Record dry weather reduced Tennessee Valley Authority's (TVA) hydro power revenues by almost a third below budget for the nine months to 30 June, resulting in a commensurate rise in fuel and purchased power costs.

Rainfall in the half year from January to June was 56% of normal, resulting in the period being the second driest on record in 118 years in the eastern Tennessee Valley.

Despite the setbacks for the hydro power part of its portfolio – which provides the cheapest generation – TVA reported operating revenues up 4.3% to US$6.6B for the first nine months of the fiscal year.

Net income for the nine months nearly trebled to US$371M. However, the outlook for the full year, ending 30 September, is expected to see net income down on budget due to the ‘unseasonable’ winter weather and dry conditions.

While water levels in its main reservoirs are nearly normal due to TVA having to maintain them for multi-purpose uses, it noted that the levels of upstream tributary reservoirs on the Tennessee river were on average 19 ft (5.85m) below normal. TVA added that such levels left ‘very little water to operate the hydroelectric plants’.

Yesterday, TVA announced an increase in its fuel cost adjustment with effect from 1 October to help recover higher than expected fuel and purchased power costs from earlier in the year, and assist in offsetting future costs as the period of poor hydrology is expected to continue. TVA also urged greater attention to energy efficiency among its consumers.