Tennessee Valley Authority · NYSE:TVC
Tennessee Valley Authority — Investor Presentation (November 2015)
59 slides from Tennessee Valley Authority's investor presentation, Nov 20, 2015
Slide 1: Board Meeting
Board Meeting November 20, 2015 Bowling Green, Kentucky
Slide 2: President's Report
President’s Report November 20, 2015 BILL JOHNSON President and CEO
Slide 3: Bowling Green
Bowling Green | 3
Slide 4: Local Power Company Partners
Local Power Company Partners | 4
Slide 5: Kentucky and TVA
Kentucky and TVA 15 Local Power Companies 200. 00 i~ 28 HUIVICO BUSINESSES COUNTIES “13 LARGE ee Kea Keen INDUSTRIES -~-Vvav 1, Covees NEARLY % 0 0 OF OUR WORKFORCE 8,200 JOBS $844 MILLION BUSINESS INVESTMENT TIA in ig ~ 22.4 TAs EQUI. ENT ?/ MN > TVA PURCHA. =p $306. MILLION MILLION 11-fuel goods a
Slide 6: Veterans Day
Veterans Day UTILITY-SCALE SOLAR PPA | 6
Slide 7: Veterans Day
Veterans Day Blandon Prowse and son UTILITY-SCALE SOLAR PPA | 7
Slide 8: Energy | Environment | Economic Development
Energy | Environment | Economic Development
Slide 9: Strong Performance In Energy
Strong Performance In Energy
Slide 10: Strong Performance In Energy: Coal – Paradise
Strong Performance In Energy Coal – Paradise
Slide 11: Strong Performance In Energy: Coal – Shawnee
Strong Performance In Energy Coal – Shawnee
Slide 12: Strong Performance In Energy: Nuclear – Watts Bar
Strong Performance In Energy Nuclear – Watts Bar
Slide 13: Strong Performance In Energy: Nuclear – Sequoyah
Strong Performance In Energy Nuclear – Sequoyah
Slide 14: Strong Performance In Energy: Transmission
Strong Performance In Energy Transmission
Slide 15: Stewards of the Environment
Stewards of the Environment
Slide 16: Stewards of the Environment: Lands and Waters
Stewards of the Environment Lands and Waters
Slide 17: Stewards of the Environment: Recreation
Stewards of the Environment Recreation
Slide 18: Economic Development
Economic Development
Slide 19: Economic Development
Economic Development Stimulating economic development and investment in the Valley Douglas Autotech KapStone Container Corp. Graham Packaging Parkdale Mills Bridgestone Americas, Inc. DENSO Manufacturing Target Corp. M-Tek TeamHealth Cummins, Inc. Under Armour Resolute Forest Products Kellogg Sales
Slide 20: Energy | Environment | Economic Development
Energy | Environment | Economic Development
Slide 21: Safety
Safety | 21
Slide 22: Safety
Safety | 22
Slide 23: Energy | Environment | Economic Development
Energy | Environment | Economic Development
Slide 24: Strategic Imperatives
Strategic Imperatives Serve the people of the Tennessee Valley Maintain low rates Meet reliability PEOPLE expectations x Be responsible & provide a RERFORMANGE stewards balanced ~ j 7 portfolio ey, ‘ Debt —— | __, Live within our means
Slide 25: Strategic Priorities
Strategic Priorities Rates Maintain low rates and align O&M spending with revenue Debt Effectively manage debt to ensure long-term financial health Work safely and effectively People Embrace continuous improvement Performance Develop employees and leadership for sustained optimal performance High pe
Slide 26: 6B-H2296 it
6B-H2296 it
Slide 27: President Truman quote
“great American accomplishment”. . . one that was achieved through “enterprise and courage and skill.” President Truman
Slide 28: Slide 28
Slide 29: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 30: Financial Performance
Financial Performance JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 31: Fiscal Year 2015
Fiscal Year 2015 Net Income: $1.1 billion • $517M more than budget and $642M above last year Base Revenues ($343M above budget) • Weather-related • Fuel expense $158M favorable due to generation performance and lower gas prices Operating & Maintenance Expenses ($151M favorable to budget) • Exceeded
Slide 32: Weather Patterns
Weather Patterns Heating Degree Days Cooling Degree Days 4,500 2,500 Normal Normal 1,863 °Days 3,360 °Days Colder Warmer Warmer Colder 4,000 FY12 2,000 FY15 3,500 FY14 2,032 3,699 FY14 FY15 FY13 1,898 3,555 FY13 1,500 3,000 FY12 2,500 1,000 Fiscal year 1970 through 2015 (low to high) Fiscal year 197
Slide 33: Weather Impact
Weather Impact Energy delivered FY 2015 vs. 2014 % of Total Sales Actual 0.5% Weather Normal Local Power 0.1% Companies 87% -1.8% Industries -1.8% Directly Served(1) 11% -6.8% Federal Agencies -6.8% & Other 2% 0.1% -0.3% Total ~~ -7.0% -3.0% -2.0% -1.0% 0.0% 1.0% (1) Excludes energy for USEC
Slide 34: FY15 Summary Income Statement
FY15 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 $ 11,003 $ 10,697 $ 306 $ 11,137 $ (134) Fuel & Purchased Power 3,394 3,552 158 3,824
Slide 35: FY15 Summary Cash Flow Statement
FY15 Summary Cash Flow Statement FYTD 2015 FYTD 2014 $ million Actual Budget Variance Actual '15 v '14 Cash Flow from Operating Activities $ 3,315 $ 2,482 $ 833 $ 2,980 $ 335 Cash Flow used in Investing Activities (3,585) (3,768) 183 (2,756) (829) Cash Flow from Financing Activities 70 1,086 (1,016)
