Tennessee Valley Authority · NYSE:TVC
Tennessee Valley Authority — Investor Presentation (February 2019)
66 slides from Tennessee Valley Authority's investor presentation, Feb 14, 2019
Slide 1: Board Meeting
Board Meeting February 14, 2019 Chattanooga, TN
Slide 2: President's Report
President’s Report BILL JOHNSON President and CEO
Slide 3: Chattanooga
Chattanooga
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Slide 5: Chattanooga
Chattanooga PRESIDENT’S REPORT | 5
Slide 6: Mission | Strategic Imperatives
Mission | Strategic Imperatives Why We Are Here How We Achieve Sustainability TVA Mission Strategic Imperatives Energy Environment Economic Development PRESIDENT’S REPORT | 6
Slide 7: Serving
Serving PRESIDENT’S REPORT | 7
Slide 8: Financials
Financials PRESIDENT’S REPORT | 8
Slide 9: President's Report
PRESIDENT’S REPORT | 9
Slide 10: Energy | Environment | Economic Development
Energy | Environment | Economic Development PRESIDENT’S REPORT | 10
Slide 11: Browns Ferry Uprate
Browns Ferry Uprate PRESIDENT’S REPORT | 11
Slide 12: Hydro Modernization
Hydro Modernization PRESIDENT’S REPORT | 12
Slide 13: Slide 13
Slide 14: Energy | Environment | Economic Development
Energy | Environment | Economic Development PRESIDENT’S REPORT | 14
Slide 15: President's Report map
Lovers Lane KENTUCKY tee Scene rl Eas JP i co acum a Snes veal ae, Fors . Dani" chetamauca Da NesapocOan ae Cae i ifs MISSISSIPPI Kemper conbestlon a “tae PRESIDENTS REPORT | 15
Slide 16: Dispatch Costs By Plant – FY 2019
Dispatch Costs By Plant – FY 2019 100 Coal Gas CC Gas CT 75 Hydro Nuclear Renewables 50 Bull Run Paradise 25 0 Nuclear Coal MW 0 2K 4K 6K 8K 10K 12K 14K 16K 18K 20K 22K 24K 26K 28K 30K 32K PRESIDENT’S REPORT | 16
Slide 17: Paradise and Bull Run Don't Fit Portfolio Need
Paradise and Bull Run Don’t Fit Portfolio Need Large Coal Units Large Coal Units Small Coal Units Low Cost / Low EFOR Med-High Cost / High EFOR Medium Cost / Low EFOR Effectively Serving Baseload Ineffectively Operating on the Margin Effectively Meeting Load Swings Cumberland Paradise Gallatin Kings
Slide 18: Power Supply Remains Diverse
Power Supply Remains Diverse FY19 FY28 FY28 PAF3 & BRF Remain PAF3 & BRF Retired Wind & Wind & Wind & Solar TVA EE Solar TVA EE Solar TVA EE 3% 1% 1% 1% 5% 5% Hydro Hydro Hydro 10% 10% 10% Nuclear 41% Nuclear Nuclear Gas 43% 43% Gas 23% Gas 28% 24% Coal Coal Coal 17% 18% 17% Total CO2 Emissions 48 4
Slide 19: Integrated Resource Plan
Integrated Resource Plan PRESIDENT’S REPORT | 19
Slide 20: Integrated Resource Plan
Integrated Resource Plan For more information visit tva.com/IRP PRESIDENT’S REPORT | 20
Slide 21: Energy | Environment | Economic Development
Energy | Environment | Economic Development PRESIDENT’S REPORT | 21
Slide 22: River Management
River Management PRESIDENT’S REPORT | 22
Slide 23: Flood Prevention
Flood Prevention PRESIDENT’S REPORT | 23
Slide 24: Energy | Environment | Economic Development
Energy | Environment | Economic Development PRESIDENT’S REPORT | 24
Slide 25: Continuing Economic Development
Continuing Economic Development FYTD Results 25,000 Jobs Created or Retained $4.3 Billion Capital Investment PRESIDENT’S REPORT | 25
Slide 26: Recent Announcements
Recent Announcements Operations Hub Fulfillment Center in Nashville in Mississippi 5,000 Jobs 850 Jobs PRESIDENT’S REPORT | 26
Slide 27: Recent Announcements
Recent Announcements $800 MILLION INVESTMENT 1,000 JOBS PRESIDENT’S REPORT | 27
Slide 28: Employees
Employees PRESIDENT’S REPORT | 28
Slide 29: Our Mission
Our Mission To serve the people of the Tennessee Valley to make life better. PRESIDENT’S REPORT | 29
Slide 30: Engineer
ENGINEER _———— —_
