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Wednesday, February 3, 2016

TVA Financial Report, Facts, Figures and Visual Aids About TVA Debt, Pension Shortfall and Nuclear Decommissioning Fund - February 3, 2016


Mild Weather Impacts TVA’s First Quarter Earnings
KNOXVILLE, Tenn. ― The Tennessee Valley Authority reported a net loss of $37 million for the first three months of fiscal year 2016 ending Dec. 31, 2015. Net income was $118 million lower  compared to the same period last year due in part to $131 million lower operating revenues, representing a 5 percent decrease, primarily driven by weather. Temperatures in the Tennessee Valley in December were the mildest in more than 50 years, contributing to 8 percent lower sales of electricity compared to the same period a year ago.

Operating expenses for the first quarter of 2016 increased by less than 1 percent versus the same period in the prior year. Operating costs were helped by $56 million lower fuel and purchased power expense as a result of lower sales, more hydroelectric and natural gas-fired generation, as well as lower natural gas prices. Non-fuel operating and maintenance costs were $52 million higher than in the same period last year, driven primarily by nuclear refueling outages and remediation work at Boone Dam.

“TVA customers continue to benefit from the diversity of our power system, which helped keep costs lower in the first quarter, despite unusual conditions,” said TVA President and CEO Bill Johnson. “Increased output from TVA’s robust hydroelectricsystem and low cost natural gas-fired power  helped offset lower revenues, limiting the impact on TVA’s financial performance. We are also maintaining good discipline in managing our costs, which is particularly important in periods of lower sales and revenues.”

TVA’s mission of environmental stewardship includes management of the Tennessee River system for multiple benefits, including flood control. With recordbreaking rainfall in December 2015, TVA personnel worked to avert millions of dollars of potential flood damage in the Tennessee Valley during the first quarter of 2016, and worked with the U.S. Army Corps of Engineers to reduce impacts on the Ohio and Mississippi Rivers through coordinated use of TVA’s system of dams.
“This past December was both the warmest and also one of the wettest in TVA history,” said Chief Financial Officer John Thomas. “Guntersville Reservoir, for example, had 9 inches of rainfall on Christmas Day alone - something that happens only every 100-200 years.” (My comment - Not true, we have had at least 3 other major flood and storm events in the past 25 years in the Tennessee River Valley. We are also witnessing an increase in tornadic activity. Flooding and severe weather is related to climate change via a warming global climate according to meteorologists.)

“It is in these times that we are reminded of the value of TVA’s stewardship mission and that TVA is more than a power company,” Johnson added. “It was the dedication of TVA’s employees that helped prevent the loss of life and property across the Tennessee Valley.” (My comment: There is no doubt that TVA flood control has saved lives and property.)


Pension Plan - Quote: "Pension Fund As of September 30, 2015, TVA's qualified pension plan had assets of $6.8 billion compared with liabilities of $12.8 billion. The potential for the plan's funded status to quickly improve is limited because of expected equity performance and the significant amount of benefits paid each year to plan beneficiaries. The plan currently has approximately 35,200 participants, of which approximately 23,700 are retirees and beneficiaries currently receiving benefits. Benefits of approximately $700 million were paid to participants in 2015.
(page 52)

Op-Ed on TVA Debt
Feb. 2, 2016  TVA promises broken by Pam Sohn, Chattanooga Times Free Press
(Fair-Use Rights segment for non-profit news reporting)
TVA President Bill Johnson wants ratepayers to think the Tennessee Valley Authority has a tough choice to make: raise our electricity rates or stiff 23,700 TVA retirees and most of the utility's 10,800 current employees...First, it's important to understand that TVA is playing both ends against the middle of being a public utility as well as a nonprofit business that is ratepayer — not taxpayer — funded...TVA ratepayers are on the hook...Make no mistake: Whatever tag is put on our guarantee that retirees' pensions be met, there currently is a $6 billion funding shortfall, and we will pay one way or another...The unions charge — and rightfully so — that the utility's leaders are punishing workers while getting fat paychecks and retirement benefits themselves. Johnson drew $6.4 million in 2015, including his own multimillion-dollar bonuses for "performance incentives" and uncapped retirement packages. Four other top TVA executives each drew more than $2 million in salary and bonuses.Read the entire article at the Chattanooga Times Free Press link below.

Looking at TVA's Decommissioning Fund status they do not have a sufficient amount of funds to cover more than one nuclear reactor's decommissioning - reference, March 31, 2015 ML15098A176 http://pbadupws.nrc.gov/docs/ML1509/ML15098A176.pdf Total funds in their decommissioning fund, near $1.516 billion for 6 nuclear reactors.
TVA's cost estimates for decommissioning their nuclear facilities are low, listed at $3.5706 billion, those rates are at least 5 years old, maybe older. TVA typically underestimates costs and overestimates needs, an indicator of TVA mismanagement.

Costs of decommissioning in today's dollars, in the TVA area, are estimated at $900 million on the low side to $1.2 billion on the high side. It is estimated $6 billion dollars will be needed to decommission TVA nuclear facilities in todays dollars, $2.5 billion short in todays dollars. Plants such as Diablo Canyon's2 units in California are estimated at cost $2.6 billion - http://www.dra.ca.gov/general.aspx?id=2459 Vermont Yankee is estimated to cost $1.2 billion and take 15 years. - https://www.bostonglobe.com/metro/2015/11/26/the-long-road-decommissioning-nuclear-power-plant/k5VWUQzLKCIz2VuYs8RhoO/story.html

SACE - Southern Alliance for Clean Energy's article on TVA's Watts BarUnit 2: "...the nuclear industry is the only one that celebrates bringing a project online 37 years late and many billions of dollars over budget."  - See more at: http://blog.cleanenergy.org/2016/02/03/did-tva-stay-on-budget-with-the-new-tva-watts-bar-2-reactor/#sthash.Sduqj2vV.dpuf

(click on image to expand view)

TVA Debt with Interest and Obligations
(click on image to expand view)

The Bottom Line is this, TVA debt with interest exceeds assets. Combine all long term obligations, their total commitments are in excess of $61 Billion. Assets are $48.742 billion, while all TVA debt with interest is $49.748 billion, I'll write that out,
$49,748,000,000.00. To place the debt  in a visual context - TVA's weight of its debt is approximately 980,000 pounds. One billion dollars on pallets weighs 10 tons. 49x10=490tons x 2000 pounds per ton=980,000 pounds.

Picture of 1 billion dollars
Each palate is $100 Million Dollars = 1 Ton (photo credit - usagamers.com fair-use rights for non-profit news reporting and commentary)

It would take 25 semi-trucks to carry TVA's debt and interest on its debt.
(photo credit - hybridclaims.com fair-use rights for non-profit news reporting and commentary)
TVA's debt is no small matter, it is growing and does not officially reflect their unfunded pension obligations nor their nuclear and coal facility decommissioning costs. (Estimated at $10 Billion total, add another 5 semis.)

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