published Wednesday, June 16th, 2010

TVA rates rise 2.3 percent in July

  • photo
    The TVA headquarters building is located in downtown Chattanooga.
    Photo by Angela Lewis

Electric rates are heating up with the summertime temperatures.

The Tennessee Valley Authority said Tuesday that it will raise its wholesale power rates in July by another 3 percent, boosting the typical residential electric bill for most Chattanoogans by $2.80 a month, and 2.3 percent at the retail level.

Next month’s increase will be the fifth consecutive monthly hike in TVA’s fuel-cost adjustment, reflecting the end of credits accumulated when fuel prices plummeted during the recent recession.

“Part of this increase reflects the end of the credits we built up last year, and part of it is due to our expectation of higher fuel prices this year during the summer months,” TVA spokesman Scott Brooks said.

With the July increase, TVA electric rates this summer will be slightly higher than they were a year ago.

TVA cut its fuel cost adjustment by nearly 25 percent before March when the fuel-cost adjustment began moving higher again after a year of falling prices. TVA also implemented an 8 percent base rate increase last October, although the initial impact of that jump was offset by an 11 percent drop in the fuel-cost adjustment.

Donald Huffman, executive director of Associated Valley Industries, a Chattanooga-based trade group, said any rate increase will be difficult for some commercial and industrial customers in the current economic environment.

“None of us like a rate increase, but we understand that the fuel-cost adjustment passes along the fuel costs that neither TVA nor us can influence in the production of electricity,” he said.

Mr. Huffman said industrial rates for TVA are about average in the Southeast, while residential rates remain about 20 percent below the U.S. average.

TVA residential rates are lower because residential customers enjoy most of the benefits of TVA’s cheapest generation — hydroelectricity — from 29 power-producing dams.

PDF: TVA fuel cost adjustments

Article: TVA rates rise 2.3 percent in July

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PDF: Bellefonte TVA letter

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PDF: TVA president report

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PDF: Rising Fuel Costs Fact Sheet.pdf

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PDF: TVA environmental policy

The agency adjusts its wholesale rates each month to reflect the actual costs of fuel and purchased power bought by the federal utility compared with budget expectations.

Natural gas and coal prices spiked in 2007, then fell during the recession in the next two years and now are trending higher again as energy demand rebounds, TVA President Tom Kilgore said.

In his quarterly report to the TVA board last month, Mr. Kilgore conceded that TVA’s favorable electric rates “are slipping a bit” and may not achieve the relative advantage the agency established in its corporate goal.

Mr. Huffman said he expects the fuel cost adjustment from TVA will rise further in the second half of 2010.

“But hopefully, it will be less of an increase than what we have been experiencing,” he said.

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eyesopen said...

Our rates go up - they claim it's a fuel cost adjustment- baloney - it's the CEO's raise, it's the bonuses, it's the Kingston area clean-up, it's the fines. Why are there raises and bonuses? These people need to pay for their lack of leadership-(clean-up,fines) not get rewarded for them. Hold them responsible - they're obviously overpaid - they don't do their jobs - they just collect their fatter and fatter pay. They should pay the fines - not us consumers. Maybe then they would start earning their keep istead of passing the liability onto us!

June 16, 2010 at 9:05 a.m.
nrutledge1 said...

This all ends the day that we all decide we want more nuclear power. Nuclear is green technology. It makes cheap power, and you don't have to worry about an ash spill. Nay-sayers will say, "It's too expensive, it'll cost $8 billion+" Well, that may be, but Sequoyah has paid for itself twice and is working on time number 3. As far as the folks that are worried about a TMI accident, first of all, things have DRAMATICALLY CHANGED since TMI in 1979. Reactor operator training is extremely difficult and rigorous and those folks know what they are doing. Also, look at numbers,number of coal miners killed at Upper Big Branch: 38, number of oil rig workers killed at Deep Water Horizon: 11, number of wild life: countless, NUMBER OF PEOPLE KILLED AT TMI IN 1979: 0. Numbers don't lie. Gimme a round of nukes please.

June 16, 2010 at 1:05 p.m.
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