Slide 31: 2019 Engineer of the Year
2019 Engineer of the Year Marjorie Parsons Senior Program Manager, NERC Planning Coordinator, Transmission & Power Supply PRESIDENT’S REPORT | 31
Slide 32: President's Report
President’s Report BILL JOHNSON President and CEO
Slide 33: Board Meeting
Board Meeting February 14, 2019 Chattanooga, TN
Slide 34: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 35: Financial Performance Update
Financial Performance Update JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 36: Q1 Fiscal Year 2019
Q1 Fiscal Year 2019 Operating Revenues: $297M above budget • Sales volume 4% more than budget due to weather impacts Interest Expense: $21M favorable to budget • Lower debt rates and less reliance on debt • Total Financing Obligations (TFO) $588M less than budget Net Income: $423M • $303M more than
Slide 37: Q1 Combined Degree Days Above Normal
Q1 Combined Degree Days Above Normal Hot Start to October; Colder November with Second Highest Peak °Days 1,800 Normal 1,600 1,294 Below Above 1,400 Q1 FY 19 Q1 FY 18 1,374 1,474 1,200 1,000 800 BOARD MEETING | 37
Slide 38: Q1 Summary Income Statement
Q1 Summary Income Statement $303M favorable due to operating revenue and lower expenses FYTD 2019 FYTD 2018 Variance '19 v '18 $ million Actual Budget Fav/(Unfav) Actual Fav/(Unfav) Operating Revenue $ 2,725 $ 2,428 $ 297 $ 2,549 $ 176 Fuel & Purchased Power 738 660 (78) 695 (43) Total O&M 745 720 (
Slide 39: Q1 Summary Cash Flow Statement
Q1 Summary Cash Flow Statement TFOs were $588M favorable to budget FYTD 2019 FYTD 2018 $ million Actual Budget Variance Actual '19 v '18 Cash Flow from Operating Activities $ 502 $ 442 $ 60 $ 626 $ (124) Cash Flow used in Investing Activities (601) (536) (65) (628) 27 Cash Flow from Financing Activi
Slide 40: Q1 Summary (Results v. Plan)
Q1 Summary (Results v. Plan) Higher Revenues – Weather impacts increased demand and energy revenue Lower Expenses – Less interest expense and management of O&M costs Lower Debt Balance – FY18 performance driving FYTD 2019 favorability BOARD MEETING | 40
Slide 41: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 42: Asset Portfolio Evaluation
Asset Portfolio Evaluation JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 43: TVA's Optimal Portfolio
TVA’s Optimal Portfolio Cost Effectiveness – Take a long run, risk-informed approach to least cost planning Environmental Stewardship – Demonstrate our environmental commitment Efficiency (Portfolio Fit) – Provide reliability and flexibility in the portfolio Portfolio Diversity – Provide rate stabil
Slide 44: Coal Asset Evaluation Components
Coal Asset Evaluation Components Economic Evaluation Environmental Assessment Resiliency: Fuel Security Study Resiliency: Transmission Study BOARD MEETING | 44
Slide 45: Retirement Saves $320 Million
Retirement Saves $320 Million Decision robust under range of assumptions Decision Breakeven $320M NPV Savings $0 Load (Energy CAGR) Base: 0.47% 0 (264) 243 Low: -0.10% High: 1.04% Gas Price (Range 2018-2037) Base: $2.86 - $5.59 (avg. $4.02) 0 (51) 200 Low 1 STD: $2.42 - $3.89 (avg. $2.96) High 1 STD
Slide 46: Power Supply Remains Diverse
Power Supply Remains Diverse FY19 FY28 FY28 PAF3 & BRF Remain PAF3 & BRF Retired Wind & Wind & Wind & TVA EE TVA EE Solar 1% Solar TVA EE Solar 3% 1% 1% 5% 5% Hydro Hydro Hydro 10% 10% 10% Nuclear 41% Nuclear Nuclear Gas 43% 43% Gas 23% Gas 28% 24% Coal Coal Coal 17% 18% 17% Total CO2 Emissions 48 4
Slide 47: Evaluation Summary
Evaluation Summary Economic Analysis - indicates retirement of Paradise Fossil Unit 3 (subject to ongoing rotor inspections) in 2020 and Bull Run Fossil in 2023 are best least- regrets options Environmental Assessments - indicate minor cumulative impacts overall, with negligible or beneficial impact
