Colder winter temperatures and higher electric rates have combined to put a financial chill over many Chattanooga homeowners this month.
But the Tennessee Valley Authority says monthly power bills could rise even more in coming years as the utility absorbs the costs of cleaning up from investment losses and coal pollution.
“My electric bill is ridiculous already, and I don’t see how it can go any higher,” said James Pittman, a North Chattanooga homeowner who paid a $513 monthly electric bill on Wednesday to heat his two-bedroom home.
Leandra Satterfield, who lives with her three children in an Oak Street home in downtown Chattanooga, said her current $221 monthly electric bill is the highest she’s ever had and is forcing her to arrange a payment plan with Chattanooga’s EPB.
“If rates go any higher, I don’t think I could pay it at all,” she said.
TVA INVESTMENT LOSSES
Assets value: $5.1 billion, as of Nov. 30, 2008
Fiscal 2008 decline: 19 percent, or $1.4 billion
November 2008 decline: Another 18 percent, or $1.1 billion
Nuclear decommissioning fund
Assets value: $1.1 billion
Fiscal 2008 decline: 22 percent, or $241 million
November 2008 decline: Another 24 percent, $206 million
Source: TVA 10K filing, December 2008
Electric rates across the Tennessee Valley — already up by more than 25 percent from a year ago due to coal and natural gas prices — could be pushed even higher by court-ordered pollution controls and the need to replenish retirement and decommissioning accounts, according to TVA financial filings.
Decommissioning money is used to dismantle obsolete nuclear power plants and safely dispose of their dangerous parts.
The TVA reported last month that it lost more than $3 billion in investment income last year. Those losses soon could require the federal utility to add to its financial reserves for both its employee retirement program and its nuclear decommissioning fund, TVA President Tom Kilgore said in a recent interview.
“We’ve done a tad bit better than the market overall, but our returns like everybody else have gone down, and if things don’t turn around we’ll have to put some more money in,” he said. “The market is going to come back sometime, but how much it comes back is the question.”
TVA’s $5 billion-plus retirement fund, one of the biggest in the Southeast, lost more than $2.5 billion from its peak in 2007 because of the drop in the stock market, according to TVA’s most-recent annual report.
In a financial filing this week, TVA also disclosed that a federal court ruling will require the utility to spend extra money to install more pollution controls on some of its coal-fired power plants.
U.S. District Judge Lacy Thornburg ordered TVA last week to reduce smog, haze and acid rain-causing emissions produced by its four coal-fired power plants closest to North Carolina.
A lawsuit brought by the state of North Carolina charged TVA with being a “public nuisance.” In its ruling, the court said TVA must expedite plans for scrubbers at its John Sevier Plant near Rogersville and add scrubbers to six older boilers at the Widows Creek Fossil Plant in Alabama.
“Advancing the construction schedule or taking additional actions could increase TVA’s expenses or cause TVA to change the way it operates these facilities,” TVA Chief Financial Officer Kim Greene wrote in an SEC filing this week.
Utility spokesman John Moulton said TVA personnel still are reviewing Judge Thornburg’s order.
TVA already has ordered more than $1 billion in pollution controls for its Bull Run, John Sevier and Kingston coal plants.
The agency also is spending nearly $1 million a day at its Kingston plant to clean up more than 1 billion gallons of coal ash and sludge that spilled out of an ash pond last month.
“At this point, we are still preparing our long-term cleanup plans, and we don’t have any estimate of the total cost,” Mr. Francis said.
But the ash cleanup and pollution controls are likely to add upward pressure on rates, officials said.
Jack Simmons, president of the Tennessee Valley Public Power Association, which represents the municipalities and cooperatives that sell TVA-generated power, said distributors and customers are worried about more increases in TVA rates and fuel cost adjustments.
“TVA doesn’t have a source of revenue other than its customers, so we are particularly sensitive to what has happened and what that may cost TVA, especially when we are already seeing higher bills this January from the cold weather and previous rate increases,” he said. “There has been some moderation in fuel costs in the past few months, but coal prices are still much higher than they were a year ago, and there certainly are additional costs TVA is having to pay to clean up from the Kingston ash spill.”