Presentation to GIOA. March 2015

Transcription

1 Presentation to GIOA March 2015

2 Safe Harbor Statement This document contains forward looking statements relating to future events and future performance. All statements other than those that are purely historical may be forward looking statements. In certain cases, forward looking statements can be identified by the use of words such as may, will, should, expect, anticipate, believe, intend, project, plan, predict, assume, forecast, estimate, objective, possible, probably, likely, potential, speculate, or other similar expressions. Although TVA believes that the assumptions underlying the forward looking statements are reasonable, TVA does not guarantee the accuracy of these statements. Numerous factors could cause actual results to differ materially from those in the forward looking statements. For a discussion of these factors, please see the annual, quarterly, and periodic reports that TVA files with the Securities and Exchange Commission. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the extent to which any factor or combination of factors may impact TVA s business or cause results to differ materially from those contained in any forward looking statement. TVA undertakes no obligation to update any forward looking statement to reflect developments that occur after the statement is made. 2

3 Corporate Profile

4 82 years ago, President Roosevelt asked Congress to create a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.

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6 Corporate Profile Year Created Core Business Activities Service Area Size Service Area Population Annual Revenues Total Assets Credit Ratings 1933 Electric power generation, economic development, regional resource stewardship 80,000 square miles (across parts of seven states) 9 million $11 billion $46 billion Aaa/AAA/AA+ 6

7 Corporate Profile Largest public power electric utility in the U.S. Among the largest of all U.S. utilities in power capacity and annual electricity sales 80,000 square mile service area, covering parts of 7 states Produces a vital commodity (electricity) for 9 million people every day Highest credit ratings in the U.S. utility industry (Aaa / AA+ / AAA) Wholly-Owned Government Corporation under U.S. Code (not a GSE) All TVA Board members appointed by U.S. President, Confirmed by the U.S. Senate TVA holds real property as an agent of the U.S. Government TVA obligations comprise the majority of U.S. agency debt (non-gse) TVA debt is not guaranteed by the U.S. Government TVA debt not counted against U.S. Treasury debt limit Self-funded from power revenues and financing authority Completely self-funded, receives no government appropriations Power rates set by TVA Board of Directors Traditional bonds and notes are subject to $30 billion limit under the TVA Act 7

8 Corporate Governance Nine Member Board of Directors part time, appointed by the U.S. President Board Committees Various Inspector General Independent Auditor Ernst & Young (selected by the TVA Board) Disclosure Control Committee Composed of members of TVA management Congressional Committees: U.S. Senate Environment & Public Works Committee U.S. House of Representatives Transportation & Infrastructure Committee Financial Reporting U.S. Securities & Exchange Commission (SEC) Budget and Program Review U.S. Office of Management and Budget (OMB) Other Various agency relationships and authorities (e.g. EPA, NRC, FERC, DOE, U.S. Treasury, and others) 8

9 Strategic Overview

10 Strategic Imperatives Maintain low power rates Meet reliability expectations & provide a balanced portfolio Be responsible stewards Live within our means Strategic imperatives are aligned with TVA s mission: Energy Environment Economic Development 10

11 Fiscal Year 2015 Business Priorities RATES DEBT PEOPLE PERFORMANCE EXCELLENCE ASSET PORTFOLIO STEWARDSHIP Maintain low rates and align O&M spending with revenues Effectively manage debt to ensure long-term financial health Work safely and effectively Proactively seek opportunities for continuous improvement Focus on values and behaviors Pursue operational excellence Position Watts Bar for successful commercial operations in 2015 Balance the portfolio to provide cleaner, reliable and affordable energy Stimulate economic development and investment in the Valley Strengthen customer loyalty and relationships Manage the Tennessee River Protect and improve the natural resources and the use and enjoyment of public lands 11

12 TVA Power System Energy Sources Safe and reliable Economic Clean Diverse Hydro 6% Nuclear 26% Coal 38% EE 7% Renewables 3% Hydro 11% Coal 25% EE 9% Renewables 3% Hydro 10% Coal 58% Gas 10% Gas 10% Nuclear 31% Gas 16% Nuclear 37% TVA Carbon Emissions(CO 2 ) (millions of tons) % projected reduction by

