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Industry feels the heat from Tennessee Valley Authority rate increase

By: Dave Flessner
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Harold DePriest

Power bills for most electric users will jump by nearly 20 percent next month, but the biggest industrial customers in the Tennessee Valley will face rate increases nearly twice that amount.

EPB President Harold DePriest said the rate charged for the biggest industrial customers in Chattanooga will jump as much as 39 percent Oct. 1 when TVA raises its fuel cost adjustment and its energy and demand charges. Among the 100 biggest electricity users in the Chattanooga area, rates will rise from 25 to 39 percent under the new TVA rate schedule.

“It’s going to be hard on some businesses,” Mr. DePriest told EPB directors Friday. “I am especially concerned about those companies which are on the edge.”

The latest rate hike from TVA — the third since April — is expected to drain about $90 million a year out of the Chattanooga economy in higher electricity costs, Mr. DePriest said.

The increase, effective on Oct. 1, is to cover soaring costs of coal, natural gas and purchased power. Coal costs have more than doubled since this spring, according to TVA officials.

Ed Bredniak, president of CC Metals and Alloys, LLC in Calvert City, Ky., said TVA’s rate increase next month will cost his company more than $1 million extra each month, effectively raising electricity costs for his firm by more than 30 percent.

“In the past two years with this latest rate increase some of our industrial customers in the Valley will have had a 60 percent increase in electric rates, compared with about a 32 percent increase in residential rates,” said Mr. Bredniak, a former president of the Tennessee Valley Industrial Committee of TVA’s biggest direct-served customers. “I think that needs to be looked at if TVA wants to encourage business growth.”

In one instance, Mr. DePriest said, an industrial customer in Mississippi, which he declined to identify, could end up paying as much as 57 percent more for electricity in October.

“In the past, major power users tended to get better rates, but in this case they are going to end up being hit harder,” Chattanooga Manufacturers Association President Ray Childers said.

At Eureka Foundry Co. in Chattanooga, Fred Hetzler Jr., projects the latest rate increase will boost his company’s monthly power bill by more than $84,000.

“We will emphasize conservation wherever we can and try, as we can, to pass along the extra expense to others,” he said.

Ron Hutchins, president of the North Georgia Electric Membership Corp., in Dalton, said electricity prices reflect the global increase in fuel costs and commodity expenses.

“Like the gasoline prices we’ve seen go up so much this year, this is definitely going to add a lot of price pressure on individuals and businesses,” he said. “We’re trying to gear ourselves up to listen to our customers at this time and help them in any way that we can.”

At EPB, Mr. DePriest said he is working with a $150,000 grant for supplies from TVA to establish this fall volunteer teams to make needed energy improvements in low-income areas.

Already, requests for utility assistance in Chattanooga during the first eight months of 2008 were up 47 percent over the same period a year ago. John Hayes, director of the United Way’s “Building Stable Lives” program, said his agency expects an even bigger increase in calls following the Oct. 1 rate increase.

“We’re already seeing many more people call us for help because they simply can’t afford the higher prices for their utilities,” he said.

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