Slide 36: FY15 Financial Summary (v. Plan)
FY15 Financial Summary (v. Plan) Electricity Sales Flat – warmer winter & summer Higher Base Revenue and Lower Fuel Cost Effective rate flfla at for our customers Over $600 million in cumulative O&M reductions Resulting in: Higher Net Income and Lower Debt
Slide 37: Section 13 Tax Equivalent Payments
Section 13 Tax Equivalent Payments JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 38: Tax Equivalent Payments
Tax Equivalent Payments The TVA Act requires TVA to make tax equivalent payments to states and counties in which TVA holds power property or sells power. For Board Consideration: Approval of the final tax equivalent payments to the states and counties for FY 2015 Approval of the estimated tax equiva
Slide 39: Background
Background Section 13 of the TVA Act requires five percent of TVA’s gross proceeds from power sales* to be redistributed as tax equivalent payments. The payments to states are determined by the following criteria: • 50 percent from the state’s book value of TVA power properties compared to TVA’s tot
Slide 40: Total Tax Equivalent Payments
Total Tax Equivalent Payments Tax Equivalent Revenues and Payments ($ million) Estimated FY11 FY12 FY13 FY14 FY15 FY16 Gross Proceeds from $10,593 $11,580 $10,948 $10,661 $10,840 $10,699 Power Sales Required % to be 5% 5% 5% 5% 5% 5% Distributed Total Tax Equivalent $ 530 $ 579 $ 547 $ 533 $ 542 $ 5
Slide 41: Tax Equivalent Payments by State
Tax Equivalent Payments by State ($ million) Estimated State FY11 FY12 FY13 FY14 FY15 FY16 Alabama $ 116 $ 123 $ 111 $ 106 $ 103 $ 94 Georgia 9 9 8 9 9 9 Illinois <1 1 1 <1 1 1 Kentucky 47 47 47 41 32 35 Mississippi 33 41 39 38 39 40 North Carolina 3 3 3 3 3 3 Tennessee 321 354 337 335 354 352 Virgi
Slide 42: Recommendation
Recommendation 1. Approval of the final tax equivalent payment allocations to the states and counties for FY 2015 2. Approval of the estimated tax equivalent payment allocations to the states and counties for FY 2016
Slide 43: Modifications to TVA's Imbalance Transmission Rate
Modifications to TVA’s Imbalance Transmission Rate JACINDA WOODWARD Senior Vice President, Transmission
Slide 44: Purpose
Purpose Request approval to adjust the energy imbalance service rate calculation
Slide 45: Background
Background Generators are required to submit a schedule of their expected output Imbalance occurs when actual output does not equal schedule Output > schedule, TVA pays Generator for excess Output < schedule, Generator pays TVA for shortage Imbalance rate calculation sets compensation amount
Slide 46: Imbalance Rate Calculation – Goals
Imbalance Rate Calculation – Goals Provide reliable power to the people of the Valley at the lowest feasible rate Align payment for over-generation closer to actual costs associated with correcting over-generation Improve schedule adherence by Generators to reduce operational impacts to TVA
Slide 47: Recommendations
Recommendations 1. Eliminate the “purchased and interchange power costs” components from the definition of decremental costs, and 2. Reduce the Deviation Band III multiplier from 75% to 50% of TVA’s decremental costs, and 3. Delegate authority to the CEO to make certain other changes to cost basis a
Slide 48: People and Performance Committee
People and Performance Committee
Slide 49: Audit, Risk, and Regulation Committee
Audit, Risk, and Regulation Committee
Slide 50: Nuclear Oversight Committee
Nuclear Oversight Committee
Slide 51: Place the Title of the Presentation Here
PLACE THE TITLE OF THE PRESENTATION HERE | 51
Slide 52: External Relations Committee
External Relations Committee
Slide 53: Regional Resource Stewardship Council Charter
Regional Resource Stewardship Council Charter VAN M. WARDLAW Executive Vice President And Chief External Relations Officer
Slide 54: Background
Background Created in 2000 to provide TVA advice from public and private sectors on its stewardship activities and on setting priorities among competing objectives and values Advice and recommendations are reported to the TVA Board External Relations Committee Current Charter expires April 30, 2016
Slide 55: Membership (Based on the Charter)
Membership (Based on the Charter) Council consists of up to 20 members with membership balanced to include a broad range of diverse views and interests. 7 4 Nominations by Distributors of State Governors TVA power, in the Valley TVPPA and TVIC 1 2 Beneficiaries of Directly served customer of TVA’s n
Slide 56: Recommendation
Recommendation 1. Approve and authorize renewal of the proposed Charter 2. Authorize the Vice President, Stakeholder Relations, to serve as Designated Federal Officer 3. Delegate to the Chief Executive Officer the authority to approve membership and to fill vacancies that may arise during the course
Slide 57: External Relations Committee
External Relations Committee
Slide 58: Floating Houses
Floating Houses
Slide 59: Slide 59
Tennessee Valley Authority — Investor Presentation (November 2015) on 6ix