TVA rates to drop 5.5 percent in December

Chattanoogans facing higher rates for sewer charges, stormwater fees and natural gas prices this fall are getting some relief from another utility.

The Tennessee Valley Authority will cut wholesale electricity rates by another 5.5 percent next month, returning power rates close to where they were two years ago before a record run-up in prices last year.

Under the latest fuel cost adjustment, the typical residential customer of Chattanooga's EPB will save about $5.50 in December, EPB spokeswoman Lacie Newton said.

The electricity price break should help offset some, but not all, of the impact of higher sewer and stormwater fees this fall from the city of Chattanooga.

The electric rate cut is the seventh this year for TVA due to falling prices of fuel and increased hydroelectricity generation from more rainfall.

TVA President Tom Kilgore said rainfall in the Tennessee Valley is above normal this year for the first time in four years, helping to boost the agency's cheapest source of power -- hydroelectricity generated at TVA's 27 power-producing dams.

The commodity prices of natural gas, oil and coal also have declined in the past year, although Chattanooga Gas Co. announced this week it is seeking a rate increase on the local distribution portion of Chattanooga bills.

"The great news is that fuel costs are coming down," Mr. Kilgore told TVA's board during a meeting Thursday in Bowling Green, Ky.

Effective Dec. 1, the average residential rate for TVA will be 8.4 cents per kilowatt-hour, down from the peak reached in October 2008 when electric rates averaged 10.4 cents per kilowatt-hour. Two years ago, residential electricity rates were 8.3 cents per kilowatt-hour.

For some industrial customers using more than 30,000 kilowatts, power prices in December of 4.5 cents per kilowatt-hour will be below the 4.8 cents per kilowatt-hour charged in October 2007, officials said.

"Anything that can provide downward pressure on power rates is certainly welcome, because industry is struggling to keep production active in the valley," said John Van Mol, a spokesman for the Tennessee Valley Industrial Committee, which represents the largest industries directly served by TVA.

EPB estimates the typical Chattanooga homeowner who uses 1,461 kilowatt-hours of power each month will pay $120.10 for December power use under the new rates, or $5.50 less than in the current month.

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Changes in utility costs this fall for typical residential customers:

* $5.50 -- Average monthly reduction in electricity bills in December

* $6.62 -- Average monthly increase in stormwater fees for Chattanooga residences

* $2.84 -- Average monthly increase in proposed rates by Chattanooga Gas Co.

* 70 cents -- Average monthly increase in sewer fees in Chattanooga

Sources: TVA, Chattanooga Gas, city of Chattanooga