The new year will bring higher electricity rates in the Tennessee Valley, which industrial customers complain already have risen above the Southeast average.
BY THE NUMBERS* $1.10 -- Average increase in EPB residential monthly power bills in January due to rate increase announced Tuesday* 1 percent -- Wholesale rate increase next month by TVA due to January change in fuel cost adjustment* 5.5 percent -- Change in TVA electricity rates compared with a year ago* 31 -- TVA's rank in overall rates among the top 100 utilities in 2010, up from its 41st position the previous year* 6.12 cents -- Average kilowatt-hour electricity price for TVA industrial load, or 3.9 percent higher than Southeast utility average* 24 percent -- Increase in calls to United Way of Chattanooga for utility assistance in the past yearSources: Tennessee Valley Authority, EPB, Brubaker & Associates
"The trend is troubling," said John Van Mol, director of the Tennessee Valley Industrial Committee, the trade group that represents the largest industrial power users directly served by TVA.
"Many of our members report that they are buying electricity less expensively in other parts of the country at sister plants," he said. "We have some real concerns that TVA's industrial power rates are not always the most competitive."
TVA insists its overall rates still are well below the U.S. average, even with a 1 percent wholesale rate increase planned for January.
"TVA's rates overall remain below the national average, and in the lower third among similar utilities," spokesman Scott Brooks said.
The federal utility announced Tuesday it will boost its wholesale rates by nearly $1 million a month starting in January, due to higher fuel costs during the winter. That will reverse two months of declines in the utility's monthly fuel-cost adjustment.
Brooks said the colder weather expected in January will cause TVA to use more expensive fuel to generate power, resulting in the higher fuel-cost adjustment next month.
In Chattanooga, the increase will boost the average EPB residential monthly electric bill in January by $1.10.
TVA cut its wholesale rates by 3.5 percent this month and by 5 percent in November due to lower fuel-cost adjustments from declining natural gas prices. But overall, TVA rates remain 5.5 percent above a year ago due to fuel-cost increases earlier this year.
TVA adjusts the fuel portion of its power rates every month to reflect the actual and anticipated costs of the coal, natural gas and purchased power used to generate its electricity.
Georgia Power customers could face much higher rate increases next month if the Georgia Public Service Commission accepts a proposed agreement to boost Georgia Power rates by $844 million, or about $15 a month for the average household. The commission is discussing the increase in a meeting set for Tuesday.
DOCUMENT DOWNLOADSPDF: Industrial power rate comparisonPDF: TVA peformance results and overall rate comparison
But Donald Huffman, executive director for Associated Valley Industries, the trade group that represents major commercial and industrial power users served by TVA distributors, said TVA industrial rates often still are higher than the power prices charged by neighboring utilities.
"TVA has some of the lowest residential rates in the Southeast, but our industrial rates are higher than they used to be and often higher than what other utilities charge in the region," Huffman said.
That rate disparity may help Tennessee Valley households, but it makes the region less competitive to recruit business, Huffman said.
EPB President Harold DePriest said industrial customers tend to see bigger rate increases from fuel-cost adjustments than do residential customers because a bigger share of their bills is tied to fuel costs. When TVA rates jumped 20 percent overall in October 2008, for instance, some local industrial users faced power rate increases of more than 30 percent, DePriest said.
"It's a concern that we definitely need to address," he said.
But Brooks said TVA improved its relative standing among the top 100 utilities last year, rising to No. 31 in overall rates, up from the 41st ranking the previous year.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.