13 Capital Plan Fiscal year 2015 plan calls for TVA s largest capex outlay of all-time *Capital expenditures includes AFUDC, Kingston Ash related items, AROs, and BLN regulatory asset 13

14 Economic Development Stimulating economic development in the Tennessee Valley 27,400 jobs created and/or retained $2.8 billion of capital investment 14

15 Stewardship Activities Protect and improve the Tennessee Valley region s natural resources for the multiple benefits they provide 15

16 Financing Program

17 TVA Financing History Early Financing Authorization: Original TVA Act in 1933 authorized TVA to issue bonds with all rights and privileges accorded by law to Panama Canal bonds. Congressional Appropriations: (primary) Total = $1.4 billion (including property transfers) Self Financing Amendment to the TVA Act: 1959 Public Markets: November 1960: First Power Bonds issued Federal Financing Bank (U.S. Treasury): Public Markets: 1989 Present June 1995: First Global Power Bonds issued Over $70 billion in total long term financings since re entering the public markets 17

18 Financing Program Overview Issuance Types: Short term debt Long term Bonds Various lease backed and other obligations Short term Debt (Discount Notes): Maturities up less than one year (typically 4 6 weeks) Weekly auctions Dedicated dealer group Long Term Bonds: Retail and institutional products Various structures Maturities out to 50 years maximum Alternative financings including lease backed obligations, prepayments Bonds and notes backed by the net power proceeds of the TVA power system 18

19 $3 $2 $1 $0 Debt Maturities Profile 19 billions of dollars As of Dec 31, 2014 Short term debt Statutory Long term Debt bonds & notes Alternative Financing financing

20 Portfolio Management Principles Maintain an average life of debt less than the average life of TVA s assets Seek lower funding costs in balance with risk considerations Maintain appropriate financial flexibility Maintain a strong reputation in the capital markets to ensure market access and minimize funding costs Maintain the strongest credit ratings possible 20

21 Liquidity Profile TVA has a solid liquidity profile $500 million target for cash and cash equivalents $2.5 billion commercial lines of credit with staggered, multi year maturities Two $1 billion syndicated facilities One $500 million bi lateral facility $150 million MOU with the U.S. Treasury (statutory) Robust short term Discount Notes program: Well established and supported by 12 participating broker/dealers 48 weekly offerings in FY 2014 totaling more than $21 billion of issuance More than $4.5 billion of issuance in the first quarter of FY

22 Credit Ratings Trends United States of America (Soverign Credit Rating) Tennessee Valley Authority Credit Rating Agency (Rating / Outlook) Credit Rating Agency (Rating / Outlook) Date Action S&P Moody's Fitch Date Action S&P Moody's Fitch July 1, AAA / Stable Aaa / Stable AAA / Stable July 1, AAA / Stable Aaa / Stable AAA / Stable July 14, 2011 Watch (S&P) AAA / Negative Aaa / Stable AAA / Stable July 14, 2011 Watch (Moody's) AAA / Stable Aaa / Stable AAA / Stable July 15, 2011 Watch (S&P) AAA / Negative Aaa / Negative AAA / Stable Aug. 5, 2011 Downgrade (S&P) AA+ / Negative Aaa / Stable AAA / Stable Aug. 3, 2011 Affirmed (Moody's) AA+ / Negative Aaa / Stable AAA / Stable Aug. 8, 2011 Downgrade (S&P) AA+ / Negative Aaa / Negative AAA / Stable Jun. 10, 2013 Affirmed (S&P) AA+ / Stable Aaa / Stable AAA / Stable Jun. 11, 2013 Affirmed (S&P) AA+ / Stable Aaa / Stable AAA / Stable Oct. 15, 2013 Watch (Fitch) AA+ / Stable Aaa / Stable AAA / Negative Oct. 16, 2013 Watch (Fitch) AA+ / Stable Aaa / Stable AAA / Negative Mar. 21, 2014 Affirmed (Fitch) AA+ / Stable Aaa / Stable AAA / Stable Mar. 24, 2014 Affirmed (Fitch) AA+ / Stable Aaa / Stable AAA / Stable Dec. 31, AA+ / Stable Aaa / Stable AAA / Stable Dec. 31, AA+ / Stable Aaa / Stable AAA / Stable 22

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