Slide 48: Asset Portfolio – Recommendation
Asset Portfolio – Recommendation Based on comprehensive evaluation findings, retire: • Paradise Fossil Unit 3 and Bull Run Fossil • Authorize CEO to determine the dates based on TVA’s fiscal and operational needs BOARD MEETING | 48
Slide 49: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 50: Research & Renewable Projects
Research & Renewable Projects JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 51: Flexibility Solutions
Flexibility Solutions Request approval of two Flexibility Solutions: • Flexibility Research Project • Flexible Renewable Option BOARD MEETING | 51
Slide 52: Flexibility Research Project
Flexibility Research Project Onsite and community mid-scale customer solutions: • Two-year pilot project • Allows Local Power Companies (LPCs) to provide solutions that address behind-the-meter (BTM) opportunities • 10 MW or less per solution • Project capped at 300 MW peak or 100 MW equivalent base
Slide 53: Flexible Renewable Option
Flexible Renewable Option Offsite, new to the world, utility scale customer solutions: • This structure was key in successfully recruiting technology companies to the Tennessee Valley • Ability to aggregate customers, providing the lowest cost option for offsite solutions • The specific end-use cust
Slide 54: Flexibility Solutions – Recommendation
Flexibility Solutions – Recommendation Recommend delegation to the CEO authority to approve transactions covered by the Flexibility Research Project and Flexible Renewable Option BOARD MEETING | 54
Slide 55: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 56: Dual Metering Standard Change & GPP Design Exploration
Dual Metering Standard Change & GPP Design Exploration JOHN THOMAS Executive Vice President and Chief Financial Officer
Slide 57: Background
Background In 2007, in response to a requirement of the Energy Policy Act of 2005, the TVA Board considered the net metering standard and, pursuant to its authority under the Public Utilities Regulatory Polices Act of 1978 and the TVA Act, adopted a dual metering standard that: • Made a dual metered
Slide 58: Proposed
Proposed • Adopt a revised standard that separates the standard from any specific program • Close the Green Power Providers program (GPP) to new applications effective January 1, 2020 • Delegate authority to the Chief Executive Officer (CEO) to provide for the design and implementation of one or mor
Slide 59: Revised Standard
Revised Standard Proposed Standard: Any compensation for electricity produced by an electric consumer from an eligible on-site generation source that is delivered to the local distribution facilities, or otherwise to TVA, may only be made under, and in accordance with, rates, metering, and billing a
Slide 60: Recommendation
Recommendation Recommend the Board: 1) Approve the revised standard; 2) Close the Green Power Providers program (GPP) to new applications effective January 1, 2020, and phase out the GPP program completely as existing contracts with retail electric consumers expire; 3) Delegate authority to the Chie
Slide 61: Finance, Rates, and Portfolio Committee
Finance, Rates, and Portfolio Committee
Slide 62: Audit, Risk, and Regulation Committee
Audit, Risk, and Regulation Committee
Slide 63: Nuclear Oversight Committee
Nuclear Oversight Committee
Slide 64: External Relations Committee
External Relations Committee
Slide 65: People and Performance Committee
People and Performance Committee
Slide 66: Slide 66
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