May 7, 2015 BILL JOHNSON PRESIDENT AND CEO
Slide 3: Huntsville
Huntsville | 3
Slide 4: Huntsville
Huntsville | 4
Slide 5: TVA in North Alabama
TVA in North Alabama TVA IN ALABAMA $106 MILLION ‘tax-equivalent payments to Alabama $135 MILLION non-fuel goods & services REDSTONE ARSENAL Aes es es es ee ee es eH TEN LARGE INDUSTRIES LOCATED HERE IN NORTH AL 900000... NIT counties POWERED BY TVA ELECTRICITY IN PARTNERSHIP WITH LOCAL POWER COMPAN
Slide 6: TVA in North Alabama
TVA in North Alabama | 6
Slide 7: 3,000 Miles of Shorelines
3,000 Miles of Shorelines tT iene
Slide 8: Energy | Environment | Economic Development
Energy | Environment | Economic Development Energy Environment Economic Development
Slide 9: Energy | Environment | Economic Development
Energy | Environment | Economic Development Energy Environment Economic Development
Slide 10: Integrated Resource Plan
Integrated Resource Plan | 10
Slide 11: Energy | Environment | Economic Development
Energy | Environment | Economic Development Energy Environment Economic Development
Slide 12: Energy | Environment | Economic Development
Energy | Environment | Economic Development Energy Environment Economic Development
Slide 13: Tennessee River System
Tennessee River System | 13
Slide 14: Living Lands and Waters
Living Lands and Waters | 14
Slide 15: Recreation
Recreation | 15
Slide 16: Dam Safety
Dam Safety | 16
Slide 17: Energy | Environment | Economic Development
Energy | Environment | Economic Development Energy Environment Economic Development
Slide 18: Energy | Environment | Economic Development
Energy | Environment | Economic Development 44,000 Jobs Attracted and/or Retained $4.9 Billion In Capital Investments
Slide 19: Strategic Imperatives
Strategic Imperatives UTILITY-SCALE SOLAR PPA | 19
Slide 20: Slide 20
Slide 21: External Relations Committee
External Relations Committee
Slide 22: Kingston – Emory River Road Properties
KINGSTON – EMORY RIVER ROAD PROPERTIES RIC PEREZ SENIOR VICE PRESIDENT, SHARED SERVICES
Slide 23: For Board Consideration
For Board Consideration • Declare surplus and authorize a public auction sale, pursuant to Section 31 of the TVA Act, affecting approximately 76.8 acres of land that includes 39 vacant parcels and 23 parcels with houses located along Emory River Road in Roane County, Tennessee. • Authorize the sale,
Slide 24: Background
Background • TVA acquired 62 parcels near the Kingston Fossil Plant (KIF). Of these parcels, 39 are vacant parcels of land and 23 parcels are improved with houses. • TVA’s decision to purchase the parcels was primarily due to anticipated visual impacts and noise disturbance that the property owners
Slide 25: Desired Outcome
Desired Outcome • The KIF restoration project is mostly complete and these 62 parcels are no longer necessary for TVA operations. Returning these properties to their pre-spill state of residential use would be in the best interest of the local community. KINGSTON – EMORY RIVER ROAD PROPERTIES | 25
Slide 26: Proposed Sale Area
Proposed Sale Area KINGSTON – EMORY RIVER ROAD PROPERTIES | 26
Slide 27: Recommendation
Recommendation • Staff recommends that the Board declare surplus and authorize the sale at public auction, pursuant to Section 31 of the TVA Act, or by negotiation pursuant to Section 4(k)(a), of approximately 76.8 acres consisting of 39 vacant parcels of land and 23 parcels with houses. KINGSTON –
Slide 28: Audit, Risk, and Regulation Committee
Audit, Risk, and Regulation Committee
Slide 29: People and Performance Committee
People and Performance Committee
Slide 30: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 31: Financial Performance Update
Financial Performance Update JOHN THOMAS CHIEF FINANCIAL OFFICER
Slide 32: Q2 Fiscal Year 2015
Q2 Fiscal Year 2015 Net Income: $509M better than plan and $349M better than last year Operating Revenue ($327M above plan) • Colder weather resulting in 10% more heating degree days Fuel Cost ($33M favorable to plan) • Increased lower cost generation and lower gas prices Operating & Maintenance ($1
Slide 33: Cool Winter Temperatures
Cool Winter Temperatures 4,000 Heating Degree Days (Nov – Mar) Warmer Colder 65° Base 3,000 FY14 2,944 FY15 3,351 3,292 2,000 FY12 2,260 1,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentile (FY62 – present) FINANCIAL PERFORMANCE UPDATE | 33
Slide 34: Winter Temperature Deviations
