Jun. 1--COLUMBUS, Miss. -- The lack of rain is drying up cash reserves for the Tennessee Valley Authority, TVA President Tom Kilgore said Thursday.

TVA estimates it has lost $200 million of hydroelectric power generation over the past eight months due to one of the driest years on record in the Tennessee Valley. Without sufficient rainfall, TVA may end up losing $300 million for all of fiscal 2007 because of the drought, Mr. Kilgore said. TVA typically generates nearly 10 percent of its electricity from its 29 hydroelectric-producing dams and pumped storage facility on the Tennessee River and its tributaries. But hydro generation so far this year is down 32 percent from expectations and unoff into TVA lakes is off 39 percent. Hydro power is TVA's cheapest source of electricity and normally can be generated during peak demand periods.

But rainfall in the Tennessee Valley east of Chattanooga is more than 10 inches below normal this year, making this the driest year in the Vall y since 1986. In Chattanooga, the National Weather Service said rainfall so far this year totals less than 12 inches, or less than half the normal 25-inch total by this time of the year. "We're in good shape in terms of our overall electricity supplies and we continue to generate net income," Mr. Kilgore said following a TVA board meeting here. "But our bank account is getting low. We've got to conserve our cash, but we won't make that p unless we have a real hot summer." Mr.

Kilgore said TVA revenues during the first eight months of fiscal 2007 are about 3 percent below budget, primarily because of the recent mild winter. TVA, which began the fiscal year last October with about $500 million in cash, is down to about $200 million in cash reserves. "With our large operation, that's pretty tight," Mr. Kilgore said. But TVA should soon get some help from its oldest nuclear reactor. William "Skip" Orser, the outgoing chief operating officer at TVA, told directors here he expects the Unit 1 reactor at the Browns Ferry Nuclear Power Plant to begin generating electrici y at any time.

The Browns Ferrry reactor was restarted on May 22 after a 5-year, $1.8 billion repair program. TVA estimates the power generated by Browns Ferry will be less expensive to produce than electricity generated by either coal or natural gas. E-mail Dave Flessner at dflessner@timesfreepress.com