TVA writes off $3.4 billion in assets

The Board of Directors for Tennessee Valley Authority at a recent meeting in Jackson, Tenn., approved a recommendation by TVA Chief Financial Officer David N. Smith to reduce the carrying value of certain TVA assets by $3.4 billion.
   Asset values being reduced are Watts Bar Nuclear Plant Unit 2, $1.72 billion; Bellefonte Nuclear Plant, $500 million; the canceled Hartsville Nuclear Plant, $410 million; and deferred debt refinancing costs, $789 million. However, the reduction in asset values does not prevent TVA from making Watts Bar 2 or Bellefonte productive in the future.
   TVA ended the 2001 fiscal year Sept. 30 with revenue of nearly $7 billion, reflecting increased power sales and lower interest expense. The agency also reduced its debt by more than $600 million, according to unaudited financial results presented at the Oct. 24 board meeting.
   Smith told the board that devaluation of assets is a "non-recurring accounting adjustment" that has no impact on cash flow, rates or TVA's ability to service its debt. TVA does not expect any change in its triple-A bond rating, according to Smith.
   The agency's power sales increased by 1.2 percent over the previous year's and interest expense was down $103 million from 2000.
   TVA reduced its debt by $610 million in 2001, $160 million more than projected, for a total reduction of almost $2.4 billion since 1997. Interest expense in 2001 accounted for 23 percent of TVA revenue, down from a high of 34 percent in 1997 and the lowest percentage in more than 15 years.
   The agency also increased generating capacity in 2001, added miles of transmission lines, installed new customer delivery points, and invested in clean air equipment to improve reliability and protect the environment.