Winter Temperature Deviations 500 Heating Degree Day Colder than Deviation 250 Normal from Normal (Nov – Mar) 65° Base 0 -250 Warmer than Normal -500 -750 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FINANCIAL PERFORMANCE UPDATE | 34
Slide 35: Revenue and Sales
Revenue and Sales Maintaining low rates ($ million) FYTD 2015 FYTD 2014 Change % Change Total Operating Revenues $ 5,274 $ 5,320 $ (46) (0.9)% Power Sales (GWh) 78,467 79,699 (1,232) (1.5)% Effective Rates(1) (¢/kWh) Total Effective Rate 6.6 6.6 0.0 – (1) Excludes other revenue and off-system sales
Slide 36: Q2 Summary Income Statement
Q2 Summary Income Statement Net Income favorability due to higher revenues and lower operating spend FYTD 2015 FYTD 2014 Variance '15 v '14 $ million Actual Budget Fav/(Unfav) Actual Fav/(Unfav) Operating Revenue $ 5,274 $ 4,947 $ 327 $ 5,320 $ (46) Fuel & Purchased Power 1,628 1,661 33 1,770 142 Bu
Slide 37: Q2 Summary Cash Flow Statement
Q2 Summary Cash Flow Statement FYTD 2015 FYTD 2014 $ million Actual Budget Variance Actual '15 v '14 Cash Flow from Operating Activities $ 1,412 $ 1,273 $ 139 $ 1,426 $ (14) Cash Flow used in Investing Activities (1,644) (2,126) 482 (1,374) (270) Cash Flow from Financing Activities 234 853 (619) (1,
Slide 38: Second Quarter Summary (v. Plan)
Second Quarter Summary (v. Plan) Higher Revenue Lower Fuel Cost Lower Expenses: • Operation & Maintenance • Interest Higher Net Income and Lower Debt FINANCIAL PERFORMANCE UPDATE | 38
Slide 39: Generation Fleet Planning Widows Creek Unit 7
Generation Fleet Planning Widows Creek Unit 7 CHARLES PARDEE CHIEF OPERATIONS OFFICER
Slide 40: Background
Background • Widows Creek Fossil Plant is a coal-fired generation station with eight units located in North Alabama • Per the EPA Consent Decree, units 1 – 6 were retired in stages between May 2012 and July 2013 • Unit 8 was idled in October 2014 • Unit 7 is the only remaining unit in operation and
Slide 41: CCR Rule Impacts
CCR Rule Impacts • EPA’s final Coal Combustion Residual (CCR) rule was signed in December 2014 and published in the Federal Register April 2015 • The CCR rule regulates ash impoundments that are used to store coal ash created from fueling the plant • Increased requirements for storing, monitoring, a
Slide 42: Recommendation
Recommendation • Direct the CEO to retire Widows Creek Fossil Unit 7 • Specific date to be determined by CEO but no later than October 2015 WIDOWS CREEK UNIT 7 | 42
Slide 43: Nuclear Oversight Committee
Nuclear Oversight Committee
Slide 44: Watts Bar Unit 2 Update
Watts Bar Unit 2 Update MIKE SKAGGS SENIOR VICE PRESIDENT, WATTS BAR OPERATIONS & CONSTRUCTION
Slide 45: Watts Bar Unit 2 Overview
Watts Bar Unit 2 Overview • Project-to-date recordable incident rate at 0.26 – better than goal • Quality Control Acceptance Rate continues to trend above 97% • On track with revised estimate to complete developed in 2012 - Included ranges up to $4.5 billion for completion costs and June 2016 for c
Slide 46: Watts Bar Unit 2 Completion Progress
Watts Bar Unit 2 Completion Progress • Open vessel testing • Primary hydrostatic testing • Secondary hydrostatic testing • Unit 2 transformers energized • Condenser vacuum established Watts Bar Unit 2 -‐ Approximately 98% complete -‐Major construction finishing -‐Pre-‐operational testing in prog
Slide 47: Watts Bar Unit 2 Upcoming Milestones
Watts Bar Unit 2 Upcoming Milestones • Hot functional testing • Operational readiness assessment team inspection • Integrated leak rate test • Engineered safety features testing • Regulatory approval • Fuel load Watts Bar Unit 2 Update | 47
Slide 48: Watts Bar Unit 2 Challenges and Risks
Watts Bar Unit 2 Challenges and Risks • Component and pre-operational testing • Emergent equipment issues and repairs • Readiness for hot functional testing • System and area turnovers • Emergent licensing issues Protect the safe, reliable operation of Unit 1 Watts Bar Unit 2 Update | 48
Slide 49: Watts Bar Unit 2
Watts Bar Unit 2 • Safe, quality work being done • Cost and schedule within established plans • Progress being made, milestones being achieved • Component and pre-operational testing current focus • Significant work and challenges remain • Actions continue to mitigate risks to forecast • Watts Bar U
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